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3rd DCA Opinion Provides Guidance in Alleged Waiver of Appraisal Provision Cases

On June 24, 2020, the Third District Court of Appeal issued an opinion in the case of Peoples Trust Insurance Company v. Lavadie, et al., Case No. 3D-19-1153 (which consolidated Case Nos.: 3D19-962 and 3D19-810).  The opinion addresses two consolidated appeals from a property insurance case originating in Miami-Dade County challenging the insurance company’s right to compel appraisal prior to litigation.  Of note is the Court’s clarification as to insured’s argument claiming waiver of the appraisal provision for failing to timely notify them of the availability of the Mediation program.

In the first of the two consolidated issues addressed in the opinion, (Case No.: 3D19-810), the insured sought to avoid the appraisal clause by alleging that the carrier had waived the policy provision by failing to properly provide notice of a change in the policy terms, pursuant to Section § 627.43141(2), Florida Statutes.  Correspondingly, in the second issue addressed in the opinion (Case No.: 3D19-962), the insureds contended that the carrier had waived its right to demand appraisal because it failed to provide the statutory notice of the right to participate in DFS mediation, pursuant to Section § 627.7015, Florida Statutes, at the time the insureds first filed a claim of loss.  The Miami-Dade County Judge had ruled against the carrier as to both issues, and the 3rd DCA reversed.

As to the issue of providing notice of changes to the policy terms, the 3rd DCA ruled that pre-2018:  “The statute required the insurer to notify the insured and the insured’s agent in writing that the policy for the new policy period would be different, but it did not require the insurer to identify every amendment to the form …”  Id.  Accordingly, prior to 2018, the notice requirement was less stringent than the present version.

As to the issue of providing notice to the insured about the option to participate in the DFS Mediation Program, the 3rd DCA clarified that Section § 627.7015 did not require notice of the mediation program at the inception of the insureds claim, but rather when the adjustment process culminated in a “dispute” between the insured and the carrier. Id..; see also State Farm Florida Insurance Co. v. Lime Bay Condominium, Inc., 187 So. 3d 932, 936 (Fla. 4th DCA 2016) (“Subsections 627.7015 (2) and (9) must be read together.”) Notably, the 3rd DCA, relying on the Lime Bay decision,  stated: “A mediation notice is irrelevant during the time when an insured makes a “claim” and the adjustment process is underway.  If the adjustment process culminates in a payment or repair without rising to the level of a “dispute,” the insurer need not send a notice.” Id. (Emphasis added).  The “trigger” according to the 3rd DCA was noticed to the carrier of a dispute relating to the scope of work or amount of repairs/replacement, or the threat of litigation.  Id.

In conclusion, the 3rd DCA upheld the appraisal provision since the carrier had provided timely notice to the insured of their right to participate in mediation under the DFS program once it became clear there was a “dispute”.   In so doing, the 3rd DCA recognized the long-standing judicial preference to resolve claims without the need for unnecessary litigation.  As such, carriers should be cognizant if a “dispute” arises during the adjustment of the claim and timely notify the insured of the availability of the DFS mediation program.  Ensuring that timely notice is provided to the insured and their representatives, pursuant to Section § 627.7015, Florida Statutes, when litigation is threatened or a dispute as to the price, scope, or method of proposed repairs arises will prevent the unanticipated waiver of the policy’s appraisal provisions.

Presented (on behalf of the Firm) by

Jose Pagan

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