Today, in Citizens Property Ins. Co. v. Mango Hill #6 Condominium Assoc., Inc., ___ So. 3d ___, No.: 3D10-2630 (Fla. 3rd DCA July 10, 2013) the 3rd DCA once again held a trial court erred in applying Florida’s arbitration rules to insurance appraisals. Mango Hill involved a Hurricane Wilma claim, and Citizens had issued a commercial windstorm damage policy covering Mango Hill’s 7 building condominium complex.After suffering loss during Hurricane Wilma, Mango Hill provided a notice of hurricane loss to its insurer. Citizens adjusted the loss and paid $39,900.10 after deductibles. However, a few months later, Mango Hill presented a supplemental claim in the amount of $846,049.46 through a public adjuster. Citizens requested a sworn proof of loss to support the supplemental claim; however, Citizens did not receive the proof of loss until nearly 9 months later. Ultimately, after numerous issues and supplemental claims which occurred during the appraisal process itself, an appraisal award in the amount of $1,058,122.52 was entered against Citizens. Mango Hill sought to enforce the award.
Citizens asserted numerous defenses to enforcement of the appraisal award which also constituted coverage defenses. These defenses included Mango Hill’s failure to comply with post-loss obligations, failure to cooperate, failure to appear for an examination under oath, refusing to provide an amended sworn proof of loss, refusing to provide additional documentation, failing to allow Citizens’ appraiser full inspection of the loss, among others.
In its legal analysis, the 3rd DCA initially emphasized in detail the differences between appraisal and arbitration.
Among other differences, the 3rd DCA recognized that arbitration is intended to resolve all differences between parties, and appraisal is only intended to determine the amount of the loss. The court noted (in footnote 1) that the term “appraisal award” is
[R]eally a misnomer because the appraisal panel only determines the amount of loss, not an insured’s entitlement to any damages, prominently including coverage issues such as whether the loss falls within the insuring clause of the policy, and whether the loss was caused by a covered peril.
Ultimately, the 3rd DCA determined that the trial court needed to resolve the coverage issues by way of Summary Judgment. If the insurer proved there was no coverage, the Court could not enforce the appraisal award. If the insured prevailed on coverage, then the Court could enforce the appraisal award.
Frequently, insurance companies try to force my clients into the “potentially expensive and time-consuming adversarial appraisal process.” (Fla. Stat. § 627.7015) In many of these instances, coverage—not the amount of damages—is the issue in the case, and appraisal will accomplish nothing. As the 3rd DCA just noted, Florida law is clear that the appraisal process applies to amounts in controversy, not coverage issues.
I expect many insurance companies will attempt to use the Mango Hill opinion for the proposition that confirmation and enforcement of an appraisal award is never appropriate. However, the 3rd DCA did not say this, and a wealth of case law recognizes that confirmation and enforcement proceedings are appropriate. Mango Hill, like a wealth of other Florida case law, merely stands for the proposition that appraisal is not the proper vehicle for resolving coverage disputes.