The Georgia Court of Appeals has ruled in favor of Hippo Insurance Services and its underwriter, Spinnaker Insurance Company, in their legal dispute with Atlantic Restoration Services, Inc. The case, which involved a contested insurance claim, centered on whether Atlantic had standing to sue Hippo for non-payment of water damage mitigation services rendered to an insured homeowner, Amber Dawson.
The dispute arose in 2021 when Dawson's condominium suffered water damage due to a plumbing leak. She hired Atlantic Restoration Services to handle the mitigation, and the company’s service agreement included an assignment of insurance rights clause. This clause stated that Dawson "irrevocably and fully assign[s] and transfer[s] to [Atlantic] all of [Dawson’s] legal and equitable rights, title, and interest under all insurance policies arising from claims for the damage [Atlantic] was hired to address. . . , includ[ing] . . . the rights to collect insurance policy benefits and proceeds. . . [and] to sue the insurance company. . . ."
However, Hippo’s insurance policy contained a provision explicitly prohibiting such assignments without its prior consent. The policy stated: "Assignment of this policy will not be valid unless we give our consent." Since Hippo never approved the assignment, it contested Atlantic’s standing to sue under Dawson’s policy.
Atlantic sued Hippo in 2022, seeking payment for the services it provided to Dawson. Hippo responded by challenging Atlantic’s standing to sue, arguing that Dawson’s assignment of rights was invalid without their consent. The trial court denied Hippo’s motion for summary judgment, citing a standing order requiring such motions to be filed within 30 days of the close of discovery. Hippo appealed this decision, contending that their challenge was not a matter for summary judgment but rather a fundamental issue of standing, which could be raised at any point in the legal proceedings.
The Court of Appeals agreed with Hippo’s argument, ruling that the trial court erred in dismissing the motion as untimely. The appellate court emphasized that challenges regarding a plaintiff’s standing to sue are issues of abatement, which can be brought up at any stage of litigation. Consequently, the court vacated the trial court’s decision and remanded the case for further proceedings, allowing the lower court to consider Hippo’s motion on its merits.
This ruling reinforces the importance of contract provisions regarding assignment clauses in insurance policies and highlights the need for policyholders and third-party service providers to obtain insurer approval before assigning policy benefits. The outcome is significant for insurers as it upholds the enforceability of policy terms requiring consent for assignments, potentially limiting third-party claims against insurers without direct contractual relationships. Additionally, the case underscores the necessity for businesses in restoration and mitigation services to review insurance contract restrictions before relying on assignments for payment recovery.
