Just last week, the Third District Court of Appeals issued another ruling involving entitlement to appraisal in Citizens Property Insurance Corp., v. Mango Hill Condo. Association 12, Inc., No. 3D10-2014 (Fla. 3d DCA February 9, 2011). The Third District has been busy the last couple of months with rulings on the issue of appraisal, and one carrier in particular seems to be filing many of the appeals. I wanted to introduce the recent ruling, and there will likely be some follow up discussion in the weeks to come.

Citizens appealed the Miami-Dade Circuit Court’s order compelling appraisal related to Mango Hill’s Hurricane Wilma claim. Citizens, not surprisingly, asserted at the hearing before the trial court judge that the association failed to comply with the post-loss provisions of the insurance policy issued by Citizens. A brief discussion of the facts of the case is important.

Mango Hill reported the Hurricane Wilma claim to Citizens in October of 2005. Citizens investigated the claim, acknowledged coverage for the loss and issued several checks to the association for hurricane-related damages. Mango Hill later retained a public adjuster and claimed additional funds to restore it to its pre-loss condition. Citizens demanded documentation and information from the association, and Mango Hill submitted a sworn proof of loss, an estimate of damages and an engineering report stating the damages were the result of Hurricane Wilma. The current board president appeared for examination under oath as well. Citizens made additional requests for documents and information, and refused to commence the appraisal process until that information was provided. Citizens asserted that the damages were “newly claimed,” over three years after the loss and over a year after Citizens had closed its claim file.

Mango Hill filed the lawsuit against Citizens, claiming it satisfied all policy post-loss obligations and moved to compel appraisal. Citizens filed an answer and affirmative defenses denying coverage for the claim and asserting that appraisal could not be compelled until the association complied with the policy post-loss obligations or until the court sufficiently ruled on that issue. Mango Hill argued that the issue of post-loss compliance relates to coverage and, given prior Third District Court of Appeals’ rulings, the issue of coverage could be determined after appraisal is compelled. Mango Hill essentially argued for a “dual-track” approach: letting the appraisal proceed while the court decides issues of coverage. Mango Hill asserted that the issue of post-loss compliance involves an issue of coverage since a failure to comply could jeopardize coverage for the claim.

The Third District cited Citizens v. Galeria Villas Condo. Assoc., 48 So.3d 188 (Fla. 3d DCA 2010); and Citizens v. Maytin, No. 3D10-693, 36 Fla. L. Weekly D51 (Fla. 3d DCA December 29, 2010), in support of its ruling which reversed the trial court’s order compelling appraisal and sent the case back to the trial court for an evidentiary hearing on the issue of Mango Hill’s post-loss compliance. The Third District discussed the Galeria Villas decision in some detail, and seems to be of the view that until there is a ruling that the policy’s post-loss conditions were sufficiently met by the policyholder, there is no disagreement over the amount of loss to be appraised and the trial court is unable to issue an order on the “dual track” approach of coverage and appraisal.

There are still unanswered questions after this recent decision. For example, does a disagreement over the amount of loss really only exist after an insured complies with broad and burdensome demands for post-loss compliance? Can’t there be a disagreement over the loss amount based on what the insurer previously paid and what the policyholder and its experts have estimated as the damages? Should the amount of time between the last payment by the insurer and the policyholder’s estimate of damages revealing a disagreement over the loss amount even matter where the policy does not have a time limitation and the appraisal panel determines causation of the damages anyhow?

We may revisit some of the issues in these recent cases in the upcoming weeks.