Florida Farm Bureau Cas. Ins. Co. v. Sheaffer, 96-2504

• Decision Date: 31 January 1997
• Docket Number: No. 96-2504,96-2504
• Citation: 687 So.2d 1331
• Parties: 22 Fla. L. Weekly D330 FLORIDA FARM BUREAU CASUALTY INSURANCE CO., Appellant, v. Jason P. SHEAFFER and Vivian L. Sheaffer, Appellees.
• Court: Florida District Court of Appeals

Page 1331

687 So.2d 1331

22 Fla. L. Weekly D330

FLORIDA FARM BUREAU CASUALTY INSURANCE CO., Appellant, v. Jason P. SHEAFFER and Vivian L. Sheaffer, Appellees.

No. 96-2504.

District Court of Appeal of Florida First District.

Jan. 31, 1997.

Rehearing Denied March 11, 1997.

Nancy A. Lauten and George A. Vaka of Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., Tampa, for Appellant.

Ray P. Pope of the Cordovan Law Center, Pensacola, for Appellees.

VAN NORTWICK, Judge.

Florida Farm Bureau Casualty Insurance Company appeals a nonfinal order denying its motion to dismiss the complaint filed by its insureds, appellees, Jason and Vivian Sheaffer, and to compel arbitration under the provisions of the Sheaffers' homeowner's insurance policy. The Sheaffers' complaint sought recovery under their homeowner's insurance policy for damages to the tile roof of their home which was caused by hurricanes Erin and Opal in 1995. In seeking dismissal, the insurance company argued that the appraisal provision in the insurance policy required the parties to arbitrate their dispute and that the arbitration was a condition precedent to the insureds maintaining an action on the policy. We agree, and reverse and remand for the trial court to order arbitration.

Factual and Procedural Background

As alleged in the complaint, the Sheaffers' home was built in 1991 with a unique ceramic tile roof. The manufacturer of the ceramic tiles is no longer in business, and the Sheaffers allege that no tiles are presently available which match the existing tiles in color, size and shape. The Sheaffers' policy covers losses "at replacement cost without deduction for depreciation" subject to certain enumerated conditions. The Sheaffers demanded that the insurance company pay for the replacement of their entire roof in order to return the roof to its condition and value prior to the loss. The insurance company refused, maintaining that the roof could be repaired by replacing only the damaged and missing tiles, even if the replacement tiles are not consistent with the existing tiles. Accordingly, the Sheaffers filed suit seeking both a declaratory judgment that would require the insurer to provide "coverage for full replacement of Plaintiffs' roof, and attendant repairs" and a judgment for damages.

The insurance company moved to dismiss the complaint and demanded appraisal of the dispute pursuant to the following appraisal provision in the policy:

Appraisal. If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the residence premises is located. The appraisers will separately set the amount of loss. If the appraisers submit a written report of an agreement to us, the amount agree upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.

Each party will:

a. pay its own appraiser; and

b. bear the other expenses of the appraisal and umpire equally.

The Sheaffers argued below, as here, that this appraisal provision is not an agreement to arbitrate. They contend that this appraisal provision is limited in scope and applies only in the event the parties disagree on the limited issue of how much it will cost to replace the roof. Thus, the Sheaffers argue, the provision does not apply to the issue of whether the entire roof should be replaced under these unique facts. Under the Sheaffers' theory, whether the entire roof must be replaced is a "coverage" issue which requires judicial construction of the policy language. The insurance company argues in response that, because it concedes that the insurance policy covers the damage to the Sheaffers' home and it would be bound by the appraisers' determination that replacement of the entire roof was required, there is no coverage dispute between the parties, but simply a dispute regarding the amount of the loss.

After concluding that the dispute between the parties involved an issue of coverage under the policy, the trial court denied the motion to dismiss. This appeal followed.

Jurisdiction

Pursuant to article V, section 4(b)(1) of the Florida Constitution, district courts of appeal have the jurisdiction to review by appeal only those non-final orders "in such cases to the extent provided by rules adopted by the supreme court." Florida Rule of Appellate Procedure 9.030(b)(1)(B), authorizes district courts of appeal to review by appeal "non-final orders of circuit courts as prescribed by rule 9.130." Under the circumstances of the instant case, the only part of rule 9.130 that might allow review of the trial court's interlocutory order is subparagraph 9.130(a)(3)(C)(v), which grants jurisdiction to review non-final orders "that ... determine ... the entitlement of a party to arbitration." Accordingly, here we have jurisdiction to review the order on appeal only if we determine that the appraisal provision in the Sheaffers' insurance policy entitles the insurer to arbitration of the dispute between the parties. Because, for the reasons discussed below, we conclude that the appraisal provision constitutes an agreement to arbitrate, we have jurisdiction.

Appraisal as Arbitration

Traditionally, agreements for arbitration involved a scope and purpose much different from agreements for appraisal. As explained by the court in Preferred Ins. Co. v. Richard Parks Trucking Co., 158 So.2d 817, 820 (Fla. 2d DCA 1963)(quoting 5 Am.Jur.2d, Arbitration and Award § 3, now found at 4 Am.Jur.2d, Alternative Dispute Resolution § 12 (1995)):

[a]n agreement for arbitration ordinarily encompasses disposition of the entire controversy between the parties upon which award a judgment may be entered, whereas an agreement for appraisal extends merely to the resolution of the specific issues of actual cash value and the amount of loss, all other issues being reserved for determination in a plenary action before the court.

The Parks Trucking court also recognized that the distinctions between the traditional appraisal and arbitration processes are most obvious in the role of and procedures used by the decision-makers.

[A]ppraisers are generally expected to act on their own skill and knowledge; they may reach individual conclusions and are required to meet only for the purpose of ironing out differences in the conclusions reached; and they are not obliged to give the rival claimants any formal notice or to hear evidence, but may proceed by ex parte investigation so long as the parties are given opportunity to make statements and explanations with regard to matters in issue. Arbitrators, on the other hand, must meet together at all hearings; they act quasi-judicially and may receive the evidence or views of a party to the dispute only in the presence, or on notice to, the other side; and may adjudge the matters to be decided only on what is presented to them in the course of an adversary proceeding.

Id.

Despite these traditional distinctions between appraisal and arbitration, with the increased use of various forms of alternative dispute resolution, Florida courts have interpreted appraisal provisions similar to the instant provision as constituting binding arbitration agreements. State Farm Fire & Cas. Co. v. Middleton, 648 So.2d 1200, 1202 (Fla. 3d DCA 1995); Preferred Mut. Ins. Co. v. Martinez, 643 So.2d 1101 (Fla. 3d DCA 1994); American Reliance Ins. Co. v. Village Homes at Country Walk, 632 So.2d 106 (Fla. 3d DCA 1994); Intracoastal Ventures Corp. v. Safeco Ins. Co. of Am., 540 So.2d 162 (Fla. 4th DCA 1989); U.S. Fire Ins. Co. v. Franko, 443 So.2d 170 (Fla. 1st DCA 1983); Transamerica Ins. Co. v. Weed, 420 So.2d 370 (Fla. 1st DCA 1982). For example, in Weed, this court treated as an arbitration agreement an appraisal provision virtually identical to the provision at issue here, noting that "[t]he 'appraisal' provision in the policy is in fact an agreement to submit to arbitration in the event of disagreement on the amount of loss." 420 So.2d at 371, n. 1. Florida courts also agree that appraisal under such provisions is a condition precedent to any suit on the policy. New Amsterdam Cas. Co. v. J.H. Blackshear, Inc., 116 Fla. 289, 291, 156 So. 695, 696 (1934); State Farm Fire & Cas. Co. v. Middleton, 648 So.2d 1200 (Fla. 3d DCA 1995); Preferred Mut. Ins. Co. v. Martinez, 643 So.2d 1101, 1103 (Fla. 3d DCA 1994); Intracoastal Ventures Corp. v. Safeco Ins. Co. of Am., 540 So.2d 162 (Fla. 4th DCA 1989); and U.S. Fire Ins. Co. v. Franko, 443 So.2d 170, 172 (Fla. 1st DCA 1983). Consistent with the above authority, we conclude that the appraisal provision before us in the instant case is an agreement to arbitrate.

No Coverage Question Involved

As the supreme court has recently pointed out, "[a] challenge of coverage is exclusively a judicial question. ..." State Farm Fire and Casualty Co. v. Licea, 685 So.2d 1285, ---- (Fla.1996)(quoting Midwest Mutual Ins. Co. v. Santiesteban, 287 So.2d 665, 667 (Fla.1973)). Thus, if the dispute over whether the insurer is obligated to replace the entire roof is a coverage issue, it may not be the...