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Four New Kelley Kronenberg First Party Property Case Law Updates

May 21, 2021

1. Kelley Kronenberg Case Law Update: Express Damage Restoration, LLC. v. Citizens Property Insurance Corporation– Appraisal

Express Damage Restoration, LLC (“EDR”) sought certiorari review of the trial court’s order granting Citizens Property Insurance Corporation’s (“Insurance Company”) motion for summary judgment.  The trial court granted summary judgment in favor of the Insurance Company on EDR’s declaratory judgment action. EDR’s action sought a determination that Citizens wrongfully invoked the underlying homeowner’s insurance policy’s appraisal provision to resolve a disagreement between the parties as to both the necessity of the water mitigation services provided by EDR and the reasonableness of EDR’s charges for those services. The court affirmed the trial court’s decision of granting summary judgment as the subject appraisal provision clearly and unambiguously applied to EDR’s claim for water mitigation services.

Marie Casimir (“the Insured”) reported a water damage loss to the Insurance Company, and then retained EDR to perform water mitigation services. The Insured executed an assignment of benefits (“AOB”) with EDR. After completion of its services, EDR sent the Insurance Company an invoice, which the Insurance Company found to be excessive. Due to this, the Insurance Company demanded appraisal over the disagreement. The Insurance Company attached the appraiser’s evaluation report and a check for $2,355.99; the amount the Insurance Company determined to be reasonable for the services. A month after sending this correspondence, EDR filed suit against the Insurance Company.

In its suit, EDR sought a determination that the subject policy’s appraisal provision did not apply to water mitigation services, and therefore, the Insurance Company had erroneously invoked the policy’s appraisal provision. Both parties filed competing Motions for Summary Judgment, and the trial court concluded, ““the language of the appraisal provision of the subject policy is clear and unambiguous, straightforward, and that appraisal is appropriate for this [water mitigation services] claim.”

The court found that because the appraisal provision is under the policy’s Section 1, which also contains coverage for water mitigation services, the appraisal provision applies to water mitigation services that are incurred to protect the property from further damage. Due to this, the court affirmed the trial court’s ruling in favor of the Insurance Company.

2. Kelley Kronenberg Case Law Update: People’s Trust Insurance Company v. Alejandro Amaro– Right to Repair/Appraisal

People’s Trust Insurance Company (“Insurance Company”) sought certiorari review of the trial court’s order granting Plaintiff’s motion for summary judgment.

Alejandro Amaro (“the Insured”) purchased an insurance policy from the Insurance Company, which included a Preferred Contractor Endorsement (“the Endorsement”). The Endorsement gave the Insurance Company the right to have its preferred contractor, Rapid Response Team, LLC (“Rapid Response”) repair any covered damages in lieu of issuing cash payment.

The Insured reported a Hurricane Irma loss to the Insurance Company, who investigated and found partial coverage. The Insurance Company elected to repair the covered damage under its Endorsement, and requested that the Insured submit a sworn proof of loss to determine if the parties agreed on the scope of loss for the repairs. Eventually, the Insured submitted a sworn proof of loss, which the Insurance Company rejected as noncompliant as the Insured failed to provide any specific supporting documentation to identify the scope of the claimed damages or proposed repairs. The Insurance Company sent a notice of material breach to the Insured, which explained that his continued failure to provide a compliant sworn proof of loss with documentation to support it would constitute a material breach of the policy. Instead of complying, the Insured a breach of contract action against the Insurance Company.

In response, the Insurance Company moved to dismiss the claim and compel appraisal, and to enforce its right to repair under the Endorsement. The trial court abated the case and ordered appraisal. Once appraisal was complete, the Insurance Company sought to conduct the repairs. Instead, the Insured, through his counsel, notified the Insurance Company that he had already hired his own contractor, completed the repairs, and sold the property. The Insured then filed a Motion to Compel the Insurance Company to pay the appraisal amount, and argued that the Insurance Company was still liable to pay the Insured what they would have paid Rapid Response for the repairs. In response, the Insurance Company filed A Motion for Summary Judgment as the Insured breached the policy by (1) failing to authorize the Insurance Company to commence repairs, (2) failing to provide a policy-compliant sworn proof of loss, (3) failing to respect the appraisal process, and (4) filing suit prematurely in violation of the policy. The trial court heard the argument, denied the Insurance Company’s Motion, granted the Insured’s Motion to Compel, and entered final judgment against the Insurance Company.

In looking at the Policy, the court highlighted the provision of appraisal which specified that appraisal is used to determine the amount of the loss and scope of repairs, and that the decided scope of repairs would establish the work to be performed by Rapid Response.

The court reasoned that “the trial court failed to recognize that the [Insured] breached the policy by failing to pay the deductible, filing suit against the [Insurance Company] prior to fulfilling his post-loss obligations, and by circumventing the explicit terms of the policy by hiring his own contractor to perform the appraised repairs.” See, e.g., Allstate Floridian Ins. Co. v. Farmer, 104 So. 3d 1242, 1250 (Fla. 3d DCA 2012) (stating Florida courts have consistently interpreted proof of loss obligations coupled with similar no-action clauses to be conditions precedent, i.e., an obligation to be performed before the contract is effective).

The court found that the Insured failed to substantially comply with the contractually mandated post-loss obligations, which then rendered impossible the Insurance Company’s performance of its contractual obligation to repair. As such, the court reversed and remanded for entry of judgment in favor of the Insurance Company.

3. Kelley Kronenberg Case Law Update: Mishpaja Shajine, Inc. et al., v. Granada Insurance Company– Leave to Amend

Mishpaja Shajine (“Insured”) sought certiorari review of the trial court’s order granting Granada Insurance Company’s (“Insurance Company”) motion for summary judgment.  The court reversed the trial court’s order as the trial court abused its discretion in denying the Insured’s ore tenus motion, made at the summary judgment hearing, to amend its answer to an assert an affirmative defense.

The Insurance Company moved for final summary judgment on its claim for declaratory relief. Prior to the hearing, the Insured filed a notice of affidavit in opposition to the Motion, which attested to the facts supporting an unpled affirmative defense. The Insured did not file a Motion to Amend their Answer as they believed the hearing would be cancelled. Instead, the Insured made an ore tenus motion to assert the affirmative defense, which the trial court denied and granted the Insurance Company’s summary judgment motion.

The court found that (1) the Insured  did not make its ore tenus motion to intentionally delay the proceeding; (2) the Insurance Company did not argue that it was prejudiced; and (3) “‘[a]ny doubt with respect to futility should be resolved in favor of allowing the amendment, especially when leave to amend is sought at or before the summary judgment hearing.’” RV-7 Prop., Inc. v. Stefani De La O, Inc., 187 So. 3d 915, 917 (Fla. 3d DCA 2016). Due to this, the court found that the trial court abused its discretion by not granting the Insured’s leave to file an amended answer and affirmative defenses.

4. Kelley Kronenberg Case Law Update: People’s Trust v. Pedro Ramos Santon– Right to Repair

People’s Trust Insurance Company (“Insurance Company”) sought certiorari review of the trial court’s order granting Plaintiffs’ motion for summary judgment.  The trial court granted summary judgment in favor of the Plaintiffs who claimed that the Insurance Company violated sections 627.7011, 627.70131, and 627.7142, Florida Statutes.  The court found that the trial court erred in granting summary judgment as the Insurance Company did not violate the statues, and in light of the Insurance Company’s exercise of its right to repair option, the judgment was inconsistent with the record.

The Plaintiffs, in return for a premium discount, purchased the subject policy, which contained a Preferred Contractor Endorsement (“the Endorsement”), which allowed the Insurance Company to elect to have its own contractor repair the subject Property following a covered loss. The Endorsement delineated that the Insurance Company must notify the Insureds, in writing, within thirty(30) days of its inspection of the reported to loss, of its election of the right to repair. The Endorsement also contained an appraisal provision.

Pedro Ramos Santos and Yanela Arteaga Simon (“the Insureds”) reported a Hurricane Irma loss to the Insurance Company, who then inspected the Property and prepared an Estimate and Scope of Repairs, which totaled $3,059.80 at replacement cost value. On October 27, 2017, the Insurance Company sent correspondence to counsel for the Insureds affording coverage for the loss, and electing to use its preferred contractor, Rapid Response Team, LLC (“Rapid Response”) to repair the Property. However, as the Insurance Company’s $3,059.80 repair estimate did not exceed Insureds’ $6,800 hurricane deductible, the repairs would not commence until the parties either reached an agreement as to the amount of the loss in excess of the deductible “or the amount of loss, including the scope of repairs[,] has been determined by an appraisal panel to exceed your deductible amount of $6,800.”

Due to this, the correspondence notified Insureds that if they disagreed with the scope of repairs set forth in the Estimate and Scope of Repairs, Insureds, within sixty (60) days, they should provide the Insurance Company with a sworn proof of loss “which provides the details of what you believe the proper scope to be, including, but not limited to, a scope prepared by you or your own behalf.” The correspondence also highlighted that should the Insureds not agree to the assessment of the cost and scope of repairs, appraisal would be invoked, per the Policy. However, if after appraisal it is determined that the damages exceed the deductible, the Insurance Company would proceed with repairs with Rapid Response. Thereafter, on March 27, 2018, the Insureds submitted a sworn proof of loss, and proceeded to file suit on May 1, 2018.

The Insurance Company filed a Motion to Dismiss and in the alternative, a Motion to Compel Appraisal as the Insureds failed to comply with the Policy’s provision allowing the Insurance Company to invoke appraisal to resolve the dispute. The trial court granted the Insurance Company’s Motion to Compel Appraisal, and an appraisal award of $25,204.70 was entered. After the award was entered, the Insureds filed a Motion for Summary Judgment, asserting that they were entitled to money damages for the Insurance Company’s breach of contract, premised upon its purported violations of 627.7011, 627.70131, and 627.7142, Florida Statutes. The trial court heard the Motion and ultimately granted Plaintiffs motion, noting that the evidence brought by the Insurance Company failed to rebut that of the Insureds, and that the Insurance Company failed to indemnify the Insureds, as required by the contract policy of Insurance.

The court indicated that the Insurance Company did not violate 627.7011, 627.70131, and 627.7142, Florida Statutes. The court found that 627.7011 is inapplicable when the Policy contains, and the Insurance Company “validly exercises a right to repair clause.” See § 627.7011(5)(e).  627.70131 was also not violated, and the court reasoned that “where the insured is represented by an attorney, the statute requires only that the insurer acknowledge receipt of those communications that notify the insurer that its insured is making a claim under the policy. In such instances, the insurer’s acknowledgment of the claim notification need only provide the insured’s attorney with the necessary claim forms and instructions. The court also found that a violation of 627.7142 cannot form the basis for a breach of contract action. Due to all of the above, the court reversed all three grounds upon which the Insureds’ summary judgment motion was premised. In conclusion, the court held “[t]he policy’s appraisal provision – contained within the endorsement – is available as a dispute mechanism to the parties only if [the Insurance Company] elects its right to repair option in lieu of making a loss payment. Insureds’ complaint, however, contains no allegations, and the challenged orders do not contain any findings, that [the Insurance Company] improperly exercised the right to repair option or that the endorsement is otherwise invalid.”

Authored by:

Lilli Balik
Attorney, Fort Lauderdale