Charlevoix Equity Partners Intl., Inc. v. AIG Property Casualty Company

Filing 43

ORDER granting 10 Motion to Compel and to Stay(Status Report due by 9/18/2017.); denying as moot 31 Motion for Reconsideration; denying as moot 42 Motion for Hearing. Closing Case. Signed by Judge Robert N. Scola, Jr. on 5/18/2 017. (pes) NOTICE: If there are sealed documents in this case, they may be unsealed after 1 year or as directed by Court Order, unless they have been designated to be permanently sealed. See Local Rule 5.4 and Administrative Order 2014-69.

United States District Court
for the
Southern District of Florida
Charlevoix Equity Partners Intl.,
Inc., Plaintiff,
v.
AIG Property Casualty Company,
Defendant.

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) Civil Action No. 16-24764-Civ-Scola
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Order Granting Motion to Compel Appraisal and Stay Case
In this case Plaintiff Charlevoix Equity Partners Intl., Inc. seeks
compensation for losses it incurred when its insured ninety-seven foot yacht
and the yacht’s thirty-seven foot tender ran aground, against rocks, in the
Bahamas. (Def.’s Mot. to Compel Appraisal and Mot. to Stay, ECF No. 10, 2–
3.) Defendant AIG Property Casualty Company, the insurer, specifically does
not deny coverage for the damages to the vessel, but quarrels only as to the
amount of the loss sustained. (Def.’s Mot. at 7; Def.’s Reply, ECF No. 21, 2.)
Based on an appraisal clause within the parties’ insurance policy, AIG asks
the Court to compel an appraisal and stay this case. (Id.) Charlevoix has not
persuaded the Court, in its response (ECF No. 20), that the appraisal process
should not move forward. The Court therefore grants AIG’s motion (ECF No.
10), thus compelling the appraisal and staying this case.
1. Background
Under the parties’ policy, where partial damage to the insured’s vessels
results from a covered loss, AIG agrees to “pay the reasonable costs of repair,
with materials of like kind and quality.” (Def.’s Mot. at 2.) In accordance with
the “General Conditions” section of the policy, the insured is required to
comply with a number of requirements under certain conditions. (Def.’s Mot.,
Ex. 1, ECF No. 10-1, 24.) One of those General Conditions provisions sets
forth an appraisal procedure, which is triggered when the parties “fail to agree
on the amount of physical loss or damage.” (Id. at 25.) According to that
provision, upon such a disagreement, “either party may make a written
demand that each selects an independent appraiser.” (Id.) Once such a
demand is made, “the parties must notify each other of their selection within
twenty [] days.” (Id.) Thereafter, the independent appraisers must select an
arbitrator within fifteen days. (Id.) Assuming the parties are able to agree on

an arbitrator, the appraisers are to submit any differences in their appraisals
for arbitration. (Id.)
In a September 12, 2016 letter, AIG notified Charlevoix that if it did not
accept AIG’s payment as a full settlement of Charlevoix’s claim and instead
contested the insurer’s damage calculations, then AIG “demand[ed] an
appraisal.” (Pl.’s Reply, Ex. A., ECF No. 20-1, 1.) In the same paragraph, AIG
announced the appointment its own appraiser and requested that Charlevoix
do the same. (Id.) Charlevoix, in response, refused to appoint an appraiser, or
otherwise participate in the appraisal process, and instead filed suit against
AIG in state court. AIG thereafter removed the case to this Court. (Not. of
Removal, ECF No. 1.)
Charlevoix’s complaint lodges two counts against AIG. First, Charlevoix
complains that AIG has breached the terms of the policy insuring the vessels
by failing to pay the full amount of the damages caused by the grounding.
Second, Charlevoix seeks a declaratory judgment, claiming AIG has
essentially denied coverage based on its construction of certain terms in the
policy.1
2. Discussion
AIG submits that it properly triggered the appraisal process and that
Charlevoix has failed to comply with its corresponding duties and obligations
related to that process. According to AIG, complying with the appraisal
provision is a condition precedent to Charlevoix’s right to maintain an action
on the policy. Charlevoix counters that the appraisal provision is not
applicable for a number of reasons. First, Charlevoix argues that AIG’s failure
to comply with Florida Statutes section 627.7015 renders the appraisal
provision unenforceable. Second, Charlevoix says that its suit is really a
dispute over coverage, and not the amount of the loss, and therefore an
appraisal would be premature. And third, Charlevoix complains that AIG did
not properly demand an appraisal and thus has not actually triggered the
appraisal process. The Court finds Charlevoix’s arguments unavailing.

1 Charlevoix sought leave to amend its complaint which the Court granted in part and denied
in part. (Order, ECF No. 29.) Unhappy with the result, Charlevoix filed a motion for
reconsideration of that part of the Court’s order denying its motion to amend. That motion is
denied as moot as a result of the relief granted in this order. The Court notes, however, that
whether the Court allowed the amendment or not would not have affected its decision in this
matter.

A. Florida Statutes section 627.7015 does not apply to this case.
Charlevoix contends that AIG may not invoke the policy’s appraisal
process because it failed to comply with certain notice requirements set forth
in Florida Statutes section 627.7015. This statute section establishes a
mediation alternative for the handling of certain property insurance claims.
Charlevoix has not presented any support for its impression that this section
applies to this case. In assessing the plain terms of the statute, Florida case
law, and the Florida rules implementing the statute section, the Court finds
that this section appears to apply only to policies covering residential
properties. Therefore, this statute section would have no bearing on the policy
in this yacht-insurance case. Fla. Stat. § 627.7015(1) (“This section is
available with respect to claims under personal lines and commercial
residential policies . . . .”); see also Florida Ins. Guar. Ass’n, Inc. v. Devon
Neighborhood Ass’n, Inc., 67 So. 3d 187, 191 (Fla. 2011) (noting that when
section 627.7015 was first enacted it applied only to homeowner residential
insurance policies and was later expanded to include commercial residential
insurance policies as well); Fla. Admin. Code Ann. r. 69J-166.002, .031 (in
implementing section 627.7015 noting that “the program established under
this rule is prompted by the critical need for effective, fair, and timely
handling of commercial residential [and residential] property claims”).
Charlevoix has failed to provide any support for his contention that this
statute section should apply to this case.
B. The controversy in this case involves an amount-of-loss dispute
and not a coverage dispute.
Charlevoix also argues that this case involves a coverage dispute rather
than an amount-of-loss dispute. In support, Charlevoix points to two parts of
the policy: the provision that provides that AIG will cover “the reasonable
costs of repair, with materials of like kind and quality”; and the definition
supplied for reasonable costs which the policy defines as “the amount of
money, which would be paid by a prudent purchaser.” (Pl.’s Resp. at 4.)
Charlevoix complains that because the terms “reasonable costs,” “prudent
purchaser,” and “materials of like kind and quality” are “vague and
ambiguous,” an “appraisal panel cannot possibly reach a valid decision”
regarding the loss amount. (Id. at 3–4.)
Charlevoix’s argument fails to persuade. To begin with, Charlevoix does
not provide any context or support for its summary conclusion that the listed
terms are vague and ambiguous. It also fails to establish how such terms
might prevent an appraiser from forming an opinion regarding a loss amount.

Conversely, AIG explains that it has never denied coverage and instead
disputes only the amount of the loss. (Def.’s Reply at 3–4.) As such, it appears
to the Court that a marine appraiser would be particularly, if not uniquely,
well suited to resolving the amount of “the reasonable costs of repair, with
materials of like kind and quality” based “the amount of money, which would
be paid by a prudent purchaser.” See Johnson v. Nationwide Mut. Ins. Co.,
828 So. 2d 1021, 1025 (Fla. 2002) (“[W]hen the insurer admits that there is a
covered loss, but there is a disagreement on the amount of loss, it is for the
appraisers to arrive at the amount to be paid.”) (emphasis in original) (quoting
and adopting the lower appellate court’s analysis in Gonzalez v. State Farm
Fire & Cas. Co., 805 So. 2d 814, 816 (Fla. 3d DCA 2000). The Court finds
Charlevoix’s attempt to recharacterize the dispute as pertaining to coverage
rather than amount unconvincing.
C. AIG’s letter was sufficient to trigger the appraisal process.
Lastly, Charlevoix complains that AIG neglected to properly invoke the
appraisal provision in its September 12, 2016 letter to Charlevoix. (Pl.’s Resp.
at 6.) The Court disagrees. In its September 12th letter, AIG stated that if its
check was not accepted by Charlevoix as settlement of its claim and
Charlevoix contested AIG’s damages calculation, then AIG “demands an
appraisal pursuant to the terms and conditions of the policy” and “request[s]
that [Charlevoix] advise . . . who [it] will appoint as [its] appraiser.” (Pl.’s
Resp., Ex. 1 at 1–2.) Under the appraisal provision of the policy, if the parties
“fail to agree on the amount of physical loss or damage,” then “either party
may make a written demand that each selects an independent appraiser.”
(Def.’s Mot., Ex. 1 at 25.) Once a demand has been made, the parties are
required to “notify each other of their selection within twenty [] days.” (Id.)
There does not appear to be any real dispute that as of September 12, 2016
the parties had failed to agree on a loss amount. Further, the Court finds that
AIG’s “request” that Charlevoix “advise” who it will appoint as its appraiser
qualifies as “a written demand” that Charlevoix “select[] an independent
appraiser.”
3. Conclusion
For the foregoing reasons, AIG’s motion to compel arbitration and stay
this case (ECF No. 10) is granted. Charlevoix must notify AIG of its
appointment of an independent appraiser on or before June 7, 2017. Once
Charlevoix has made its appointment, the parties are directed to comply with
the procedures set forth in the appraisal provision of the policy. In the

meantime, while the parties proceed with the appraisal process, the Clerk is
directed to administratively close this case. Any pending motions, including
Charlevoix’s motions for reconsideration (ECF No. 31) and for oral argument
(ECF No. 42) are denied as moot. The parties shall notify this Court on or
before September 18, 2017 of the status of the appraisal and whether this
case is ready to resume, if appropriate. Once the case is reopened, Charlevoix
may refile, if necessary, its motion to reconsider the Court’s order denying in
part Charlevoix’s motion to amend.
Done and ordered, at Miami, Florida, on May 18, 2017.
________________________________
Robert N. Scola, Jr.
United States District Judge