AMERICAN COASTAL INSURANCE COMPANY v. HANSON'S LANDING ASSOCIATION, INC.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
AMERICAN COASTAL INSURANCE COMPANY,
Appellant,
v.
HANSON’S LANDING ASSOCIATION, INC.,
Appellee.
No. 4D21-1221
[December 1, 2021]
Appeal of nonfinal order from the Circuit Court for the Nineteenth
Judicial Circuit, Martin County; Gary L. Sweet, Judge; L.T. Case No. 43-
2019-CA-001509.
Patrick E. Betar, William S. Berk and Austin J. North of Berk, Merchant
& Sims, PLC, Coral Gables, for appellant.
Christopher N. Mammel and Tamara Chen-See of Merlin Law Group,
P.A., West Palm Beach, for appellee.
CONNER, C.J.
In this appeal regarding real property casualty insurance, we again
confront the issue of whether appraisal was prematurely granted when
coverage was “wholly denied” by the insurance company. American
Coastal Insurance Company (“American Coastal”) appeals the trial court’s
order granting appraisal, raising two issues: (1) whether appraisal was
prematurely granted; and (2) whether the insured waived the right to
appraisal by actively pursuing litigation maneuvers inconsistent with its
motion to compel appraisal. To the extent that the trial court’s order can
be construed as a denial of American Coastal’s appraisal waiver argument,
we affirm the trial court’s ruling on that issue without discussion.1
1 “Because appraisal exists only to determine the amount of loss, and not whether
coverage exists, a party cannot seek appraisal until the insurer admits coverage
(or until coverage is determined by the court). Consequently, a party cannot act
inconsistently with the right to seek appraisal until that time.” Fla. Ins. Guar.
Ass’n. Inc. v. Martucci, 152 So. 3d 759, 761 (Fla. 5th DCA 2014) (citations
However, because we agree with American Coastal that appraisal was
prematurely granted, we reverse and remand for further proceedings.
Background
Hanson’s Landing Association, Inc. (“the Association”), a condominium
complex, was insured by American Coastal when a hailstorm occurred in
April 2015. In August 2017, the Association notified American Coastal
that it was making a claim for damages caused by the hailstorm,
purportedly after the Association became aware of the loss for the first
time. Immediately after receiving the claim, American Coastal issued a
reservation of rights due to the Association’s delay in providing notice of
the claim. Along with the reservation of rights, American Coastal sent a
notice of the policy’s post-loss obligations and conditions precedent to
coverage. In addition to requiring prompt notice of a loss, the policy
required the Association to permit inspection of its books and records, and
an examination under oath.
As part of investigating the claim, American Coastal requested to
inspect maintenance records, board meeting minutes, contracts and
invoices for repairs, and records regarding any other insurance claims filed
by the Association. It further asked the Association to confirm the
damages claimed and the units affected by the storm. Additionally,
American Coastal had the property inspected by its field adjuster, an
engineer, and a roofer.
The engineer reported that his evaluation was affected by the passage
of time between when the loss occurred and his inspection. The engineer
found evidence of some hail damage, concluding that repairs were feasible
for the roofs of the two-story structures in the development, but the three
pool buildings and thirty carports needed roof replacements. Based on the
engineer’s report and his own inspection, American Coastal’s independent
field adjuster prepared an estimate with a replacement cost value of
$1,165,334.
The Association’s president testified during his examination under oath
that he was not aware of any damage to the property, other than some
landscaping and a few broken windows and skylights. In stark contrast,
omitted); see also Williams v. Citizen Prop. Ins. Co., 285 So. 3d 334, 335 (Fla. 4th
DCA 2019) (“An insured cannot seek appraisal until coverage is determined.”)
2
the Association presented a $6,852,120 estimate for repairs prepared by a
contractor. The estimate included replacement of all the roofs in the
development. The Association did not provide documentation in support
of the estimate.
Approximately seven months later, in August 2019, the Association
submitted a revised claim for $18,278,455.08. Two months later, the
Association produced engineering reports in support of the revised claim.
As a result, the last of the reports requested by American Coastal from the
Association to document the claim was produced over four years from the
initial date of loss and two years after reporting the claim.
American Coastal denied coverage in its entirety. In denying the claim,
American Coastal cited the Association’s failure to comply with its post-
loss obligations and conditions precedent to coverage. More specifically,
American Coastal asserted that the Association breached the conditions
precedent of: (1) providing prompt notice of loss or damage; (2) providing
a description of the property being claimed as damaged promptly; and (3)
providing all documents requested. Additionally, American Coastal cited
the Association’s violation of the concealment, misrepresentation, or fraud
provision of the policy. That provision provided that coverage is void if, at
any time, the insured intentionally conceals or misrepresents a material
fact concerning a claim. American Coastal maintained that the revised
claim was “grossly inflated,” and that the manner in which the Association
responded to requests for information suggested intentional concealment.
After the denial of coverage, the Association sued American Coastal for
breach of contract and declaratory relief to enforce appraisal. American
Coastal answered the complaint and raised affirmative defenses, including
no coverage due to the Association’s material breach of its post-loss
obligations and conditions precedent, as well as the Association’s violation
of the concealment, misrepresentation, or fraud provision.
The Association filed a motion to compel appraisal. In response,
American Coastal noted the fact that coverage was denied as a whole, and
the Association acted inconsistently with its right to appraisal by actively
participating in discovery.
The trial court held a hearing on the motion to compel appraisal. No
evidence was presented at the hearing. The Association contended that
the dispute was nothing more than a disagreement as to the amount of
loss as evidenced by the fact that American Coastal’s investigation
confirmed the property was damaged by the hailstorm, despite American
Coastal’s denial of the claim based on late notice and appearance of
3
misrepresentation based on the numbers going up “radically.” The
Association further contended that it complied with its post-loss duties.
In response, American Coastal argued that an appraisal cannot be ordered
when there has been an outright denial of coverage. American Coastal
also explained how the 2015 loss was not reported until 2017, and that it
was not until 2019 that the Association provided its $18 million loss
estimate. For those reasons, American Coastal denied there was any
coverage available under the policy.
The trial court reserved ruling and later issued its written order
granting the motion to compel appraisal without explanation of its
reasoning. American Coastal gave notice of appeal.
Appellate Analysis
Our review of a trial court’s order compelling an appraisal pursuant to
an insurance policy is de novo. Citizens Property Ins. Corp. v. Demetrescu,
137 So. 3d 500, 502 (Fla. 4th DCA 2014).
Our supreme court has opined that “causation is a coverage question
for the court when an insurer wholly denies that there is a covered loss
and an amount-of-loss question for the appraisal panel when an insurer
admits that there is covered loss, the amount of which is disputed.”
Johnson v. Nationwide Mut. Ins. Co., 828 So. 2d 1021, 1022 (Fla. 2002)
(emphasis added). “Consistent with Johnson, we have held that the trial
court must resolve all underlying coverage disputes prior to ordering an
appraisal.” Demetrescu, 137 So. 3d at 502 (citing Sunshine State Ins. Co.
v. Corridori, 28 So. 3d 129, 131 (Fla. 4th DCA 2010)). We have required
that coverage disputes be resolved prior to appraisal “because a finding of
liability necessarily precedes a determination of damages.” Id.American Coastal argues the trial court erred in granting appraisal after
it denied liability for payment under the policy for two reasons: (1) the
Association failed to comply with post-loss obligations and conditions
precedent to coverage; and (2) American Coastal declared the policy was
void due to the Association’s violation of the policy’s concealment,
misrepresentation, or fraud provision. In other words, American Coastal
contends it wholly denied coverage under the policy.
The Association argues the trial court properly ordered appraisal
because: (1) the claim for hail damage is covered under the all-risk policy;
(2) appraisal is a mandatory right under the policy; (3) the Association
substantially complied with post-loss duties enabling investigation of the
claim by American Coastal; and (4) based on the specific findings of
4
American Coastal’s retained engineer, hail damage was still visible in 2017
from the 2015 hailstorm, and American Coastal was not prejudiced in its
investigation even if the Association’s notice of the damage was late.
Additionally, the Association argues that American Coastal’s post-loss
affirmative defense of concealment, misrepresentation, or fraud raises a
condition subsequent to the policy and is at its core simply a dispute as to
the amount of loss.
We agree with American Coastal that appraisal was prematurely
granted in this case. The facts of this case have a significant resemblance
to the facts of Corridori. There, a claim for damage caused by Hurricane
Wilma was submitted to the insurance company and paid not long after
the hurricane passed. 28 So. 3d at 130. Two years later, a supplemental
claim for damages discovered by a public adjuster was filed. Id. The
insurer requested a sworn proof of loss with a time deadline. Id. The
homeowners did not comply with the deadline, and the insurance
company contended that the late submission was incomplete and
inaccurate. Id. The insurer “denied the claim, concluding that the
damages claimed were not in fact ‘supplemental’ to the original damages.”
Id. The insurer further claimed that the homeowners materially breached
the policy by failing to comply with the proof of loss requirement. Id. We
reversed the trial court’s grant of appraisal, relying on Johnson. Id. at 131.
We further concluded that the trial court prematurely ordered appraisal
without a factual determination as to whether compliance with the policy
provisions was necessary and whether the homeowners’ partial
compliance with the policy provisions was sufficient. Id. (citing Haiman v.
Fed. Ins. Co., 798 So. 2d 811, 812 (Fla. 4th DCA 2001)).
Like Corridori, there is a factual dispute in this case as to whether there
is coverage under the policy because notice of the claim was untimely and
because the Association failed to comply with policy requirements to
provide requested information about the extent of the losses purportedly
payable under the policy. Significantly, unlike Corridori, there is an
additional factual dispute in this case as to whether coverage under the
policy is void because the Association allegedly engaged in concealment,
misrepresentation, or fraud in submitting its claim. As such, the factual
dispute regarding coverage is more pronounced in this case than the facts
in Corridori.
Because American Coastal has pled denial of coverage under the policy,
and because the trial court must resolve the extent of coverage under the
policy prior to ordering an appraisal, we reverse and remand for further
proceedings consistent with this opinion.
5
Affirmed in part, reversed in part, and remanded.
WARNER and CIKLIN, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
6