By: Oliver B. Clark
2021 WL 1432160, 2D20-1414 (Fla. 2d DCA 1/20/2021)
In this opinion, the Second District Court of Appeals held the insurance company could not avoid appraisal based on coverage defenses because the insurance company had made payments on the claim. Villagio at Estero Condominium Association’s (Villagio) sued American Capital Assurance Co. (American Capital), alleging breach of contract and asking for a declaratory judgment. Villagio then moved to stay the case and compel appraisal, which the trial court denied. Villagio argued that the trial court could compel the Parties to appraisal and order that all coverage issues need not be determined before same. The trial court denied the motions and Villagio appealed. Relying heavily on the court’s reasoning in American Capital Assurance Corp. v. Leeward Bay at Tarpon Bay Condominium Ass’n, 306 So. 3d 1238 (Fla. 2d DCA 2020), review granted, No. SC20- 1766, 2021 WL 416684 (Fla. Feb. 8, 2021). Florida’s Second District Court of Appeals agreed with Villagio that not all coverage issues must be determined before appraisal and remanded for an order compelling appraisal.
The facts on offer were as follows. American Capital insured Villagio under a commercial property insurance policy. The insured property allegedly sustained damage as the result of Hurricane Irma and Villagio filed the underlying claim. American Capital extended coverage and paid Villagio $263,465.11. Then American Capital paid Villagio an additional $70,913.33. Villagio later filed a sworn proof of loss, representing a net claim of $24,237,262.30. American Capital determined this claim to be an intentional misrepresentation, grossly inflated, and indicative of fraud; American Capital voided and denied the claim. This suit followed.
Of paramount concern on appeal was whether the trial court’s position that coverage issues must be determined before appraisal and its consequent denial of Villagio’s Motion to Stay and Compel Appraisal was incorrect. Villagio contended that the trial court erred, and that American Capital’s defense of misrepresentation necessitated factual determinations that were the appropriate province of an appraisal panel. Villagio further asserted that the trial court correctly recognized that American Capital’s defenses to coverage did not invalidate the policy’s appraisal provision or the requirement to participate in appraisal. American Capital contended that no appraisable issue existed because it denied the claim based on intentional misrepresentation. American Capital further argued that Villagio must demonstrate that coverage has been resolved before appraisal.
Applying its reasoning in Leeward Bay above, which involved strikingly similar facts, the Court noted that American Capital could not avoid appraisal by claiming that the insured fraudulently overinflated its claim after American Capital admitted coverage. In both cases, American Capital initially extended coverage and paid the insured for the claim. When the insured filed what American Capital considered to be an overinflated claim, American Capital denied the claims and declared the policies void. Thus, both cases “necessarily involved the amount of loss; any coverage dispute is intertwined with the amount of loss.” The court therefore concluded that the facts compelled a similar conclusion as that reached in Leeward Bay (i.e., that the trial court ruling on Villagio’s Motion to Stay and Compel appraisal should be reversed, as “all coverage issues” need not be determined before appraisal).