Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

There are some who claim that judges make bad umpires for appraisal. There is no empirical evidence to support that opinion and, frankly, I disagree. Umpires from the insurance industry carry their own bias and problems. I have no preference one way or another until I learn more about the case and the parties to the matter. It is always a debatable issue.

One of my Impressions Following the Alternative Dispute Resolution Roundtable was that the insurance industry does not think retired judges can be fair and are even lazy because they allegedly split the difference. I am curious if anybody actually has proof of this. In David's case, the Honorable Guy Spicola was the umpire.

The Francisco Court noted the following in its legal analysis:

...under Florida law, “an insurer can only dispute coverage for the loss as a whole and not as individual parts.”...The leading case in the Eleventh Circuit on whether an insurer can challenge or require a delineation of an appraisal award is Three Palms Pointe, Inc. v. State Farm Fire and Casualty Co., 250 F. Supp. 2d 1357 (M.D. Fla. 2003), aff’d 362 F.3d 1316 (11th Cir. 2004).

In Three Palms Pointe, State Farm, as the insurer, had an appraisal award of $11,300,000, which included $560,000 for personal relocation expenses...After the appraisal award was issued, State Farm alleged that the “personal relocation expenses of residents were not recoverable.”... Three Palms filed suit to confirm the appraisal award, which essentially would require State Farm to pay the total appraisal award and not delineate between what it considered to be covered and non-covered losses...

The District Court held that the appraisal award should be confirmed... First, the Court confirmed the appraisal award because it was issued under valid procedures used in the Florida courts...The Court noted that once a petitioner moves to confirm an appraisal award, the insurer may assert an affirmative defense for “lack of coverage, policy limits, or a violation of policy conditions such as fraud, lack of notice, or failure to cooperate.”...Furthermore, “if the insurer fails to raise an affirmative defense or the insured defeats the defenses raised in a judicial proceeding, then a valid enforceable judgment is entered and the appraisal award is confirmed.”

The Court also specifically held that the relocation expenses that State Farm said were not covered under the policy were, in fact, recoverable in accordance with Florida law and the Court’s interpretation of the policy....Additionally, the Court found that “when an insurer admits that the loss is covered [under the policy], the appraisers can determine the cause of damage and the amount of that loss without judicial review of that decision (other than through Florida Statutes §§ 682.13, -.14). When the insurer claims that the loss is not covered, then the coverage question must be judicially determined.” ...

The Eleventh Circuit Court of Appeals affirmed the decision of the district court. See Three Palms Pointe, Inc. V. State Farm Fire & Casualty, Co., 362 F.3d 1316 (11th Cir. 2004). The Eleventh Circuit further interpreted the Florida Supreme Court case of State Farm Fire & Casualty Co. v. Licea, 685 So.2d 1285 (Fla. 1996). According to the Eleventh Circuit, “the Florida Supreme Court held that if an insurer and an insured party go to appraisal, the insurer can only dispute coverage for the ‘loss as a whole.’”...In sum, the Eleventh Circuit found that Licea held that “once an award has been made, the only defenses that remain for the insurer to assert are lack of coverage for the entire claim, or violation of one of the standard policy conditions (fraud, lack of notice, failure to cooperate, etc.) . . . .

The best part of Three Palms Pointe was that State Farm could have settled for a little more than $3 million at the time we were first retained. Once we hired engineers who more fully explored the damages hidden behind the walls, even State Farm acknowledged that the damages were significantly greater. Eventually, after a very formal appraisal where evidence was taken and witnesses were examined, the award was rendered and included a unique personal relocation expense. Relocation expenses were part of the "construction cost" because they lowered the amount of total construction. Had my client done the repair with the condominium residents in their homes, the overall cost would have been far greater. State Farm never seemed to grasp the concept that I would figure a method to save it money, but the judges understood.

In Francisco, the Court noted the following:

In the present case, Nationwide specifically requested that the appraisal award delineate damage due to water from damage due to mold and other perils. The Court presumes that the reason for the delineation is for Nationwide to distinguish between covered (water) and non-covered damage (other perils). Because the Eleventh Circuit has held that in Florida, once an appraisal award has been issued, an insurer may only challenge the lack of coverage of the entire claim, this Court is bound to hold that Nationwide may not challenge part of the appraisal award....

Footnotes are not normally that important. But in this case, the court made an important point in footnote 3:

To date, neither party has filed a copy of the actual insurance policy covering Francisco’s home. Based on statements during oral arguments, the Court understands that mold is a covered peril, but coverage is limited under the policy. However, without the actual insurance policy, the Court can make no determination as to what perils are and are not covered by the insurance policy.

I suggest defense counsel learn from this footnote and file certified copies of the policy next time.

It would seem that Motions to Confirm appraisal awards are the procedure to be followed by policyholder attorneys whenever insurers fail to fully pay the awarded amount to the policyholder:

Francisco’s Motion to Confirm the Appraisal Award must be granted because Nationwide does not assert a lack of coverage defense for the entire claim or a violation of one of the standard policy conditions, such as fraud, lack of notice, or failure to cooperate. See Three Palms Pointe, 362 F.3d at 1319 (“Given that an appraisal occurred, we hold [that the insurer] may not seek to challenge coverage with respect to part of the award on appeal.”). Furthermore, the fact that Nationwide paid the appraisal award in full into the court registry after Francisco filed the Motion to Confirm does not preclude confirmation of the appraisal award. In light of Nationwide’s Motion to Strike the appraisal award, the Motion to Confirm was necessary.

Three Palms Pointe continues to be a significant insurance coverage decision regarding Florida appraisals which needs to be studied, especially by those in federal court.

Shaun's interview process was unique. I spent quite a bit of time quizzing his wife about Shaun's work and personal habits. She has a fairly strong opinion about people and things. In the end, I am certain he will do fabulous work and his start over the past several weeks has been fantastic. Last week, this is what I said in an interview about the new office and Shaun Marker:

Ever since we opened our office in Coral Gables, we’ve received many requests from policyholders and public adjusters to provide an office north of Dade County. Opening this office made sense in being able to provide greater service and convenience to clients and referral sources, as long as we could find the “right” attorney with values similar to ours. Fortunately, we did.

Shaun has the knowledge, skills, and tenacity needed to provide the type of personal and friendly service to clients that the firm expects from all of its attorneys. Shaun also has the proper temperament to provide zealous representation for those embroiled with insurance coverage disputes, yet still empathize and listen carefully to the client’s needs. In our business to be truly successful, you have to do both. My intent is that everyone at the Merlin Law Group will continue to listen to our clients, referring attorneys, and public adjusters so that we can better ourselves and continue growing in a manner that meets the needs and expectations of those we are honored to serve.

What I said in the press release is much more difficult in practice than it sounds. There is no one exact method to handle a legal matter correctly. I have learned that attorneys who are jerks will often be jerks to their clients. For lawyers, interpersonal skills are extraordinarily important. Many attorneys and, unfortunately, clients or referral sources, think that being an aggressive jerk will win cases. The best trial attorneys, while not wallflowers, are honest, kind, and work hard. They win at trial and in settlement because of those character traits. They usually outwork their opponent on the important issues of a matter. In the long run, people see through the jerks once the truth is exposed.

An attorney can be tough as nails and professional at the same time---and can even be a kind individual, treating clients and referral sources with compassion and understanding while promptly and professionally handling their cases. I truly believe that Shaun Marker can be that type of attorney if he applies himself, much like the rest of the attorneys working in our firm.

I appreciate all the help and constructive criticisms that many of you have provided to us. I often feel I am the luckiest guy in the world with so many providing help and suggestions. It has been a blessing, and God knows I need it.

We have a long way to go and will continue to listen and try to provide better service and legal assistance to policyholders. Often, the training and dedication support staff provide to an attorney and a law firm's success is understated. Sometimes our clients say nice things about our attorneys when they really mean that our staff has done a marvelous job. So long as every person in our firm genuinely appreciates that we are very fortunate to make a living at helping others and that we should be honored by their request to retain us, we will continue to strive to improve our performance and never take success for granted.

Here is the contact information for the Merlin Law Group West Palm Beach office:

777 South Flagler Dr., Suite 800-West Tower
West Palm Beach, FL 33401

Office: 561.515.6025
Fax: 561.515.6001

His article concerning the Loss Payment Clause is about a fairly standard provision found in all commercial and residential insurance policies. It usually provides:

Loss Payment. We will adjust all losses with you. . . . Loss will be payable:

a. 20 days after we receive your proof of loss and reach agreement with you; or

b. 60 days after we receive your proof of loss and

(1) there is an entry of a final judgment; or

(2) there is a filing of an appraisal award with us.

David argues that the clause should be interpreted to mandate payment of the undisputed or agreed to amounts of the loss:

The loss payment provision must be interpreted to mean that once an insured has submitted a properly executed sworn proof of loss (POL) statement, the insurer has a certain number of days to tender the undisputed amount of benefits. Insurers argue that the provision implies an obligation to pay benefits only after there is an "agreement" between it and the policyholder.

Taking this argument to its extreme, the insurer would never be obligated to pay benefits as long as it disagreed with the POL's claimed amount, in part or whole. Under such a contract, the insurer could collect premiums from the policyholder but never have a contractual obligation to perform any duties, unless it expressly agreed to them.

A more reasonable interpretation of the loss payment provision is that on submission of the POL, if the claimed amount exceeds the insurer's damage estimate, the insurer is obligated to tender undisputed benefits in agreement with the policyholder, leaving the balance as disputed.

Certainly, insurance companies acting in good faith should pay all amounts undisputed as promptly as possible and most do. I cannot imagine an equitable reason which would allow a debtor to hold onto monies agreed to as owed. The inequitable reason to do so is for leverage of the disputed amount. Replacement cost policies certainly contemplate prompt payment of undisputed amounts because most have time requirements for actual replacement. Some states now have penalties for insurers that do not promptly pay agreed amounts of loss.

The Merlin Law Group is very proud of what David has accomplished and for his continued development as a policyholder leader. Here is the article in full.

I am proud that Merlin’s David Pettinato was elected as a Vice Chair of the Insurance Section of the American Association for Justice. He will also Co-Chair the Bad Faith Litigation Group. Kelly Kubiak gave a fine speech yesterday regarding Catastrophe Losses, and she was elected as the Vice Chair of the Bad Faith Litigation Group. David and Kelly are two of our firm’s most successful attorneys and their passion for helping other attorneys learn from their experiences shows in the leadership they provide. While I work with them day to day, in the presentations they made yesterday, I learned a few extra tips for better handling of my claims. I am certain that by putting thoughts and ideas to paper and teaching others, they learned lessons as well.

Attorney Jerry Ramsey gave a presentation about the recurrent issue of underinsurance. Given my recent post, Insurance Agents and Brokers Should Be Concerned Writing Risks with 100 Percent Coinsurance to Avoid Error and Omission Claims, Ramsey’s suggestions regarding the remedies that are available for policyholders with such issues is invaluable, and could only be learned by those attorneys who went to AAJ Convention and are members of the Bad Faith Litigation Group. I am much better today representing clients with these problems. How many of my colleagues do not even appreciate that the issue exists, much less have been trained to do something about it. I strongly urge attorneys with clients that have been underinsured to read Ramsey’s article, “Underinsurance Litigation: The Hidden Deductible,” in the November/December issue of the Consumer Attorneys of California magazine, Forum, Volume 38, number 6.

Since the former insurance company litigation claims manager made a point about how important discovery can be to finding embarrassing conduct in claims departments, I was also proud that Slabbed in "If you don’t stand for something you’ll fall for anything – Plaintiffs’ growing opposition to State Farm Protective Orders," described Deborah Trotter as a hard nose policyholder attorney hell bent on getting to the truth regarding State Farm in Mississippi. Slabbed quoted from one of Deborah’s briefs at length. I assigned the job of discovery disputes involving literally millions of documents in our case representing the Port of New Orleans to Deborah. She became an expert in electronic retrieval of information from computers, and I am happy she is using her knowledge and experience to get at State Farm’s misdeeds. I felt the conclusion of her brief was just as good as the quoted portion by Slabbed:

Several years ago, a Federal District Court Judge observed:

"District Courts are today being bombarded by an ever increasing number
of requests for protective orders. Some of the increase may be attributed
to legitimate attempts by litigants to stem the increasing use of abusive
discovery tactics. Much of the increase, though, must be attributed to a
practice among some attorneys to automatically seek protective orders in
every case where any potential for embarrassment or harm, no matter how
slight, exists."

Ericson v. Ford Motor Co., 107 F.R.D. 92, 94 (E.D. Ark. 1985)

Many courts have come to recognize a defendant’s true objective in seeking estrictive confidentiality orders, and in objecting to production of internal documents. See, e.g., Wilson v. American Motors Corp., 759 F. 2d 1568, 1571 (11th Cir. 1985)(Discussing harm to a defendant’s reputation); Earl v. Gulf & Western Mfg. Co., 366 N.W. 2d 160, 164-65 (Wis. Ct. App. 1985)(Discussing a defendant’s concern that the plaintiff might pass discovery information along to other plaintiffs involved in similar
litigation, and explaining that this rationale does not constitute good cause for a
protective order).

A number of legal scholars have recognized that the true motivation behind the
tactics utilized by large defendants, in seeking to cloak information with the robe of
secrecy, is to deny the plaintiff the benefit of coordinating discovery efforts, and to
otherwise prevent the disclosure of potentially embarrassing internal information:
“Frivolous claims of confidentiality have been asserted to cause delay and disruption, to drive up discovery expenses, and make it difficult for opposing counsels to simply understand the information being sought.” Martin I. Kaminsky, Proposed Federal Discovery Rules for Complex Civil Litigation, 48 Fordham L. Rev. 907, 929 (1990). Many courts, therefore, favor access to discovery conducted by other parties in collateral or similarly situated litigation. It makes the administration of justice more efficient. Any other result would require that “each litigant who wishes to ride a taxi to court must undertake the expense of inventing the wheel.” Ward v. Ford Motor Co., 93 F.R.D. 579, 580 (D. Colo. 1982). See also Wauchop v. Domino’s Pizza, Inc., 138 F.R.D. 539, 546-47 (D. Ind. 1991) (Federal Rules of Civil Procedure should be construed to foster the just, speedy, and inexpensive determination of every civil action....collaborative use of discovery material fosters that purpose.); Baker v. Ligett Group, Inc., 132 F.R.D. 123, 126 (D. Mass 1990)(To routinely require every plaintiff to go through a comparable, prolonged and expensive discovery process would be inappropriate.); Patterson v. Ford Motor Co., 85 F.R.D. 152, 154 (W.D. Tex. 1980)(The sharing of discovery information between plaintiffs may reduce time and money which must be expended in similar proceedings, and allows for effective, speedy, and efficient representation.); Cipollone v. Liggett Group, Inc., 113 F.R.D. 86, 87 (D. N.J. 1986)(Maintaining a high cost of litigation for future advisories is not a proper purpose under Rules 1 or 26.); Wilk v. American Medical Ass’n, 635 F.2d 1295, 1301 (7th Cir. 1980) (That the expense of litigation deters many from exercising that right is no reason to erect gratuitous road blocks in the path of a litigant who finds a trail blazed by another.); U.S. v. Hooker Chemicals & Plastics Corp., 90 F.R.D. 421, 426 (W.D. N.Y. 1981) (Use of discovery fruits disclosed in one lawsuit in connection with other litigation and even in collaboration among plaintiffs attorneys, comes squarely within the purposes of Federal Rules of Civil Procedure.); Foltz v. State Farm Mut. Ins. Co., 331 F.3d 1122, 1131 )(9th Circ. 2003) (This court strongly favors access to discovery materials to meet the needs of parties in collateral litigation.”)

Her point is well taken. When attorneys share information and ideas, our clients are the better for it. I am certain that the last thing the insurance industry wants is a better informed legal bar pointing out how unfair and wrongful some of its practices and conduct has become. Attorneys are in a better position to do so when they make the investment in their profession to come to the events such as those sponsored by the AAJ.

Sandy Burnette and I reminisced about Butler Pappas while he was editing his Guest Blog, Sandy Burnette Defends Insurance Fraud Fighters. Sandy joined Paul Butler while I was a law clerk in 1981. The firm was then known as Butler and Neilson. Lane Neilson is still practicing insurance defense in Orlando Florida. Sandy recounts that the prior names of the current Butler Pappas have been:

Wilson and Butler

Butler and Neilson

Butler and Burnette

Butler, Burnette & Wood

Butler, Burnette, Wood & Freemon

Butler and Burnette

Butler, Burnette & Pappas

Butler and Pappas

Butler, Pappas, Weihmuller, Katz & Craig

Attorneys have a peculiar way of coming and going at law firms. Few of us, especially litigators, ever stay in one place during our entire legal career.

Paul Butler came to Tampa via Atlanta. His mentor was Clayton Farnham. Paul is an ordained Methodist minister. Like Clayton Farnham, Paul is a consummate gentleman, driven, and very bright. Like many Methodist ministers, he can touch one’s soul with eloquent rhetoric. I was at a trial he won where the jury was crying with Paul during his closing argument.

John Pappas and I were not only classmates, but also on the Law Review and Moot Court in law school. He was a hardworking student and a very competitive debater. When Paul Butler indicated that they needed to hire more attorneys because of the firm’s growth, I recommended John. I felt he would be a perfect fit for the type of practice Paul Butler was establishing. I have been proven right about that.

John Pappas is as dedicated to the insurance industry as I am to the advocacy of policyholders. It is not uncommon for tough feelings and bitter disagreements to come about between lawyers on opposite sides of a case where the stakes are high. Possibly as a result of competitiveness for our clients, John and I have not seen much of each other socially for a long time. However, while many who meet John may think he has a serious and unrelenting personality, he personally has a light sense of humor. I would encourage reading his From Beautiful Brazilians to Bear-Catchers to gain a glimpse of Pappas’ humor.

Yesterday, I replied to a comment concerning Surplus Lines Insurers, Sinkholes, and the Law of Mars. I thought a lot about how attorneys and policyholders view our opponent’s representatives and wrote in part:

“The attorney in the above cited case, Donna Devaney, represented insurance companies at one of the largest law firms in Florida. After becoming a partner and finding that status was not all it seemed when she was younger, she switched over to the policyholder side with us.

Donna has always been successful. Fortunately for her, she is now able to use her considerable talents to help people.

One of the reasons I left the representation of insurance companies in 1985 is because I did not want to go see my Maker and explain that I used my talents to help save Travelers $25 million dollars. This is not to say that I do not respect my adversaries. The vast majority of insurance counsel are very honorable, good people, and play an important role in society. However, we all have a choice to make at the endeavors we try to be successful.”

I was very fortunate to have Paul Butler as a mentor early in my career. Indeed, I may have been blessed. Without Paul teaching me this line of legal work, I would never have become an attorney for policyholders. It is interesting how one thing leads to another in life’s journey.

The American Association for Justice is having its Winter Conference in New Orleans. A number of specialized litigation groups will also have their meetings. The Bad Faith Litigation Group is comprised of consumer attorneys that have cases where the insurance company has engaged in wrongful conduct.

Over a decade ago, I served as the Chair of that Litigation Group. David Pettinato is also a past Chair and Kelly Kubiak is a current officer. We find that by sharing information among consumer attorneys across the country, we can gain knowledge and better represent our clients against insurance companies. Twice a year, we formally get together as friends trying to help each other in our battles against wrongful insurance company practices.

The Bad Faith Litigation Group shares information regarding many insurance companies. I strongly encourage attorneys representing policyholders to join. Nobody representing insurers is allowed to be a member. Contact Kelly Kubiak if you have questions.

The Port of New Orleans lawsuit was very unique. When you pour your heart and soul into a difficult endeavor with others, there is often a special bond that forms. We expected the lawsuit to drag on through this summer. When it settled early last September, most of us missed the day to day litigation grind that takes place in such a massive lawsuit. We built a fairly large contract legal staff that was suddenly without a lawsuit to work upon. What do you do when the war is over?

Tonight, we are hosting a Port Legal Team Dinner to celebrate our work and accomplishments. New Orleans attorney, Bill Hall, was a perfect co-counsel. Like so many attorneys in New Orleans, he is a diehard LSU Tiger (pronounced "Tiga") fan. I guess Florida Gators and LSU Tigers can come together for mutual gain when they put their minds to it. I will always be indebted to Bill and the General Counsel of the Port, Brien Gussoni, for believing in our talents and selecting our firm as the litigation insurance counsel.

There is one aspect to New Orleans that everybody has to admire---the New Orleans people know how to have fun. It is a culture different from that anywhere else in the United States. The music, food, and people are exotic, and we are better for it. While New Orleans still has not recovered from Hurricane Katrina, Mardi Gras fun is still going on in the Vieux Carré.