PEOPLE'S TRUST INSURANCE COMPANY v. KARLA SOTO ESPANA AND ROSALINDA SOTO

Third District Court of Appeal
State of Florida
Opinion filed May 19, 2021.
Not final until disposition of timely filed motion for rehearing.
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No. 3D19-2428
Lower Tribunal No. 18-16745
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People's Trust Insurance Company,
Appellant,
vs.
Karla Soto Espana and Rosalinda Soto,
Appellees.
An Appeal from the Circuit Court for Miami-Dade County, Carlos
Guzman, Judge.
Cole, Scott & Kissane, P.A., and Mark D. Tinker, and Mary Lou Cuellar-
Stilo (Tampa); Brett Frankel and Jonathan Sabghir (Deerfield Beach), for
appellant.
Alvarez, Feltman, Da Silva & Costa, PL, and Paul B. Feltman; Legal
Armor- The People's Law Firm, and Alian M. Perez, for appellees.
Before EMAS, C.J., and LINDSEY, and BOKOR, JJ.
LINDSEY, J.
People’s Trust Insurance Company appeals from a final order granting
Appellees Karla Soto Espana and Rosalindo Soto’s (the “Insureds”) motion
to enforce payment of an appraisal award and entering judgment in the
amount of $25,454.44. Because People’s Trust did not fail to comply with
any conditions precedent necessary for the formation of a repair contract, we
reverse.
I. BACKGROUND
In September 2017, the Insureds reported a loss due to damage to
their home caused by Hurricane Irma. The Insureds’ policy contained a
Preferred Contractor Endorsement, which the Insureds agreed to in
exchange for a premium credit. Pursuant to the Endorsement, the Insureds
agreed “that in the event of a covered loss . . . [People’s Trust] at our option
may elect Rapid Response Team, LLCTM to repair ‘your’ damaged property
as provided by the policy and its endorsements.” The Endorsement further
explains that “[w]hen [People’s Trust has] exercised our option to repair ‘your’
damaged property pursuant to this Preferred Contractor Endorsement,
[People’s Trust] will repair the damaged property with material of like kind
and quality without deduction for appreciation. Such repair is in lieu of issuing
any loss payment that would otherwise be due under the policy.” (Emphasis
added).
2
In October 2017, People’s Trust accepted coverage and exercised its
option to repair pursuant to the Endorsement. The Insureds sent People’s
Trust a Sworn Proof of Loss and agreed that “[p]ursuant to the terms of the
policy, [the Insureds are] willing to proceed with People’s Trust’s option to
repair [the] property and all covered damages.” However, a dispute arose
as to the scope of repairs.
The Endorsement contains the following “Appraisal” provision in the
event the parties disagree on the amount of loss and scope of repairs:
S. Appraisal, the following is added to the policy:
Where [People’s Trust] elect[s] to repair:
1. If [the Insureds] or [People’s Trust] fail to agree
on the amount of loss, which includes the scope of
repairs, either may demand an appraisal as to the
amount of loss and the scope of repairs. . . .
2. The scope of repairs shall establish the work to
be performed and completed by Rapid Response
Team, LLCTM. Such repair is in lieu of issuing any
loss payment to [the Insureds] that otherwise would
be due under the policy. . . .
Pursuant to the above provision, People’s Trust demanded appraisal
in March 2018. The Insureds did not respond and instead sued People’s
Trust for breach of contract in May 2018 based on People’s Trust’s failure to
“(i) provide coverage for the entire covered Loss; (ii) acknowledge that
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payment for the entire Loss would be forthcoming; and/or (iii) make payment
of insurance proceeds for the entire Loss to the Insured.”
People’s Trust again sought appraisal by filing a “Motion to Dismiss
and to Compel Appraisal, Deductible Payment, Work Authorization, and
Repairs[.]” In response, the Insureds argued that the dispute over the scope
of repairs was actually a coverage dispute, and therefore, the trial court
should resolve the dispute.1 The Insureds also argued that People’s Trust
could not enforce the Endorsement because it breached conditions
precedent by failing to provide the Insureds with documentation of Rapid
Response’s current licensure, current workers’ compensation insurance, and
commercial general liability coverage.
The trial court denied People’s Trust’s motion to dismiss and granted
its motion to compel appraisal.2 Both parties participated in the appraisal
1
The trial court correctly rejected this argument. See Cincinnati Ins. Co. v.
Cannon Ranch Partners, Inc., 162 So. 3d 140, 143 (Fla. 2d DCA 2014)
(“Notably, in evaluating the amount of loss, an appraiser is necessarily
tasked with determining both the extent of covered damage and the amount
to be paid for repairs. Thus, the question of what repairs are needed to
restore a piece of covered property is a question relating to the amount of
‘loss’ and not coverage.” (citing Johnson v. Nationwide Mut. Ins. Co., 828
So. 2d 1021, 1025 (Fla. 2002))).
2
In ordering appraisal, the trial court necessarily determined the
Endorsement was enforceable because the appraisal procedure is set forth
in the Endorsement.
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process, and the appraisal panel determined the replacement cost, reflecting
the “scope of repairs” to be $24,703.45, an amount higher than either party’s
estimate.
Despite the fact that appraisal was conducted pursuant to the
Endorsement, and the appraisal award explicitly determined the “scope of
repairs,” the Insureds filed a motion to enforce payment of the appraisal
amount. The Insureds sought payment under the “Loss Payment” provision
in the policy, even though the Endorsement explained that loss payment was
unavailable once People’s Trust elected its option to repair. The Insureds
again argued that People’s Trust could not enforce the Endorsement
because it breached the same conditions precedent the Insureds relied on
in their response to the motion to compel arbitration (failure to provide
documentation of current licensure, current workers’ compensation
insurance, and commercial general liability coverage).
Following a hearing, the trial court entered an order granting the
Insureds’ motion to enforce payment of the appraisal award in the amount of
$25,454.44, the appraisal award plus prejudgment interest. 3 People’s Trust
appealed.
3
In their one-count Complaint, which was never amended, the Insureds
sought damages for breach of contract. The trial court’s order did not
adjudicate the breach claim set forth in the Complaint nor did it enter a
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II. ANALYSIS
We review the trial court’s construction of the insurance policy de novo.
Am. Integrity Ins. Co. v. Estrada, 276 So. 3d 905, 911 n.13 (Fla. 3d DCA
2019) (quoting Barnier v. Rainey, 890 So. 2d 357, 359 (Fla. 1st DCA 2004)).
The issue before us involves a straightforward interpretation of the
Endorsement. As this Court has previously explained, “[t]he election-to-
repair endorsement has been an established option for various Florida
residential insurance policy forms for several years. The legal features of the
endorsement have been analyzed repeatedly by Florida’s appellate courts.
The new contract formed between the insurer’s preferred and designated
contractor under such an endorsement and the insured has been termed a
‘Drew agreement,’ a reference to Drew v. Mobile USA Ins. Co., 920 So. 2d
832 (Fla. 4th DCA 2006).” People’s Tr. Ins. Co. v. Franco, 305 So. 3d 579,
582 (Fla. 3d DCA 2020).
On appeal, the Insureds argue there was no formation of a Drew
agreement because People’s Trust failed to comply with certain conditions
precedent. Specifically, the Insureds rely on a section in the Endorsement
judgment. In response to an order to show cause why the appeal should not
be dismissed for lack of jurisdiction, the parties filed an order entering final
judgment.
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setting forth People’s Trust’s duties after loss, which provides, in pertinent
part, as follows:
T. Our Duties After Loss, the following section is
added to the policy:
[People’s Trust’s] duties after loss pertaining to
commencement and performance of repairs are as
follows:
1. [People’s Trust] will instruct [Rapid Response] to
furnish [the Insureds] with written documentation
of current licensure . . . .
2. [People’s Trust] will instruct [Rapid Response] to
furnish [the Insureds] with written documentation
of current workers’ compensation insurance and
commercial general liability coverage . . . .
[People’s Trust] may, at “our” option, assist [Rapid
Response] by providing the documentation.
Nothing in the above section indicates that these duties are conditions
precedent to the formation of the Drew agreement. See Mitchell v. DiMare,
936 So. 2d 1178, 1180 (Fla. 5th DCA 2006) (“A condition precedent is an act
or event, other than a lapse of time, that must occur before a binding contract
will arise.” (citations omitted)). In fact, under the plain language of this
section, these duties, which pertain to the “commencement and performance
of repairs,” are added to the policy only after People’s Trust selects its option
to repair under the Endorsement.
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Moreover, there are no conditions in the portion of the Endorsement
setting forth People’s Trust’s option to elect to make repairs, which simply
provides as follows: “THIS ENDORSEMENT ALLOWS US AT OUR OPTION
TO SELECT RAPID RESPONSE TEAM, LLCTM TO MAKE COVERED
REPAIRS TO YOUR DWELLING OR OTHER STRUCTURES.” In short, all
that is needed for the Endorsement to apply is for People’s Trust to exercise
its option to repair. Under Florida law, this creates a new, binding contract
pursuant to the terms in the Endorsement. See Drew, 920 So. 2d at 835(“[W]hen the insurer makes its election to repair, that election is binding upon
the insured and creates a new contract under which the insurer is bound .
. . .” (quoting Travelers Indem. Co. v. Parkman, 300 So. 2d 284, 285 (Fla.
4th DCA 1974))); see also Allstate Fire & Cas. Ins. Co. v. Hradecky, 208 So.
3d 184, 187 (Fla. 3d DCA 2016) (“The law in Florida is clear that to the extent
an endorsement is inconsistent with the body of the policy, the endorsement
controls.”).
Because People’s Trust’s duties under the Endorsement to provide
certain documentation are not conditions precedent to the formation of the
repair contract, there was no basis for the Insureds’ underlying breach of
contract action. Consequently, the appraisal award, which determined the
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“scope of repairs,” should not have been transformed into a loss payment.4
We therefore reverse and remand for proceedings consistent with the terms
of the Endorsement.
Reversed and remanded
4
The appraisal award was not a damages determination either. See Citizens
Prop. Ins. Corp. v. Mango Hill #6 Condo. Ass’n, Inc., 117 So. 3d 1226, 1227
n.1 (Fla. 3d DCA 2013) (“‘Appraisal award’ is really a misnomer because the
appraisal panel only determines the amount of loss, not an insured’s
entitlement to any damages, prominently including coverage issues such as
whether the loss falls within the insuring clause of the policy, and whether
the loss was caused by a covered peril.”).
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