Policy Terms Control Right to Return of Overpayments

Post 5226

See the video at https://lnkd.in/gxtJVDse and at https://lnkd.in/gGBxEHHH, and at https://zalma.com/blog plus more than 5200 posts.

An Insurer that Claims it Paid More than it Owed Admits to an Incompetent Claims Staff

In Scott A. Saveraid Trust for Scott A. Saveraid Revocable Trust v. QBE Specialty Insurance Company 2:25-cv-394-SPC-DNF, United States District Court for the Middle District of Florida, Fort Myers Division, Judge: Sheri Polster Chappell, U.S. District Judge (Date: November 7, 2025)

Key Facts

The plaintiff, Scott A. Saveraid Trust (the “Trust”), owns real property in Fort Myers Beach, FL. The Trust purchased a homeowners insurance policy (the “Policy”) from defendant QBE Specialty Insurance Company (“QBE”). In September 2022, the property sustained damage from Hurricane Ian, a covered peril under the Policy.

The Trust filed a claim with QBE, which investigated and paid $307,622.32 for dwelling coverage and $20,600 for loss of use. QBE alleges the damage was primarily water-related (e.g., flood damage), which is excluded under the Policy, and that it “mistakenly opened coverage” leading to these payments. The Trust contends QBE underpaid and owes additional benefits under the Policy.

Procedural History

The Trust filed suit against QBE for breach of contract, seeking additional Policy benefits. QBE filed a two-count counterclaim:

Count I:

Declaratory judgment under 28 U.S.C. § 2201, seeking a declaration that the VPL does not apply to the Policy (i.e., QBE is not obligated to pay the full Policy limit for a total loss).

Count II:

Unjust enrichment, seeking repayment of the $328,222.32 allegedly overpaid to the Trust.
Legal Issues

1. Does QBE’s request for a declaration that the VPL does not apply to the Policy state a valid claim under 28 U.S.C. § 2201, or is it duplicative of the Trust’s breach of contract claim and QBE’s affirmative defenses, or merely a factual dispute unsuitable for declaratory relief?

2. Can QBE pursue an equitable claim for recovery of alleged overpayments under the Policy when an express insurance contract governs the parties’ relationship and the subject matter of the payments?
Motion to Dismiss Granted in Part and Denied in Part:

Count I (Declaratory Judgment):

Denied. The claim survives as it presents a valid actual controversy, is not impermissibly duplicative, and involves a legal (not purely factual) issue.

Count II (Unjust Enrichment):

Granted with prejudice. The claim is barred under Florida law because the alleged overpayments fall within the subject matter of the express insurance contract.

Reasoning

Actual Controversy Requirement:

The claim satisfies 28 U.S.C. § 2201 and Article III because there is a substantial, immediate controversy over the VPL’s applicability to the Policy — adverse legal interests between the parties on whether QBE must pay the full Policy limit for a total loss. This is a legal interpretation, not a mere “factual allocation dispute” as argued by the Trust.

Even if redundant, redundancy alone does not warrant dismissal under Rule 12(b)(6), which tests validity, not necessity. Substantively, the claims differ: the Trust’s breach claim seeks benefits “pursuant to the terms of the Policy itself,” while the declaratory claim addresses whether the VPL independently mandates full payment.

Courts permit declaratory claims alongside overlapping defenses because defenses are negative (relieving liability) while declaratory relief is affirmative (seeking a binding interpretation). Dismissing at the pleading stage is premature, as overlap may not moot the claim, and litigation costs are minimal. The Court exercises discretion to retain it.
Unjust Enrichment Claim

Unjust enrichment requires: (1) conferral of a benefit; (2) defendant’s knowledge; (3) acceptance/retention; and (4) inequity in retention without payment. However, it is unavailable where an express contract covers the same subject matter. Here, the Policy governs all claims, payments, and coverage disputes, including the overpayments QBE made in response to the Trust’s claim.

The Eleventh Circuit’s recent decision in MONY Life Ins. Co. v. Perez, 146 F.4th 1018 (11th Cir. 2025), is dispositive. There, an insurer’s unjust enrichment claim for overpayments failed because the payments — even if mistaken or unauthorized— arose from the insured’s claim under the contract’s terms. The court held such claims “fall squarely within the ambit of the express contract” regardless of policy provisions for recovery or the reason for overpayment (e.g., mistake vs. misrepresentation). Payments were made pursuant to contractual obligations, not outside the Policy’s scope.

QBE’s claim that overpayments are a distinct “subject matter” is unpersuasive post-MONY. MONY applies broadly, not limited to misrepresentation cases, and dismissal is with prejudice as amendment would be futile.
Broader Implications

This ruling reinforces the Eleventh Circuit’s strict bar on quasi-contract claims in insured-insurer disputes, prioritizing contract law over equity for payment recoveries. It highlights courts’ reluctance to dismiss declaratory claims early, especially in insurance cases involving statutory interpretation like the VPL, which mandates full payment for total losses from covered perils but may not apply to flood exclusions. The decision aligns with post-Hurricane Ian litigation trends in Florida, emphasizing efficient resolution of coverage disputes without redundant equitable remedies.

ZALMA OPINION

The insurer, proving it maintained an incompetent claims staff and alleged it erroneously paid $328,222.32 more than they owed. Its attempt to get its mistaken payment back from the insured failed when judge Sheri Polster Chappell found the payments were made under the terms of the contract of insurance.

(c) 2025 Barry Zalma & ClaimSchool, Inc.

Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.

Subscribe to my substack at https://barryzalma.substack.com/subscribe

Go to X @bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the InsuranceClaims Library – https://lnkd.in/gwEYk.