Travelers Indem. Ins. Co. v. MEADOWS MRI

• Citation: 900 So.2d 676
• Decision Date: 13 April 2005
• Docket Number: No. 4D04-1702.,4D04-1702.
• Parties: The TRAVELERS INDEMNITY INSURANCE COMPANY OF ILLINOIS, Appellant, v. MEADOWS MRI, LLP, Meadows, Inc., Edwin L. Albright, Ltd., and Team Radiology, Inc., Appellees.
• Court: Court of Appeal of Florida (US)

900 So.2d 676

The TRAVELERS INDEMNITY INSURANCE COMPANY OF ILLINOIS, Appellant, v. MEADOWS MRI, LLP, Meadows, Inc., Edwin L. Albright, Ltd., and Team Radiology, Inc., Appellees.

No. 4D04-1702.

District Court of Appeal of Florida, Fourth District.

April 13, 2005.

Rehearing Denied May 19, 2005.

Amy S. Rubin of Ruden, McClosky, Smith, Schuster & Russell, P.A., West Palm Beach, and John H. Pelzer of Ruden, McClosky, Smith, Schuster & Russell, P.A., Fort Lauderdale, for appellant.

Richard M. Benrubi of Liggio, Benrubi & Williams, P.A., West Palm Beach, for appellees Meadows MRI, LLP, and Meadows, Inc.

POLEN, J.

This appeal is from an award of attorney's fees arising out of an insurance contract issued by the Appellant, Travelers, covering certain losses to an MRI machine owned by the Appellee, Meadows. Following a final judgment confirming the appraisal award, the trial court entered an order awarding Meadows attorney's fees and costs in connection with the appraisal. We affirm because the trial court acted in accordance with Section 627.428(1), Florida Statutes (2003) and the prevailing case law.

In July of 2001, while the insurance policy was in full force and effect, Meadows' MRI equipment was damaged by a sudden and accidental explosion in the magnet which caused a loss of the magnetic field. Meadows promptly notified Travelers of its loss, at which point Travelers engaged in a lengthy four-month investigation to determine exclusively whether the cause of the loss was a covered cause. Meadows retained the services of an attorney to protect its rights and legal remedies. Travelers ultimately acknowledged coverage in early November 2001, and then proceeded to conduct a lengthy investigation of the amount of Meadows' loss. In December of 2001, Travelers issued payment to Meadows' based on its own estimation of Meadows' loss. However, there was a significant difference between the two parties' value estimates. Though efforts were taken to settle the dispute, there was no final resolution of the matter, and on May 20, 2002, Travelers demanded that the dispute be resolved pursuant to the appraisal provision of the insurance policy.

Before the appraisal process began, Meadows' counsel sent Travelers a letter inquiring about the procedures of the appraisal and entitlement to attorney's fees for the prevailing party. Meadows informed Travelers that absent a prompt response, Meadows would file a suit for declaratory judgment. Travelers did not address the procedures of the appraisal nor respond to the question of any entitlement to attorney's fees. Both parties selected their appraisers, and the appraisal process had already begun when Meadows, on November 20, 2002, filed a declaratory suit¹ to assure that the appraisal be governed by the Florida Arbitration Code and that it would be entitled to attorney's fees should it be determined to be the prevailing party pursuant to section 627.428(1). The appraisal resulted in Travelers owing Meadows a significant balance, which was seasonably paid once determined. However, when all was said and done, the appraisal process had lasted one year and one day.

Meadows filed in the circuit court proceeding a Motion to Confirm Appraisal Award and Entry of Judgment Thereon before the claim had been paid. However, the trial court heard argument on Meadows' motion after the claim had been paid, in which Travelers first asserted that Meadows was not entitled to a confirmation of the appraisal. After it became obvious that the trial court, based on Allstate Ins. Co. v. Suarez, 833 So.2d 762 (Fla.2002), was intent on confirming the appraisal, Travelers strenuously argued that Meadows should not be deemed the prevailing party in anticipation of a motion for attorney's fees. The trial court declined to address whether Meadows was the prevailing party and entered its Judgment Confirming the Appraisal Award.

On August 20, 2003, Meadows filed a Motion for Entitlement to Attorney's Fees and Cost, pursuant to section 627.428(1). Prior to a hearing on this motion, the two parties stipulated to the sum of $19,600 as a reasonable attorney's fee in connection with the appraisal if there was an entitlement to such. After hearing argument, the trial court granted Meadows' motion and awarded it $19,600 in attorney's fees and $1,255 in costs.

Section 627.428(1), Florida Statutes, provides:

Upon the rendition of a judgment ... by any of the courts of this state against an insurer and in favor of any named ... insured ... under a policy ... executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured ... a reasonable sum as fees or compensation for the insured's ... attorney prosecuting the suit in which the recovery is had.

Travelers claims that the underlying suit was primarily initiated as a vehicle for generating and seeking attorney's fees, rather than for any valid purpose. Pursuant to that theory, Travelers relies heavily on Nationwide Property & Cas. Ins. v. Bobinski, 776 So.2d 1047 (Fla. 5th DCA 2001), in arguing that the trial court's award of attorney's fees and costs was in error.

In Nationwide, seventeen days after the completion of the second of two appraisals² and full voluntary payment of both related insurance claims, an insured filed suit for the first time seeking confirmation of the appraisal award, prejudgment interest, and a declaration determining the right to recover attorney's fees. "Summary judgment was granted to Nationwide denying the claim for prejudgment interest and the only issue on ... appeal [was] whether the attorney's fees should have been granted." Id. at 1048. The fifth district, in recognizing that this case presented an issue of first impression, noted that "[a]ttorney's fees have been awarded when suit was filed prior to payment of the appraisal or arbitration award or to compel an insurer to participate in an appraisal, see State Farm Fire & Cas. Co. v. Palma, 629 So.2d 830, 832-33 (Fla.1993),

" but held that the plaintiff in Nationwide filed suit solely in order to obtain attorney's fees. Id. Accordingly, the fifth district held that such a suit, which did not yield a final judgment pursuant to section 627.428(1), did not qualify for entitlement to fees under section 627.428(1), and reversed the fee award.

We find Travelers' reliance on Nationwide to be misplaced. First, the suit in Nationwide was filed after the appraisals were entirely completed and the payments were made. Here, however, Meadows filed its suit long before the appraisal was completed rather than after payment was already made. Second, unlike in Nationwide where the plaintiff never obtained a final judgment, Meadows clearly obtained a...