39 Fla. L. Weekly D2020a
Insurance — Homeowners — Sinkhole claim — Appraisal — Trial court did not
err in ordering appraisal of dispute over method of repair — Method or extent
of necessary repairs is within scope of “amount of loss” appraisal provision —
Insureds did not waive right to demand appraisal by participating in litigation
— Where policy required the selection of disinterested appraisers, it was error
to allow insureds to select a partner in the law firm representing them as their
IRMA BRANCO, Appellees. 5th District. Case No. 5D13-2929. Opinion filed
September 19, 2014. Non Final Appeal from the Circuit Court for Hernando County,
Richard Tombrink, Jr., Judge. Counsel: G. William Bissett, Jr., of Kubicki
Draper, PA, Miami, for Appellant. Nancy A. Lauten and George A. Vaka, of Vaka
Law Group, Tampa, and Kenneth C. Thomas, Jr., of Marshall Thomas Burnett, Land
O’Lakes, for Appellees.
loss under a homeowner’s insurance policy issued to Manuel and Irma Branco. FIGA
contends that the trial court erred in ordering appraisal because: (1) the
policy provides for appraisal only if the amount of loss is disputed and, here,
only the method of repair is disputed; (2) the Brancos waived their right to
demand appraisal; and (3) the order implicitly approves the Brancos’ selection
of a partner in the law firm representing them as their appraiser, contrary to
the policy’s requirement to select “disinterested” appraisers. We agree that the
trial court erred in allowing the Brancos to select an appraiser who was not
“disinterested.” We reject FIGA’s other arguments.
reported the loss to their homeowner’s insurer, HomeWise Preferred Insurance
Company (“HomeWise”), several days later. In response, HomeWise retained an
engineering firm to perform a limited structural assessment. Following receipt
of the engineer’s report, HomeWise denied the Brancos’ claim, asserting that a
“sinkhole loss,” as defined in the policy, had not occurred. Several months
later, the Brancos sued HomeWise, alleging breach of contract. HomeWise filed
its answer and defenses in May 2011, denying that it had breached the insurance
contract because the Brancos’ property had not sustained a covered loss.
with the “covered claims” within the scope of the enabling statutes. As a
result, the Brancos’ case was automatically stayed.2 In August 2012, after the stay expired, the Brancos
filed an amended complaint, substituting FIGA as the named defendant due to
HomeWise’s insolvency.3 FIGA then asked
the court for an additional stay to allow further investigation of the claim.
The court extended the stay, and FIGA completed its additional testing in early
March 2013. On April 8, 2013, FIGA answered the Brancos’ amended complaint,
admitting, for the first time, “that sinkhole activity was identified as a
contributing cause of damage to the [Brancos’] property,” and that the Brancos
“are entitled to the amount payable for the actual repair of the loss/actual
repairs to the property, not to exceed policy limits . . . .”
23, 2013, the Brancos moved the court to compel appraisal. The Brancos’
appraisal request was based on a provision in the insurance policy that
provided, in relevant part:
6. If you and we fail to agree on the amount of loss either
. . . .
b. Demand an appraisal of the loss. In this event each
party will choose a competent and disinterested appraiser within twenty (20)
days after the receipt of a written request from the other
(1) The two appraisers will choose a competent and independent
. . . .
(2) The appraisers will separately set the amount of the loss and
assign the amount of loss attributable to each specific policy
(3) If the appraisers submit a written report of an agreement to us,
the amount agreed upon will be the amount of the loss
(4) If they fail to agree, they will submit their difference to the
(5) A decision by any two must assign the amount of loss
attributable to each specific policy coverage
allow for neutral evaluation of the Brancos’ claims and, simultaneously opposed
the Brancos’ motion to compel appraisal. The trial court granted FIGA’s request
for an additional stay and further ordered that “[t]he parties are to first
attempt to resolve the underlying claims in the lawsuit through neutral
evaluation, and barring resolution, the parties are to then take the matter
through appraisal.” FIGA appeals this order to the extent that it requires
appraisal because their dispute with the Brancos is over the “method of repair”
rather than the “amount of loss.” Interpretation of insurance policies is
reviewed de novo, e.g., State Farm Florida Insurance Co. v.
Phillips, 134 So. 3d 505, 507 (Fla. 5th DCA 2014), as are orders compelling
appraisal, e.g., Citizens Property Insurance Corp. v. Demetrescu,
137 So. 3d 500, 502 (Fla. 4th DCA 2014).
depends on the contract provisions. Citizens Prop. Ins. Corp. v. Casar,
104 So. 3d 384, 385-86 (Fla. 3d DCA 2013). Absent ambiguity, the plain meaning
of an insurance policy controls. E.g., Arias v. Affirmative Ins.
Co., 944 So. 2d 1195, 1197 (Fla. 4th DCA 2006) (quoting Se. Fire Ins. Co.
v. Lehrman, 443 So. 2d 408, 408-09 (Fla. 4th DCA 1984)). Courts should
resort to rules of interpretation only when the policy language is ambiguous or
otherwise susceptible to multiple meanings. E.g., Phillips, 134
So. 3d at 507 (citing Arias, 944 So. 2d at 1197).
the appraisers to arrive at the amount to be paid. Johnson v. Nationwide Mut.
Ins. Co., 828 So. 2d 1021, 1025 (Fla. 2002). The issue in this case is
whether the method or extent of necessary repairs is within the scope of an
“amount of loss” appraisal policy provision. At least one court, considering
this question, answered affirmatively, reasoning:
Estimating the dollar value of a loss presupposes a judgment of what
repairs are necessary to recoup from the loss. Appraisers could not perform
their duties if they were prohibited from opining on these matters. And in
practice, where there have been two different assessments of the amount of loss
— one by Plaintiffs’ assessor, one by Defendant’s — it is not surprising that
the assessors may have some disagreement as to whether the covered occurrence
actually caused a certain portion of the putative damage, as well as
disagreements about the scope and method of necessary repairs. But to say such
disputes are sufficient to negate the appraisal provision in the policy would
effectively eliminate appraisal as a workable method of alternative dispute
at *4 (E.D. Pa. Mar. 8, 2012); see also UrbCamCom/WSU I, LLC v.
Lexington Ins. Co., No. 12-CV-15686, 2014 WL 1652201, at *6 (E.D. Mich. Apr.
23, 2014) (approvingly citing Williamson, and holding that dispute
regarding necessary repairs, and length of time, to reopen building goes to
“amount of loss,” which falls squarely within ambit of appraisal); Correnti
v. Merchs. Preferred Ins. Co., Civ. No. 12-6303, 2013 WL 373273, at *2 (E.D.
Pa. Jan. 31, 2013) (determining that as dispute was over “extent of damage,” it
was dispute regarding “amount of loss,” and, thereby, required appraisal);
Sydney v. Pac. Indem. Co., Civil Action No. 12-1897, 2012 WL 3135529, at
*3 (E.D. Pa. Aug. 1, 2012) (“A disagreement as to the scope of the repairs and
replacements needed to remedy a loss is still within the purview of the
interpretation of the appraisal clause in the policy would render the appraisal
process meaningless. Although FIGA may characterize the dispute over the
necessary repairs as a coverage issue, in reality, it is an “amount of loss”
issue. There is no dispute that HomeWise insured the Brancos’ home at the
relevant time for sinkhole losses, and FIGA has now admitted that the Brancos
have sustained a covered loss. The logical disagreement between an insured and
the insurer after a covered loss would be, as the court in Williamson
stated, “disagreement as to whether the covered occurrence actually caused a
certain portion of the putative damage, as well as disagreements about the scope
and method of necessary repairs.” 2012 WL 760838, at *4. The extent and cost of
the necessary repairs to the Brancos’ property will determine, in large part,
the amount FIGA owes. To accomplish their task, the appraisers will have to
consider the necessary method and scope of required repairs to evaluate the
amount of the Brancos’ loss.5
Williamson, 2012 WL 760838 at *4; see Currie v. State Farm Fire
& Cas. Co., Civil Action No. 13-6713, 2014 WL 4081051, at *5 (E.D. Pa.
Aug. 19, 2014). For these reasons, we reject FIGA’s contention that the
appraisers cannot determine the method or scope of the necessary repairs when
determining the amount of the loss.6
initiating and participating in litigation. In this regard, appraisal clauses
are viewed similarly to arbitration clauses. Thus, we review the trial court’s
findings of fact for competent, substantial evidence, and its conclusions of law
de novo. Fla. Ins. Guar. Ass’n v. Castilla, 18 So. 3d 703, 704 (Fla. 4th
DCA 2009); Doctors Assocs. v. Thomas, 898 So. 2d 159, 162 (Fla. 4th DCA
2005) (reiterating that question of waiver is one of fact, reviewable for
competent, substantial evidence, and all questions about waivers of arbitration
should be construed in favor of arbitration, rather than against it). Here,
while the trial court made no findings of fact on the issue of waiver, the facts
are not in dispute. Therefore, we review the waiver issue de novo. See
Truly Nolen of Am., Inc. v. King Cole Condo. Ass’n, 39 Fla. L. Weekly
D1535, D1535 (Fla. 3d DCA July 23, 2014).
a party actively participates in a lawsuit or engages in conduct inconsistent
with the right to arbitrate. Raymond James Fin. Servs., Inc. v. Saldukas,
896 So. 2d 707, 711 (Fla. 2005). Active participation in a lawsuit is considered
a waiver because it is generally presumed to be inconsistent with the right to
arbitrate. Thomas, 898 So. 2d at 162; see, e.g., Morrell v.
Wayne Frier Manufactured Home Ctr., 834 So. 2d 395, 395-98 (Fla. 5th DCA
2003) (finding waiver where party litigated for eleven months with various
motions and pleadings); ARI Mut. Ins. Co. v. Hogen, 734 So. 2d 574, 576
(Fla. 3d DCA 1999) (finding waiver when party engaged in “aggressive” litigation
for nine months with pleadings, interrogatories, requests for productions,
sought hearings, and contested other party’s motions and pleadings); Owens
& Minor Med., Inc. v. Innovative Mktg. & Distribution Servs., Inc.,
711 So. 2d 176, 176 (Fla. 4th DCA 1998) (finding waiver when party litigated for
thirteen months, secured prejudgment writ of garnishment, made multiple requests
for admissions, filed pleadings and motions, and contested other party’s
pleadings and motions); Gray Mart, Inc. v. Fireman’s Fund Ins. Co., 703
So. 2d 1170, 1171-73 (Fla. 3d DCA 1997) (finding waiver following fourteen
months of litigation and demand for appraisal one month before trial).
multiple pleadings and discovery requests. However, the question of waiver of
appraisal is not solely about the length of time the case is pending or the
number of filings the appraisal-seeking party made. Instead, the primary focus
is whether the Brancos acted inconsistently with their appraisal rights.
Saldukas, 896 So. 2d at 711; see Am. Capital Assur. Corp. v.
Courtney Meadows Apartment, L.L.P., 36 So. 3d 704, 707 (Fla. 1st DCA 2010)
(finding party did not waive right to appraisal as party had not acted
inconsistently with right from time of demand).
determination of ‘the amount of the loss.’ ” Citizens Prop. Ins. Corp. v.
Mango Hill #6 Condo. Ass’n, 117 So. 3d 1226, 1230 (Fla. 3d DCA 2013). Until
the insurer has a reasonable opportunity to investigate and adjust the claim,
there is no “disagreement” (for purposes of appraisal) regarding the value of
the property or the amount of loss to be appraised. Citizens Prop. Ins. Corp.
v. Galeria Villas Condo. Ass’n, 48 So. 3d 188, 191 (Fla. 3d DCA 2010)
(reversing prematurely-ordered appraisal). An insurer that denies coverage does
not need to seek appraisal before litigation because “[i]t would make no sense
to say that [the insurer] was required to request . . . appraisal on a loss it
had already refused to pay.” Gonzalez v. State Farm Fire & Cas. Co.,
805 So. 2d 814, 817 (Fla. 3d DCA 2000); see Chimerakis v. Sentry Ins.
Mut. Co., 804 So. 2d 476, 480 (Fla. 3d DCA 2001) (holding “an action to
compel appraisal does not accrue until the policy conditions precedent have been
performed or waived, and appraisal is then refused”). Absent contract language
to the contrary, we see no reason why the insured should not have the same
flexibility in cases when coverage is denied. But see Cypress Pointe
at Lake Orlando Condo. Ass’n v. Mt. Hawley Ins. Co., No.
6:10-cv-1459-Orl-36TBS, 2012 WL 6138993, at *2 (M.D. Fla. Nov. 19, 2012)
(finding insured acted inconsistently with appraisal right by pursuing
litigation for two years, though insurer consistently denied coverage).
not have been appropriate until April 2013 at the earliest, when FIGA conceded
that a covered loss had occurred. After FIGA admitted coverage and the trial
court lifted the stay, the Brancos filed one request for admissions and demanded
appraisal three weeks later. Because the Brancos demanded appraisal shortly
after FIGA conceded coverage, and propounded only a single request for
admissions before seeking appraisal, we view this case as closer to those
finding no waiver. See, e.g., Courtney Meadows, 36 So. 3d at 707
(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); Castilla, 18 So. 3d at 703-05 (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).
Thus, we conclude, as did the trial court, that the Brancos did not waive their
right to appraisal.7
the Brancos nominated one of their own attorneys, Alan S. Marshall, as an
appraiser, violating the policy’s requirement of “disinterested” appraisers. The
Brancos concede that their policy requires disinterested appraisers, and admit
that Attorney Marshall is “a partner in the law firm representing them.”
Further, Attorney Marshall actually represented the Brancos below, as his name
appears on several documents filed on their behalf. Because these facts are
undisputed and the interpretation of the insurance policy is a pure question of
law, the trial court’s acceptance of Attorney Marshall as a “disinterested
appraiser” is reviewed de novo. Truly Nolen, 39 Fla. L. Weekly at D1535;
Demetrescu, 137 So. 3d at 502; Phillips, 134 So. 3d at 507;
Castilla, 18 So. 3d at 704.
decision makers in their preferred form of alternative dispute resolution.
Lee v. Marcus, 396 So. 2d 208, 210 (Fla. 3d DCA 1981); see
Citizens Prop. Ins. Corp. v. M.A. & F.H. Props., Ltd., 948 So. 2d
1017, 1020 (Fla. 3d DCA 2007). Our research has revealed no Florida case that
has squarely addressed whether a party’s attorney may serve as a “disinterested
appraiser.”8 The Brancos rely on the third
district’s holding in Rios v. Tri-State Insurance Co., 714 So. 2d 547,
548-49 (Fla. 3d DCA 1998), which interpreted “independent appraiser” to allow
the appointment of an appraiser whose compensation was calculated as a
percentage of the eventual appraisal award. See also Galvis v.
Allstate Ins. Co., 721 So. 2d 421, 421 (Fla. 3d DCA 1998) (reaching same
conclusion when policy required “disinterested appraiser”). Rios was in
large part premised on, and extensively quoted from, the then-existing version
of the Code of Ethics for Arbitrators in Commercial Disputes, promulgated
jointly by the American Arbitration Association (“AAA”) and the American Bar
Association (“ABA”). Rios, 714 So. 2d at 550. That version of the Code of
Ethics did not explicitly address the neutrality of arbitrators, but simply
required disclosure of any direct or indirect financial interest in the outcome
of the proceeding. However, the revised Code of Ethics adopted by AAA and ABA,
effective since March 1, 2004, changes the landscape considerably, thus,
undercutting the continued viability of the holding in Rios. The current
Code of Ethics provides, in relevant part:
[I]t is preferable for all arbitrators including any party-appointed
arbitrators to be neutral, that is, independent and impartial, and to comply
with the same ethical standards. However, parties in certain domestic
arbitrations in the United States may prefer that party-appointed arbitrators be
non-neutral and governed by special ethical considerations. These special
ethical considerations appear in Canon X of this Code.
This Code establishes a presumption of neutrality for all
arbitrators, including party-appointed arbitrators, which applies unless the
parties’ agreement, the arbitration rules agreed to by the parties or applicable
laws provide otherwise.
Commercial Disputes (Oct. 21, 2011),
(follow “Code of Ethics for Arbitrators in Commercial Disputes” hyperlink).
Ethics establishes a presumption of neutrality for all arbitrators, including
party-appointed arbitrators. This fundamental change undermines the Rios
holding, particularly when, as here, the contract requires the appointment of
“disinterested” appraisers. If an appraiser owes his nominating party a
“fiduciary duty of loyalty” or a “confidential relationship,” as do attorneys,
then “[t]he existence of such a relationship between a litigant and an
[appraiser] creates too great a likelihood that the [appraiser] will be
incapable of rendering a fair judgment.” Donegal Ins. Co. v. Longo, 610
A.2d 466, 468-69 (Pa. Super. Ct. 1992) (citing Bole v. Nationwide Ins.
Co., 379 A.2d 1346, 1350 (Pa. 1977) (Roberts, J., dissenting, but agreeing
with majority that attorney in present employment of party cannot serve as
arbitrator)); see Land v. State Farm Mut. Ins. Co., 600 A.2d 605,
607 (Pa. Super. Ct. 1991) (holding that “indirect connection” between party and
arbitrator was not objectionable, unlike attorney-client relationship); see
also The Florida Bar v. Padgett, 481 So. 2d 919, 919 (Fla. 1986)
(explaining that attorneys owe a fiduciary duty to their clients). This
conclusion makes common sense.
the parties’ clear intention to restrict appraisers to people who are, in fact,
disinterested. Given the duty of loyalty owed by an attorney to a client, we
conclude that attorneys may not serve as their clients’ arbitrators or
appraisers when “disinterested” arbitrators or appraisers are bargained
for.9 See Tiger Fibers, LLC v.
Aspen Specialty Ins. Co., 571 F. Supp. 2d 712, 716 (E.D. Va. 2008) (finding
that under statute governing parties’ appointment of disinterested appraisers to
assess insurance losses, disinterestedness of selected appraiser pertains to
partiality of appraiser for or against specific parties to dispute); N.
Assur. Co., Ltd., of London, v. Melinsky, 213 N.W. 70, 71 (Mich. 1927)
(explaining that appraisers should be disinterested and not represent parties
selecting them); Longo, 610 A.2d at 469 (determining that arbitrator’s
legal representation of party, even though in matter unrelated to dispute in
arbitration, gave rise to confidential relationship, which created likelihood
that arbitrator would be incapable of rendering fair judgment); see also
Allstate Ins. Co. v. Suarez, 833 So. 2d 762, 765 (Fla. 2002) (holding
that while appraisal may be less formal than arbitration, its proceedings should
still be conducted in accordance with contract provisions); Lee, 396 So.
2d at 210 (adopting principle that parties are free to bargain for
Marshall to serve as an appraiser. In all other respects, we affirm the order.
created by statute to provide a mechanism for payment of covered claims under
certain classes of insurance policies issued by insurers which have become
insolvent.” Fla. Ins. Guar. Ass’n v. Devon Neighborhood Ass’n, 67 So. 3d
187, 189 (Fla. 2011); see §§ 631.51, 631.55, Fla. Stat. (2011).
(requiring automatic six-month stay on activation of FIGA); see also
Snyder v. Douglas, 647 So. 2d 275, 279 (Fla. 2d DCA 1994) (holding
extension beyond statutorily mandated six-month stay is subject to discretion of
is deemed the ‘insurer’ to the extent of covered claims and has the same
obligations as the insolvent insurer,” except as limited by statute. Jones v.
Fla. Ins. Guar. Ass’n, 908 So. 2d 435, 454 (Fla. 2005); see also §
631.57, Fla. Stat. (2010).
App. P. 9.130(3)(C)(iv).
observed that appraisal clauses “require an assessment of the amount of a loss.
This necessarily includes determinations as to 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 . . . .” State Farm Fire
& Cas. Co. v. Licea, 685 So. 2d 1285,1288 (Fla. 1996) (emphasis added);
see also Gonzalez v. State Farm Fire & Cas. Co., 805 So. 2d
814, 817 (Fla. 3d DCA 2000) (noting that under Licea where insurer admits
there is covered loss, “the appraisers are to inspect the roof and arrive at a
fair value for the [covered loss] damage, while excluding payment for the
repairs required by [other causes]”).
outcome of the case, including having to pay the insured directly, in
contravention of section 631.54(3)(c); having to pay more than the “covered
losses,” under a particular version of section 631.54; having to pay attorney’s
fees for which it is not liable; and so on. However, these issues are not
properly before this Court because the order under review does not require any
resolved with an evidentiary hearing, neither party suggests that they ever
requested a hearing below.
suggesting that one’s own attorney is disinterested seems so odd.
from bias, prejudice, or partiality; not having a pecuniary interest <a
disinterested witness>,” Black’s Law Dictionary 536 (9th ed. 2009),
and “not having the mind or feelings engaged : not interested . . . free from
selfish motive or interest : unbiased,” Miriam-Webster’s Collegiate
Dictionary 333 (10th ed. 2000). The latter also defines “disinterestedness”
as “the quality of being objective or impartial.” Id.; see also
Tiger Fibers, LLC v. Aspen Specialty Ins. Co., 571 F. Supp. 2d 712, 716
(E.D. Va. 2008) (defining “disinterested” as “lacking or revealing lack of
interest,” “not influenced by regard to personal advantage,” “free from selfish
motive,” or “not biased or prejudiced”).
* * *