In Florida Ins. Guar. Ass’n v. Monaghan, 40 Fla. L. Weekly D1508 (Fla. 5th DCA June 26, 2015), Florida’s Fifth District Court of Appeals held that the insureds had waived their right to appraisal by delaying their demand for same and actively pursuing litigation. The decision arises out of an appeal filed by Florida Insurance Guaranty Association (FIGA) from the trial court’s order granting the insureds’ motion to compel appraisal.
On appeal, FIGA advanced two arguments. First, the trial court’s order should be reversed because the dispute arises out of the “method of repair,” and not the “amount of loss,” which is the sole appraisable issue under the policy. Second, the insureds waived any right to appraisal by their conduct.
As to the first issue, the court affirmed without further discussion, citing case law holding that the “method of repair” is an appraisable issue. With regard to the second issue, the court reviewed the issue of waiver under case law providing that in reaching its decision, the court should: (1) review the length of time that has lapsed between the insurer’s admission of coverage and the insured’s claim for appraisal; and (2) evaluate the insured’s actions during that period to determine whether the insured engaged in significant legal activity inconsistent with the right to appraisal.
Under the first prong of the Fifth District’s analysis, the court found that nearly 11 months had passed between FIGA’s concession of coverage and the insureds’ request for appraisal. Specifically, the court determined that appraisal was appropriate as of October 10, 2012, when, in its answer to the complaint, FIGA admitted that it had agreed to pay the claim. However, the insureds did not demand appraisal until September 6, 2013.
Under the second prong of its analysis, the court determined that the insureds had actively pursued litigation inconsistent with their right to appraisal. The court noted that in the months between FIGA’s admission of coverage and the insureds’ request for appraisal, the insureds served discovery requests, reasserted their demand for a jury trial, and prepared for and attended a case management conference and mediation. In reaching its decision, the court relied on Fla. Ins. Guar. Ass’n v. Reynolds, 148 So. 3d 840 (Fla. 5th DCA 2014). In that case, the insureds filed a motion to compel mediation, moved to compel responses to discovery, sought and obtained partial summary judgment, and noticed the case for trial for over a year after the insurer admitted coverage. In view of such “significant litigation activity,” the court held that the insureds had waived their right to appraisal. The Monaghan court noted that in the case before it, a period of approximately one year had elapsed between the concession of coverage and the request for appraisal and found similarly that the insureds had engaged in significant litigation activity inconsistent with their right to appraisal.
Monaghan demonstrates that Florida litigants must be mindful of the time between an admission of coverage and the exercise of a policy right, specifically appraisal. The court’s rationale will apply to policyholders and insurers alike, so as to prevent an insurer from compelling appraisal where the claim is not timely raised. Attorneys and their clients thus should agree on a litigation strategy as early as possible. If appraisal appears to be the preferable course of action for recovery or in defense of a claim, the parties should proceed in a manner consistent with that approach. Once a party decides to engage in discovery and motion practice, it may be found to have waived its right by “actively pursuing litigation.”
A copy of the court’s decision may be read here.