Citizens Prop. Ins. Corp. v. Trapeo

• Decision Date: 31 January 2014
• Docket Number: Case No. 2D13-2078
• Court: Court of Appeal of Florida (US)
• Parties: CITIZENS PROPERTY INSURANCE CORPORATION, a Florida government entity, Petitioner, v. GARY TRAPEO, Respondent.

CITIZENS PROPERTY INSURANCE CORPORATION,
a Florida government entity, Petitioner,
v.
GARY TRAPEO, Respondent.

Case No. 2D13-2078

DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT

Opinion filed January 31, 2014

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED

Petition for Writ of Certiorari to the Circuit
Court for Pasco County; Stanley R. Mills,
Judge.

Kara Berard Rockenbach and Kristi
Bergemann Rothell of Methe &
Rockenbach, P.A., West Palm Beach, for
Petitioner.

Amy S. Farrior and Raymond T. Elligett, Jr.
of Buell & Elligett, P.A., Tampa; and Michael
A. Giasi and Matthew R. Danahy of Danahy
& Murray, P.A., Tampa, for Respondent.

BLACK, Judge.

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Citizens Property Insurance Corporation ("Citizens") seeks certiorari review of the trial court's order denying it a stay pending neutral evaluation of the sinkhole claim that forms the basis for the underlying lawsuit. Citizens argues that the statute governing neutral evaluation mandates a stay of court proceedings and that the statutory right to neutral evaluation cannot be waived by participating in litigation. Based on the nature of the order on review and the relief requested, we treat Citizens' petition as one for writ of certiorari, in part, and writ of mandamus, in part. The petition is granted.

I. Background

Citizens issued an insurance policy to Gary Trapeo in 2009. The policy was effective from December 2009 through December 2010. As the result of 2010 sinkhole damage to the property and a dispute between Citizens' retained engineer and Mr. Trapeo's retained engineer as to the appropriate remedial action, Mr. Trapeo filed a lawsuit against Citizens in March 2012. In December 2012, after engaging in discovery, Citizens filed a request for neutral evaluation with the Department of Financial Services ("Department") pursuant to section 627.7074(4), Florida Statutes (2012). Section 627.7074 is titled "Alternative procedure for resolution of disputed sinkhole insurance claims." The statute defines and establishes the right to neutral evaluation along with the procedures for neutral evaluation. "Neutral evaluation" is defined as "the alternative dispute resolution provided in s. 627.7074." § 627.706(2)(b).

Citizens also filed a "Notice of Automatic Stay" with the trial court, advising the court that it had filed its request for neutral evaluation with the Department and that section 627.7074 mandated a stay of the court proceedings "pending completion of the

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neutral evaluation and for 5 days after the filing of the neutral evaluator's report with the court." See § 627.7074(10).

In response, Mr. Trapeo filed a "Response and Objection to Defendant's Notice of Stay of Litigation Pending Completion of Neutral Evaluation and Memorandum of Law." Mr. Trapeo alleged that Citizens "waived its right to demand participation in [the Department's] neutral evaluation program based upon its denials contained within its Answer, its assertion of Affirmative Defenses and its participation in this litigation for approximately ten (10) months." In the memorandum of law, Mr. Trapeo argues that "Citizens failed to protect and safeguard its contractual right to neutral evaluation" and that "it has waived such right to participate in such process."

In addition to the response, Mr. Trapeo filed a "Motion to Prevent the Retroactive Application of Florida Statutes 627.706 through 627.7074" and a motion to determine the constitutionality of section 627.7074. Neither of these motions is included in the records provided to this court but both are discussed in the transcript of the hearing on the objection to notice of stay. Only the former is relevant to our review.

At the hearing on the stay issue, Mr. Trapeo argued that Citizens waived its right to neutral evaluation based upon its participation in the circuit court litigation. Mr. Trapeo acknowledged that neutral evaluation is not only a contractual process but also statutory and that Citizens' request was made pursuant to statute. He nonetheless argued that participation in neutral evaluation is a right that can be waived by litigating a case in court. Citizens countered with the argument that neutral evaluation is a statutory right which cannot be waived. It argued that neutral evaluation is unlike arbitration in that it is not an "opt out" of litigation. Citizens' counsel also stated that he

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objected to his required presence at the hearing because the case should have been automatically stayed. Finally, Citizens argued that Mr. Trapeo's analogizing waiver of neutral evaluation to a defendant waiving his right to jury trial was inapplicable because a criminal defendant must knowingly do so and in this case Citizens did not knowingly waive any right.

At the close of the hearing, the trial court specifically ruled that "like contractual rights, constitutional rights or anything else, [statutory rights] can be waived. And, in this case, by participating in discovery pursuant to the litigation [the right to neutral evaluation] was, in fact, waived." The court "sustained the objection to neutral evaluation." The written order provides that Mr. Trapeo's objection is sustained "as [Citizens] waived its right to neutral evaluation when it participated in litigation" and that "the right to neutral evaluation, like any statutory or contractual right, can be waived and that waiver did occur in the instant action."

II. Statute

Mr. Trapeo's arguments and the court's ruling confuse the central issue. First, Mr. Trapeo's objection was to the stay but his argument centered on Citizens' ability to request or participate in neutral evaluation. Second, the court's order purports to sustain the objection to the stay but it also finds that neutral evaluation has been waived. As a result, the 2011 amendments to the neutral evaluation statute are intertwined with the issues presented in Citizens' petition for writ of certiorari. Therefore before reaching the issues directly before us, we must consider whether the 2009 or 2012 version of section 627.7074 is applicable to this case.

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Section 627.7074 was enacted in 2006 and substantially amended in 2011. The relevant amendment for our purposes was to the stay provision of the statute. Previously, section 627.7074 provided: "Any court proceeding related to the subject matter of the neutral evaluation shall be stayed pending completion of the neutral evaluation." § 627.7074(11), Fla. Stat. (2006); see ch. 2006-12, § 29, Laws of Fla. (2006). Effective May 17, 2011, the stay provision was renumbered to section 627.7074(10) and substantively provided: "Regardless of when noticed, any court proceeding related to the subject matter of the neutral evaluation shall be stayed pending completion of the neutral evaluation and for 5 days after the filing of the neutral evaluator's report with the court." § 627.7074(10) (emphasis added); see ch. 2011-39, § 27, Laws of Fla. (2011).

Mr. Trapeo argues that the 2009 version of section 627.7074 is applicable in determining whether waiver occurred because Citizens issued his insurance policy in 2009. He also contends that Citizens was required to request neutral evaluation "at the beginning of the case" and that its failure to do so amounted to waiver. Citizens contends that the 2012 amended version containing the phrase "regardless of when noticed" is applicable.

" '[T]he statute in effect at the time an insurance contract is executed governs substantive issues arising in connection with that contract.' " Menendez v. Progressive Express Ins. Co., Inc., 35 So. 3d 873, 876 (Fla. 2010) (quoting Hassen v. State Farm Mut. Auto. Ins. Co., 674 So. 2d 106, 108 (Fla. 1996)). However, procedural issues are governed by the laws in effect at the time the issues arise, for example, at the time suit is filed or at trial. See generally Alamo Rent-A-Car, Inc. v. Mancusi, 632

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So. 2d 1352, 1358 (Fla. 1994) ("Procedural or remedial statutes . . . are to be applied . . . to pending cases."); Sottilaro v. Figueroa, 86 So. 3d 505, 508 n.1 (Fla. 2d DCA 2012) ("[T]he issue on appeal is a procedural issue; thus, the statute in effect at the time of the trial is the applicable statute."); Butler v. Bay Ctr./Chubb Ins. Co., 947 So. 2d 570, 572 (Fla. 1st DCA 2006) ("[P]rocedural or remedial changes to law apply without regard to the date of a claimant's accident.").

Section 627.7074 contains both procedural and substantive aspects. The right to neutral evaluation is clearly substantive. State Farm Fla. Ins. Co. v. Buitrago, 100 So. 3d 85, 88 (Fla. 2d DCA 2012) (quoting Morejon v. Am. Sec. Ins. Co., 829 F. Supp. 2d 1258, 1260-61 (M.D. Fla. 2011) ("Section 627.7074 provides a substantive right of parties to have a neutral evaluator review the claim and render a nonbinding report before the matter is adjudicated by a court . . . . [T]he statute is substantive rather than procedural inasmuch as it will not impact in any manner Plaintiffs' method of proceeding with litigation once the condition precedent of neutral evaluation is met.")). However, the means by which neutral evaluation occurs are procedural. And although not expressly stated, this court has viewed the stay subsection of the statute as procedural: "[T]he stay provision is sufficiently intertwined with substantive provisions so that it is not an unconstitutional violation of separation of powers." Cruz v. Cooperativa De Seguros Multiples De Puerto Rico, Inc., 76 So....