State Farm Florida Insurance Company v. Lime Bay Condominium, Inc. , 2016 Fla. App. LEXIS 4529 ( 2016 )

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
STATE FARM FLORIDA INSURANCE COMPANY,
Appellant,
v.
LIME BAY CONDOMINIUM, INC.,
Appellee.
No. 4D13-4802
[March 23, 2016]
Appeal from the Circuit Court for the Seventeenth Judicial Circuit;
Thomas Lynch, IV, Judge; L.T. Case No. 07-005044 CACE (05).
Elizabeth K. Russo of Russo Appellate Firm, P.A., Miami, and Green,
Ackerman & Frost, P.A., Boca Raton, for appellant.
Michael O. Colgan of Katzman Garfinkel, Maitland, for appellee.
ON MOTION FOR REHEARING
BOORAS, TED, Associate Judge.
We grant State Farm Florida Insurance Company’s motion for
rehearing, deny Lime Bay Condominium, Inc.’s motion for rehearing,
withdraw our prior opinion, and substitute this opinion in its place.
State Farm appeals the final summary judgment and award of
attorney’s fees entered in favor Lime Bay in this breach of contract action.
State Farm argues that the trial court erred in finding that State Farm
breached the insurance contract, where State Farm invoked its
contractual right to appraisal and resolved the insurance claim through
the appraisal process. We agree and reverse.
In October 2005, as a result of Hurricane Wilma, Lime Bay’s
condominiums sustained roof damage and Lime Bay filed a claim with
State Farm. During the loss adjustment process, Lime Bay obtained a
proposal to replace all the condominium buildings’ roofs for approximately
$1.5 million. However, Lime Bay never provided State Farm with any
evidence that the roofs needed to be replaced, only an estimate for
replacement. After several inspections, State Farm determined that the
roofs in question needed to be repaired, not replaced. In September 2006,
after making adjustments for the policy deductible, State Farm paid Lime
Bay $6,940.46 for the roof repairs.
On February 9, 2007, Lime Bay filed a Civil Remedy Notice alerting
State Farm that it intended to file suit. State Farm responded with a
demand for an appraisal pursuant to the appraisal provision in the
insurance contract. Lime Bay responded that it would not participate in
the appraisal process until State Farm provided proof of compliance with
the mediation notification requirements of subsection 627.7015(2)1,
Florida Statutes (2012). Subsection 627.7015(7) provides that the insured
is not required to participate in the appraisal process until the insurer
complies with subsection (2). On March 7, 2007, Lime Bay filed a breach
of contract action against State Farm without first participating in the
appraisal process.
On State Farm’s motion, the trial court ordered the case abated pending
the completion of appraisal. The appraiser issued an award in the amount
of approximately $1.1 million, before deductible. After applying
deductibles and the previous payment, State Farm paid Lime Bay
$608,141.41.
Lime Bay filed a motion to confirm the appraisal award and a motion
for final judgment and attorney’s fees. Lime Bay argued that State Farm’s
payment of the appraisal award after Lime Bay filed suit was a confession
of judgment. State Farm filed a motion for summary judgment. State
Farm argued that Lime Bay was not entitled to a confirmation of the
appraisal award, because the claim had been fully resolved through the
parties’ contractual appraisal process and State Farm had paid the
appraisal award. Therefore, State Farm did not breach the contract.
The trial court denied State Farm’s motion and granted Lime Bay’s
motion. The court found that State Farm failed to prove that it complied
with the mediation notification requirements of section 627.7015 and that
State Farm’s voluntary payment after Lime Bay filed suit was a confession
1Subsection 627.7015(2), Florida Statutes (2012) provides: “At the time a first-
party claim within the scope of this section is filed by the policyholder, the insurer
shall notify the policyholder of its right to participate in the mediation program
under this section.”
2
of judgment as a matter of law. This appeal ensued.
The standard of review for an order granting summary judgment is de
novo. Jaffer v. Chase Home Fin., LLC, 155 So. 3d 1199, 1201 (Fla. 4th
DCA 2015). “[A]n appellate court must examine the record in the light
most favorable to the non-moving party.” Wolf v. Sam’s E., Inc., 132 So.
3d 305, 307 (Fla. 4th DCA 2014) (citation omitted). Summary judgment
should be entered only when there is no genuine issue of material fact.
See Jaffer, 155 So. 3d at 1201.
In this case, the trial court made a finding that State Farm’s voluntary
payment of the appraisal award after suit was filed was a confession of
judgment as a matter of law. However, when the insured utilizes the
confession of judgment doctrine, the underlying issue is not when the
insurer paid the claims, but if the insured was forced to litigate in order to
get the insurer to pay the claim. See Clifton v. United Cas. Ins. Co. of Am.,
31 So. 3d 826, 829 (Fla. 2d DCA 2010) (“[T]he confession of judgment rule
will operate only to penalize an insurance company for wrongfully causing
its insured to resort to litigation in order to resolve a conflict with its
insurer when it was within the company’s power to resolve it.”) (citations
and internal quotation marks omitted); State Farm Fla. Ins. Co. v. Lorenzo,
969 So. 2d 393, 398 (Fla. 5th DCA 2007) (“[C]ourts generally do not apply
the [confession of judgment] doctrine where the insureds were not forced
to sue to receive benefits; applying the doctrine would encourage
unnecessary litigation by rewarding a race to the courthouse for attorney’s
fees even where the insurer was complying with its obligations under the
policy.”) (citing Basik Exps. & Imps., Inc. v. Preferred Nat’l Ins. Co., 911 So.
2d 291, 294 (Fla. 4th DCA 2005)).
Similarly, when an insured moves for attorney’s fees, the underlying
issue is whether the suit was filed for a legitimate purpose, and whether
the filing acted as a necessary catalyst to resolve the dispute and force the
insurer to satisfy its obligations under the insurance contract. See Lewis
v. Universal Prop. & Cas. Ins. Co., 13 So. 3d 1079, 1081 (Fla. 4th DCA
2009) (“Florida’s cases have uniformly held that a section 627.428
attorney’s fee award may be appropriate where, following some dispute as
to the amount owed by the insurer, the insured files suit and, thereafter,
the insurer invokes its right to an appraisal and, as a consequence of the
appraisal, the insured recovers substantial additional sums.”); Travelers
Indem. Ins. Co. of Ill. v. Meadows MRI, LLP, 900 So. 2d 676, 679 (Fla. 4th
DCA 2005) (holding that the insured was entitled to attorney’s fees
because it had to hire counsel and eventually resort to formal legal action
to resolve the claim); Goff v. State Farm Fla. Ins. Co., 999 So. 2d 684, 688
(Fla. 2d DCA 2008) (holding that the insureds were entitled to section
3
627.428 attorney’s fees because their lawsuit forced State Farm to request
an appraisal and to pay significant additional amounts). However, the
timing of the request for appraisal is not determinative of the insured’s
right to fees. Lewis, 13 So. 3d at 1082.
On appeal, State Farm argues that Lime Bay breached the insurance
contract by filing suit after State Farm invoked the appraisal provision of
the contract policy. The appraisal provision states in pertinent part:
SECTION I
CONDITIONS
4. Appraisal. If we and you disagree on the value of the
property or the amount of loss, either may make written
demand for an appraisal of the loss. In this event, each party
will select a competent and impartial appraiser. Each will
notify the other of the selected appraiser’s identity with 20
days after receipt of the written demand for appraisal.
....
6. Legal Action Against Us. No one may bring legal action
against us under this insurance unless:
a. there has been full compliance with all of the terms of
this insurance . . . .
State Farm argues that the appraisal provision and the section
explaining the prerequisites for legal action should be interpreted together.
Specifically, once State Farm made a written demand for an appraisal,
Lime Bay was required to participate in the appraisal process before filing
suit.
In the trial court and on appeal, Lime Bay argues that it was not
required to participate in the appraisal process because State Farm failed
to prove that it notified Lime Bay of its right to mediate. As previously
noted, subsection 627.7015(7) states that the insured is not required to
participate in any contractual appraisal process unless the insurer
complies with subsection 627.7015(2) and notifies the insured of its right
to mediation. When State Farm invoked its right to appraisal, Lime Bay
requested proof of State Farm’s compliance with section 627.7015’s,
mediation notification requirements. State Farm filed an affidavit stating
that it complied with subsection 627.7015(2)’s requirements by notifying
Lime Bay of its right to mediate the claim in two different letters in March
and May of 2006.
4
Lime Bay argues that the notice of mediation contained in these letters
was untimely because subsection 627.7015(2) states that the insurer shall
notify the claimants of their right to participate in the mediation program,
“[a]t the time a first-party claim within the scope of the section is filed.”
Since State Farm’s notice of the right to mediate was not sent until March
2006, five months after Lime Bay filed its claim, Lime Bay argues that
State Farm did not prove that it fully complied with subsection
627.7015(2). We disagree because the subsection 627.7015(2) notice
requirement does not ripen until the insurer is on notice that there is a
dispute between the insurer and the policyholder relating to a material
issue of fact. Subsections 627.7015(2) and (9) must be read together.
Subsection 627.7015(9) provides:
(9) For purposes of this section, the term “claim” refers to any
dispute between an insurer and a policyholder relating to a
material issue of fact other than a dispute:
(a) With respect to which the insurer has a reasonable basis
to suspect fraud;
(b) Where, based on agreed-upon facts as to the cause of
loss, there is no coverage under the policy;
(c) With respect to which the insurer has a reasonable basis
to believe that the policyholder has intentionally made a
material misrepresentation of fact which is relevant to the
claim, and the entire request for payment of a loss has been
denied on the basis of the material misrepresentation;
(d) With respect to which the amount in controversy is less
than $500, unless the parties agree to mediate a dispute
involving a lesser amount; or
(e) With respect to a windstorm or hurricane loss that does
not comply with s. 627.70132.
§ 627.7015(9), Fla. Stat. (2012) (emphasis added). The facts of this case
do not meet any of the exceptions listed in subsection 627.7015(9). Thus,
we conclude that the requirement for giving notice of the right to
participate in mediation regarding a claim does not ripen until the insurer
is put on notice that there is a dispute that relates to a material issue of
fact.
5
Lime Bay filed suit in this case contending State Farm breached the
policy by not replacing the roof. State Farm contends it was not aware
Lime Bay was dissatisfied with State Farm’s payment to repair the roof
until Lime Bay sent its Civil Remedy Notice. Lime Bay responds State
Farm clearly knew there was a dispute because (1) State Farm sent
adjusters out three different times and changed its estimates of the
amounts to satisfy the claim each time; (2) it never responded to Lime
Bay’s request for a list of contractors that would do the repairs at the price
estimated by State Farm; and (3) deposition testimony of a State Farm
employee clearly shows that State Farm knew there was a dispute over
whether the roof needed replacement, rather than repair. We are satisfied
that there are disputes of material fact as to whether there was timely
compliance with the notice requirements of subsection 627.7015(2), which
in turn leaves a dispute of material fact as to whether Lime Bay was
compelled to file suit and whether there was a confession of judgment as
a matter of law.
As this case is being remanded for evidentiary findings, we must
address the trial court’s protective order entered against State Farm’s
discovery requests. Lime Bay argued that State Farm’s discovery requests
were irrelevant, immaterial, harassing and not reasonably calculated to
lead to the discovery of admissible evidence, because State Farm’s
payment of the appraisal award automatically constituted a confession of
judgment.
The ruling on a motion for protective order is reviewed for abuse of
discretion. See Katzman v. Rediron Fabrication, Inc., 76 So. 3d 1060, 1065
(Fla. 4th DCA 2011). Pursuant to Florida Rule of Civil Procedure 1.280(c)
and upon a motion, a party “from whom discovery is sought, and for good
cause shown, the court in which the action is pending may make any order
to protect a party or person from annoyance, embarrassment, oppression,
or undue burden or expense that justice requires . . . .”
The trial court erred by granting Lime Bay’s motion for protective order
against State Farm’s request for production of documents because, as
previously discussed, State Farm’s payment of the appraisal award was
not an automatic confession of judgment. The issue for summary
judgment was whether Lime Bay was forced to file suit to resolve the
dispute with State Farm. It appears that the court granted Lime Bay’s
motion for protective order on the grounds that State Farm’s payment of
the appraisal award was automatically a confession of judgment, entitling
Lime Bay to a judgment as a matter of law. In its first request for
production, State Farm requested, among other things, a copy of the
communication between Lime Bay and any public adjuster or contractor
6
hired by Lime Bay. This information was relevant to the issue of whether
Lime Bay continued to dispute State Farm’s estimate and was forced to
file suit to resolve the claim.
In sum, because there is a genuine issue of material fact as to whether
Lime Bay was forced to file suit, we reverse and remand for further
proceedings consistent with this opinion.
Reversed and Remanded with directions.
CIKLIN, C.J., and CONNER, J., concur.
7