This is the last in our blogs analyzing a series of cases from the 5th DCA that involve the question of when litigation activity constitutes a waiver of appraisal rights under a Florida insurance policy. As we observed in prior blogs, policyholders can inadvertently forfeit their right to the appraisal remedy contained in insurance policies by engaging in significant litigation conduct that is inconsistent with the appraisal process. These actions can include discovery, pleadings and motions or other procedures that are part of litigating an insurance claim.
The prior cases discussed on this blog have demonstrated the sensitive nature of these cases. These cases make clear that the key issue is the length of time before demanding appraisal, as well as the amount of litigation activity by the insured after the insurer concedes coverage. These 5the DCA cases also make clear that the elapsed time might be less important than the nature of the litigation activity undertaken during the interim period between the admission of liability by the insurance company and the insured’s demand for appraisal.
In FIGA v. Maroulis, the insured had a homeowners policy with Homeowners Preferred Insurance Company. When the insured submitted a claim for sinkhole damage suffered in October 2009, the insurer denied that the claim was covered by the policy. The homeowners filed a breach of contract lawsuit in June 2010. A neutral evaluator reached the conclusion that the damage was caused by a sinkhole, but HomeWise continued to deny coverage when filing its answer to the lawsuit. In September 2011, HomeWise went into receivership which resulted in activation of FIGA. The homeowners amended their complaint to substitute in FIGA in July 2012, but the amended complaint did not refer to appraisal.
FIGA filed an answer on July 30, 2012 that indicated FIGA did not deny coverage and admitted that the insured was entitled to the actual cost of repair or loss up to policy limits. The insurance company sent a letter to the policyholder on October 5, 2012 formally agreeing to the repairs suggested by the neutral evaluator. Rather than request appraisal regarding the amount of loss, the policyholders filed a 2nd amended complaint, served a second request for admissions, and demanded a jury trial. The 2nd amended complaint did not mention appraisal. The parties proceeded to mediation but were unable to reach an agreement. On July 15, 2013, the policyholder requested appraisal, and the request was granted by the trial court. The insurers appealed the order referring the parties to appraisal.
The 5th DCA started by noting that appraisal became appropriate on October 5, 2012 when the insurer sent its letter acknowledging coverage and agreeing to the repairs recommended by the neutral evaluator. The court proceeded to distinguish this case from the its prior case Fla. Ins. Guar. Ass’n v. Branco. The court pointed out that the insured delayed its request for appraisal for over a year from the time FIGA admitted coverage unlike the homeowners in Branco. The court also noted the extent of litigation activity during the interim, including filing a 2nd amended complaint, request for admissions and mediation. Based on the time that elapsed before the demand for appraisal and the litigation activity, the court concluded that the homeowners did waive their right to appraisal.
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