Claims And Issues

WIND 2019: LET THE CONFERENCE BEGIN!

On its website, the Windstorm Insurance Network (WIND) describes itself as "the only member association to bring together both defense and policyholder professionals to connect, learn, and engage on important topics in the property/windstorm insurance claims industry."  I will be taking a look myself this week.

Starting tomorrow, Thursday the last day of January in 2019, and scheduled to continue on Friday, February 1, 2019, I will be attending the sessions I signed up for a couple of months ago.  They include catastrophe claims handling and Hurricane damages coverages.  I would like to meet up with many participants especially the defense and policyholder professionals that make up the announced membership of WIND, in other words, the people who represent the people who make and deny insurance claims every day but especially after Hurricanes and earthquakes and wildfires.

The 20th Annual Windstorm Insurance Conference is set for Jan. ​30 - Feb. 2, 2019 at the Walt Disney ​Dolphin Resort.  (I will not be staying there.  I will drive back and forth from my home in the Orlando area.  It's a lot less expensive.)

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APPRAISAL NOT A HURDLE TO FLORIDA STATUTE'S CIVIL REMEDY NOTICE.

In an appeal from Seminole County, Florida, two judges of the Fifth District Court of Appeal agreed in Landers v. State Farm Fla. Ins. Co., No. 5D15–4032, 2017 WL 3443077 (Fla. 5th DCA August 11, 2017) (STATED NOT RELEASED FOR PERMANENT PUBLICATION AND SO SUBJECT TO REVISION OR WITHDRAWAL), that the onset of Florida's "Bad Faith" statute was not delayed by the insurance policy before the court in that case.

In Landers, the Florida court was confronted with a homeowner's insurance policy provision requiring an appraisal in the event of a dispute over value.  The policy's appraisal provision is reproduced in footnote 3 of the majority opinion on appeal.

The appraisal provision applied to a dispute over the claim's value, in essence.  The insurance policy did not make appraisal a condition precedent to coverage, and it did not raise a bar to suing the carrier under a statute or otherwise for bad faith or unfair dealing until after an appraisal process was finished.

Resting its analysis on the Florida statute, neither does the Florida "Bad Faith" Statute make completing the appraisal process a condition precedent, the majority held.  The policyholder in that case was permitted to proceed with a civil remedy notice of insurer violation which he had filed under the statute even before the appraisal process was completed.

Parenthetically, the one judge who dissented did not file a reported opinion.

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Video Displays "Lender Force-placed Insurance Practices".

Pre-AWARD Interest Held Recoverable on Successful Appraisal.

What can a policyholder recover from its property insurance company in an appraisal of the policyholder's damaged property?  In Housing & Redevelopment Auth. of Redwood Falls v. Housing Auth. Prop. Ins., 864 F.3d 986 (8th Cir. 2017), the court held that an insured can recover pre-award interest from its property insurer on its insurance appraisal award.

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"THE WAGES OF SIN" ... IS PAYING THE OTHER PARTY'S ATTORNEY'S FEES Continued.

This is the conclusion of an article which began with the post here on Wednesday, February 27, 2013.

      A little over one month after the lawsuit was filed, and approximately one month after the homeowner's Motion for Leave to Amend to Add a Punitive Damages Claim was filed, the Carrier paid the homeowner "the depreciation amount it had previously withheld from the appraisal award."  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 (Fla. 3d DCA February 20, 2013).  This amount was $49,000.00.  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *2 (Fla. 3d DCA February 20, 2013). 

     After determining the issue of the homeowner's entitlement to Attorney's Fees, and after three days of testimony from the homeowner's attorney, from an Expert Witness for the homeowner, and from an Expert Witness for the Homeowner's Insurance Company, the Trial Court considered the homeowner's attorney's claim for 225 hours of time at $650.00 per hour.  Following Florida law in such matters, the Trial Court entered "a very detailed Order." The Trial Court used a required lodestar approach to enhanced attorney's fees in such cases "and the eight factors required to be used in an attorney's fees hearing, pursuant to Rule 4.1-5(a), Rules of Professional Conduct." The Trial Court also consulted several Florida Supreme Court decisions controlling these points.  The Trial Court awarded "150 hours at $450.00 per hour plus a multiplier of 2.0 with costs and expert fees."  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *2 (Fla. 3d DCA February 20, 2013).

     The resulting award of Attorney's Fees totals $138,000, "close to three times the amount of the recovered depreciation amount."  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *2 (Fla. 3d DCA February 20, 2013).

     The Homeowner's Carrier then made a firm decision.  It decided that it would be a good idea to appeal the award in this case.

     The Florida Appellate Court disagreed.  It affirmed the award.

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Experts in Insurance Cases: Experience Is the Deciding Factor.

"THE WAGES OF SIN" IS ... PAYING THE OTHER SIDE'S ATTORNEY'S FEES.

      Hurricane Katrina caused wind damage to a Miami home on August 25, 2005.  The homeowner filed a claim with his homeowner's carrier.  The homeowner, who did not have legal counsel at the time, went to arbitration with his insurance company.  And the homeowner won.  A neutral Umpire and the insured's chosen appraiser rendered an appraisal award in the homeowner's favor on November 2, 2006.  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 (Fla. 3d DCA February 20, 2013)(STATED SUBJECT TO REVISION OR WITHDRAWAL UNTIL RELEASED FOR PERMANENT PUBLICATION).

     The Homeowner's Carrier's representatives said that the Carrier could not tell whether the Appraisal Award included a deduction for depreciation, however.  It attempted to contact the Umpire more than once, without getting a reply.  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 (Fla. 3d DCA February 20, 2013).  At this point, the Carrier in this case had several options.

     The Carrier could have asked its own chosen Appraiser whether the Appraisal Award included a deduction for depreciation.  It did not ask.  In fact, the Florida Appellate Court commented on this decision in a way which I do not recall ever seeing before in a reported opinion from any Court anywhere in the country.  "We note that, and wonder why," said the Court in this case, "the record before this Court is devoid of any explanation from the insurer's appraiser as to this question." Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 n.1 (Fla. 3d DCA February 20, 2013).  [Emphasis added.]

     The Homeowner's Carrier could also have sought declaratory or other relief from a Florida Court to resolve the depreciation deduction issue.  It did not.  See   Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 n.2 (Fla. 3d DCA February 20, 2013).

     Instead, the Carrier "unilaterally" calculated what would be the amount of depreciation to deduct from the homeowner's claim.  The Carrier then deducted that amount from the amount of the Appraisal Award and sent a check for that amount to the homeowner.

     The homeowner retained a lawyer and filed suit against the Carrier on March 2, 2007.  The homeowner's Complaint is in three counts for alleged Breach of Contract, Bad Faith, and to Confirm the Appraisal Award.  Six days after filing the Complaint, the homeowner's lawyer sent the Carrier a copy of a letter along with a Motion to Amend the Complaint to add a Punitive Damages Claim against the Carrier.  The letter was from the neutral Umpire to the homeowner's attorney "stating that depreciation had already been deducted from the final appraisal award."  The homeowner's attorney, parenthetically, received the Umpire's letter approximately one week before the lawsuit was filed against the Carrier.  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 (Fla. 3d DCA February 20, 2013).

 

To be continued ....

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Mediation and Appraisal of Florida Property Insurance Claims.

    In a recent decision, a Florida Appellate Court was seemingly confronted with a difficult choice:  Applying the Florida Statutes then in effect, or applying a Property Insurance Policy Provision:  First Protective Insurance Co. v. Schneider Family Partnership, 2012 WL 5499987 (Fla. 2d DCA November 17, 2012)(STATED NOT FINAL).  Actually, there was no choice at all under the facts of that case.

    The Florida Statutes then extant set out the requirements regarding Appraisal, or not, following a Mediation of Property Insurance Claims.  The Statutes then provided that in a situation where the Insurance Company requested Mediation, and the Mediation is unsuccessful, only an Insured, not the Insurance Company, can elect an Appraisal as the next step before litigation.  The current Florida Statute is Fla. Stat. § 627.7015(7)(2012), and it retains that requirement.

    The Florida Appellate Court, however, ruled in this case that the Property Insurance Policy Provision trumped the Florida Statute on the record facts.  "Because the statute does not address a situation where the insured requests mediation and the parties cannot reach an agreement, we conclude that under the statute FPIC is entitled to pursue an appraisal pursuant to the terms of the contract."   First Protective Insurance Co. v. Schneider Family Partnership, 2012 WL 5499987 *1 (Fla. 2d DCA November 17, 2012).  [Emphasis added.]

HAVE A GOOD THANKSGIVING, REMEMBER THE HUNGRY!

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Owners Testifying Based on "Specialized Knowledge" Are Undisclosed Expert Witnesses.

   In Florida, owners of property are allowed to testify as to the value of their lost property  --  up to a very important point.  When an owner testifying to value of her or his property starts to testify based on "specialized knowledge," she or he just became an Expert Witness.

   If they were not disclosed in accordance with Court Order, their testimony in this regard is subject to being stricken as in the case of Fidelity Warranty Services, Inc. v. Firstate Insurance Holdings, Inc., 2011 WL 4577530 *4-*5 (Fla. 4th DCA October 5, 2011 and obviously not yet final).

   In the Fidelity Warranty case, once the offending testimony in question was stricken, there was no record evidence of value. As a result the Plaintiff in that case did not "meet its burden of proving the market value of its insurance agency," such that the Florida Appellate Court reversed "the final judgment for tortious interference" and remanded "for entry of a judgment for [Defendant] on that count."  Id. at *7.

   In many Insurance cases, the Policyholder is the owner of property at issue.  In many Insurance cases, the Policyholder's claim, moreover, is based on Insurance Coverage for destroyed property, the value of which needs to be established in order to complete the claim, or for diminished value of her or his property and the diminished value must be proven in order to prevail.

   The new Fidelity Warranty decision is therefore clearly significant both to potential Counsel for Policyholders and to potential Counsel for Insurance Companies alike.

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"Premature" Appraisal Not Bad Faith, Connecticut Appellate Court Holds.

    In a decision that, on  the face of it, seems dated a little prematurely, Download Jansma v. Patrons Mut. Insurance Co. (Conn. App. Ct., Case No. 31705, Opinion Filed for Publication on March 1, 2011) PUBLIC ACCESS, NOT FINAL,, also published as 2011 WL 638295 (Conn. App. "Decided [actually, to be published on] March 1, 2011")(authorized password required to access Westlaw), the Appellate Court of Connecticut rejected a contention that allegedly "premature" appraisal in a first-party case constituted actionable bad faith.  The plaintiffs claimed that the defendant Homeowner's Insurance Company delayed payment of their claim by electing to proceed to appraisal.  (The Homeowner's Insurance Company in this case paid the full amount of the Appraisal Award.  After that, the Plaintiffs filed this lawsuit for Bad Faith, and also for alleged breach of contract, negligent infliction of emotional distress, intentional infliction of emotional distress, and several statutory violations.)

   To the contrary, in the Court's eyes, "our review of the record, including the policy, reveals that the defendant was fully justified in electing appraisal.  Thus, the [Superior Court, Middlesex County trial] court properly granted the defendant's motion for summary judgment."  Id. at *2.

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Attorney's Fees, Calculating Them, and Prejudgment Interest: First-Party Appraisal.

   In the case of Travelers of Florida v. Stormont, Download Travelers of Florida v. Stormont (Fla. 3d DCA Case Nos. 3D09.1100, 3D08.2835, Opinion Filed September 15, 2010) (STATED NOT FINAL; PUBLIC ACCESS) also published as 2010 WL 3564708 *1 (Fla. 3d DCA September 15, 2010)(Westlaw subscription required to access Westlaw), the principal issue stated by the Appellate Court "is whether, and to what extent, an insured is entitled to attorney's fees for legal services rendered in connection with an appraisal under an insurance policy."  Stated differently, the principal questions presented in that appeal concern (1) Whether and When an Insured is entitled to Attorney's Fees in connection with an Appraisal under a First-Party Policy, (2) If so, in what amount, and (3) Prejudgment Interest.

   1.  Whether and When an Insured is entitled to Attorney's Fees in connection with an Appraisal under a First-Party Policy.  The Court in this case expressly held that not all Attorney's Fees can be recovered in such a case.  "In order to be entitled to attorney's fees, it must have been reasonably necessary for the insured to file a court action."  The available remedy, if any, is provided by Fla. Stat. § 627.428.  Travelers of Florida v. Stormont, 2010 WL 3564708 at *2.  "Where suit is filed without any necessity to do so, attorney's fees under section 627.428 will be denied."  Id.

   Where suit is filed prematurely, the Insured is not entitled to recover Section 627.428 Attorney's Fees.  In that case, the Insured filed suit contending that the Insurance Company's selection of a supposedly incompetent Appraiser was a violation of the Insurance Company's Policy obligation to select a competent Appraiser and was "Bad Faith."  The Florida Appellate Court held that filing a lawsuit at this juncture was premature.  "The insured was not entitled to attorney's fees for this phase of the trial court proceedings."  Id. at *3.

   In contrast, the same Insurance Company's refusal to pay an ultimate Appraisal Award and its half of the neutral Umpire's fee to boot, entitled the Insured in the same case to Attorney's Fees under the Florida Statute:  "It was entirely reasonable for the insured to file this motion [to enter judgment in accordance with the award] after the insurer not only failed to pay the award, but also failed to pay its half of the umpire's fee."  Id.

   2.  If so, in what amount.  In Florida as in other jurisdictions, a "multiplier" is judicially sanctioned for awarding Attorney's Fees.  In this case, the Trial Court awarded a 2.5 multiplier, which the Appellate Court held "must be eliminated."  The Third District in this case followed the lead of previous First District case law holding that under circumstances where there is no question that there would be a recovery of damages, the correct multiplier is only 1.0.  Id. at *4.

   3.  Prejudgment Interest.  This case involved a Theft Loss.  the Insured claimed Interest from the date of the Theft, which was January 28, 2006.  The Appellate Court disagreed.  "The prejudgment interest award must be reduced, so as to cover the period from the date of the [Appraisal] award until the date of the insurer's payment of the $95,000 principal amount of the award."  Id. at *4.

   The Appellate Court panel unanimously signed off on the Opinion in this case, which was written by Judge Gerald B. Cope.  He has been a respected Appellate Judge in Florida for over 20 years.  He resigned effective October 31, 2010 to enter private practice.  He and his demonstrated expertise in Insurance Law will be greatly missed.  Best wishes to Judge Cope as he enters another phase of his honorable career.

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IN-Competent Appraiser Remedy Stated by Florida Appellate Court.

   What is the remedy when an Insured-Policyholder or Insurance Company chooses a supposedly incompetent Appraiser but the Insurance Policy obligates them both to select competent Appraisers?

   According to the Florida Appellate Court in Travelers of Florida v. Stormont, Download Travelers of Florida v. Stormont (Fla. 3d DCA Case Nos. 3D09.1100, 3D08.2835, Opinion Filed September 15, 2010) (STATED NOT FINAL; PUBLIC ACCESS) also published as 2010 WL 3564708 (Fla. 3d DCA September 15, 2010)(Westlaw subscription required to access Westlaw), the remedy comes in two parts.

   First, "promptly" make a written demand for a new and competent Appraiser.  If the other Party refuses, then "plan B" is to file a Complaint seeking that the Appraiser be removed.  Travelers of Florida v. Stormont, 2010 WL 3564708 at *2.

   The Appellate Court panel unanimously signed off on the Opinion in this case, which was written by Judge Gerald B. Cope.  He has been a respected Appellate Judge in Florida for over 20 years.  He has resigned effective October 31, 2010 to enter private practice.  He and his demonstrated expertise in Insurance Law will be greatly missed.  Best wishes to Judge Cope as he enters another phase of his honorable career.

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"Do Overs" Do Not Avoid Accruing Prejudgment Interest!

   Prejudgment interest on a loss payable under a First-Party Insurance Policy like a Homeowners Policy is governed by this general rule:  Prejudgment interest on the loss is recoverable from the date payment is due under the provisions of the Insurance Policy, with  one well-known exception.  The exception applies once the First-Party Insurance Company denies all Coverage.  Once it has denied all Coverage, the First-Party Insurance Company is treated by Insurance Law as though it had affirmatively waived the Policy's provision governing deferred payment.  Thereafter, any payment of the loss by the First-Party Insurance Company attracts Prejudgment Interest accruing from the Date of the Loss.

    In Download North Pointe Insurance Co. v. Tomas (Fla. 3d DCA Opinion Filed August 26, 2009), Mr. and Mrs. Tomas claimed Homeowners Insurance Coverage under their Homeowners Policy with North Pointe for a replacement of their marble kitchen floor.  North Pointe denied all Coverage based on an Exclusion.  Mr. and Mrs. Tomas "filed a petition to compel appraisal under the terms of the homeowners' policy....  North Pointe withdrew its previous denial of the claim, admitting coverage ...."  Download North Pointe Insurance Co. v. Tomas (Fla. 3d DCA Opinion Filed August 26, 2009), attached Official Slipsheet Opinion at 2.  The matter went to Appraisal, and a month after North Pointe paid the claim, "an appraisal award was entered in the amount of $115,899.52, including prejudgment interest from the date of the loss."  Id.

    The Florida Appellate Court recited the prevailing law which is summarized at the beginning of this post.  Download North Pointe Insurance Co. v. Tomas (Fla. 3d DCA Opinion Filed August 26, 2009) at 3.  The conclusion was not hard for the Appellate Court thereafter to reach:

    North Point [sic] denied coverage for the claim.  Even though it later agreed to appraisal and paid the appraisal award, it is deemed to have waived the policy provision allowing deferred payment and is responsible for prejudgment interest from the date of the loss.

Download North Pointe Insurance Co. v. Tomas (Fla. 3d DCA Opinion Filed August 26, 2009) at 4.

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