Kelley Kronenberg Case Law Update: Villagio at Estero Condominium Assoc., Inc. v. American Capital Assurance Corp. – Appraisals: Misrepresentation Defense, Coverage Determinations Prior to Appraisal, and Dual Track; Conflict Certified
Villagio at Estero Condominium Assoc., Inc. v. American Capital Assurance Corp.
Fla. 2d DCA April 16, 2021, 2D20-1414
The Ins. Co. initially admitted coverage and made payment under the policy. The Insured submitted an estimate and sworn proof of loss approximately 1444% higher than the insurer’s estimate. The Ins. Co. reasoned that the Insured fraudulently overinflated its loss, and thus “voided” the claim and denied coverage. Insured filed suit for breach of contract and declaratory judgment seeking an appraisal, then filed a motion to compel appraisal.
Both parties offered that the case proceed on a “dual track” basis, i.e., with appraisal and continuation of discovery. The trial court denied the motion to compel and ruled that all coverage determinations must be made prior to the appraisal provision applying and ordered that litigation proceed on the coverage issue before compelling appraisal. The court found that there was an enforceable appraisal provision, but it would not come into play until coverage was determined. Insured appealed those decisions.
The Second District found that the Ins. Co. initially admitted coverage under the policy and only denied the claim and declared the policy void after receiving an inflated damages amount. Due to misrepresentation being asserted regarding the amount of loss, it created a factual determination that was appropriate for appraisal. The Court held that a coverage dispute does not have to be resolved before compelling appraisal, and certified conflict with the Fourth District on this issue. The Court affirmed that the appraisal provision of the contract was enforceable, remanded the case for appraisal, and left it to the trial court’s discretion whether to allow the case to proceed on a dual track basis.
Kelley Kronenberg Case Law Update: Avatar Property & Casualty Ins. Co. v. Niulsury S. Flores – Work Product
Avatar Property & Casualty Ins. Co. v. Flores
Fla. 2d DCA April 16, 2021, 2D20-2458
Insureds brought breach of contract action following a covered Hurricane Irma claim. In discovery, Ins. Co. withheld selected documents based on work product privilege. After an in camera inspection, the trial court ordered Ins. Co. to submit four documents (two from a prior water leak claim, investigative photos of the Irma claim, and a printout of the Claim Payment Screen from Ins. Co.’s system regarding the Insureds’ Irma claim). Ins. Co. asserted that the documents were investigative and claims handling materials and thus protected from disclosure because coverage remained in dispute.
The Court agreed with the Ins. Co. and stated, “Despite the fact that [Ins. Co.] has admitted some coverage exists under the policy, the amount and nature of that coverage remains in dispute, and thus the trial court departed from the essential requirements of the law by overruling the work product objection and direction production of these privileged documents on the express basis that ‘coverage is not at issue.’” The Court noted that work product is broadly defined and includes materials generated, prepared, or obtained during an insurer’s investigation of a claim for coverage or because of the prospect of litigation, regardless of whether litigation ensues. In cases where coverage is still at issue, for instance, in an action for damages after partial payment of what is claimed by the insured, “claims file discovery may depart from the essential requirements of the law.”