On Friday of last week, Florida’s Second District Court of Appeal followed the lead of Florida’s Third District in requiring an evidentiary hearing before an appraisal can be compelled if the insurer alleges failure to comply with post-loss conditions.
In Citizens Prop. Ins. Corp. v. Admiralty House, Inc., No. 2D10-4967, — So. 3d. — (Fla. 2d DCA July 1, 2011), a condominium association filed a claim for damage from Hurricane Wilma, but the insurer valued the damage at below the policy deductible. The claim was reopened a few years later after additional damages were discovered, and the insurer paid some benefits under the policy. The insured disagreed with the insurer’s valuation of damages, and sought to appraise the loss pursuant to the appraisal clause in the insurance policy. This time, the insurer sought a fresh round of compliance with post-loss conditions before it would submit to appraisal. After years of enduring a never-ending “investigation” of the loss, the insured filed suit and obtained a court order compelling the parties into appraisal. The insurer appealed. In the appellate opinion, the Second District cites the recent string of Third District opinions as the basis for holding that the insured must submit to an evidentiary hearing before appraisal may be compelled if the insurer alleges failure to comply with post-loss conditions.
What is significant about Admiralty House, in which the Second District followed the Third, is that the Second District did not follow the direction the Fourth District has recently taken. In Must All Coverage Disputes Be Resolved Prior to a Court Order for Appraisal?, I discussed how the Fourth District has taken the position that all coverage disputes must be resolved first before the question of damages may be considered. The Third District has taken a somewhat different approach, allowing appraisal to go forward on a “dual-track” basis, where appraisal goes forward to determine damages on one track while litigation over coverage goes forward at the same time on a second track. In Admiralty House, the Second District expressly followed the Third District’s discretionary approach to the order of determining damages and coverage when it said:
We note that "[o]nce the trial court determines that a demand for appraisal is ripe, the court has the discretion to control the order in which an appraisal and coverage determinations proceed." Galeria Villas Condo. Ass’n, 48 So. 3d at 191-92 (citing Sunshine State. Ins. Co. v. Rawlins, 34 So. 3d 753, 754-55 (Fla. 3d DCA 2010)).
Merlin Law Group has been closely following these emerging cases and we have written about them frequently. In Ask for Appraisal – Get a Lawsuit and Appeal, Chip Merlin discussed the insurance industry trend of the never-ending “investigation” before appraisal, which is exactly what happened in Admiralty House. In Litigating the Right to Resolve Disputes Without Litigation, I wrote about the noticeable patterns after the fourth successive appellate decision was published from the Third District regarding appraisals with Citizens Property Insurance Corporation. Admiralty House fits right in line with the other four decisions from the Third District. We will continue to write more as new opinions are published regarding this important issue in Florida insurance law. Stay tuned to this blog and the Condominium Insurance Law Blog for the latest updates.