On July 20, 2022, the Florida Third District Court of Appeals reversed and remanded a trial court’s decision requiring the parties to proceed with the valuation and stay litigation until that valuation is finished. The Florida Court of Appeals held that the trial court erred in granting the motion to compel the appraisal without first conducting an evidentiary hearing to determine post-disaster liability.
This the case began when the insureds, Nolan and Maria Santee, notified their homeowner’s police insurer, that their home had suffered interior and roof damage in a storm on June 14, 2019. The Auto Club’s inspection of the property three days later revealed that the house had suffered water damage on the inside and that although the flashing on the roof was also damaged, it was the result of wear and tear rather than a one-time event like a storm. As a result, the Auto Club issued a partial denial letter acknowledging coverage for interior damage, but denying coverage for roof damage resulting from excluded causes and enclosing a check in payment for repair of covered interior damage.
Shortly after, Auto Club received an email from Santees’ public adjuster advising that he was representing Santees in the claim and demanding that Auto Club contact him “directly with any inquiries information regarding this claim”, including “any information you require from the [Santees].” Auto Club recognized the public surveyor and indicated that it would engage an independent engineering company for a re-inspection in relation to the alleged roof damage.
Shortly after, Auto Club was informed that the independent engineering firm had also not observed any storm-related damage to the house. Auto Club immediately emailed a copy of the engineering report to the Santees public adjuster and simultaneously advised the public adjuster that although the roof damage was not caused by a storm, additional monies may still be due for interior damage. To this end, the Auto Club asked the public adjuster to provide an estimate of the extent of the losses for the interior damage repairs. No response was received.
About a month and a half after Auto Club’s initial request for a scope and loss estimate, Auto Club contacted the public adjuster again to inquire about the estimate. The public expert replied that an estimate was being finalized and would be transmitted once completed.
After four months with no indication as to whether the Santees were seeking reimbursement of the claim beyond the amount already paid, an Auto Club representative called the Santees public adjuster to advise that the Auto Club would be closing. the complaint and that the complaint would be immediately reopened. if Santees invoke the right to additional reimbursement. The complaint was closed accordingly.
About a year and a half after the loss was initially reported, the Auto Club received a letter from Perry & Neblett, PA, advising that the Santees had retained an attorney and demanded “full payment of the loss and/or valuation”. The letter did not specify any amount to be paid, nor did it attach or refer to the extent of the loss estimate that Auto Club had requested twice before.
Concurrently with providing its letter of representation, Perry & Neblett, PA also filed a notice of civil remedy, claiming that the Santees had made a timely pre-trial submission to the Auto Club of an estimate of $52,582. $.52 along with sworn proof of loss. Within a month, the Santees filed suit against Auto Club alleging breach of contract, bad faith and fraudulent inducement, seeking an appraisal and seeking declaratory judgment and mediation.
The Santees claimed the Auto Club refused to comply with its policy assessment process and decided to require an assessment. The Auto Club objected and served a motion for sanctions pursuant to Section 57.105 of the Florida Statutes challenging the pre-action submission of an estimate of the extent of the loss or sworn proof of loss. The trial court granted an assessment and the Auto Club appealed.
The author of this blog post represented Auto Club and wrote the appeal brief. In the brief, Auto Club argued that, contrary to the Santees’ assertions in their Civil Remedy Notice and Complaint, the Santees never provided Auto Club with an estimate of loss for damages or sworn evidence of loss, and that the failures of the Santees to comply with their post-claim obligations precluded their right to an appraisal. The Auto Club brief suggested that the case rather inexorably pointed to a calculated bad faith setup that could not be allowed to proceed.
Ultimately, the Third District Court of Appeals unanimously ruled that the trial court erred in granting the motion to compel assessment without first hearing the evidence for determine compliance with post-disaster obligations. The Court ordered that “[b]Prior to a persuasive valuation, the trial court must determine that the post-loss obligations have been satisfied and that there is an arbitrable question regarding the amount of the loss,” and remanded for retrial in accordance with its opinion. The Court also granted the Auto Club’s motion for attorneys’ fees and costs, subject to a finding that the Auto Club has complied with the requirements of Section 57.105 of the Florida Statutes.
Health is clearly a victory for insurers. It allows insurers to object to assessment in circumstances where the parties have not engaged in a meaningful exchange sufficient to establish a disagreement as to the amount of the loss. The decision again establishes that a genuine disagreement over the amount of the loss must materialize before an expert order can be made.