In State Farm Florida Insurance Company v. Seville Place Condominium Association, Inc., ____ So.3d ____ (Fla. 3rd DCA October 14, 2009) a group of condos was damaged by Hurricane Wilma.  Seville submitted the claim to State Farm.  Seville presented an estimate of damage in excess of $4.6 million.  State Farm initially paid a total of $90,564.62 on the claim.  Thereafter, Seville requested appraisal, which State Farm agreed to if Seville would agree to two conditions: 1) that the appraisal award "must be a line item document, broken down by building and unit number, including the pricing that establishes the award of that item;" and 2) that the insured provided State Farm with a proof of loss form. 

In response, Seville filed suit in Circuit Court for breach of the insurance contract, and declaratory relief regarding coverage and State Farm’s waiver of policy defenses.  Seville also requested that the court enforce the appraisal provision without State Farm’s required conditions. 

The Court ordered the appraisal without State Farm’s conditions.  The Court further ordered that the appraisal be completed in 60 days.  State Farm later moved for an additional 60 days.  The Court granted the extra time, and set a final appraisal hearing for June 28, 2008.  The day before that hearing, State Farm filed an emergency motion seeking removal of the neutral umpire previously appointed by the Court.  State Farm later supplemented this motion with a "request for an ‘entirely new panel to conduct a new appraisal,’ asserting that otherwise it would "require many weeks, months, and possibly even years to sort through the multiple issues related only to this highly problematic and invalid appraisal gone wrong.’"  State Farm’s motion was denied.   

Seville’s appraiser and the umpire ultimately agreed on a final appraisal award of $2,960,405.  The trial court confirmed the award, and Seville moved to amend its complaint to add claims for bad faith and punitive damages.  State Farm objected, claiming that Seville could not add bad faith an punitive damage claims until there was a "final judgment" and until all of State Farm’s appeals were "finally final."  The Court granted the insured’s motion to amend.  State Farm sought cert from the 3rd DCA.

The 3rd totally rejected all of State Farm’s arguments holding that the final appraisal award was sufficient basis for the commencement of a bad faith claim, and that there is no requirement for an insured to wait until the exhaustion of all appeals before commencing the bad faith and punitive damages claim.  In conclusion, the 3rd stated:

State Farm originally estimated the Association’s covered loss at $324,017.  This is less than eleven percent of the amount determined by the appraisal process.  State Farm will have an opportunity to explain this fact, to explain the extraordinary length of time it has taken to resolve the Association’s claim, and to defend State Farm’s aggressive legal tactics (including the unfounded imposition of conditions on the contractually-stipulated appraisal provision and the last-minute attempt to remove the neutral umpire).  For now, however, we find no basis in this record to quash the orders below as requested by State Farm.