Fla. Ins. Guar. Ass'n Inc. v. Devon Neighborhood Ass'n Inc.

• Decision Date: 30 June 2011
• Docket Number: No. SC10–347.,SC10–347.
• Citation: 67 So.3d 187
• Court: Florida Supreme Court
• Parties: FLORIDA INSURANCE GUARANTY ASSOCIATION, INC., Petitioner,v.DEVON NEIGHBORHOOD ASSOCIATION, INC., d/b/a Devon Neighborhood & Condominiums A–J Association, Inc., Respondent.

67 So.3d 187

FLORIDA INSURANCE GUARANTY ASSOCIATION, INC., Petitioner,

v.DEVON NEIGHBORHOOD ASSOCIATION, INC., d/b/a Devon Neighborhood & Condominiums A–J Association, Inc., Respondent.

No. SC10–347.

Supreme Court of Florida.

June 30, 2011.

Jeffrey T. Kuntz, Philip E. Ward, Roland E. Schwartz, and Evan D. Appell of Gray Robinson, P.A., Fort Lauderdale, FL, for Petitioner.Daniel S. Rosenbaum, John M. Siracusa, Richard C. Valuntas and Mark G. Keegan of Rosenbaum Mollengarden Janssen and Siracusa, PLLC, West Palm Beach, FL, for Respondent.LABARGA, J.

Florida Insurance Guaranty Association, Inc., seeks review of the decision of the Fourth District Court of Appeal in Florida Insurance Guaranty Ass'n v. Devon Neighborhood Ass'n, 33 So.3d 48 (Fla. 4th DCA 2009), on the ground that it expressly and directly conflicts with the decisions of this Court in Old Port Cove Holdings, Inc. v. Old Port Cove Condominium Ass'n One, Inc., 986 So.2d 1279 (Fla.2008), and Metropolitan Dade County v. Chase Federal Housing Corp., 737 So.2d 494 (Fla.1999). FIGA also asserts that the decision of the Fourth District expressly and directly conflicts with this Court's decision in Menendez v. Progressive Express Insurance Co., 35 So.3d 873 (Fla.2010), which was issued after the Fourth District's decision below. We have jurisdiction. See art. V, § 3(b)(3), Fla. Const.¹ The conflict issue in this case concerns the proper test to be utilized by a court when determining whether a statute may be applied retroactively, in this case to a contract of insurance. As we explain below, because we conclude that the district court in this case misapplied the test for retroactivity, we quash the decision of the Fourth District below.

BACKGROUND

This case arose from certain hurricane damage claims made by Devon Neighborhood Association, Inc., d/b/a Devon Neighborhood & Condominiums A–J Association, Inc. (“Devon”), under a 2004 insurance policy issued by Devon's original insurer, Southern Family Insurance (“Southern Family”). As explained more fully below, Southern Family became insolvent and the Florida Insurance Guaranty Association (“FIGA”) then became obligated to respond to certain claims made under that insurance policy.

FIGA is a public, nonprofit corporation created by statute to provide a mechanism for payment of covered claims under certain classes of insurance policies issued by insurers which have become insolvent. ²See § 631.51, Fla. Stat. (2010); O'Malley v. Fla. Ins. Guar. Ass'n, 257 So.2d 9, 10 (Fla.1971). Under Florida's statutory insurer liquidation system, when an insurer becomes insolvent, FIGA becomes obligated to respond to covered claims that arise prior to adjudication of the insurer's insolvency and within a specified period after insolvency. Jones v. Fla. Ins. Guar. Ass'n, 908 So.2d 435, 442 (Fla.2005); see § 631.54(3), Fla. Stat. (2010) (defining “covered claim”); § 631.57, Fla. Stat. (2010) (stating scope of FIGA's powers and duties). “FIGA is strictly a creature of statute.” Fla. Ins. Guar. Ass'n v. All the Way with Bill Vernay, Inc., 864 So.2d 1126, 1129 (Fla. 2d DCA 2003). “Thus, ‘the statutory language defines the extent of FIGA's obligations. FIGA is not responsible for claims against an insurer that do not fall within FIGA's statutory obligations.’ ” Fla. Ins. Guar. Ass'n v. Petty, 44 So.3d 1191, 1194 (Fla. 2d DCA 2010) (quoting All the Way with Bill Vernay, Inc., 864 So.2d at 1130), review granted, 53 So.3d 230 (Fla.2011). The FIGA act is expressly designed to protect the insured, rather than the insurance industry. See Jones, 908 So.2d at 442. However, “the full gamut of a defunct insurance company's liabilities was not intended to be shifted onto FIGA.” Fla. Ins. Guar. Ass'n, Inc. v. Olympus Ass'n, Inc., 34 So.3d 791, 794 (Fla. 4th DCA 2010) (quoting Williams v. Fla. Ins. Guar. Ass'n, Inc., 549 So.2d 253, 254 (Fla. 5th DCA 1989)).

In this case, Devon timely filed a claim with its insurer Southern Family after the condominium was damaged during Hurricane Wilma in October 2005. Devon submitted a sworn proof of loss claim in February 2006. However, Southern Family became insolvent and was placed in receivership in April 2006. FIGA then assumed responsibility for Devon's claims, and Devon filed a second proof of loss claim. It is undisputed that Southern Family paid Devon approximately $2.5 million, and FIGA subsequently paid Devon an additional $1.7 million. See Fla. Ins. Guar. Ass'n v. Devon, 33 So.3d at 50. The record reflects that in January 2008, Devon submitted supplemental claims to FIGA totaling $4,800,286.84, and shortly thereafter, on February 11, 2008, filed suit against FIGA.

FIGA answered the complaint and, in an affirmative defense, demanded an appraisal of the claimed loss under the appraisal provision contained in the 2004 insurance policy between Devon and Southern Family. The appraisal provision allowed either party to demand an appraisal of a claimed loss. FIGA also sent a letter demanding an appraisal under the policy provision, filed a motion to compel appraisal, and moved to stay the action pending the appraisal. The appraisal provision in the insurance contract at issue sets forth a procedure for resolving disputes that is somewhat similar to an arbitration process, providing that where the parties disagree on the value of the property or the amount of the loss, either party may make a written demand for an appraisal of the loss. Under this appraisal provision, each party will select an appraiser and the two appraisers will select an umpire. Also under the express terms of the policy, “[a] decision agreed to by any two will be binding.” ³

Devon objected to being required to participate in the appraisal process because it had not been provided notice of the availability of mediation—a notice requirement that was imposed on commercial residential insurers, such as Southern Family, by a 2005 amendment to section 627.7015, Florida Statutes, a provision of the Florida Insurance Code.⁴ The trial court agreed with Devon and on January 15, 2009, denied FIGA's motion to compel an appraisal. FIGA then took a nonfinal appeal to the Fourth District under Florida Rule of Appellate Procedure 9.130(3)(C)(iv), which was amended effective January 1, 2009, to provide for the appeal of nonfinal orders regarding entitlement to an appraisal under an insurance policy. See In re Amendments to Fla. Rules of Appellate Procedure, 2 So.3d 89, 90 (Fla.2008).

On appeal, the Fourth District affirmed, holding that section 627.7015, Florida Statutes, as amended in 2005, applied retroactively to Devon's 2004 contract of insurance, including the amendment to section 627.7015(7) barring the insurer from exercising its right to an appraisal if the insurer does not give notice of mediation under subsection (2) of the statute. Because Devon had not been given notice of the availability of mediation, the district court held that section 627.7015(7) applied to bar FIGA from availing itself of the appraisal process provided in the policy. Thus, we turn next to a discussion of the 2005 amendments to section 627.7015, Florida Statutes.

Section 627.7015, Florida Statutes

Section 627.7015 was first enacted in 1993. See ch. 93–410, § 20, Laws of Fla. It provided for alternative dispute resolution of claims made under homeowners' residential insurance policies before commencing the appraisal process that most homeowners' policies required. See § 627.7015(1), Fla. Stat. (1994 Supp.). From its inception, the statute required that when a first-party claim is filed, the homeowner's residential insurer shall notify the claimant of the right to participate in the mediation program provided in the statute. See § 627.7015(2), Fla. Stat. (1994 Supp.). The statute was amended in 2005 to expand its scope, for the first time, to “commercial residential insurance policies” such as Devon's condominium association policy in this case. See ch. 2005–111, § 15, Laws of Fla.⁵ Section 627.7015 was also amended in 2005 to provide that an insurer—now including a commercial residential insurer—which fails to give the notice of mediation required by subsection (2) is barred from insisting that the insured participate in the appraisal process provided in the insurance policy as a precondition to suit. The pertinent provisions of the statute, with the 2005 amendment language underlined, are set forth below:

Section 15. Effective July 1, 2005, subsections (1) and (7) of section 627.7015, Florida Statutes, are amended, and subsection (2) of that section is reenacted, to read:

627.7015 Alternative procedure for resolution of disputed property insurance claims.—

(1) PURPOSE AND SCOPE.—This section sets forth a nonadversarial alternative dispute resolution procedure for a mediated claim resolution conference prompted by the need for effective, fair, and timely handling of property insurance claims. There is a particular need for an informal, nonthreatening forum for helping parties who elect this procedure to resolve their claims disputes because most homeowner's and commercial residential insurance policies obligate insureds to participate in a potentially expensive and time consuming adversarial process prior to litigation. The procedure set forth in this section is designed to bring the parties together for a mediated claims settlement conference without any of the trappings or drawbacks of an adversarial process. Before resorting to these procedures, insureds and insurers are encouraged to resolve claims as quickly and fairly as possible. This section is available with respect to claims under personal lines and commercial residential policies for all claimants and insurers prior to commencing the appraisal process, or commencing litigation....

(2) At the time a first-party claim within the scope of this section is filed, the insurer shall notify all first-party claimants of their right to participate in the mediation program under this section....