Evanston Insurance Company v. Etcetera, Etc Inc. et al
Filing
31
OPINION AND ORDER granting 24 Defendant's Motion to Compel Appraisal and Stay Proceedings. The parties shall cooperate in expeditiously obtaining an appraisal in the manner proscribed by the appraisal clause of the subject insurance policy , and this case is STAYED pending further notification by the parties that the stay is due to be lifted. Plaintiff's request for a line-item appraisal as set forth in its Response (Doc. # 27 ) is granted. The Clerk shall terminate all deadlines, administratively close this case, and add a stay flag to the docket. See Opinion and Order for further details. Signed by Judge John E. Steele on 7/23/2018. (BLW)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
EVANSTON INSURANCE COMPANY,
Plaintiff,
v.
Case No. 2:18-cv-103-FtM-99MRM
ETCETERA, ETC INC., KLAS
ETCETERA, LLC and GOLF ETCETERA,
INC.,
Defendants.
/
OPINION AND ORDER
This matter comes before the Court on defendants’ Motion to
Compel Appraisal and Stay Proceedings (Doc. #24) filed on May 15,
2018.
Plaintiff filed a Response in Opposition (Doc. #27) on June
5, 2018, and defendants filed a Reply (Doc. #30) on June 19, 2018.
For the reasons set forth below, the Motion is granted.
I.
On
September
Southwest Florida.
10,
2017,
Hurricane
Irma
made
landfall
on
This declaratory judgment action involves an
insurance dispute regarding the amount of damage to commercial
property located at 175 Kings Highway, Port Charlotte, Florida
(the “Property”) that is attributable to Hurricane Irma.
(Doc.
#1.)
Evanston provided general liability and property insurance
coverage on the Property to defendants (the “Insureds”) with an
$800,000 policy limit.
Following
submission
investigated the loss.
(Doc. #1, ¶ 10; Doc. #1-1, the “Policy.”)
of
a
claim
(Id., ¶ 13.)
by
the
Insureds,
Evanston
During the time when Evanston
was investigating, Charlotte County issued a “Notice of Unsafe
Building” with respect to the Property dated November 9, 2017,
noting
that
collapse.”
the
building
(Doc. #1-2.)
on
the
Property
“was
in
danger
of
The Notice states that the Property was
inspected by the County on October 25, 2017.
The Notice informed
defendants they had two options – repair or demolish the building:
If you decide to repair the building, you must, within
30 days of your receipt of this notice, secure all
necessary permits and commence the work. All work must
fully comply with the provisions of the applicable
building codes.
If you decide to demolish the building, you must, within
30 days of your receipt of this notice, secure all
necessary permits and complete the demolition, including
debris removal.
(Id.)
The Notice further stated that if the foregoing actions
were not commenced or completed within 30 days, the County would
demolish the building.
(Id.)
Defendants had the right to appeal
the County’s Notice or seek modification, but it does not appear
that they did so.
(Id.)
Despite the absence of any law or
ordinance that would have prevented defendants from repairing the
building, defendants decided to demolish the building.
The record
is unclear what the motivations were for their decision to demolish
the building rather than repair it.
Evanston
disagreed
with
the
County’s
assessment
Insured’s decision to demolish the building.
and
the
After receiving a
copy of the County’s Notice, Evanston issued a letter to the
Insureds on December 5, 2017 (just shy of the Insured’s 30-day
deadline from the County), dated November 28, 2017.
16; Doc. #1-3.)
follow
up
(Doc. #1, ¶
Evanston’s letter stated that it “serve[d] as a
after
learning
that
Etcetera,
Etc.
Inc.
and
Klas
Etcetera, LLC intend to undertake the demolition of the insured
property.”
(Id.)
Evanston took the position that the County’s
Notice makes clear that the Property could be repaired.
(Id.)
Evanston had employed its own engineer, who found that the building
could be repaired and there was no reason to demolish the building,
and thus “any decision by you to demolish the building would be a
voluntary decision and not related to the covered loss.”
(Id.)
Through counsel, in a letter dated January 2, 2018, the
Insureds
responded
that
although
there
was
some
pre-existing
damage to the Property, Hurricane Irma caused additional damage,
rendering it a “total loss.”
(Doc. #1-5.)
The letter ended by
stating:
Furthermore,
please
be
advised
that
the
local
municipality has ordered the demolition of the subject
property.
We believe that the property will be torn
down within the next few weeks, possibility sooner.
Therefore, should Evanston Insurance Company wish to reinspect the loss, we urge that it do so immediately.
(Id., p. 2) (emphasis in original).
Evanston responded to the letter, stating that it would “reopen
the
claim”
and
would
coordinate
Property on January 15, or 16, 2018.
a
re-inspection
(Doc. #24-4.)
of
the
Evanston
stated that it would require the re-inspection before considering
any advance payment of the claim.
(Id.)
It is not clear whether
the re-inspection took place.
Despite Evanston’s letter stating that a re-inspection of the
Property would take place on January 15 or 16, 2018, Evanston
issued a letter to the Insureds on January 11, 2018, which was
dated December 29, 2017, advising them that Evanston had completed
its investigation, reiterating its belief that the building could
be repaired, and although there was some covered loss, the damage
estimate
($9,334.67)
was
below
windstorm or hail ($24,000).
the
applicable
deductible
(Doc. #1, ¶ 17; Doc. #1-4.)
for
Evanston
told its Insureds to submit documentation reflecting the cost of
repair of damages caused by Hurricane Irma if it disagreed with
Evanston’s conclusion that the claimed damage does not exceed the
Policy’s applicable deductible.
(Doc. #1-4.)
The Insureds state that they did not respond to Evanston’s
letter because they believed that Evanston was still attempting to
negotiate and resolve the claim; that is until Evanston filed the
instant
suit
on
February
14,
2018.
(Doc.
#24
p.
1).
Coincidentally, the demolition of the building was completed on
the same day the Complaint was filed.
Defendants filed an Answer
on March 12, 2018 and sent Evanston a demand for “appraisal of the
loss” under the terms of Policy the same day.
1.)
(Doc. #9; Doc. #24-
Evanston never responded to the demand for appraisal.
II.
In its Complaint for Declaratory Judgment, Evanston disputes
that the Property is a total loss and believes that its liability
for the Insureds’ claim is limited to any coverage caused by
Hurricane Irma, subject to the Policy deductible and other terms
and conditions.
(Doc. #1, ¶ 20.)
Evanston also alleges that to
the extent the loss was caused by the enforcement of an ordinance
or law regulating the construction, use, or repair of any property
or requiring the tearing down of any property, including the cost
of removing its debris, it is excluded under the Policy.
23-24.)
(Id., ¶
In sum, Evanston seeks a declaration that:
1. The Insured Property is not a total loss;
2. Florida’s
Policy 1;
Valued
Policy
Law
does
not
apply
to
the
3. Loss or damage caused by the enforcement of an ordinance
or law (1) regulating the construction, use, or repair
of any property; or (2) requiring the tearing down of
any property, including the cost of removing its debris,
is excluded; and
1
The purpose of Florida’s Value Policy Law “is to fix the measure of
damages payable to the insured in case of total loss,” and the statute’s
plain language “requires an insurer to pay that amount listed on the
face of the policy in the event of a total loss without the necessity
of any additional proof of the actual value of the loss incurred.”
Ceballo v. Citizens Prop. Ins. Corp., 967 So. 2d 811, 813-14 (Fla. 2007);
Fla. Stat. § 627.702.
4. Its liability for the loss is limited to any covered
damage caused by Hurricane Irma, subject to the Policy
deductible and other terms and conditions.
(Id., ¶ 37.)
The Insureds request that the Court compel appraisal of the
Property pursuant to the Policy’s appraisal clause, which states:
E. Loss Conditions
. . .
2. Appraisal
If we and you disagree on the value of the property or
the amount of loss, either may make written demand for
an appraisal of the loss, either may make written
demand for an appraisal of the loss. In this event,
each party will select a competent and impartial
appraiser. The two appraisers will select an umpire.
If they cannot agree, either may request that selection
be made by a judge of a court having jurisdiction. The
appraisers will state separately the value of the
property and amount of loss. If they fail to agree,
they will submit their differences to the umpire. A
decision agreed to by any two will be binding. Each
party will
a.
Pay its chosen appraiser;
b. Bear the other expenses of the appraisal and umpire
equally.
If there is an appraisal, we will still retain our
right to deny the claim.
(Doc. #1-1, p. 68). Evanston responds that defendants waived their
right to appraisal by demolishing the building prior to demanding
appraisal and should be estopped from asserting same.
III.
A. Appraisal Right
Under Florida law 2, a dispute regarding a policy’s coverage
for a loss is exclusively a judicial question.
Gonzalez v. Am.
Sec. Ins. Co., No: 8:15-cv-1515-36EAJ, 2015 WL 12852303, at *4
(M.D. Fla. Nov. 10, 2015) (citations omitted).
However, when an
insurer acknowledges that there is a covered loss, any dispute
regarding the amount of such loss is appropriate for appraisal.
Id. (citations omitted); Freeman v. American Integrity Ins. Co. of
Florida, 180 So. 3d 1203, 1208 (Fla. 1st DCA 2015).
“Notably, in
evaluating the amount of loss, an appraiser is necessarily tasked
with determining both the extent of covered damage and the amount
to be paid for repairs.”
Cincinnati Ins. Co. v. Cannon Ranch
Partners, Inc., 162 So. 3d 140, 143 (Fla. 2d DCA 2014) (emphasis
in original).
Thus, the question of what repairs are needed to
restore a property is a question relating to the amount of loss
and not coverage.
Evanston has stated that damages caused by Hurricane Irma are
covered, but disputes the amount of damage, and has asserted that
it falls below the deductible set forth in the insurance policy.
On the other hand, the Insureds believe that the damage incurred
is a “total loss.”
2
(Doc. #19 ¶¶ 88, 89; Doc. #1 ¶ 20.)
Thus,
In this diversity case, the Court applies Florida substantive law.
because there is no dispute between the parties that the cause of
at least some of the damage to the Property is covered under the
Policy, the remaining dispute concerning the scope of the damage
is not exclusively a judicial decision and may be appropriate for
appraisal.
B. Waiver
Evanston nonetheless contends that defendants have waived
their right
demolish
the
to
an
appraisal
building
prior
when
to
they
unilaterally
invoking
chose
appraisal,
to
making
appraisal impossible, and defendants should therefore be estopped
from asserting a right to appraisal. 3
(Doc. #27 p. 4.)
“A waiver of the right to seek appraisal occurs when the party
seeking appraisal actively participates in a lawsuit or engages in
conduct inconsistent with the right to appraisal.” Fla. Ins. Guar.
Ass’n v. Rodriguez, 153 So. 3d 301, 303 (Fla. 5th DCA 2014) (citing
Fla. Ins. Guar. Ass’n v. Branco, 148 So. 3d 488, 493 (Fla. 5th DCA
2014)). “[T]he primary focus is whether [the insureds] acted
inconsistently with their appraisal rights.”
Id.
The Court agrees with the parties that there is little case
law in Florida on the precise issue of whether the right to
appraisal is waived by demolition of the property to be appraised,
3
If appraisal is compelled, Evanston requests that the Court direct the
appraisal panel to itemize the appraisal because coverage issues remain
to be decided by the Court. (Doc. #27, pp. 9-10.)
but on the facts of this case the Court does not find waiver.
Evanston had inspected the condition of the building just 30 days
prior to Hurricane Irma (Doc. #24, p. 7) and the building was again
inspected by the parties’ adjusters and engineers following the
hurricane.
Evanston also had the opportunity to inspect the
building prior to demolition.
Although Evanston argues that
defendants’ conduct made appraisal impossible, Evanston has not
convinced the Court it would be impossible to appraise the Property
based on inspections and reports generated prior to demolition.
Appraisal
is
appropriate
here
given
that
Evanston
has
admitted that at least some of the loss is covered by the Policy
but disputes the amount of its liability.
“‘[W]hen the insurer
admits that there is a covered loss, any dispute on the amount of
loss suffered is appropriate for appraisal.’”
Fla. Ins. Guar.
Ass’n v. Lustre, Case No. 2D13–5780, 2015 WL 1874445 (Fla. 2d DCA
Apr. 24, 2015) (quoting Cincinnati Insurance Co. v. Cannon Ranch
Partners, Inc., 162 So. 3d 140 (Fla. 2d DCA 2014)).
Accordingly,
the appraisal requested by defendants is both mandated by the
Policy and appropriate under the facts of the case.
The case will
be stayed while the appraisal is obtained.
C. Scope of the Appraisal
In the event the Court compels appraisal, Evanston requests
that the Court direct the appraisal panel to prepare a detailed
appraisal that states the cause of loss for each item found to be
damaged and the amount of that damage, as there are remaining
coverage issues to be decided by the Court. Specifically, Evanston
requests that the appraisal panel include line items for the
following:
1. The Actual Cost Value of all damages at the subject
property prior to the demolition of the damaged
building on the subject property;
2. Damages resulting from the enforcement of
or law regulating the construction, use,
any property, or requiring the tearing
property, including the cost of removing
an ordinance
or repair of
down of any
its debris;
3. The Actual Cost Value of covered damages to the
building that existed prior to the demolition of the
building and are directly attributable to Hurricane
Irma; and
4. Damages that commenced prior to the inception of the
Policy that was in effect on September 10, 2017, to
include damages related to Hurricane Charley.
(Id., p. 10.)
Although defendants filed a Reply (Doc. #30), they
stated no position as to Evanston’s request for a delineated
appraisal.
A detailed line-item appraisal has been found to streamline
the litigation process because an appraiser assigns a value for a
particular type of damage, which allows the Court to more easily
assess coverage disputes.
Bonafonte v. Lexington Ins. Co., No.
08-cv-21062-CIV, 2008 WL 2705437, *2 (S.D. Fla. July 9, 2008).
See also Florida Ins. Guar. Ass’n, Inc. v. Olympus Ass’n, Inc., 34
So. 3d 791, (Fla. 4th DCA 2010) (quoting Bonafonte) (approving the
use of a line-item appraisal form, which allows the court to
“readily identify any coverage issues that arise during the course
of the appraisal and resolve these without having to try and
decipher what value the appraiser assign for a particular type of
damage”).
The Court agrees that such an approach could streamline
coverage issues and seeing no objection from defendants, the Court
approves
the
use
of
a
line-item
appraisal
as
set
forth
in
Evanston’s Response (Doc. #27).
Accordingly, it is hereby
ORDERED:
1.
Defendant’s
Proceedings
is
Motion
GRANTED.
to
The
Compel
parties
Appraisal
shall
and
cooperate
Stay
in
expeditiously obtaining an appraisal in the manner proscribed by
the appraisal clause of the subject insurance policy, and this
case is STAYED pending further notification by the parties that
the stay is due to be lifted.
2.
The parties shall file a status report on or before
October 22, 2018 if the appraisal is not complete or a notification
has not been filed by this date.
3.
Plaintiff’s request for a line-item appraisal as set
forth in its Response (Doc. #27) is granted.
4.
The
Clerk
shall
terminate
all
deadlines,
administratively close this case, and add a stay flag to the
docket.
DONE and ORDERED at Fort Myers, Florida, this __23rd__ day of
July, 2018.
Copies:
Counsel of Record
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