When and To What Extent Are Fees Available To An Insured After An Appraisal

In Travelers of Florida v. Stormont (3D09-1100 & 3D08-3825), the Third District addressed the following: "The main question presented by this appeal is whether, and to what extent, an insured is entitled to attorney’s fees for legal services rendered in connection with an appraisal under an insurance policy."  Generally, the court described the facts as follows:

In January 2006, the car was stolen while in a garage for mechanical work.  The plaintiff-appellee insured retained counsel and submitted a claim to the defendant-appellant insurer. The insurer offered to pay $39,587 based on a valuation by Auto-Source, while the owner claimed a value of $65,000 to $75,000 based on an appraisal by Speed Shop. The insurer objected that Speed Shop was not qualified to appraise the value of the stolen vehicle. In June 2006, Travelers demanded appraisal and appointed Luis Aucar as its appraiser. The insured failed to respond. Instead, in October 2006, the insured filed a suit against the insurer demanding payment of the claim.

With regard to the law, the court stated:

In order to be entitled to attorney’s fees, it must have been reasonably necessary for the insured to file a court action....“The purpose behind section 627.428 is plainly to place the insured or beneficiary in the place she would have been if the carrier had seasonably paid the claim or benefits without causing the payee to engage counsel and incur obligations for attorney’s fees.”...Where suit is filed without any necessity to do so, attorney’s fees under section 627.428 will be denied....If the insured is forced to file suit, and the insurer thereafter pays the award without the necessity of the trial court entering judgment, the confession of judgment doctrine applies. “This doctrine applies where the insurer has denied benefits the insured was entitled to, forcing the insured to file suit, resulting in the insurer’s change of heart and payment before judgment.”...In that circumstance, the insured is entitled to an award of attorney’s fees. With these principles in mind, we turn to the facts of the present case.

The insurer argues that the insured filed suit prematurely. That point is well taken.  In June 2006, the insurer demanded appraisal and appointed its appraiser. For the following five months, the insured failed to respond to the insurer’s letters in which the insurer attempted to move the appraisal process forward....The suit was premature. Once the insurer demanded appraisal, the insured was required to comply with the appraisal clause. Proceeding to court was not justified.

The insured had attempted to disqualify the insurer's appraiser.  On that issue, the court stated:

If the insured believed that the insurer’s appraiser was not competent (where, as here, the appraisal clause required appointment of a competent appraiser), the issue must be raised promptly upon learning of the grounds for disqualification. The correct procedure would be first to make a written demand that the insurer replace the appraiser. If the insurer declines to do so, then the insured must promptly file a complaint in circuit court seeking removal of the appraiser.

In this case, the insurer disclosed the identity of its appraiser in June of 2006. It is clear that the insured learned of the ground for disqualification early on, but the insured’s complaint did not seek disqualification and the insured did not raise the issue by motion until 2008. The insured was not entitled to attorney’s fees for this phase of the trial court proceedings.

The insured also sought attorneys fees for the legal work associated with its filing of a motion to confirm appraisal award after the insurer did not timely pay the award.  On that issue the court stated:

In June 2008, the insured filed a motion to enter judgment in accordance  with the appraisal award. The insurer contends that this was unnecessary and that the insured is not entitled to any attorney’s fees at all. The insurer’s argument is without merit.

The appraisal award was entered in April of 2008. The insurer failed to pay. In June, after almost three months had expired, the insured filed its motion to enter judgment in accordance with the award. It was entirely reasonable for the insured to file this motion after the insurer not only failed to pay the award, but also failed to pay its half of the umpire’s fee.

Six weeks after the insured filed the motion, but before the motion was ruled on, the insurer paid the principal amount of the award. Even later the insurer paid the interest it calculated to be due.

***

The insured acted entirely reasonably in seeking court enforcement of the award and is entitled to attorney’s fees for that phase of the litigation.

Finally, the court discussed the insured's request for a 2.5 multiplier for its attorneys fees.  The court stated:

In this case it was clear that the loss would be covered by the insurance policy and the insured would achieve a recovery. The question was whether the insured could obtain the amount of compensation he sought on the basis that the stolen vehicle was a unique collectible car....In considering the issue now before us, the First District has held that 1.0 is the correct multiplier. The First District reasoned that “[a]though there was some question as to the amount that would be recovered by [the insured] under the insurance policy, there was no question that there would be a recovery of damages.” Reliance Ins. Co. v. Harris, 503 So. 2d 1321, 1323 (Fla. 1st DCA 1987). That logic is applicable here. The multiplier must be eliminated.

Other posts relating to cases discussing appraisal and/or fees are available at the links.