On March 7, 2011, Jeremy Tyler wrote Litigating The Right To Resolve Disputes Without Litigation, providing an excellent synopsis of various appeals Citizens Property Insurance Corporation (Citizens) pursued in the Florida Third District Court of Appeal related to compliance with policy conditions before appraisal. He discussed how Citizens is forcing policyholders to “proceed with evidentiary hearings to prove entitlement to an alternative dispute resolution proceeding that was, ironically, created as an alternative to litigation.” With so much contractual and judicial support for appraisal, policyholders may wonder what this evidentiary hearing that Citizens keeps requesting is supposed to accomplish.

In a recent case decided by the Third District Court of Appeal the Court used a buzz word that may shed some light on the issue. On October 26, 2011, the Court issued its opinion in Citizens Prop. Ins. Corp. v. De Los Cuetos, 2011 WL 5061232 (Fla. 3d DCA 2011). It was only a paragraph long, but involved a scenario similar to many of the other Citizens appraisal appeal cases.

In the case, the trial court ordered the parties to appraisal without conducting an evidentiary hearing on post-loss compliance with the policy duties. Citizens filed an appeal, and the policyholder’s counsel confessed error. That means that they agreed the trial court should have conducted the evidentiary hearing before compelling appraisal. Based on that confession of error and the record reviewed by the appellate court, the case was remanded for an evidentiary hearing to determine whether post-loss obligations were “sufficiently” met under the policy. Notably, the Court did not direct the trial court to determine whether all of the post-loss obligations were “specifically” met.

It almost seems that Citizens uses the duties after loss as a shield to the resolution of claims through appraisal and intends to force the parties to litigate in court. Litigation can be far more costly and time consuming than the dispute resolution process of appraisal. We will continue to provide updates on this blog, as well as on the Property Insurance Coverage Law blog, as this area of law develops.