The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
DIAMOND LAKE CONDOMINIUM
ASSOCIATION, INC.,
Plaintiff,
v. Case No. 2:19-cv-547-FtM-38NPM
EMPIRE INDEMNITY INSURANCE
COMPANY
Defendant.
ORDER
Before the Court is Plaintiff’s Motion to Compel Appraisal (Doc. 46). Defendant
Empire Indemnity Insurance Company (“Empire”) filed a Response (Doc. 50), and with
leave of Court, Plaintiff Diamond Lake Condominium Association, Inc. (“Diamond Lake”)
filed a Reply (Doc. 56). For the reasons discussed below, the Court grants the motion.
I. Background
This action involves an insurance dispute concerning the extent to which Hurricane
Irma damaged an 81-unit condominium development known as Diamond Lake. (Docs. 1-
5, 29). Pursuant to the Policy attached to the pleadings (Doc. 29, pp. 8-91), Empire
insured the fifteen buildings that comprise Diamond Lake when Hurricane Irma struck the
Property on September 10, 2017. (Doc. 29, ¶¶ 5-6). Diamond Lake promptly reported the
loss to Empire and made a claim under the policy. (Id. at ¶ 8). Empire acknowledged
coverage for the loss, evaluated the replacement cost value of the damages at
$555,966.94, and, between the Fall of 2017 and the end of 2018, made payments totaling
$283,026.59 (after application of the policy deductible and depreciation). Disagreeing with
Empire’s valuation of the loss, Diamond Lake invoked the Policy’s appraisal provision and
timely submitted a Proof of Loss with supporting documentation on December 6, 2018 for
$8,348,814.97. With repeated demands for an appraisal and in response to Empire’s
requests for corrections to be made, Diamond Lake submitted a revised Proof of Loss on
February 9, 2019 for $8,312,174.31, and another revised Proof of Loss on April 15, 2019
for $8,256,923.67. (Doc. 29, ¶ 14; Doc. 31, ¶ 14; Doc. 46, pp. 2-3). In response, Empire
advised Diamond Lake on April 22, 2019: “we do not agree with the amounts claimed and
we continue our investigation.” (Doc. 50-2, p. 1). Empire then completed its site
inspections in May 2019. (Doc. 46-7, p. 5).
Based on Empire’s alleged failure to “extend full policy benefits due” and breach
of the Policy’s appraisal provision, Diamond Lake initiated this breach-of-contract suit in
state court on June 24, 2019, and Empire timely removed the action to this Court on
August 5, 2019. (Doc. 1). About the same time, and indicating that its investigation was
complete, Empire made a final payment of $122,249.33 based on a loss valuation of
$555,966.94. (Doc. 46-2, p.2; Doc. 46-7, p. 5). In correspondence dated August 16, 2019,
Diamond Lake asked Empire to immediately advise if any requests for information were
left unfulfilled. (Doc. 46-3). Empire has never responded to say that anything more was
needed. (Doc. 46, p.5; Doc. 56, p. 5).
Nonetheless, in an Amended Answer filed four months later, Empire asserted that
the Policy’s appraisal process remained premature because it had yet to complete its
investigation. (Doc. 31, pp. 3-6). As Diamond Lake recounts: “The parties continued to
communicate with regard to appraisal until February 7, 2020, when Empire finally,
unequivocally advised that it was not interested in appraisal of this claim.” (Doc. 56, p. 2).
And in what appears to be a game of Catch-22, Empire continues to resist Diamond
Lake’s contractual right to appraisal by arguing that it is both premature and waived. (Doc.
50).
II. Discussion
Absent an agreed-upon resolution, the Policy provides that an amount-of-loss
question will be resolved not by a judge or jury but by an appraisal panel instead, and—
if the parties end up in litigation concerning the benefits of the contract—it contemplates
judicial facilitation of the appraisal process if it is not entirely self-executing by the parties.
In relevant part, the Policy states:
If we and you: . . .
Disagree on the value of the property or the amount of loss,
either may request an appraisal of the loss, in writing. 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:
1. Pay its chosen appraiser; and
2. 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. 50-1, p. 44).
When an insurance policy contains an appraisal provision such as this one, “the
right to appraisal is not permissive but is instead mandatory, so once a demand for
appraisal is made, ‘neither party has the right to deny that demand.’” McGowan v. First
Acceptance Ins. Co., Inc., 411 F. Supp. 3d 1293, 1296 (M.D. Fla. 2019) (quoting United
Cmty. Ins. Co. v. Lewis, 642 So. 2d 59, 60 (Fla. Dist. Ct. App. 1994)). Furthermore, “when
[an] insurer admits that there is a covered loss, any dispute on the amount of loss suffered
is appropriate for appraisal.” Id. at 1297 (quoting Cincinnati Ins. Co. v. Cannon Ranch
Partners, Inc., 162 So. 3d 140, 143 (Fla. Dist. Ct. App. 2014)). “Thus, where, as here,
‘coverage [is] admitted and the only remaining dispute is the amount of the loss ...
appraisal is appropriate.’” Id. (quoting Gonzalez v. Am. Sec. Ins. Co., 2015 WL 12852303,
at **3-4 (M.D. Fla. Nov. 10, 2015). Indeed, given the “overwhelming preference in Florida
for the resolution of conflicts through any extra-judicial means ... for which the parties
have themselves contracted,” resort to the appraisal process is strongly preferred. Id. at
1296 (quoting State Farm Fire & Cas. Co. v. Middleton, 648 So. 2d 1200, 1201-02 (Fla.
Dist. Ct. App. 1995)).
With both the text of the appraisal provision and these standards favoring its
enforcement firmly in mind, the Court addresses Empire’s attempt to deny the demand
for appraisal on the grounds that Diamond Lake’s right to do so is unripe and waived.
A. Ripeness
Empire argues that Diamond Lake’s right to invoke the Policy’s appraisal provision
is not ripe—or did not become ripe prior to filing suit and is therefore forfeit—because
certain terms in the Policy commonly referred to as “post-loss conditions” are conditions
precedent to invoking appraisal and Diamond Lake has yet to, or did not timely,
substantially comply with them. (Doc. 50, pp. 8-11).
Under the Policy, Diamond Lake has certain post-loss duties including:
(5) At our request, give us complete inventories of the
damaged and undamaged property. Include quantities, costs,
values and amount of loss claimed.
(7) Send us a signed, sworn proof of loss containing the
information we request to investigate the claim. You must do
this within 60 days after our request. We will supply you with
the necessary forms.
(8) Cooperate with us in the investigation or settlement of
the claim.
(Doc. 50-1 at 37). While appraisal provisions like the one at issue here do not expressly
condition either party’s unilateral right to invoke the appraisal process on any form of
compliance with the Policy’s post-loss duties (with which only the insured must comply),
the parties agree that Florida’s courts, at least in some circumstances (that may not exist
here), have constructively conditioned an insured’s right to invoke appraisal on substantial
compliance with the Policy’s post-loss duties. And assuming the post-loss duties are
constructive conditions precedent here, Empire advances a two-pronged argument: (1)
Diamond Lake has yet to substantially comply because it has not substantiated an opinion
purportedly held by Diamond Lake’s public adjuster; and (2) Diamond Lake’s compliance
was untimely because it did not substantially comply before filing suit.
The only information Empire claims Diamond Lake has not produced is information
supposedly requested in an April 22, 2019 letter. Specifically, information or
documentation to substantiate Diamond Lake’s public adjustor George Keys’ statement
regarding the replacement of all the roofs. (Doc. 50 at 10-11). The Court reviewed the
April 22, 2019 letter and finds no such request for information concerning Mr. Keys’
statement. (See Doc. 50-2 at 1-3). However, in a March 4, 2019 letter, Empire requested:
“On November 17, 2017, the minutes reflect that Keys Claims attended the board meeting
and advised Diamond Lake that if one roof within a condominium association community
is damaged then all roofs must be replaced. Please provide the basis for this
commentary.” (Doc. 56-1 at 4). Tellingly, Empire does not point to a post-loss duty
requiring the production of this information, and the Court does not find any. The Policy
requires Diamond Lake to provide inventories, a sworn proof of loss, and to cooperate
with Empire’s investigation (such as accommodating site inspections), but does not
require Diamond Lake to provide a basis for commentary by a public adjuster found in the
minutes of a board meeting. Thus, Diamond Lake has fulfilled its post-loss obligations.
As for whether Diamond Lake’s compliance was untimely, Empire points to a July
6, 2019 letter—sent after the lawsuit was filed—in which Empire asserted that it needed
certain outstanding documents for its investigation. (Doc. 50 at 10; Doc. 46-6 at 3-4).
Specifically, the July 6 letter claims Empire previously requested a copy of the bylaws
and documentation related to a Herron Roofing report dated August 4, 2016, and it
requested invoices related to window and door repairs for Units 208 and 504.1 (Doc. 50
at 10-11; Doc. 46-6 at 3-4). But it appears uncontested that the “bylaws were provided
before suit was filed” (Doc. 56, p.4), and Diamond Lake had already complied, prior to
filing suit, with the request for documents related to the Herron Roofing report by providing
a roof repair summary for 2010-2018 from the property manager. (Doc. 46-5, p.1). So,
Empire’s argument that Diamond Lake’s compliance was untimely because it did not
substantially comply before filing suit, is based on Diamond Lake “provid[ing] the
requested documents related to Units 208 and 504” (Doc. 50 at 11) in response to a
request that was made after the lawsuit was filed.
1 Notably, Empire requested the invoices related to window and door repairs for Units
208 and 504 “regardless of whether or not Diamond Lake wishes to include them in the
claim.” (Doc. 46-6 at 3).
Besides, even if the document requests had been made prior to the initiation of the
lawsuit, an insured may remedy any post-loss and pre-filing obligations for appraisal after
filing suit. As the court reasoned in Scottsdale Insurance Company v. University at 107th
Avenue, Inc., 827 So. 2d 1016 (Fla. 3d DCA 2002), “[T]he nature of the post-loss
obligations is merely to provide the insurer with an independent means by which to
determine the amount of loss, as opposed to relying solely on the representations of the
insured.” (quoting United States Fid. & Guar. Co. v. Romay, 744 So.2d 467, 471 n. 4
(Fla. 3d DCA 1999)). And so if an insured provides whatever the insurer might have
wanted “post-loss and pre-suit” during the course of the suit, such as through discovery,
then a trial court commits no error when it orders the insurer to “submit to an appraisal.”
Id. at 1016-1017.
In the instant action, Diamond Lake substantially complied with the post-loss
provisions in the Policy before filing suit. Even if it did not, it complied within two months
of filing suit. Since August 2019, Empire has not represented it requested any further
documentation or needs any additional information to complete its investigation and
adjust the claim. And it is clear the parties have a disagreement as to the amount of loss
that is ripe for appraisal. (Doc. 29 at ¶¶ 10, 11).
B. Waiver
Empire argues that Diamond Lake’s delay in filing the motion to compel appraisal
evinces a waiver of its right to appraisal. “A party can waive its right to appraisal by actively
participating in a lawsuit or engaging in conduct inconsistent with the right to appraisal.”
Waterford Condo. Ass’n of Collier Cty., Inc. v. Empire Indem. Ins. Co., No. 2:19-CV-81-
FTM-38NPM, 2019 WL 3852731, *3 (M.D. Fla. Aug. 16, 2019), reconsideration denied,
No. 2:19-CV-81-FTM-38NPM, 2019 WL 4861196 (M.D. Fla. Oct. 2, 2019) (citations
omitted). But “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 [plaintiffs] acted inconsistently with their appraisal rights.”
Fla. Ins. Guar. Ass’n v. Branco, 148 So. 3d 488, 493 (Fla. 5th DCA 2014).
Diamond Lake invoked its right to appraisal on multiple occasions before filing suit
and it has consistently pursued appraisal ever since. (Doc. 56 at 6-7). In fact, as early as
December 6, 2018, Diamond Lake demanded appraisal in its initial Proof of Loss, named
an appraiser, and requested Empire to name an appraiser—all prior to the lawsuit being
filed. (Doc. 46 at 4). In an April 22, 2019 letter, Empire acknowledged Diamond Lake
invoked its right to appraisal, but found Diamond Lake’s request inappropriate as
premature because Empire was continuing to investigate the claim. (Doc. 46-4 at 4). And
in the same letter, Empire objected to Diamond Lake’s appraiser as not being impartial.
(Id.). Diamond Lake then voluntarily named a different appraiser. (Doc. 46 at 15).
Diamond Lake claims that through the entire period both before suit and after, the
parties were actively negotiating regarding submitting the claim to appraisal. (Doc. 56 at
6). Diamond Lake sued, in part, to compel appraisal, and during the Preliminary Pretrial
Conference on October 10, 2019, Diamond Lake’s counsel represented that Diamond
Lake intended to file a motion to compel appraisal. (Docs. 19, 20). Furthermore, when
Diamond Lake served its February 5, 2020 discovery requests to support its motion for
Rule 56(b) deferment directed to Empire’s early-filed motion for partial summary
judgment, it included an unopposed reservation of it right to submit the claim for appraisal.
(Doc. 46 at 16; Doc. 50-3 at 1). And Diamond Lake explains that not until February 7,
2020—just nineteen days before the filing of the motion to compel appraisal—did Empire
finally and unequivocally advise that it did not agree to appraisal.
In sum, Diamond Lake invoked its right to appraisal before suit, included a request
for appraisal in its pleadings, continued to negotiate for appraisal throughout this period,
represented in open court that it intended to move for appraisal, and reserved its right to
appraisal in its discovery requests served in response to an early summary judgment
motion. Diamond Lake filed its motion to compel appraisal shortly after learning that
Empire would not agree to appraisal, and it named a different appraiser to resolve
Empire’s impartiality objection. Keeping in mind that motions to compel appraisal should
be granted when a party invokes a contractual right to appraisal, Wright Way Emergency
Water Removal, LLC, 2016 WL 9526569, at *2, and based on Diamond Lake’s conduct
as a whole, the Court finds that Diamond Lake has not waived its right to appraisal.
III. Conclusion
For the above reasons, the Court finds that Diamond Lake’s invocation of its
contractual right to appraisal is neither waived nor untimely.
Accordingly, it is hereby ORDERED:
(1) The Motion to Compel Appraisal (Doc. 46) is GRANTED and the Request for
Oral Argument is DENIED.
(2) By October 21, 2020, the parties will file a either a joint notice of agreed umpire
or a joint motion for the Court to appoint an umpire. If the parties move the
Court to appoint an umpire, the motion will be set for an in-person hearing
during which the parties’ respective appraisers will explain their objections to
each other’s proposed umpires.
(3) On January 4, 2021, and on the first business day of every other month
thereafter, the parties will file a status report concerning the appraisal.
DONE and ORDERED in Fort Myers, Florida on September 30, 2020.
Lida Ee Line dL
NICHOLAS P. MIZEL
UNITED STATES MAGISTRATE JUDGE