23 Fla. L. Weekly Supp. 788a
Online Reference: FLWSUPP 2307ARADInsurance — Automobile — Windshield repair — Appraisal — Insurer’s motion to stay repair shop’s complaint for declaratory relief is denied and motion to invoke appraisal is reserved where interpretation of ambiguities in policy sought in declaratory action is necessary before there can be disagreement as to amount of loss so as to allow invocation of appraisal process — Appraiser that has in past retained counsel to threaten repair shops with litigation during appraisal process does not qualify as impartial appraiser required by policy — Court defers ruling on argument that appraisal provision is unenforceable because expense of appraisal is prohibitive for shop and insured
CLEAR VISION WINDSHIELD REPAIR LLC (a/a/o Regiena Aradanas) vs. PROGRESSIVE SELECT INSURANCE COMPANY. County Court, 17th Judicial Circuit in and for Broward County. Case No. 15-010712 COCE (50). December 14, 2015. Honorable Peter B. Skolnik, Judge. Counsel: Emilio R. Stillo, Andrew Davis-Henrichs and Mac S. Phillips, for Plaintiff. George Hooker and Brooke Beebe, for Defendant.
ORDER ON DEFENDANT’S MOTION TO STAY ANDMOTION TO ENFORCE APPRAISAL
THIS CAUSE came before the Court on November 4, 2015 for hearing on Defendant’s Motion to Stay and Motion to Enforce Appraisal, and the Court, having reviewed the motion and entire court file; having reviewed the relevant legal authorities; having heard argument of counsel; and having been sufficiently advised in the premises,
ORDERS AND ADJUDGES that the Motion to Stay is hereby DENIED as to Plaintiff’s Declaratory Count and Defendant’s Motion to Enforce Appraisal is RESERVED for the reasons set forth below.Background
On July 1, 2015, the Defendant filed a notice purportedly invoking the appraisal provision of the policy and naming Auto Glass Inspection Services (“AGIS”) as its chosen appraiser1. On the same day, the Defendant filed its Motion to Enforce Appraisal.
The Plaintiff opposes the Motion on several basis: 1) that appraisal is an inappropriate process to resolve equitable claims such as declaratory relief; 2) that AGIS is not “impartial” and that Progressive breached the policy’s appraisal provision in selecting a partial (to Defendant) appraiser in AGIS; 3) there was no “meaningful disagreement” as to the amount of loss and appraisal is premature; and 4) even if the appraisal provision is applied, the actual cost to participate will likely exceed the amount of the claim thus ensuring the Plaintiff will lose money. For the reasons set forth below, this Court agrees with the Plaintiff that Defendant’s Motion to Stay Plaintiff’s Complaint for Declaratory Relief be Denied.AGIS
Plaintiff seeks a declaration that Defendant’s appointed appraiser, AGIS, is not “impartial” as is required by the policy of insurance. In opposition to Defendant’s motion the Plaintiff filed correspondence dated June 21, 2013 from attorneys retained by AGIS which threatened various repair shops with litigation.2 The correspondence states the Alvarez & Gilbert, PLLC law firm represents AGIS in its capacity as appraiser for Progressive’s various entities. Further, the letter contains threats of litigation against these shops by AGIS relating to disputes at issue in the appraisal process. The firm, on behalf of AGIS further warns repair shops to “govern [themselves] accordingly.”
The Plaintiff also filed a print-out of the AGIS website on which AGIS states its mission is “to verify glass damage for the insurance industry.” The website also represents that “AGIS sole purpose is to report back to the insurance industry what type of damage exists or lack thereof.” It further indicates that “AGIS has no affiliation with any companies in the glass industry and only serves large insurance companies.”
At hearing on November 4, 2015, the Defendant orally withdrew AGIS as its appraiser. The Defendant, however, has refused to stipulate or agree that AGIS is not an impartial appraiser. Accordingly, the “impartiality” of AGIS is still at issue as framed by the pleadings.The Policy
The applicable policy provision states:
In determining the amount necessary to repair damaged property to its pre-loss physical condition the amount to be paid by us: (i) will not exceed the prevailing competitive labor rates charged in the area where the property is to be repaired and the cost of repair or replacement parts and equipment as reasonably determined by us; and (ii) will be based on the cost of repair or replacement parts and equipment which may be new, reconditioned, remanufactured, or used. . .
Additionally the policy provides:
If we cannot agree with you on the amount of a loss, then we or you may demand an appraisal of the loss. Within 30 days of any demand for an appraisal, each party shall appoint a competent and impartiaI3 appraiser and shall notify the other party of that appraiser’s identity.
The Claim for Declaratory Relief
The Plaintiff claims it is in doubt as to the meaning and interpretation of several portions of the policy provisions which must be resolved before determining whether there is even a disagreement on the amount of the loss in order to invoke the appraisal process.
Specifically, Plaintiff is in doubt and seeks declaratory relief as to:
1) Whether the Plaintiff’s charge exceeds the limits of liability provision as set forth in the policy;
2) Whether the Defendant’s use of a fair and reasonable standard as its admitted payment methodology is contemplated by the terms of the policy;
3) Whether the limit, of liability’s use of the term “Prevailing Competitive Labor Rates Charged” is vague and ambiguous in both its meaning and application;
4) Whether the policy term “based on the cost of repair or replacement parts which may be new, reconditioned, manufactured or used” is vague, ambiguous and capable of more than one reasonable interpretation;
5) Whether the parties have a disagreement as to the “amount of loss” so as to allow Defendant to invoke the appraisal provision or whether the Plaintiff is entitled to first obtain a declaration that the terms and conditions of the policy which govern how the Defendant is to calculate and limit the loss is vague and ambiguous;
6) Whether the appraisal process, if enforced, would violate public policy by placing the Plaintiff in a position of not being able to recoup the amount of its charge since the cost of appraisal would exceed the charge;
7) Whether the Defendant’s appointed appraiser is “competent and impartial” as contemplated by the policy.
Until the Court declares the meaning of these terms in the policy, there can be no disagreement as to the amount of the loss. There is merely a disagreement as to whether the Defendant has properly defined and applied the terms in the limit of liability provision of the policy and whether the definitions and application may be interpreted in more than one reasonable manner. Only then will the parties know whether there is a disagreement as to the amount of the loss so as to allow the invocation of appraisal. Also requiring resolution is whether Defendant’s originally selected appraiser meets the policy requirement of “competent” and “impartial.”
For the reasons stated above the Court denies the Motion to Stay Plaintiff’s complaint for declaratory relief.Analysis
Plaintiff contends that Defendant’s demand for appraisal is unripe until Plaintiff’s complaint for declaratory relief is resolved. In this case the Plaintiff seeks a judicial declaration interpreting what it perceives as ambiguities in the policy and as to Defendant’s appraisal request. Equitable relief may only be afforded by a court of competent jurisdiction and not an appraiser. Appraisal should not be ordered until a determination as to whether the demand for appraisal is ripe. Citizens Property Insurance Corporation v. Admiralty House Inc., 66 So.3d 342 (Fla. 2d DCA 2011) [36 Fla. L. Weekly D1436a]. Plaintiff contends that Defendant failed to engage in the prerequisite, meaningful disagreement the appraisal provision contemplates. The existence of a real difference in fact, arising out of an honest effort to agree between the insured and the insurer, is necessary to render operative a provision in a policy for arbitration of differences. Furthermore, there must be an actual and honest effort to reach an agreement between the parties. United States Fid. & Guar. Co. v. Romay, 744 So. 2d 467, 470 (Fla. 3d DCA 1999) [24 Fla. L. Weekly D1963a].
Here, Plaintiff contends Defendant engaged in no such honest effort to reach an agreement as to an amount of loss. Instead, Defendant seeks to unilaterally invoke appraisal in direct disregard to established precedential authority prohibiting such practices. Id at 469-70. The appraisal clause in the parties’ agreement provides: “If we cannot agree with you on the amount of a loss, then we or you may demand an appraisal of the loss.” By these terms, the disagreement necessary to trigger appraisal cannot be unilateral.
Plaintiff maintains it is clear that Defendant could not possibly disagree on the amount of loss, because there is no evidence to suggest any dispute or contrary valuation. “[A] mere arbitrary refusal to pay the amount demanded, and the offer of a less amount, without any attempt upon the part of the insurer to ascertain and estimate the amount of loss and damage, [does] not constitute such a disagreement as is contemplated [under the appraisal provision]”.Id. at 470 citing Couch on Insurance 2d §50:56 (1982).
In this instance, the Plaintiff contends the demand is not ripe. The Court agrees with the Plaintiff that the Plaintiff be allowed to conduct discovery as to their complaint for declaratory relief.Impartiality of Defendant’s Chosen Appraiser
Plaintiff contends Defendant has violated the policy of insurance by selecting an appraiser who is not “impartial”. In Florida Ins. Guar. Ass’n v. Branco, 148 So. 3d 488 (Fla. 5th DCA 2014) [39 Fla. L. Weekly D2020a], reh’g denied Oct. 15, 2014, the Fifth District addressed whether an entity who was clearly “interested” in the outcome could serve as the party’s appraiser. In Branco, the attorney for the policy holder was selected by the policyholder to serve as the party’s appraiser. The Court held that it was impermissible to select one’s own lawyer to act in that capacity when the contract of insurance called for a “disinterested” appraiser. The policy called for each party to “choose a competent and disinterested appraiser,” and Judge Orfinger stated that the court’s research had “revealed no Florida case that has squarely addressed whether a party’s attorney may serve as a ‘disinterested appraiser.’ ” The panel looked to Pennsylvania law and concluded that “the current Code of Ethics establishes a presumption of neutrality for all arbitrators, including party-appointed arbitrators. . . . If an appraiser owes his nominating party a ‘fiduciary duty of loyalty’ or a ‘confidential relationship,’ as do attorneys, then ‘[t]he existence of such a relationship between a litigant and an [appraiser] creates too great a likelihood that the [appraiser] will be incapable of rendering a fair judgment.’ ” Donegal Ins. Co. v. Longo, 610 A.2nd 466, 468-69 (Pa.Super.Ct. 1992).
The Court in Bronco found the policy provision, which requires a “disinterested appraiser,” expressed the parties’ clear intention to restrict appraisers to individuals who are, in fact, disinterested. Further, the Court held that given the duty of loyalty owed by an attorney to a client, it has been concluded that attorneys may not serve as their clients’ arbitrators or appraisers when “disinterested” arbitrators or appraisers are bargained for. Id.
Similar to the requirement that the appraiser be “disinterested,” in the instant case the Defendant’s policy requires an “impartial” appraiser. Plaintiff contends that AGIS is clearly not “impartial” and has propounded discovery as to this contention. Plaintiff argues that the act of retaining counsel and threatening litigation are not the actions of an “impartial” appraiser, and this Court agrees. Further, the Plaintiff contends the Defendant breached the insurance contract by selecting an obviously “partial” appraiser in AGIS in the face of clear policy language compelling the selection of an “impartial” appraiser within 30 days of demanding appraisal.Prohibitive Cost Doctrine
The Plaintiff also argues this Court should find the appraisal provision unenforceable because the expense to enter appraisal is prohibitive upon both the insured and Clear Vision. Cohen v. D.R. Horton, Inc., 121 So. 3d 1121, 1123 (Fla. 5th DCA 2013) [38 Fla. L. Weekly D1800a] (an arbitration clause could be rendered unenforceable where the existence of substantial arbitration costs would otherwise preclude a litigant from effectively vindicating his or her federal statutory rights).
Presently, the amount in controversy is under $ 65.00 dollars. Under the appraisal provision, it requires that each party bears the costs of its own appraisal and split the costs for the umpire. The Plaintiff presented the Court with verified interrogatory responses in the case of Clear Vision Windshield Repair LLC (Jennifer Beckles) v. Progressive Amer. Ins. Co., Case No.: 14-18722 COCE (50) (Fla. Broward County, Cnty., Ct. 2015) [23 Fla. L. Weekly Supp. 486a], wherein the Defendant verified that it can spend up to $ 135.00 dollars per appraisal solely for the cost of paying AGIS.4 Plaintiff maintains it is absurd to ask a reasonable and rational individual to spend ten dollars to recover five. Zephyr Haven Health & Rehab Ctr., Inc. v. Hardin, 122 So. 3d 916, 921-922 (Fla. 2d DCA 2013) [38 Fla. L. Weekly D2070a] (there exists a threshold where the costs of arbitration in a fee-splitting agreement can become prohibitive and render the agreement unenforceable by denying the plaintiff access to the forum . . . [A] case-by-case analysis focusing among other things, upon the claimant’s ability to pay the arbitration fees and costs, the expected cost differential between arbitration and litigation in court, and whether that cost differential is so substantial as to deter the bringing of claims) (emphasis added).
Plaintiff maintains the Defendant is likewise incentivized to arbitrarily invoke appraisal since the appraisal provision requires the costs of appraisal to be split between the insured and insurer, Defendant may freely utilize the appraisal provision to paralyze the remedial purpose of Florida Statute 627.428, enacted to penalize insurers from wrongfully withholding payment. Omega Ins. Co. v. Johnson, 2014 WL 4375189, at *3 (Fla. 5th DCA Sept. 5, 2014) [39 Fla. L. Weekly D1911a]review granted, 171 So.3d 117 (Fla. 2015) ([t]he purpose of section 627.428 is to penalize a carrier for wrongfully causing its insured to resort to litigation to resolve a conflict when it was reasonably within the carrier’s power to do so).
The Fourth Circuit ruled in Fonte v. AT&T Wireless Services, 903 So.2d 1019, 1024 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D1491a] citing, LaFerney v. Scott Smith Oldsmobile, Inc., 410 So.2d 534, 536 (Fla. 5th DCA 1982):
“If, because of the small sums involved, consumers cannot recover in full their attorney fees, they will quickly determine it is too costly and too great a hassle to file suit, and individual enforcement of this act will fail. . . . The obvious purpose of the [Statute] is to make consumers whole for losses caused by fraudulent consumer practices. . . . These aims are not served if attorney fees are not included in the protection. Accordingly, the arbitration clause’s bar on an award of attorney’s fees defeats a remedial purpose of [the Statute].”
Similarly, Plaintiff contends the insurer should not be permitted to utilize the appraisal provision as a firewall between a practice of unjustifiably withholding full payment and Florida Law enacted to protect the public from this act. Since the appraisal panel is narrowly limited insofar as discovery is concerned, this Court recognizes the insurer evades the far-reaching discovery procedures of the courts if appraisal is compelled. Thus, the Court will allow the Plaintiff to conduct discovery as to the Declaratory Count. The Court will consider application of the “Prohibitive Cost” doctrine at a later date.Conclusion
Defendant’s Motion to Stay Plaintiff’s Declaratory Count is DENIED. The Court RESERVES as to Defendant’s Motion to Invoke Appraisal pending resolution of Plaintiff’s Complaint for Declaratory Relief.
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1AGIS is a company which inspects glass damage for the insurance industry during the claims process.
2Plaintiff contends it is of vital import that AGIS has retained attorneys in the past to threaten repair facilities with litigation during the appraisal process.
3Black’s Law Dictionary defines “impartial” as “favoring neither; disinterested; treating all alike; unbiased; equitable, fair, and just”.
4 Clear Vision Windshield Repair LLC (Jennifer Beckles) v. Progressive Amer. Ins. Co., Case No.: 14-18722 COCE (50) (Fla. Broward County, Cnty., Ct. 2015) [23 Fla. L. Weekly Supp. 486a] is also pending in this division.
