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

Filing 77

ORDER granting in part and denying in part 63 Motion to Reopen or Vacate the Appraisal Award; Reopening Case; granting 66 Cross-Motion to Confirm Award. Signed by Judge Robert N. Scola, Jr. on 8/10/2018. See attached document for full details. (ls)

United States District Court
for the
Southern District of Florida
Charlevoix Equity Partners Intl.,
Inc., Plaintiff,
v.

)
)
)
) Civil Action No. 16-24764-Civ-Scola
)
)

AIG Property Casualty Company,
Defendant.
Order Regarding Appraisal Results and Reopening Case

In this case Plaintiff Charlevoix Equity Partners International, Inc. seeks
redress from Defendant insurer AIG Property Casualty Company for losses
Charlevoix sustained as a result of the grounding of its insured yacht and the
yacht’s associated tender. Previously, before permitting the case to proceed
further, the Court stayed the proceedings and ordered the parties to submit to
the appraisal process they agreed upon within the insurance policy at issue.
Since the conclusion of that appraisal process, Charlevoix has filed a motion to
reopen this case or, alternatively to vacate the arbitration award (Pl.’s Mot. to
Reopen or Vacate, ECF. No. 63), and AIG has filed a motion to confirm the
award (Def.’s Mot. to Confirm, ECF No. 65). For the reasons that follow, the
Court grants in part and denies in part Charlevoix’s motion (ECF No. 63) and
grants AIG’s motion (ECF No. 65). The Court reopens this case and will enter
an amended scheduling order, immediately following the entry of the instant
order.
1. Background
Charlevoix, in its complaint, alleges AIG, while acknowledging a covered
loss to Charlevoix’s yacht and tender, failed to cover the entirety of Charlevoix’s
claimed damages. As AIG maintains, it disputes “only the amount of
[Charlevoix’s] loss,” and “admits that the property damage caused by the
grounding is a covered loss.” (Def.’s Reply in Support of Its Mot. to Compel,
ECF No. 21, 3, 4.) Within the subject insurance policy, the parties agreed to be
bound by the result of an appraisal process intended to determine the “amount
of physical loss or damage to [covered] property.” (Ins. Policy at 19, ECF No.
20-2, 24.) Based on this provision, but over Charlevoix’s objections, the Court
ordered the parties to submit to their agreed upon appraisal process. (Order
Compelling Appraisal, ECF No. 43.) When the parties failed to properly follow
through with the Court’s order, the Court entered additional orders and held a
status conference. The Court pointedly ordered the parties’ appointed

appraisers and arbitrator1 to determine “a loss amount” in accordance with the
requirements of the parties’ policy. (Order Regarding Appraisal Process, ECF
No. 55.) Eventually the arbitrator announced his decision, informing the Court
that it determined Charlevoix was entitled to $241,894.83 for damage to its
yacht and $78,098.00 for damage to its tender. (Arb. Award,2 ECF No. 58.)
Following up on the arbitrator’s filing, AIG submitted a notice advising that
AIG’s appraiser agreed with the arbitrator’s determination, attaching appraiser
James McCrory’s signed statement to that effect. (AIG’s Notice, ECF No. 59; Ex.
B, McCrory’s Agmt. with Arb. Award, ECF No. 59-2.) AIG has since tendered
the full amount of the award, minus a $25,000.00 deductible and a
$126,263.08 payment AIG has previously provided to Charlevoix. Charlevoix
has not accepted AIG’s post-appraisal tender and wishes to proceed with its
case.
2. Discussion
In its motion, Charlevoix asks the Court either (A) to reopen this case so
that Charlevoix can conduct discovery in its anticipation of filing a “motion to
overturn the ‘Arbitration Award’” or (B), alternatively, to vacate the “Arbitration
Award” outright and appoint a neutral umpire to properly appraise the
damages. (Pl.’s Mot. at 1.) Charlevoix maintains Federal Rule of Civil Procedure
60(b)(6) supports its request to reopen this case but does not explain the basis
for its purported entitlement to conduct discovery. At the same time,
Charlevoix claims the Court has “inherent authority” to vacate the award and
to select a neutral umpire to redo the appraisal. Charlevoix maintains the
appraisal award should be vacated on a number of bases: (1) the arbitrator
exceeded his authority as set forth in Florida Statutes section 682.133 (Pl.’s
Mot. at 11); (2) the arbitrator was not competent to serve as an
arbitrator/umpire (id. at 1); (3) AIG’s appraiser was not “disinterested” (id. at
8); and (4) the award was not signed by, in addition to the arbitrator, one of the
appraisers, as required by the parties agreement (id. at 4).
The Court uses the term arbitrator because that is the term used by the parties’ in their
agreement. By using this term the Court does not mean to imply that the appointed individual
here acted as an arbitrator in a formal arbitration. Instead, the Court uses the term only to
describe the neutral decision-maker who was appointed by the appraisers, or the parties, in
this case.
1

The appointed arbitrator labeled his decision an “Arbitration Award.” (ECF No. 58.) Again, the
Court does not find the use of this label to mean that a formal arbitration, as opposed to an
appraisal, was in fact conducted.
2

Charlevoix, in its reply, without explanation, reverses course and argues that Florida Statutes
section 682.13 does not in fact apply in this case. But the Court will not consider an argument
raised for the first time in reply—certainly not an argument that directly contradicts the party’s
initial position as presented in its motion.
3

For its part, AIG opposes Charlevoix’s motion, arguing Charlevoix has
not provided support that would warrant reopening this case under Rule
60(b)(6). On the other hand, AIG does not object to Charlevoix’s reliance on
Florida Statutes section 682.13 in attempting to support its request to vacate
the award. AIG does, however, contend that Charlevoix has not established any
of the eight narrow grounds presented in that provision that would warrant the
Court’s vacating of the award. AIG also specifically maintains that the
arbitrator was indeed competent and did not exceed his authority. Additionally,
AIG counters Charlevoix’s allegations that AIG’s appraiser acted improperly
and that the award should be vacated because it was not signed by either
parties’ appraiser. Finally, AIG asks the Court to confirm the award.
A. This case is due to be reopened.
The Court is perplexed as to why Charlevoix chose to frame its request to
reopen this case under Rule 60(b) when the Court, on multiple occasions,
acknowledged that the conclusion of the appraisal process would not
necessarily resolve the parties’ dispute in its entirety. (E.g., Order Granting
Mot. to Compel, ECF No. 43, 5 (advising the parties, after the completion of the
appraisal, to “notify this Court . . . of the status of the appraisal and whether
this case is ready to resume”); Order Regarding Appraisal Process, ECF No. 55
(ordering Charlevoix to “either file a motion seeking to reopen this case or a
notice that it will not be doing so” after completing the appraisal process).)
Based on this allowance, there is really no “final judgment, order, or
proceeding” before this Court from which Charlevoix needs to be relieved in
order to reopen this case. That is, Charlevoix has not identified why it needs to
be “relieved,” under Rule 60(b), from the Court’s order closing the case when
the Court has already reserved the option to Charlevoix to file a motion to
simply reopen the case should the appraisal process not resolve the entirety of
the parties’ dispute.
Charlevoix’s complaint is still pending. While AIG has presented
opposition to Charlevoix’s entitlement to relief under Rule 60(b), neither party
has suggested that the appraisal process has wholly settled this controversy.
The Court thus grants Charlevoix’s request to reopen this case. Immediately
following this order the Court will enter an amended scheduling order, placing
this case back on the trial calendar.
B. The Court will not vacate the appraisal award.
At the same time, Charlevoix has not carried its burden of establishing
that the award should be vacated. In its motion, Charlevoix submits that the

award in this case should be vacated by virtue of Florida Statutes section
682.13 because the arbitrator exceeded his authority. (Pl.’s Mot. at 11.) Based
on the record before it, however, the Court does not find the arbitrator
exceeded his authority.
Because neither party properly objects to the application of Florida’s
Arbitration Code to the determination of whether an appraisal award should be
vacated (see note 1, above), the Court will assume, without deciding, that it
applies in this case. Under the Code, among other narrowly defined reasons, a
court “shall vacate an arbitration award if . . . an arbitrator exceeded the
arbitrator’s powers.” Fla. Stat. § 682.13(d). Charlevoix bases its argument that
the arbitrator here exceeded his powers on a number of factors. Primarily it
contends the arbitrator failed to limit his decision to the issue of the value of
damages only. In support of this claim, Charlevoix points to (1) the eight hours
the arbitrator spent interviewing the captain of the yacht as to liability, and
whether the incident really happened as he reported (Pl.’s Mot. at ¶¶ 9, 11, 18);
(2) the arbitrator’s decision to allow AIG’s appraiser to interview the captain for
hours as to liability and as to his and his crew’s alleged negligence that
resulted in the damage (id. at ¶ 9); (3) the 100-hour-long arbitration focused
on investigating the weather, liability, and negligence (id. at ¶ 10); (4) the
arbitrator’s focus on whether there was “foul play” involved in the damage to
the yacht and tender (id. at ¶ 13); (5) the arbitrator’s conducting an arbitration
instead of an appraisal (id. at ¶¶ 15, 18, 19); (6) the phrasing of the award itself
(id. at ¶ 17); and (7) the arbitrator’s improperly applying a preponderance-ofthe-evidence legal standard (id. at ¶ 19). After careful review, the Court does
not find that these allegations support vacating the award.
An arbitrator exceeds his powers when he “goes beyond the authority
granted by the parties . . . and decides an issue not pertinent to the resolution
of the issue submitted to arbitration.” Schnurmacher Holding, Inc. v. Noriega,
542 So. 2d 1327, 1329 (Fla. 1989). Here, none of the facts Charlevoix has
presented show that the arbitrator actually decided an issue beyond the
authority that was granted to him. First, although the arbitrator may have
considered issues that Charlevoix describes as irrelevant—such as whether the
captain’s portrayal of the incident was accurate, whether there was foul play
involved in the grounding, or whether the captain and the crew were at fault—
Charlevoix has not provided any support for his contention that any of those
considerations actually resulted in a decision that went beyond the arbitrator’s
authority. Further, under Florida law, it does not appear the arbitrator erred in
any event in evaluating various causation issues. That is, when determining
the amount of loss under an appraisal clause, an umpire may properly take
into account factors such as “the cost of repair or replacement and whether or

not the requirement for a repair or replacement was caused by a covered peril
or a cause not covered, such as normal wear and tear, dry rot, or various other
designated, excluded causes.” State Farm Fire & Cas. Co. v. Licea, 685 So. 2d
1285, 1288 (Fla. 1996).
In a similar vein, Charlevoix argues the arbitrator exceeded his authority
by conducting an arbitration rather than an appraisal. Again, there is no
indication that the process the arbitrator employed to reach his decision
resulted in an improper award. Further, delving into the arbitrator’s process,
absent an indication the arbitrator ultimately decided an issue beyond his
authority, would be improper. See First Protective Ins. Co. v. Hess, 81 So. 3d
482, 485 (Fla. 1st DCA 2011) (“After the parties have gone through the
appraisal process, the trial court may not consider evidence beyond the face of
the appraisal award.”) Charlevoix also contends the phrasing of the award itself
shows the arbitrator exceeded the scope of his authority. The award reads, in
part, “After numerous hearings and submissions by both parties’ Appraisers,
and considering all the credible evidence presented, the arbitrator makes the
following award based on a preponderance of the credible evidence.” (Pl.’s Mot.
at ¶ 17 (citing the award (ECF No. 58)).) Other than citing this language,
however, Charlevoix does not explain which part of the award itself exceeded
the scope of the arbitrator’s powers. Charlevoix also does not provide any legal
support for its contention.
Finally, with respect to Charlevoix’s argument that the arbitrator
exceeded his authority, Charlevoix complains the arbitrator applied the wrong
standard when he based his award on a preponderance-of-the-evidence legal
standard. The “application of an incorrect standard, however, has consistently
been rejected as a basis for vacating an award under section 682.13(1)(c).”
Felger v. Mock, 65 So. 3d 625, 627 (Fla. 1st DCA 2011) (collecting cases from
the Florida Supreme Court and various Florida District Courts of Appeal).
Charlevoix has not provided any support to the contrary.
Charlevoix’s remaining arguments that the award should be vacated are
equally unavailing. To begin with, Charlevoix provides no support, nor can the
Court find any, that the Court has “inherent authority” to vacate an appraisal
award. Next, Charlevoix’s contentions that the award should be vacated
because the arbitrator was incompetent and because AIG’s appraiser was not
“disinterested” are devoid of both factual as well as legal support. Lastly, AIG’s
supposition that the award should be vacated because it was not signed by one
of the appraisers, in addition to the arbitrator, is without merit. The parties’
agreement requires only “[a] decision in writing” which is “agreed to by . . . one
appraiser and the arbitrator.” (Ins. Policy at 19.) Here, the arbitrator has
submitted his decision in writing (ECF No. 58) and AIG’s appraiser has notified

the Court of his agreement with that decision (Agmt. with Arb. Award, ECF No.
59-2 (“The undersigned Appraiser files his agreement with the Arbitration
Award dated January 16, 2018, prepared by Reginal[d] M. Hayden, Jr.”)). There
is thus a decision in writing that both the arbitrator and one of the appraisers
have agreed to.
Accordingly, the Court denies Charlevoix’s motion to vacate the award.
The Court also denies Charlevoix’s motion to conduct discovery in order to
gather evidence in support of an “anticipated motion to overturn ‘Arbitration
Award.’” Charlevoix has not presented any legal justification for such discovery
or why it would be entitled to file a renewed motion to vacate the arbitration
award.
C. The Court does not adopt Charlevoix’s proposed interpretation of
the award.
In what it calls a supplement to its motion, Charlevoix argues, based on
a strained interpretation of the arbitration award, that AIG should not be
credited for the $126,263.08 it has already paid to Charlevoix. According to
Charlevoix, “the Arbitration Award on its face reflects no reductions in
amount based on Defendant’s prior payments to Plaintiff.” (Pl.’s Supp.,
ECF No. 64, 3 (italics and bold in original).)
The Court disagrees. Under the policy, upon a disagreement, the parties
were required to select independent appraisers to “appraise the loss” amount
based on “the amount of physical loss or damage to property covered” under
the policy. (Ins. Pol. at 24.) If the appraisers’ evaluation of the loss diverged,
they were to “submit any differences to the arbitrator” for a binding decision as
to the loss amount. (Id.) In accordance with the policy, the Court pointedly
ordered the arbitrator and the appraisers to determine the “loss amount.”
(Order Regarding Appraisal Process at 1.) Even Charlevoix acknowledges “the
appraisal panel had one task: to determine the amount of loss.” (Pl.’s Reply at
2.) Similarly, Charlevoix’s appraiser attests to a similar understanding: the
arbitrator was tasked with determining only the value of damages. (Santos Aff.
At ¶¶ 5, 8 ECF No. 72-1, 3.)
The decision agreed upon by the arbitrator and AIG’s appraiser awarded
a total of $320,789.66 (broken down as $241,894.83 for the yacht and
$78,098.00 for the tender) to Charlevoix. (Arb. Award. at 1–2.) In order for the
Court to interpret this award as already accounting for AIG’s prior payment,
the Court would have to find the arbitrator (1) exceeded his authority in
accounting for the prior payment and (2) defied the Court’s order to determine,
specifically, only the loss amount. Neither party argues the arbitrator exceeded
his authority or defied the Court’s order in this way. Since neither party has

argued that the arbitrator exceeded his power by considering prior payments in
determining the loss amount, the Court assumes AIG’s prior payment was not
factored into the award. The Court thus concludes the award amount
represents the total amount of damage Charlevoix’s vessels suffered due to the
covered grounding incident and that AIG should therefore be credited for (1)
any amounts it has already compensated Charlevoix towards that amount and
(2) any deductible under the policy. See also § 14:8.Appraisal of Homeowners
Insurance Claims, 17 Fla. Prac., Insurance Law § 14:8 (2017-2018 ed.) (“once
the award is dispensed, the court cannot utilize external evidence to make
specific calculations, other than standard items such as the deductible, prior
payments, and the overall policy limits”) (citing First Protective Ins. Co. v. Hess,
81 So. 3d 482, 485 (Fla. 1st DCA 2011).
D. The Court grants AIG’s motion to confirm the appraisal.
AIG asks the Court to confirm the award. In opposition Charlevoix
continues to maintain that the arbitrator exceeded his authority and to
complain that the appraisal process was not conducted appropriately.4
Charlevoix also argues that AIG should not be permitted to deduct any prior
payments it has made to Charlevoix. As discussed thoroughly above, the Court
is not persuaded.
Under Florida’s Arbitration Code, “In the absence of a motion legally
sufficient under either section 682.13 or 682.14, the trial court
must confirm the award.” Wells v. Castro, 117 So. 3d 1233, 1237–38 (Fla. Dist.
Ct. App. 2013).5 Finding Charlevoix’s motion to vacate legally insufficient, the
Court thus confirms the appraisal award, consistent with the analysis above.

4 Charlevoix also “incorporates by reference” into its opposition three other filings it has
entered in this case: its motion to reopen or vacate the award (ECF No. 63); its supplement to
that motion (ECF No. 64); and its reply in support of its motion to reopen (ECF No. 65). This is
improper. See Jones v. Tauber & Balser, P.C., 503 B.R. 162, 177 (N.D. Ga.), modified, 503 B.R.
510 (N.D. Ga. 2013) (“Neither the Court, nor the Defendants have a duty to scour Plaintiff's
other filings to discern what he believe specifically supports his arguments here.”) The Court
will therefore only consider the arguments Charlevoix raised in its actual response to AIG’s
motion to confirm.
5 While there be some debate as to the applicability of Florida’s Arbitration Code to confirming
an appraisal award, neither side has specifically objected to its application in confirming the
appraisal here. Accordingly, for the purposes of this order, the Court will assume, without
deciding, that the Code applies. See, Pelican Pointe of Sebastian II Condo. Ass’n, Inc. v. Empire
Indem. Ins. Co., No. 05-14142-CIV, 2007 WL 9702449, at *2 (S.D. Fla. Aug. 8, 2007) (Martinez,
J.) (“Florida’s appellate courts have regularly confirmed appraisal awards on the basis of the
Florida Arbitration Code’s confirmation process.”)

3. Conclusion
Accordingly, the Court grants in part and denies in part Charlevoix’s
motion to reopen or vacate the appraisal award (ECF No. 63). The Clerk is thus
directed to reopen this case. An amended scheduling order will follow. Further,
the Court grants AIG’s motion to confirm the award (ECF No. 65).
Done and ordered, at Miami, Florida, on August 10, 2018.
________________________________
Robert N. Scola, Jr.
United States District Judge