VOLUME XXI, NUMBER 8
August, 2009

NEW AMENDMENT TO RULES ALLOWS APPEAL OF ORDERS GRANTING OR DENYING A PARTY’S RIGHT TO APPRAISAL

Recently, the Florida Rules of Appellate Procedure were amended to permit review of certain non-final orders. Fla. R. App. P. 9.130 was amended to add the right to the immediate appeal of, “The entitlement of a party to arbitration, or to an appraisal under an insurance policy,” Fla. R. App. P. 9.130(a)(3)(c)(iv). The appeal of this type of order must be taken within thirty (30) days of rendition of the order to be reviewed. This is an important change to the Florida Rules of Appellate Procedure because it changes case law in the state that previously considered such orders to be “interlocutory” in nature and/or not reviewable until after final judgment in the case. Pursuant to the amendment, to the extent that a carrier is forced to appraisal and/or denied its right to appraisal, they may now seek an appeal of this order prior to any final judgment being entered. Note, however, that in the absence of a stay, during the pendency of the review of a non-final order, the lower tribunal may still proceed with all matters, including trial or final hearing, provided that the lower tribunal may not render a final order disposing of the cause pending such review. Fla. R. App. P. 9.130(f). Therefore, it may be necessary to move for a stay of the proceedings pending appellate review of any order compelling or denying a party’s right to appraisal.

Nancy I. Stein-McCarthy

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UNDER VALUED POLICY LAW INSURER ONLY RESPONSIBLE FOR THAT PART OF TOTAL LOSS ATTRIBUTABLE TO COVERED PERIL

In Citizens Property Insurance Corporation v. James Mallett and Martha Mallett, 34 Fla. L. Weekly D466, the First District Court of Appeal reversed a trial court’s summary judgment in favor of an insured after the lower court had determined that since the insured’s property had received “substantial damage” from a windstorm under Florida’s Valued Policy Law (VPL), the windstorm insurer was liable for the full policy limit under the policy of insurance. The First District Court of Appeal ruled where a covered peril causes only part of the total loss, insurers are only responsible for those damages directly attributable to the covered peril under their policy.

 On or about September 16, 2004, Citizens Property Insurance Corporation (“Citizens”) insured James and Martha Mallett’s (“Mallett”) home in Pensacola, Florida. Also on that date, Hurricane Ivan struck Pensacola, causing substantial damage to the Mallett’s home. The policy issued by Citizens did not cover water damage, although the Malletts did possess separate flood insurance and recovered $244,745.95 for the water damage under that policy. Citizens determined that the Mallett’s residence had sustained wind damage in the amount of $182,279.95. The Citizens’ policy valued the Mallett’s home at $561,000.00. The Malletts sought payment of the entire $561,000.00 policy limit from Citizens, but Citizens declined. Subsequently, the Malletts filed suit seeking payment of the full amount of the insured value of the property under the Citizens policy. In their suit, the Malletts argued that they had sustained a constructive total loss in light of the local government authority determining that the damage to their property exceeded fifty percent (50%) of its value. The Malletts moved for summary judgment on the claim for the total policy limit, as well as damages for coverage under the debris removal clause and the law and ordinance clause of the policy. After a hearing on the Motion for Summary Judgment, the trial court found that the Mallett’s home had suffered “substantial damage” attributable to wind alone. The trial court then ruled that based on the Florida Valued Policy Law, Florida Statute § 627.702(1) and the decision in Mierzwa v. Florida Windstorm Underwriting Association, 877 So.2d 774 (Fla. 4 th DCA 2004) that the Malletts were entitled to the full amount under the policy limit, as well as payment under the debris removal and law and ordinance coverage provisions under the policy. Also, the trial court awarded the Malletts prejudgment interest from the date of summary judgment. Both Citizens and the Malletts appealed this decision and the First District Court of Appeal took this review.

In its decision, the First District Court of Appeal determined that the trial court had relied very heavily on the decision in Mierzwa v. Florida Windstorm Underwriting Association, 877 So.2d 774 (Fla. 4 th DCA 2004), and that this reliance was an error in light of the Supreme Court’s decision in Florida Farm Bureau Casualty Insurance Company v. Cox, 967 So. 2d 815 ( Fla. 2007). In Cox, the Florida Supreme Court ruled that plain language of the VPL statute did not intend that an insurer be mandated to pay for a total loss if a covered peril causes only part of that total loss. The Supreme Court went on to rule this does not establish any requirements for any insurer to pay for excluded non-covered perils. Accordingly, the First District Court of Appeal reversed that part of the summary judgment granting the Malletts additional compensation under Coverage A under the policy against Citizens for damage sustained to their residence not solely attributable to wind.

Similarly, the appellate court ruled that the trial court’s summary judgment in favor of the debris removal coverage was also error. Specifically, the appellate court cited to the fact that the Malletts did not exclusively establish that the debris removal costs were also solely attributable to wind, and therefore a question of fact remained as to how much Citizens was obligated to pay under the debris removal coverage. In so ruling, the appellate court relied on the decision in Ceballo v. Citizens Property Insurance Corporation, 967 So.2d 811 (Fla. 2007) for the proposition that the VPL does not mandate payment of the policy limits of the additional coverage without proof of loss where the unambiguous language of the policy requires such proof.

The court also relied on the holding in Ceballo to reverse the trial court’s decision on the issue of the amount the Malletts were entitled to under the law and ordinance provision of the policy. Specifically, the appellate court ruled that Malletts had not proven that the costs they had incurred to bring their residence into compliance with the applicable building codes, were solely attributable to wind, and therefore a question of fact remained as to the amount Citizens was obligated to pay under the law and ordinance provision.

Finally, the First District Court of Appeal considered the Malletts’ cross-appeal on the issue of the trial court’s determination of when to award prejudgment interest. The court ruled that an award of prejudgment interest was moot as to Coverage A based on its reversal of the summary judgment under that coverage. As for the amounts awarded by the trial court under the additional coverage, the court found no error with the trial court’s decision. The court ruled that the terms of the contract between Citizens and the Malletts controlled the date from which the coverage payment was due, as well as when interest was due on those amounts payable. The court specifically cited the provision under the policy that provided that Citizens was not obligated to make payment on a claim for debris removal or law or ordinance coverage under the policy until twenty (20) days after it reached a written agreement with the Malletts, or sixty (60) days after entry of final judgment on the claim or after the filing of an appraisal award or mediation settlement with Citizens.

Stephanie H. Luongo

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NOTICE BY LETTER DOES NOT MEET REQUIREMENTS OF § 57.105, FLORIDA STATUTES

In a recent case, the Fifth District Court of Appeal held that the “safe harbor” provision of § 57.105 applies to motions for sanctions filed after July 1, 2002, even if suit was filed prior to that date. In addition, the court held that the safe harbor provision of § 57.105 is satisfied only if the moving party serves the motion itself upon the opposing party – an informal letter threatening to move for sanctions is not enough.

In Kenniasty v. Bionetics Corporation, etc. et al.. 34 Fla L. Weekly D1187 ( Fla. 5 th DCA 2009), suit was filed prior to July 1, 2002. The defendant had not satisfied the “safe harbor” provision, set forth in § 57.105(4), which provides, “.. a motion by a party seeking sanctions under this section must be served but may not be filed with or presented to the court unless, within 21 days after service of the motion, the challenged paper, the claim, defense, contention, allegation or denial is not withdrawn or appropriately corrected.”

The 5 th District Court of Appeals reversed the trial court’s holding and agreed with the plaintiff, holding that the defendants had failed to give proper notice to the Plaintiff by serving the motion upon the plaintiff as detailed in the statute. In addition, the court noted that the defendant had not served the plaintiff with the actual motion it intended to serve; rather, the defendant had merely sent a letter to the plaintiff threatening to move for sanctions. The court held that this was not sufficient to provide notice under the safe harbor provision. In order to prevail in a motion for sanctions after July 1, 2002, the moving party must serve the motion on the opposing party 212 days before filing the motion.

Erik Bell

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NEW REPORTING REQUIREMENTS CONCERNING PROFESSIONAL LIABILITY CLAIMS

Florida Governor, Charlie Crist has signed into law Senate BILL 2252, which amends section 927.912(1) F.S. to provide new rules for the reporting of professional liability claims by insurers and health care providers.

Substantively, the amendment provides that all self-insurers, commercial self-insurance funds, authorized insurers, surplus lines insurers, risk retention groups and joint underwriting associations are required to report to the Office of Insurance Regulation (OIC) any written claim or action for damages brought against doctors, hospitals, health maintenance organizations, ambulatory surgical centers, attorneys and dentists. The subject amendments went into effect on July 1, 2009.

The Bill clarifies existing law to the extent that it provides that a “claim” is defined to be the receipt of (1) notice of the intent to initiate action, (2) a summons and complaint of (3) a written demand from a person or their legal representative stating an intent to pursue an action for damages.

The Insurer’s obligation to file a report under the new legislation is triggered by the following occurrences:

The Insurer’s obligation to file the mandated reports must occur no later than 30 days after the trigger event. If a claim is opened, closed and then subsequently re-opened, the re-opened claim is treated as a new case for the purposes of the Insurer’s duty to report claims under the new amendment.

Robin B. Rothman

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