Order Compelling Appraisal Reversed Because Insured Did Not Cooperate In Claim Investigation

In Citizens Property Ins. Corp. v. Galeria Villas Condominium Association, Inc. (3D10-0807), the Third District reversed an order compelling appraisal and remanded the case to the trial court "to require Galeria to establish that it has (a) provided certain records requested by Citizens as it considered Galeria’s claim and (b) provided Citizens’ adjuster or “loss consultant” reasonable  rights of access to, and inspection of, the property damage detailed in Galeria’s claim."

After Galeria sustained damage from Hurricane Wilma:

Galeria submitted a sworn proof of loss that was investigated by a Citizens adjuster.  Citizens’ estimate of damages did not exceed the deductible for the property, and therefore Citizens made no payment to Galeria.  Citizens did not dispute that a covered loss had occurred....Thereafter, Galeria retained a public adjuster, Preferred Claim Solutions, Inc., and Preferred prepared detailed construction cost estimates broken out by building, line item, quantities, and unit costs.  Contractor’s overhead and profit and sales tax were also itemized for each of the 16 buildings, and a separate total for all of the repairs was included.  The total  estimate for repairs for the October 24, 2005, windstorm loss was $1,886,054.86.  These detailed cost estimates, all dated April 8, 2009, were provided to Citizens with an initial demand for appraisal in May 2009.  

In a letter of May 28, 2009, Citizens acknowledged receipt of the Preferred repair estimates, reserved various rights, and requested a final, signed and sworn proof of loss as well as copies of 13 categories of documents.  Galeria provided the signed and sworn proof of loss in July 2009.  On August 10, 2009, Citizens acknowledged receipt of the proof of loss but claimed there were inconsistencies with the earlier estimates prepared by Preferred.  Citizens also renewed its request for the 13 categories of documents identified in its May 28 letter and complained that Citizens’ loss consultant “has not been provided an opportunity to inspect this property since the initial inspection in 2005.”

With regard to the law, the court addressed the a number of issues.  First, the court addressed Citizens requests for documents:

While Citizens’ requests may seem broad, the types of documents that were not provided by Galeria may (and typically do) contain information bearing directly on the claim and the respective obligations of the insurer, the insured, and the homeowners living within the insured units....All such records may identify individuals with pertinent knowledge so that they can be contacted during the investigation of the claim.  And these records were and are required to be kept by Galeria as a matter of Florida law.

The court next addressed Galeria's refusal to allow Citizens to inspect the property:

Nor may an insured refuse access to the damaged properties to an insurer’s “loss consultant,” insisting instead that the insurer send in an “adjuster.”  The postloss duty in section E.3.a.(6) of the policy obligated Galeria to, “[a]s often as may be reasonably required, permit [Citizens] to inspect the property proving the loss or damage.”  Citizens acts through employees and agents, and an insured ordinarily recognizes that the sooner the insurer’s  representative (irrespective of title) is allowed to inspect the areas of claimed damage, the sooner the claim will be adjusted, appraised, or otherwise brought to resolution.  Finally, and as we observed in Romay, “[t]hese obligations are not unduly burdensome or arbitrary.”

Based upon the issue relating to the documents and access to the property, the court stated:

Until these conditions are met and the  insurer has a reasonable opportunity to investigate and adjust the claim, there is no “disagreement” (for purposes of the appraisal provision in the policy) regarding the value of the property or the amount of loss.  Only when there is a “real difference in fact, arising out of an actual and honest effort to reach an agreement  between the insured and the insurer,” is an appraisal warranted.  We therefore reverse the order compelling appraisal and remand for what we anticipate will be complete and immediate cooperation by Galeria in affording access to the property and the remaining records, and a prompt response to the claim by Citizens after its prompt investigation.

(emphasis from opinion).  Finally, the court addressed trial court's order staying the case pending appraisal:

Citizens also argued that the appraisal order was in error because it failed to reserve jurisdiction on any coverage issues.  Although this issue is moot because of our determination that the order compelling appraisal was premature, this court has  previously addressed Citizens’ argument.  Once the trial court determines that a demand for appraisal is ripe, the court has the discretion to control the order in which an appraisal and coverage determinations proceed.