Fla. Ins. Guaranty Ass'n v. Branco

• Decision Date: 19 September 2014
• Docket Number: No. 5D13–2929.,5D13–2929.
• Parties: FLORIDA INSURANCE GUARANTY ASSOCIATION, etc, Appellant, v. Manuel BRANCO and Irma Branco, Appellees.
• Court: Florida District Court of Appeals

148 So.3d 488

FLORIDA INSURANCE GUARANTY ASSOCIATION, etc, Appellant

v.Manuel BRANCO and Irma Branco, Appellees.

No. 5D13–2929.

District Court of Appeal of Florida, Fifth District.

Sept. 19, 2014.

Rehearing Denied Oct. 15, 2014.

G. William Bissett, Jr., of Kubicki Draper, PA, Miami, for Appellant.

Nancy A. Lauten and George A. Vaka, of Vaka Law Group, Tampa, and Kenneth C. Thomas, Jr., of Marshall Thomas Burnett, Land O'Lakes, for Appellees.

Opinion

ORFINGER, J.

Florida Insurance Guaranty Association (“FIGA”)¹ appeals an order compelling appraisal of a sinkhole loss under a homeowner's insurance policy issued to Manuel and Irma Branco. FIGA contends that the trial court erred in ordering appraisal because: (1) the policy provides for appraisal only if the amount of loss was disputed and, here, only the method of repair is disputed; (2) the Brancos waived their right to demand appraisal; and (3) the order implicitly approves the Brancos' selection of a partner in the law firm representing them as their appraiser, contrary to the policy's requirement to select “disinterested” appraisers. We agree that the trial court erred in allowing the Brancos to select an appraiser who was not “disinterested.” We reject FIGA's other arguments.

The Brancos' home sustained suspected sinkhole damage in April 2010. They reported the loss to their homeowner's insurer, HomeWise Preferred Insurance Company (“HomeWise”), several days later. In response, HomeWise retained an engineering firm to perform a limited structural assessment. Following receipt of the engineer's report, HomeWise denied the Brancos' claim, concluding that a “sinkhole loss,” as defined in the policy, had not occurred. Several months later, the Brancos sued HomeWise, alleging breach of contract. HomeWise filed its answer and defenses in May 2011, denying that it had breached the insurance contract because the Brancos' property had not sustained a covered loss.

In November 2011, HomeWise was declared insolvent and FIGA stepped in to deal with the “covered claims” within the scope of its enabling statutes. As a result, the Brancos' case was automatically stayed.² In August 2012, after the stay expired, the Brancos filed an amended complaint, substituting FIGA as the named defendant due to HomeWise's insolvency.³ FIGA then asked the court for an additional stay to allow further investigation of the claim. The court extended the stay, and FIGA completed its additional testing in early March 2013. On April 8, 2013, FIGA answered the Brancos' amended complaint, admitting, for the first time, “that sinkhole activity was identified as a contributing cause of damage to the [Brancos' ] property,” and that the Brancos “are entitled to the amount payable for the actual repair of the loss/actual repairs to the property, not to exceed policy limits ....”

The Brancos demanded appraisal in a letter to FIGA on April 30, 2013. On May 23, 2013, the Brancos moved the court to compel appraisal. The Brancos' appraisal request was based on a provision in the insurance policy that provided, in relevant part:

6. If you and we fail to agree on the amount of loss either may

....

b. Demand an appraisal of the loss. In this event each party will choose a competent and disinterested appraiser within twenty (20) days after the receipt of a written request from the other

(1) The two appraisers will choose a competent and independent umpire

....

(2) The appraisers will separately set the amount of the loss and assign the amount of loss attributable to each specific policy coverage

(3) If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of the loss

(4) If they fail to agree, they will submit their difference to the umpire

(5) A decision by any two must assign the amount of loss attributable to each specific policy coverage

(Emphasis added).

On June 24, 2013, FIGA again asked the trial court for an additional stay to allow for neutral evaluation of the Brancos' claims and, simultaneously opposed the Brancos' motion to compel appraisal. The trial court granted FIGA's request for an additional stay and further ordered that “[t]he parties are to first attempt to resolve the underlying claims in the lawsuit through neutral evaluation, and barring resolution, the parties are to then take the matter through appraisal.” FIGA appeals this order to the extent that it requires appraisal.⁴

FIGA first argues that the trial court erred in ordering the parties to appraisal because their dispute with the Brancos is over the “method of repair” rather than the “amount of loss.” Interpretation of insurance policies is reviewed de novo, e.g., State Farm Florida Insurance Co. v. Phillips, 134 So.3d 505, 507 (Fla. 5th DCA 2014), as are orders compelling appraisal, e.g., Citizens Property Insurance Corp. v. Demetrescu, 137 So.3d 500, 502 (Fla. 4th DCA 2014).

Appraisals are creatures of contract and the subject or scope of appraisal depends on the contract provisions. Citizens Prop. Ins. Corp. v. Casar, 104 So.3d 384, 385–86 (Fla. 3d DCA 2013). Absent ambiguity, the plain meaning of an insurance policy controls. E.g., Arias v. Affirmative Ins. Co., 944 So.2d 1195, 1197 (Fla. 4th DCA 2006) (quoting Se. Fire Ins. Co. v. Lehrman, 443 So.2d 408, 408–09 (Fla. 4th DCA 1984) ). Courts should resort to rules of interpretation only when the policy language is ambiguous or otherwise susceptible to multiple meanings. E.g., Phillips, 134 So.3d at 507 (citing Arias, 944 So.2d at 1197 ).

When the disagreement concerns the amount of loss, not coverage, it is for the appraisers to arrive at the amount to be paid. Johnson v. Nationwide Mut. Ins. Co., 828 So.2d 1021, 1025 (Fla.2002). The issue in this case is whether the method or extent of necessary repairs is within the scope of an “amount of loss” appraisal policy provision. At least one court, considering this question, answered affirmatively, reasoning:

Estimating the dollar value of a loss presupposes a judgment of what repairs are necessary to recoup from the loss. Appraisers could not perform their duties if they were prohibited from opining on these matters. And in practice, where there have been two different assessments of the amount of loss—one by Plaintiffs' assessor, one by Defendant's—it is not surprising that the assessors may have some disagreement as to whether the covered occurrence actually caused a certain portion of the putative damage, as well as disagreements about the scope and method of necessary repairs. But to say such disputes are sufficient to negate the appraisal provision in the policy would effectively eliminate appraisal as a workable method of alternative dispute resolution.

Williamson v. Chubb Indem. Ins. Co., No. 11–cv–6476, 2012 WL 760838, at *4 (E.D.Pa. Mar. 8, 2012) ; see also UrbCamCom/WSU I, LLC v. Lexington Ins. Co., No. 12–CV–15686, 2014 WL 1652201, at *6 (E.D.Mich. Apr. 23, 2014) (approvingly citing Williamson, and holding that dispute regarding necessary repairs, and length of time, to reopen building goes to “amount of loss,” which falls squarely within ambit of appraisal); Correnti v. Merchs. Preferred Ins. Co., Civ. No. 12–6303, 2013 WL 373273, at *2 (E.D.Pa. Jan. 31, 2013) (determining that as dispute was over “extent of damage,” it was dispute regarding “amount of loss,” and, thereby, required appraisal); Sydney v. Pac. Indem. Co., Civil Action No. 12–1897, 2012 WL 3135529, at *3 (E.D.Pa. Aug. 1, 2012) (“A disagreement as to the scope of the repairs and replacements needed to remedy a loss is still within the purview of the appraisal clause.”).

We agree with the analysis in Williamson and believe that FIGA's interpretation of the appraisal clause in the policy would render the appraisal process meaningless. Although FIGA may characterize the dispute over the necessary repairs as a coverage issue, in reality, it is an “amount of loss” issue. There is no dispute that HomeWise insured the Brancos' home at the relevant time for sinkhole losses, and FIGA has now admitted that the Brancos have sustained a covered loss. The logical disagreement between an insured and the insurer after a covered loss would be, as the court in Williamson stated, “disagreement as to whether the covered occurrence actually caused a certain portion of the putative damage, as well as disagreements about the scope and method of necessary repairs.” 2012 WL 760838, at *4. The extent and cost of the necessary repairs to the Brancos' property will determine, in large part, the amount FIGA owes. To accomplish their task, the appraisers will have to consider the necessary method and scope of required repairs to evaluate the amount of the Brancos' loss.⁵ Williamson, 2012 WL 760838 at *4 ; see Currie v. State Farm Fire & Cas. Co., Civil Action No. 13–6713, 2014 WL 4081051, at *5 (E.D.Pa. Aug. 19, 2014). For these reasons, we reject FIGA's contention that the appraisers cannot determine the method or scope of the necessary repairs when determining the amount of the loss.⁶

FIGA also argues that the Brancos waived their right to appraisal by initiating and participating in litigation. In this regard, appraisal clauses are viewed similarly to arbitration clauses. Thus, we review the trial court's findings of fact for competent, substantial evidence, and its conclusions of law de novo. Fla. Ins. Guar. Ass'n v. Castilla, 18 So.3d 703, 704 (Fla. 4th DCA 2009) ; Doctors Assocs. v. Thomas, 898 So.2d 159, 162 (Fla. 4th DCA 2005) (reiterating that question of waiver is one of fact, reviewable for competent, substantial evidence, and all questions about waivers of arbitration should be construed in favor of arbitration, rather than against it). Here, while the trial court made no findings of fact on the issue of waiver, the facts are not in dispute. Therefore, we review the waiver issue de novo. See Truly Nolen of Am., Inc. v. King Cole Condo. Ass'n, 143 So.3d 1015, 1017 (Fla. 3d DCA 2014).

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