In Mills v. Foremost Insurance Co., No. 06-16458 (Jan. 4, 2008), the 11th Circuit recently overturned the dismissal of Florida hurricane victims’ class-action lawsuit relating to mobile home damages. The plaintiffs claimed that their insurer underpaid for the damage to their mobile homes. The issues were whether the insurers should have compensated the homeowners for contractors' overhead, profit charges and sales taxes and whether sufficient common issues existed between the class members.

After Hurricane Frances damaged their mobile home, Dale and Diane Mills sought coverage from their insurer, Foremost Insurance Company. The insurer paid to repair the home but did not compensate the Mills for either contractor's overhead, profit charges or state and local sales taxes on materials.

In 2006, the Mills filed a class-action suit in Florida state court, alleging that their insurer “knowingly and unlawfully” failed to pay overhead, profit and taxes in its estimates of hurricane-damage losses and did not inform them before they bought the policy that these items would not be covered. Seeking damages and a declaratory judgment, the Mills defined the class as all Florida Foremost policyholders who submitted claims for hurricane damage to their mobile homes or personal property arising from any of the four hurricanes that struck the state in August and September 2004.

After removing the case to federal district court, the insurer filed a motion to dismiss, arguing that the case should not be a class action because individual issues predominated over common ones. The district court agreed and dismissed the suit.

The 11th Circuit reversed, finding that policyholders did not have to repair or replace their damaged property in order to be entitled to the payments the insurer had withheld. It noted that, to receive the “actual cash value” of their mobile homes, policyholders need only be “reasonably likely” to incur repair or replacement expenses. Further, the appellate court found that the plaintiffs had standing to sue because that they owned an insured mobile home, a hurricane damaged their mobile home, they made a claim for damages under the policy, and their insurer allegedly paid less on the claim than they were owed. Finally, the court remanded the case, holding that the district court should have permitted discovery before deciding that class action treatment was not appropriate for the case.

The opinion can be found here.