25 Fla. L. Weekly Supp. 379a

Online Reference: FLWSUPP 2504THOMInsurance — Automobile — Windshield repair or replacement — Appraisal — Mandatory appraisal clause constituted a de facto deductible, thereby rendering appraisal clause unenforceable, where appraisal clause required the insured to share the costs of appraisal — Discussion of interplay between section 627.7288, which precludes application of deductible to claim of windshield damage, and costs required by an appraisal clause under insurance policy’s comprehensive coverage provisions

LLOYD’S OF SHELTON AUTO GLASS, LLC a/a/o Jedidiah Thomas, Plaintiff, vs. PROGRESSIVE SELECT INSURANCE COMPANY, Defendant. County Court, 13th Judicial Circuit in and for Hillsborough County, Civil Division. Case No. 16-CC-41610, Division M. July 26, 2017. Herbert M. Berkowitz, Judge. Counsel: John C. Murrow, Tampa, for Plaintiff. Geoffrey M. Schuessler and Jeffrey Lee Gionet, Cole, Scott & Kissane, P.A., Tampa, for Defendant.

QUASHED; Cert. GRANTED 27 Fla. L. Weekly Supp. 680dORDER DENYING MOTION TO DISMISSOR IN THE ALTERNATIVE TO STAYAND COMPEL APPRAISAL

This matter came on to be heard on April 18, 2017, on the Defendant’s Motion to Dismiss and/or, in the Alternative, Motion to Stay and Compel Appraisal. The Plaintiff’s Motion to Strike Appraisal was also heard. The parties, being represented by counsel, and the Court, having heard argument and having reviewed all submissions and being otherwise fully advised in the premises, DENIES the Defendant’s Motion and GRANTS the Plaintiff’s Motion for the reasons as set forth herein:

1. This case arises out of a claim for reimbursement for repair of an automotive windshield. The Plaintiff is alleged to have repaired a damaged windshield for the Defendant’s insured, and accepted an assignment of the insured’s benefits to cover the cost of repair under the comprehensive coverage portion of the insured’s automobile insurance policy.

2. The insured’s assignee, the Plaintiff herein, submitted its invoice to the Defendant, who, within a short period of time tendered a check for what it deemed to be the fair market value of the repair, which was an amount less than the amount of the Plaintiff’s invoice. The Defendant also sent the provider and the insured a letter invoking appraisal pursuant to the terms of the policy. Apparently without further response, Plaintiff filed this lawsuit alleging breach of contract and sought recovery of the full amount of the invoice in question, together with attorney fees and costs incurred in the prosecution of this claim.

3. The Defendant filed this Motion claiming that its request for appraisal compelled either a Dismissal or Stay of this current action. The Plaintiff responded, arguing that the Defendant waived its right for appraisal as having actively engaged in this litigation. The Plaintiff also argued that this appraisal provision, with its cost-sharing provisions, violated the Prohibitive Cost Doctrine. The Plaintiff further argued that the appraisal provision was unenforceable as being in violation of Fl. Stat Sec. 627.7288, arguing that this appraisal provision requires an insured to incur expenses and that such expenses were the equivalent of a deductible.

4. A review of the activity in this case demonstrates that the Defendant timely invoked its appraisal provision and that its file activity has essentially been to enforce that provision. Therefore, this Court finds that this file activity did not constitute a waiver of the Defendant’s appraisal demand. See Florida select ins. Co., v. Keelean, 727 So.2d 1131, 1132 (2nd DCA, 1999) [24 Fla. L. Weekly D723a]

5. Florida jurisprudence has long taken the position that alternative dispute resolution (“ADR”) methods are to be encouraged, and are most generally favored as a viable alternative to time and expense typically associated with traditional litigation. Public policy is to encourage settlement without resort to litigation by use of other extra-judicial means when the parties themselves contract for such means. See State Farm Fire &Casualty Co. v Middleton, 648 So.2d 1200, 1201-1202 (3rd DCA, 1995) [20 Fla. L. Weekly D99b]. Appraisals are among the useful and appropriate forms of dispute resolution methods, and its use is encouraged when appropriate, to include use in the context of insurance claims. See Allstate Ins. Co., v. Suarez, 833 So.2d 762, 765 (Fla., 2002) [27 Fla. L. Weekly S1028a].

6. The Motion and the response thereto are not resolved, however, by a determination that the Defendant did not waive its claim for appraisal. The dispositive issue on this motion is not whether an appraisal provision is an appropriate method of resolving such disputes, but rather, whether the language of this appraisal provision itself is in conflict with Fla. Stat. Sec. 627.7288. Because this Court finds, for the reasons stated below, that this appraisal provision is unenforceable, the Court does not reach the question of the applicability of the Prohibitive Cost Doctrine.

7. The relevant policy provisions read as follows:

PART IV — DAMAGE TO A VEHICLE

* * * * *

INSURING AGREEMENT — FULL COMPREHENSIVE WINDOW GLASS COVERAGE

If you pay the premium for Comprehensive Coverage, we will pay for sudden, direct, and accidental loss to a windshield on a covered vehicle that is not caused by a collision, without applying a deductible.

* * * * *

APPRAISAL

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 appraisal, each party shall appoint a competent and impartial appraiser and shall notify the other party of that appraiser’s identity. The appraisers will determine the amount of loss. If they fail to agree, the disagreement will be submitted to an impartial umpire chosen by the appraisers, who is both competent and a qualified expert in the subject matter. If the two appraisers are unable to agree upon an umpire within 15 days, we or you may request that a judge of a court of record, in the county where you reside, select an umpire. The appraisers and umpire will determine the amount of loss. The amount of loss agreed to by both appraisers, or by one appraiser and the umpire, will be binding. You will pay your appraiser’s fees and expenses. We will pay our appraiser’s fees and expenses. All other expenses of the appraisal, including payment of the umpire if one is selected, will be shared equally between us and you. Neither we nor you waive any rights under this policy by agreeing to an appraisal.

8. On its face, this provision appears to be a very common appraisal provision. It is the type of appraisal provision found in many types of contracts covering many types of disputes, including contracts of insurance. However, this appraisal provision is contained within the Comprehensive Coverage provisions of this policy, and as such, applies directly to windshield damage coverage.

9. By its terms, this appraisal provision allows either party (the insured, and by extension, the insured’s assignee, or the insurer) to demand an appraisal when either party does not agree as to the amount of the loss. If either party makes such a demand, each party is then required to select and pay for its own “impartial” appraiser, and if necessary to appoint a third appraiser (an “umpire”) and each must also bear one half of the additional expense of this third appraiser. Similarly, the parties are to share equally any expenses of the appraisal process. The decision agreed to by any two of the appraisers is binding on each party, thus arriving at a resolution of the disagreement as to the amount of the loss in question.¹

10. The insurance company drafted this insurance policy, and chose to include this appraisal provision. The terms of the policy must be construed as written, and viewed in a light most favorable to the insured. United States Fid & Guar. Co., v. Romay, 744 So.2d 467, 471 (3rd DCA, 1999) [24 Fla. L. Weekly D1963a]. The imposition of these extra-contractual expenses upon an insured for claims of windshield damage place this application of this appraisal provision in direct conflict with Fl. Stat. Sec. 627.7288, thereby rendering it unenforceable. See Cincinnati Ins. Co. v. Cannon Ranch Partners, Inc., 162 So.3d 140, 143 (2nd DCA, 2014) [40 Fla. L. Weekly D78a]; and Green v. Life & Health of America., 704 So.2d 1386, 1390-91 (Fla., 1998) [23 Fla. L. Weekly S42a].

11. Fl. Stat. Sec 627.7288 reads, as follows:

The deductible provisions of any policy of motor vehicle insurance, delivered or issued in this state by an authorized insurer, providing comprehensive coverage or combined additional coverage shall not be applicable to damage to the windshield of any motor vehicle covered under such policy.

12. Legislative intent guides a court’s construction of a statute. Larimore v. State, 2 So.3d 101, 106 (Fla., 2008) [33 Fla. L. Weekly S948a], and see, Bautista v. State, 863 So.2d 1180, 1185 (Fla., 2003) [28 Fla. L. Weekly S849a]. “To discern legislative intent, a court must look first and foremost at the actual language used in the statute.” Id., citing Joshua v. City of Gainesville, 768 So.2d 432, 435 (Fla., 2000) [25 Fla. L. Weekly S641a]. “When the language of the statute is clear and unambiguous and conveys a clear and definite meaning, there is no occasion for resorting to the rules of statutory interpretation and construction. The statute must be given its plain and obvious meaning.” Holly v. Auld, 450 So.2d 217, 219 (Fla., 1984) see too, A.R. Douglass, Inc. v. McRainey, 137 So. 157, 159 (Fla., 1931).

13. This statute clearly provides for the full payment of windshield repair and/or replacement to be borne by the Defendant.² The prohibition against the application of any deductible to this specific covered loss is patent. It is the clear direction of this statute that an insured should not have to share the risk nor be subjected to less than complete coverage for such loss.

14. A review of the legislative history of this statute is instructive. The legislative purpose of this statute has always been to encourage public safety by making available the repair of windshield damage without expense to the vehicle owner. When this legislation was initially being considered, the proposed legislation was first drafted to read that vehicle glass damage repair would not be subject to a deductible. This proposal was met with opposition from the insurance industry, explaining that such universal glass exemption from deductibles would cause an expensive rise in the cost of coverage, and therefore the premiums for such coverage would be similarly affected. This, it was argued, would lead to unnecessarily high rates, and ultimately a resultant increase in uninsured drivers. This legislation was then modified to cover only windshield damage, rather than all automotive glass damage.

15. Initially, when reviewing this proposed legislation, the Senate Staff Analysis and Economic Impact Statement noted the effect of the proposed statute as, “The automobile insurance company would be responsible to the policyholder from the first dollar for cracked, chipped, or broken windshields and windows.” (SENATE STAFF ANALYSIS AND ECONOMIC IMPACT STATEMENT, SENATE BILL # 354 (Fl. 1979).

16. Public comments were made to both the House and Senate Committees studying this legislation. As a result of the comments provided by a spokesman for automobile insurers about the economic impact of this bill on the increased costs of comprehensive coverage and resultant likely increases to premiums, the Senate committee amended its bill to apply only to windshields rather than to other glass components:

“The amendment passed by the [Senate] Commerce Committee changes the word “glass” to “windshield”. Under this Amendment, no deductible would apply to windshields because windshields represent the primary safety hazard on automobiles. The deductible would be applied to all other glass.This amendment would save the insurance industry an unquantifiable portion of the cost of the replacement of glass. Their cost would be limited to replacement of windshields rather than the replacement of all glass”. (SENATE STAFF ANALYSIS AND ECONOMIC IMPACT STATEMENT, SENATE BILL #354 (1979).

17. Similarly, the House Committee on Insurance also amended its version of the bill to provide that comprehensive coverage deductibles would not apply to the replacement of windshields damaged on any automobile covered under the provisions of such policy. In considering the potential rate increase that would likely be necessary to cover all glass claims, the House Committee noted;

“[T]he bill was amended to read that this deductible would [SIC] apply only to the windshield. Therefore, people with damaged side windows, who are not exposed to any additional danger, must bear the expense of replacing them if they have a deductible. Whereas, those owners of motor vehicles with damaged windshields can have them immediately replaced, with insurance paying for the bill. Therefore, the potential safety hazard, caused by limited visibility through a cracked windshield, is alleviated.” (COMMITTEE ON INSURANCE, STAFF REPORT, HOUSE BILL #357 (1979).

18. The legislature determined windshield damage to be a primary safety hazard because a broken windshield caused visual impairment to a driver and therefore placed the safety of others at risk. The immediate repair or replacement of a windshield would alleviate this risk, and the legislature determined that having these windshields repaired without the added consumer cost of a deductible would encourage immediate replacement.

19. Although the subject appraisal provision does not use the term “deductible”, the effect of this appraisal provision is to require an insured to incur additional expense when appraisal is invoked. This constitutes a de factodeductible, and is therefore unenforceable as being contrary to public policy as set forth by Fla. Stat. Sec 627.7288. It has long been held that insurance policies that contradict or are in opposition to public policy are unenforceable. See Mullis v. State farm Mut. Auto. Ins. Co., 252 So.2d 229, 234 (Fla. 1971). See, too, Holt v. O’Brien Imp. Of Fort Myers, Inc. 862 So.2d 87 (2nd DCA, 2003) [28 Fla. L. Weekly D2608a].

20. When the Legislature has not defined a word used in a statute, that word should be given its plain and ordinary meaning. Zivitz v. Zivitz, 16 So.3d 841,847 (2nd DCA, 2009) [34 Fla. L. Weekly D1024a]; see, also Fla. Birth-Related Neurological Injury Comp. Ass’n v. Fla. Div. of Admin. Hearings, 686 So.2d 1349, 1354 (Fla. 1997) [22 Fla. L. Weekly S42a]. A “deductible”, while not defined by this statute or in the underlying insurance policy, is a form of self-insurance, which, when applicable, relieves the insurer of responsibility for a portion of the loss and requires the insured to share in the risk of loss. FL. Stat. Sec. 627.7288 was specifically designed so that the insurer would not be relieved of the responsibility for a portion of this loss, nor was the insured intended to share in the risk of that loss.

21. By imposing extra-policy costs and expenses upon the insured by simply invoking appraisal, the Defendant is immediately requiring the insured to share in this risk (without any reduced premium that an insured might enjoy upon selecting a deductible), and enables an insurer to avoid the responsibility for a portion of the loss, as well. To interpret this statute to obtain such results would render meaningless the stated intent of this statute. See Zivitz, supra. at 847. Therefore, the imposition of these costs and expenses constitutes a de facto unenforceable deductible, notwithstanding any specific nomenclature used or omitted.

22. While the language of the appraisal provision appears to allow either party to “demand” appraisal, participation is mandatory. There are no provisions for either party to decline this demand, and so the notion that this appraisal provision is anything but mandatory, is illusory. While the Defendant may tender a payment while invoking appraisal, there is no requirement for it to do so. When it does offer a payment which is less than the amount invoiced and contemporaneously demands appraisal, the insured is left with a “Hobson’s” choice of accepting a partial payment, or incurring non-recoverable expenses to obtain full payment.³

23. Public policy is to protect public safety by encouraging immediate windshield repair. The additional expense added by this appraisal provision to the insured’s ability to have his windshield repaired or replaced flies in the face of exactly the concern voiced by the legislature when it precluded the application of deductibles to windshields in 1979. The inescapable conclusion is that this appraisal provision, when applied to windshield damage claims, is unenforceable as being contrary to Fl. Stat. Sec. 627.7288.

24. Because the Court finds that the appraisal provision is unenforceable, the Court does not address the Plaintiff’s other challenge to the appraisal provision involving the interplay of the costs and expenses required by this appraisal provision and the Prohibitive Cost Doctrine. Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (2000); Zephyr Haven Health & Rehab. Ctr., Inc., v. Hardin, 122 So. 3rd 916 (2nd DCA, 2013) [38 Fla. L. Weekly D2070a].

25. The Plaintiff in this case is not the insured, but is the assignee of the insured for recovery of this claim for covered damages. It is a general principle of contract law that where there is a valid assignment of a contract, the assignee stands in the shoes of the assignor, and is entitled to all remedies to which the assignee would otherwise be entitled. See Allstate Ins. Co. v. Regar, 942 So.2d 969, 973 (2nd DCA, 2006) [31 Fla. L. Weekly D2955b]; Lauren Kyle Holdings, Inc. v. Heath-Peterson Construction Co., 864 So.2d 55, 58 (5th DCA, 2003) [28 Fla. L. Weekly D2865b]. The Florida Supreme Court has long recognized and adhered to this principle. See, Union Indemnity Co. v. City of New Smyrna, 130 So. 453, 456 (Fla. 1930).

26. There is, therefore, no legal distinction as to how the law must be applied to the interests of the assignor or the assignee. Indeed, the issues herein transcend the identity of the Plaintiff. It does not matter that the Plaintiff herein is a provider of windshield repair services, as opposed to the insured who might otherwise be seeking payment for such services under the insurance policy. The Legislature has made the determination that windshield repair is a significant public safety issue, and as a result, directed that comprehensive coverage deductibles do not apply to windshield claims. The burden of paying for such repairs was intentionally placed on the insurer. The costs and expenses necessarily accompanying this appraisal provision constitute a deductible in fact regardless of the form in which it may appear. It is unenforceable when applied to windshields regardless of whether the Plaintiff is the insured or its assignee.

IT IS THEREFORE ORDERED AND ADJUDGED THAT;

Defendant’s Motion to Dismiss or in the Alternative to Stay and Compel Appraisal, is DENIED, Plaintiff’s Motion to Strike Appraisal is GRANTED, to the extent consistent with this opinion. Accordingly, litigation shall proceed in accordance with Florida Small Claims Rules.

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¹The insurance contract does not make an appraisal a condition precedent to the invocation of a determination of loss, but once invoked by either party, its language is clearly mandatory (“. . . [I]f a demand is made for Appraisal, each party shall select a competent and impartial appraiser . . . You will pay your appraiser’s fees and expenses . . . . All other expenses . . . will be shared equally between us and you.” Emphasis added).

²This does not mean that the defendant does not have recourse if it does not agree with the amount of the loss as claimed. ADR options and litigation remain available to resolve such disputes.

³The irony is that, in reality, there can be no “full payment” as even an award by the appraisers for the full amount claimed still subjects the insured to costs and expenses that, in fact, reduces the net award to less than a full recovery.