State Farm Fla. Ins. Co. v. Hernandez

• Decision Date: 17 June 2015
• Docket Number: No. 3D13–2263.,3D13–2263.
• Citation: 172 So.3d 473
• Parties: STATE FARM FLORIDA INSURANCE COMPANY, Appellant, v. Alfredo HERNANDEZ, Appellee.
• Court: Florida District Court of Appeals

172 So.3d 473

STATE FARM FLORIDA INSURANCE COMPANY, Appellant

v.Alfredo HERNANDEZ, Appellee.

No. 3D13–2263.

District Court of Appeal of Florida, Third District.

June 17, 2015.

Rehearing Denied Aug. 19, 2015.

Russo Appellate Firm, P.A., and Elizabeth K. Russo ; Walton Lantaff Schroeder & Carson LLP, and Michael H. Galex, for appellant.

Alvarez, Carbonell, Feltman, & DaSilva, PL, and Paul B. Feltman, for appellee.

Before SHEPHERD, C.J., and ROTHENBERG and EMAS, JJ.

Opinion

ROTHENBERG, J.

State Farm Florida Insurance Company (“State Farm”) appeals the trial court's non-final order compelling appraisal of Alfredo Hernandez's (“Hernandez”) supplemental Hurricane Wilma claim. Because Hernandez failed to comply with his contractual post-loss obligations, we conclude that the trial court erred by compelling appraisal before determining the disputed issue of coverage under the policy. We therefore reverse.

FACTUAL BACKGROUND

This appeal stems from a supplemental Hurricane Wilma insurance claim that was filed after the homeowner obtained a public insurance adjuster. This particular supplemental claim was filed five years after the insurer paid the initial claim of loss filed by Hernandez. The record reflects that Hurricane Wilma struck Miami on October 24, 2005, and that within one month of Hernandez's claimed loss, State Farm paid Hernandez $36,858.80 (after subtracting the $5260 deductible) to cover the repairs, which included $27,800 for a full roof replacement. Hernandez did not complete the roof repair until nearly a year later because he was unable to acquire the proper roof tiling. Hernandez claims he noticed additional damage, including water stains, damage to the wiring and walls, and leaking in the roof sometime after State Farm's initial payment. Allegedly based on these additional damages, Hernandez renovated his entire home by replacing the floor tiles throughout the house; replacing the sinks, tubs, toilets, faucets, tiles, and lighting fixtures in the three bathrooms; replacing all of the cabinets and appliances in the kitchen; replacing some windows and window sills; and repainting various areas in and around the home. Although these renovations were completed in early 2007, Hernandez did not contact State Farm before, during, or after these repairs were made to allow inspection by State Farm. Hernandez only sparsely documented his costs with checks and receipts for only a few of the claimed repairs, and he claims that he paid cash for a substantial portion of the renovations.

In 2010, after seeing a television advertisement, Hernandez contacted a public insurance adjuster company, Expert Claims Adjusters (“ECA”), to appraise the damages. In November 2010, Hernandez contacted State Farm claiming he was entitled to supplemental damages under the terms of the policy. In response, State Farm requested a sworn proof of loss and any supporting documentation. Hernandez submitted his initial sworn proof of loss claiming he was entitled to an additional $201,038.84 in damages. Hernandez's sworn proof of loss included the public adjuster's estimate to replace Hernandez's roof in the amount of $53,000 even though State Farm had already paid Hernandez $27,865 within one month of the storm to replace his roof and Hernandez had fully replaced his roof by 2006.

Recognizing that his first sworn proof of loss for the supplemental claim had falsely included a claim for $53,000 to replace the roof, which had already been replaced in 2006 for $27,865—not the $53,000 sworn to by Hernandez—Hernandez filed a second sworn proof of loss for his supplemental claim wherein he reduced his supplemental claim from $201,038.84 to $168,346.12. This second sworn proof of loss, however, still included a claim to replace the roof for $27,800, which Hernandez admits State Farm had already paid in 2006.

In May 2011, Hernandez's supplemental claim changed again. When Hernandez testified at his Examination Under Oath (“EUO”), he stated that, in addition to the roof replacement and repairs for which he had already been compensated based on his original 2005 claim, he spent approximately $65,000 to make additional repairs to his home rather than the $201,038.84 he claimed in his first sworn proof of loss or the $168,346.12 he claimed in his second sworn proof of loss.

In October 2011, State Farm paid Hernandez an additional $1300 based on the additional costs Hernandez claimed he had incurred to replace his roof—damages to which State Farm had already admitted coverage and timely paid. State Farm did not pay the remainder of Hernandez's supplemental claim. Thereafter, Hernandez filed suit for breach of contract and then moved to compel appraisal based on an appraisal clause in his insurance policy, which states, in relevant part: “Appraisal. If you and we fail to agree on the amount of loss, either one can demand that the amount of the loss be set by appraisal.”

State Farm filed a written response objecting to appraisal based on Hernandez's failure to comply with his post-loss obligations, including his failure to give State Farm timely notice of his supplemental claim, failure to cooperate, failure to provide documents substantiating his claimed losses, and Hernandez's concealment and/or fraud in the presentation of his claim. After conducting an evidentiary hearing, the trial court found that Hernandez had “sufficiently” complied with his post-loss obligations and granted Hernandez's motion to compel appraisal. State Farm timely appealed.

ANALYSIS

The law in Florida is clear that issues of coverage and liability under an insurance policy are for the court or jury, respectively, whereas a dispute regarding the amount of loss found to be covered under the policy is subject to appraisal if so provided in the insurance policy. Citizens Prop. Ins. Corp. v. Mango Hill # 6 Condo. Ass'n, 117 So.3d 1226, 1227 n. 1 (Fla.2013). An insured's compliance with the post-loss obligations mandated in the policy raises a question of liability, not the value or amount of the loss. See State Farm Fire & Cas. Co. v. Licea, 685 So.2d 1285, 1288 (Fla.1996) (holding that even when an insurer has admitted partial coverage of the claim and submits to appraisal, it can still contest the claim if “there has been a violation of the usual policy conditions such as fraud, lack of notice, and failure to cooperate”).

Although this Court has previously held that a trial court may exercise its discretion when determining whether to allow appraisal of an insurance claim before determining whether the policy covers that claim, see Sunshine State Ins. Co. v. Rawlins, 34 So.3d 753, 754 (Fla. 3d DCA 2010) (citing Paradise Plaza Condo. Assoc. v. Reinsurance Corp. of New York, 685 So.2d 937 (Fla. 3d DCA 1996) ),¹ that discretion is not absolute. As this Court stated in Citizens Property Insurance Corp. v. Mango Hill Condominium Ass'n 12 Inc., 54 So.3d 578, 581 (Fla. 3d DCA 2011) (hereinafter “Mango Hill 12 ”), where the insured has not complied with his post-loss obligations under the policy, a trial court is not empowered to compel appraisal:

The discretion to determine the order in which coverage and loss issues are considered does not, however, override a preliminary determination as to whether an arbitrable issue exists. Before arbitration (or appraisal) under an insurance policy such as the one at issue here may be compelled, a disagreement, or “arbitrable issue,” must be demonstrated to exist. U.S. Fid. & Guar. Co. v. Romay, 744 So.2d 467, 469 (Fla. 3d DCA 1999). No disagreement or arbitrable issue exists unless “some meaningful exchange of information sufficient for each party to arrive at a conclusion” has taken place. Id. at 470. Thus, an “insured must comply with all of the policy's post-loss obligations before the appraisal clause is triggered. ” Id. at 471 ; see First Home Ins. Co. v. Fleurimond, 36 So.3d 172, 174 (Fla. 3d DCA 2010).

(emphasis added).

The law in this district is clear and has been for nearly twenty years: the party seeking appraisal must comply with all post-loss obligations before the right to appraisal can be invoked under the contract. See Romay, 744 So.2d at 471 (holding in 1999 that, “The insured must comply with all of the policy's post-loss obligations before the appraisal clause is triggered.”); Mango Hill 12, 54 So.3d at 581 (reaffirming the same in 2011). Thus, a trial court reversibly errs by compelling appraisal before an...