Hot topics my colleagues have written about on the blog this week include Citizens Property Insurance Corporation and hurricanes. The state-run insurer and the potential impact of hurricane damage are two important topics for Floridians. It was not too long ago when Citizens advised an insured that claim payment would not be forth coming and asked a court to vacate the insured’s $787,235.01 appraisal award of hurricane damages.

The case was Citizens Property Insurance Corporation v. M.A. & F.H. Properties, Ltd, 948 So.2d 1017 (3rd DCA 2007). In this matter, the insured’s three-story home was damaged by Hurricane Charley on August 12, 2004. The homeowner submitted a claim with Citizens for the hurricane damage. Citizens issued a payment for the loss, but the policyholder disagreed with the value of the claim payment and demanded appraisal. In this process, as outlined by the insurance policy language, each party was to select a competent appraiser and the two appraisers were select a competent and independent umpire if they could not reach an agreement with 15 days.

The homeowner selected Jeffery Pellet and Citizens selected Stephen White. The homeowner hired Mr. Pellet under a contingency agreement. Mr. Pellet was to be paid a fee for his services based on the amount awarded from Citizens. According to the court opinion, Mr. Pellet had performed more than 1800 appraisals and had published literature on property insurance appraisals. It was undisputed that at the time Mr. Pellet was hired Citizens was aware of the contingency fee agreement.

Citizens alleged it did not know Mr. Pellet and his wife had filed suit against Citizens for damage to their home and that Mr. and Mrs. Pellet were represented by the same counsel as M.A. & F.H. Properties, Ltd.

Mr. White and Mr. Pellet started the appraisal process, but they could not reach an agreement. Retired judge Martin Kahn was selected as the competent and neutral umpire.

The retired circuit court judge agreed with the homeowner’s appraisal of the damages as outlined by Mr. Pellet and signed a $787,235.01 award for the damages. But instead of paying the award as required by the policy, Citizens filed a motion to vacate the award and essentially re-do the appraisal. Citizens argued that there were no receipts or documentation to support the award. Citizens also filed a motion to disqualify Mr. Pellet as the insured’s appraiser because he was allegedly incompetent competent. Citizens raised issue with a letter sent from Mr. Pellet to Mr. White about the appraisal process– requiring Mr. White only to communicate with Mr. Pellet in writing and not over the telephone.

The trial court disagreed with Citizens and granted the motion filed by the homeowner to confirm the appraisal award. All of Citizens arguments were denied. Citizens persisted and renewed its motion to disqualify Mr. Pellet, vacate the $787,235.01 award, and compel re-appraisal. This time, Citizens argued that Mr. Pellet failed to disclose his own personal suit against Citizens prior to the appraisal. The trial court denied this motion as well.

Citizens appealed to the Third District Court of Appeal; asking for the same relief again and argued that Mr. Pellet was not a competent appraiser because he had a claim, a lawsuit, and animosity against Citizens.

The appellate court ruled that Citizen’s arguments were based on an erroneous premise. The court explained that the policy of insurance used the term “competent,” but without a definition within the policy, the court presumed the word was intended to have its plain and ordinary meaning. In the American Heritage Dictionary, competent is defined as “properly or sufficiently qualified or capable; adequate for the purpose; legally qualified or capable to perform an act.” Black’s Law Dictionary defines competent as “duly qualified; answering all requirements; having sufficient ability or authority; possessing the required natural or legal qualifications; able; adequate; suitable; capable; or legally fit.”

Using these definitions, the Court opined “the record clearly establishes that the homeowner’s appraiser was competent by virtue of his unquestionable prior experience/ or expertise.” The court ruled that trial court was correct when it determined Mr. Pellet was competent and that the court did not abuse its discretion in making its rulings.

This is an important case for those who help policyholders and could be more important as time goes on. The lessons we must remember from this case:

  • Citizens put up at least four roadblocks to avoid properly paying this claim before it acknowledged it must follow its own policy
  • Mr. Pellet was duly qualified to act as the insurance appraiser

Mr. Pellet is still actively doing appraisals nationwide with his company Property Insurance Estimating and Appraisals. You can click here to read the articles he has written on appraisal and Citizens Insurance Corporation.