In Florida Insurance Guaranty Association v. Olympus Association, Inc., - So. 3d -, 4D09-11, 2010 WL 1979242, 2010 Fla. App. LEXIS 6941 (Fla. 4th DCA May 19, 2010), the Fourth District reversed the trial court's order confirming an appraisal award and entry of a 5.5 million dollar judgment in favor of Olympus. The court concluded that "As explained in Kennedy and supported by Fisher, FIGA could contest part of the liability without challenging coverage as a whole." The court described the facts as follows:
Olympus’s public adjuster, Joseph Zevuloni, demanded an appraisal for Buildings 500, 600, and 2500...Tony Allogia was the appraiser for FIGA, and Michelle L. Antinucci was appointed as the Umpire. On May 30, 2008, the Umpire submitted an Appraisal of Insurance Claim—Award Form (Appraisal Award) to the appraisers. Zevuloni signed it on May 31, 2008, making the award valid and binding. The Appraisal Award totaled $7,102,879.76...There was also a separate sheet indicating the line-item appraisal amounts for each building, which in part indicated that of the total amount, $3,785,000 was allotted for Waterproofing/Painting.
[FIGA's] second Affirmative Defense stated that “[p]ursuant to the Policy, Form CP 01 25 06 95, painting or waterproofing material is not covered.” This policy provision, labeled “Windstorm Exterior Paint and Waterproofing Exclusion,” indicates that the policy does not cover loss or damage to paint or waterproofing material applied to the exterior of the buildings.
Olympus filed a Motion to Confirm Appraisal Award and Entry of Final Judgment. The trial court heard the motion, entered an Order granting it, and entered Final Judgment allowing Olympus to recover from FIGA the sum of $7,102,879.76 in principal, less $2,550,545.78 in building deductibles and a $100.00 FIGA deductible, for a total amount of $4,552,233.98.
With regard to the law, the court stated:
Appraisal clauses are preferred, as they provide a mechanism for prompt resolution of claims and discourage the filing of needless lawsuits. Issues relating to coverage challenges are questions exclusively for the judiciary....In Liberty American Insurance Co. v. Kennedy, 890 So. 2d 539, 541 (Fla. 2d DCA 2005), the second district concluded that “the submission of the claim to appraisal does not foreclose Liberty American from challenging an element of loss as not being covered by the policy.”
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Thus, the trial court erred by entering final judgment in favor of Olympus without first determining FIGA’s liability as to the coverage claims contested in its affirmative defenses. Although Licea made mention of challenging a “whole loss,” it is not reasonable to order an insurer to pay for all elements set forth by an appraiser if the insurer raises an issue of coverage as to only one element and not the whole claim. See Fisher v. Certain Interested Underwriters at Lloyds Subscribing to Contract No. 242/99, 930 So. 2d 756, 759 (Fla. 4th DCA 2006) (stating, with regard to construing a policy too narrowly, that “[t]o do so would require us to turn a blind eye to what common sense dictates”). It is the appraiser’s duty to determine the amount of coverage, while questions of coverage liability are left for the judiciary. Licea, 685 So. 2d at 1287. Then, “[i]f a court decides that coverage exists, the dollar value agreed upon by the appraisal process will be binding upon both parties.” Id. at 1287–88.
Our holding in Fisher v. Certain Interested Underwriters at Lloyds Subscribing to Contract No. 242/99, 930 So. 2d 756, 759–60 (Fla. 4th DCA 2006), further supports FIGA’s contention that the trial court erred in not permitting it to contest one element of the coverage.
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Based on the above, we conclude that the trial court erred by entering final judgment in favor of Olympus and awarding it the amount set forth in the appraisal (less the deductibles), without first deciding the issue of coverage liability. When FIGA filed its affirmative defenses in response to Olympus’s complaint, the trial court should have first decided FIGA’s liability. As explained in Kennedy and supported by Fisher, FIGA could contest part of the liability without challenging coverage as a whole.
The entire opinion is below:
*Disclaimer: Jeffrey Kuntz and/or GrayRobinson, P.A. were involved in the above-referenced action.
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