McPhillips et al v. Scottsdale Insurance Company
Filing
23
OPINION AND ORDER granting 15 Defendant's Renewed Motion to Compel Appraisal, to Stay Litigation, to Delineate and Itemize Appraisal Award, and to Strike Plaintiffs' Claim for Attorney's Fees. The Court compels appraisal and will stay this case. 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 i s due to be lifted. Plaintiff's request to strike plaintiff's demand for attorney's fees in the Amended Complaint pursuant to Fla. Stat. § 627.428 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 8/10/2018. (BLW)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
DENISE
MCPHILLIPS
RICHARD MCPHILLIPS,
and
Plaintiffs,
v.
Case No:
SCOTTSDALE
COMPANY,
2:18-cv-421-FtM-99CM
INSURANCE
Defendant.
OPINION AND ORDER
This matter comes before the Court on defendant’s Renewed
Motion to Compel Appraisal, to Stay Litigation, to Delineate and
Itemize Appraisal Award, and to Strike Plaintiffs’ Claim for
Attorney’s Fees (Doc. #15) filed on July 12, 2018.
Plaintiffs
filed a Response in Opposition (Doc. #18) on July 25, 2018, and
defendant filed a Reply (Doc. #22).
For the reasons set forth
below, the Motion is granted.
I.
Plaintiffs
Denise
and
Richard
McPhillips
(“Insureds”)
originally filed this action on April 27, 2018 in state court
before defendant Scottsdale Insurance Company’s removal on June
24, 2018.
Plaintiffs allege one count for breach of contract with
respect to a home owner’s insurance policy, Policy No. HOS1246192,
issued by Scottsdale (Doc. #9-1, the “Policy”).
Scottsdale filed
a Motion to Compel Appraisal (Doc. #8) one week after it removed
the case.
Motion
An Amended Complaint (Doc. #9) was filed and the first
to
Compel
Appraisal
was
denied
as
moot
(Doc.
#13).
Defendant thereafter filed a Renewed Motion to Compel Appraisal
(Doc. #15).
On
or
about
September
10,
2017,
plaintiffs
discovered
property damage due to Hurricane Irma on their home in Naples,
Florida (the “Property”), which was insured by Scottsdale.
#9, ¶¶ 2, 6.)
(Doc.
Plaintiffs submitted a claim to Scottsdale for
property damage.
(Id., ¶ 8.)
Scottsdale accepted coverage for
wind and water damage caused by Hurricane Irma, but the parties
dispute the extent and valuation of the covered damages.
By
failing to pay the benefits for a covered cause of loss, plaintiffs
claim defendant breached the Policy, causing damages.
(Id., ¶
15.)
It
does
not
appear
that
Scottsdale
has
previously
sent
plaintiffs any demand for appraisal, other than the filing of the
instant Motion to Compel.
Scottsdale believes that it is entitled
to appraisal because it is invoking its right to appraisal listed
under the “Appraisal” clause of the Policy and under Florida law 1
an appraiser may determine the value of the loss so the parties
can then allow the Court to resolve the coverage issues.
The
Policy’s appraisal clause states:
. . .
1
In this diversity case, the Court applies Florida substantive law.
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F. Appraisal
If we and you disagree on the value of the property or
the amount of loss, either may demand an appraisal of
the loss.
In this event, each party will choose a
competent and impartial appraiser within 20 days after
receiving a written request from the other. The two
appraisers will choose an umpire. If they cannot agree
upon an umpire within 15 days, you or we may request
that choice be made by a judge of a court of record in
the state where the ‘residence premises’ is located.
The appraisers will separately set the amount of loss.
If the appraisers submit a written report of an
agreement to us, the amount agreed upon will be the
amount of loss.
If they fail to agree, they will
submit their differences to an umpire.
A decision
agreed to by any two will set the amount of loss.
Each party will:
a.
Pay its own appraiser;
b. Bear the other expenses of the appraisal and umpire
equally.
(Doc. #9-1, p. 42).
Plaintiffs
object
to
an
appraisal,
arguing
that
because
Scottsdale is in material breach of the Policy for its failure to
pay the full amount of the loss, Scottsdale has waived its right
to appraisal.
(Doc. #18, ¶ 8.)
Plaintiffs also argue that
defendant waived its right to appraisal by failing to invoke the
option for nine months.
(Id., ¶ 20.)
II.
A.
Appraisal Right
Under Florida law, a dispute regarding a policy’s coverage
for a loss is exclusively a judicial question.
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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.
Scottsdale has stated that damages caused by Hurricane Irma
are covered but disputes the amount of damage.
On the other hand,
the Insureds believe that the damage caused by Hurricane Irma is
much more extensive.
Thus, 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.
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B.
Waiver
Plaintiffs nonetheless contend that Scottsdale waived its
right to an appraisal when it breached the contract and failed to
invoke appraisal for nine months.
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.
On the facts of this case the Court does not find waiver.
First, plaintiffs provide the Court with no legal authority to
support its argument that an alleged breach by an insurer of the
terms of the Policy is a basis for wavier of an appraisal right.
Nor have plaintiffs provided the Court with any specific facts or
Policy terms and conditions that Scottsdale breached which would
impair its right to an appraisal under the Policy.
Because
Scottsdale clearly disputes that it breached the terms of the
Policy and plaintiffs do not argue that the Policy contains any
conditions
precedent
that
are
a
prerequisite
to
demanding
appraisal, plaintiffs’ first argument in support of waiver fails.
Second, the nine-month delay in this case does not constitute
a waiver.
The appraisal clause does not require invocation prior
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to suit and Scottsdale filed its Motion to compel on June 21, 2018,
one week after removing the case.
See, e.g., Am. Capital Assur.
Corp. v. Courtney Meadows Apartment, L.L.P., 36 So. 3d 704, 707
(Fla. 1st DCA 2010) (indicating appraisal demand was timely as
policy did not contain any language to invoke appraisal within set
time from receiving or waiving sworn proof of loss); Fla. Ins.
Guar. Ass’n v. Castilla, 18 So. 3d 703, 703-05 (Fla. 4th DCA 2009);
(explaining appraisal clause may be invoked for first time after
litigation has commenced and concluding that party did not act
inconsistently with right to appraisal by participating in suit);
Gonzalez v. State Farm Fire and Cas. Co., 805 So. 2d 814, 818 (Fla.
3d DCA 2000) (finding no waiver where motion to compel appraisal
was made within thirty days of filing the lawsuit). Cf. Shoma Dev.
Corp. v. Rodriguez, 730 So. 2d 838 (Fla. 3d DCA 1999) (finding
waiver where parties had engaged in litigation and discovery for
seven months before invoking the arbitration clause).
Moreover,
the facts as set forth by the parties show that Scottsdale was
working on the claim throughout the time period that plaintiffs
allege
inactivity.
Finally,
Scottsdale
has
not
extensively
litigated this case, and has not yet filed an answer to the Amended
Complaint.
Appraisal
is
appropriate
here
given
that
Scottsdale
has
admitted that at least some of the loss is covered by the Policy
but disputes the amount of its liability.
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“‘[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 Scottsdale 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. Itemized and Delineated Appraisal
Scottsdale requests that the Court direct the appraisers to
prepare a line itemization of damages and delineation of scope in
the appraisal award as there are remaining coverage issues to be
decided by the Court.
Plaintiffs did not state a position as to
Scottsdale’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
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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 plaintiffs, the Court
approves the use of a line-item appraisal.
D. Demand for Attorney’s Fees
Defendant asserts that plaintiffs’ request for attorney’s
fees in the Amended Complaint must be stricken because plaintiffs
seek attorney fees pursuant to Florida Statute section 627.428
(Doc. #9, ¶ 17) and defendant is a surplus lines insurer to which
this section does not apply.
Plaintiffs’ Response did not address
the request to strike.
Plaintiffs’ Amended Complaint states that they are entitled
to attorney’s fees “pursuant to § 626.9373 and § 627.428.”
#9, ¶ 17.)
(Doc.
The Court agrees that one of the statutes cited in the
Amended Complaint for which plaintiff seeks attorneys’ fees (§
627.428) does not apply to surplus lines insurers.
§ 626.913(4).
an
attorneys’
insurers.
See Fla. Stat.
However, Florida Statute section 626.9373 contains
fees
provision
that
applies
to
surplus
lines
Therefore, as requested, the Court will strike the
request for attorney’s fees pursuant to § 627.428, but the basis
for recovering attorney’s fees pursuant to § 626.9373 will remain.
Accordingly, it is hereby
ORDERED AND ADJUDGED:
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1.
Defendant’s Renewed Motion to Compel Appraisal, to Stay
Litigation, to Delineate and Itemize Appraisal Award, and to Strike
Plaintiffs’ Claim for Attorney’s Fees (Doc. #15) is GRANTED.
Court compels appraisal and will stay this case.
The
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.
2.
Plaintiff’s request to strike plaintiff’s demand for
attorney’s fees in the Amended Complaint pursuant to Fla. Stat. §
627.428 (Doc. #9, ¶ 17) is granted.
3.
The parties shall file a status report on or before
November 9, 2018 if the appraisal is not complete or a notification
has not been filed by this date.
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 __10th__ day of
August, 2018.
Copies:
Counsel of Record
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