Scottsdale Ins. Co. v. Desalvo

• Decision Date: 28 December 1995
• Docket Number: No. 95-2081,95-2081
• Citation: 666 So.2d 944
• Parties: 21 Fla. L. Weekly D129 SCOTTSDALE INSURANCE COMPANY, Appellant, v. John DESALVO, as Personal Representative of the Estate of H.P. Demery, Deceased, d/b/a Port City Trading, Appellee.
• Court: Florida District Court of Appeals

Page 944

666 So.2d 944

21 Fla. L. Weekly D129

SCOTTSDALE INSURANCE COMPANY, Appellant, v. John DESALVO, as Personal Representative of the Estate of H.P. Demery, Deceased, d/b/a Port City Trading, Appellee.

No. 95-2081.

District Court of Appeal of Florida First District.

Dec. 28, 1995.

W. Lane Neilson and Andrew P. Rock of Neilson and Associates, Orlando, for Appellant.

J. Clark Hamilton, Jr., of Fannin, Tyler & Hamilton, P.A., Jacksonville, for Appellee.

WEBSTER, Judge.

Appellant (the insurer) seeks review, pursuant to Florida Appellate Rule 9.130(a)(3)(C)(v), of a non-final order denying its motion requesting that appellee's (the insured's) action be stayed and the parties compelled to resort to appraisal to resolve their differences regarding the amount of the loss sustained by the insured which is covered by insurance. We reverse.

The facts relevant to this appeal are not in dispute. The insured sustained a significant loss as the result of a fire. It filed a sworn proof of loss, in which it claimed $563,000.00, the limit of coverage under the policy. The insurer accepted coverage. However, it concluded that the insured's loss was only $405,402.08, which sum it paid to the insured. When the parties were unable to resolve their disagreement over the additional sum claimed by the insured, the insured filed suit. In response, the insurer filed a motion requesting the trial court to stay the action, and to compel the parties to submit to appraisal the amount of the loss, pursuant to a policy provision which reads:

If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:

a. Pay its chosen appraiser; and

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

If there is an appraisal, we will still retain our right to deny the claim.

(Emphasis added.)

At the hearing on the insurer's motion, the insured argued that the emphasized last sentence of the appraisal provision renders the entire provision unenforceable because it lacks mutuality of obligation, relying for support on American Reliance Insurance Co. v. Village Homes at Country Walk, 632 So.2d 106 (Fla. 3d DCA), review denied, 640 So.2d 1106 (Fla.1994). In Country Walk, the court was faced with precisely the same issue presented here. The trial court had denied the insurer's motion to compel appraisal pursuant to an identical policy provision, and the insurer appealed. In a split decision, the majority held that the appraisal provision was unenforceable because "it lack[ed] mutuality of obligation":

"The very essence of an arbitration is an agreement to be bound by the factual determination of the arbitrator and thus end the factual controversy." ... Where the insured and the insurer agree to submit the question of the insured's loss for determination by appraisers, but the appraisal would not affect the question of the insurer's liability except to fix the amounts of value and loss of [sic] damage, there is no enforceable arbitration agreement.

Id. at 107 (citations omitted).

The insurer responded that it had already accepted coverage, and that it was prepared to agree to be bound by whatever figure came out of the appraisal. It argued that the appraisal provision was standard in the industry, that Country Walk was an aberration and that appraisal should be compelled because it was a favored form of dispute resolution and would permit a faster and more economical means of resolving the dispute between it and the insured.

The trial court acknowledged the preference for such non-judicial dispute resolution techniques. However, it noted that only the Third District Court of Appeal had addressed the issue and that, in the absence of contrary precedent from either the supreme court or another district court of appeal, it was obliged to follow the Third District's decision in Country Walk. Accordingly, it denied the insurer's motion. This appeal follows.

The trial court correctly concluded that, notwithstanding its reservations about the soundness of the Country Walk decision, in the absence of contrary precedent from either the supreme court or this court, it was obliged to follow Country Walk. E.g., McGauley v. Goldstein, 653 So.2d 1108 (Fla. 4th DCA 1995). We share the trial court's concerns. However, unlike it, we are at liberty to disagree with the decision of another district court. Having carefully analyzed the majority and dissenting opinions in Country Walk and the law on the subject in general, respectfully, we now do so.

In his Country Walk dissent, Judge Cope took the position that the last sentence of the appraisal provision must be read in conjunction with the remainder of the provision, and in a manner which would result in a reasonable and effective meaning, rather than in a manner which would result in an unreasonable meaning. He reasoned that, read in such a manner, the sentence could not be "construed to allow the insurance company an open-ended escape from the results of the appraisal." 632 So.2d at 108. The provision allows either party to the contract of insurance to request an appraisal. Bearing this in mind, Judge Cope concluded that the only reasonable construction of the last sentence is that it is intended merely to clarify that, should the insurer participate in an appraisal in response to a demand by its insured, it does not thereby waive any coverage defense it might have. Id. According to Judge Cope, when so read, the appraisal provision is...