25 Fla. L. Weekly Supp. 530a
Online Reference: FLWSUPP 2506PODOInsurance — Homeowners — Water damage — Appraisal — Competent and impartial appraiser — Appraiser whose fee is based on total amount of loss has an interest in the amount of loss and, accordingly, cannot be impartial
SHERMAN PODOLSKY & ELLEN PODOLSKY, Plaintiffs, vs. FEDERATED NATIONAL INSURANCE COMPANY, Defendant. Circuit Court, 15th Judicial Circuit in and for Palm Beach County. Case No. 502016CA008731XXXXMB (AO). May 15, 2017. Cymonie S. Rowe, Judge. Counsel: David D. Barnhill, McDonald Barnhill, Tampa, for Plaintiffs. Michael A. Cassel, Kirwan Spellacy & Danner, P.A., Fort Lauderdale, for Defendant.
ORDER GRANTING DEFENDANT’S MOTION FORSUMMARY JUDGMENT AND DENYING PLAINTIFFS’CROSS-MOTION FOR SUMMARY JUDGMENT ASTO DEFENDANT’S SECOND, THIRD, AND FOURTHAFFIRMATIVE DEFENSES AS TO COUNTII OF PLAINTIFFS’ COMPLAINT
THIS CAUSE having come before the Court on Defendant’s Motion for Summary Judgment and Plaintiffs’ Cross-Motion for Summary Judgment as to Defendant’s Second, Third, and Fourth Affirmative Defenses as to Count II of Plaintiffs’ Complaint, and the Court having considered the motion and related filings, heard argument of counsel, reviewed relevant legal authorities, and being otherwise advised, hereby makes the following findings of fact and conclusions of law:
I. BACKGROUND AND FACTS
Federated National Insurance Company (hereinafter “Defendant”) issued insurance policy number FE-0000540379-02 to Plaintiffs Sherman Podolsky and Ellen Podolsky (hereinafter “Plaintiffs”), for the property located at 7921 Wellwynd Way, Boca Raton, Florida 33496 (hereinafter the “Subject property”).
On April 14, 2016, Plaintiffs alleged sustaining water damage to the Subject Property as a result of a toilet leak in the guest bathroom and, on the same date, entered into a contingency fee contract for public adjusting services with Stephen Sarasohn of Sarasohn & Company, Inc., and reported the loss to Defendant. The public adjusting contract states in pertinent part that “the undersigned insured hereby assigns and hereby agrees to pay Sarasohn & Company, Inc., 10% of the amount recovered, by adjustment or otherwise, due when paid by the insurance company.”
On June 23, 2016, based on Plaintiffs’ presentation of the claim, Defendant afforded coverage to Plaintiffs. On July 13, 2016, due to an apparent disagreement between Defendant’s adjustment and the estimate provided on Plaintiffs’ behalf, Defendant sent correspondence to Plaintiffs invoking the appraisal provision of the subject policy. The appraisal provision of the subject policy states, in pertinent part:
SECTION I — CONDITIONS
* * *
6. Mediation Or Appraisal
If you and we:
* * *
b. Fail to agree on the amount of loss, either may request an appraisal of the loss. In this event, each party will choose a competent and impartial appraise1 within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the “residence premises” is located. The appraisers will separately set the amount of the loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of the loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.
Said correspondence further named an appraiser to act on Defendant’s behalf and called specific attention to the requirement outlined in the appraisal provision which mandates that the insured select a “competent and impartial appraiser.”
On July 15, 2016, after the invocation of the appraisal provision, counsel for the Plaintiffs filed a Civil Remedy Notice. On July 27, 2016, Mr. Sarasohn sent correspondence to Defendant naming himself as Plaintiffs’ appraiser. On July 28, 2016, Defendant sent correspondence advising, inter alia that Plaintiffs’ public adjuster could not act as an impartial appraiser due to his direct monetary interest in the outcome of the appraisal. Said correspondence further advised Plaintiffs that they were required to name their impartial appraiser by August 7, 2016, in order to maintain compliance with the terms of the appraisal provision contained within the subject policy.
Following Plaintiffs’ failure to name another appraiser, on August 9, 2016, Defendant sent correspondence to Plaintiffs denying the claim due because of non-compliance with the appraisal provision. During the discovery process, Mr. Sarasohn testified that he owed Plaintiffs a duty of loyalty, a duty of truthfulness, a duty of fairness, and a duty to act in their best interests. Additionally, Mr. Sarasohn testified that the Plaintiffs’ held a level of control over his actions as the claim at issue is the insureds’ claim and not his own. Furthermore, Mr. Sarasohn testified that he stands to recover a percentage of any amount recovered, without limitation, be it through settlement, appraisal, or litigation.
II. LEGAL DISCUSSION
As to Defendant’s Motion for Summary Judgment, the issue before the Court is the interpretation of the policy language. Specifically, the issue is whether Plaintiffs’ choice of appraiser is a competent and impartial appraiser within the meaning of the policy. Plaintiffs argue that their choice of appraiser complies with the policy requirement; Defendant argues the contrary.
Plaintiffs filed a response to Defendant’s Motion and incorporated therein was their own Cross Motion for Summary Judgment concerning affirmative defenses two, three, and four of Count II of Plaintiffs’ Complaint.2
Plaintiffs cite to Galvis v. Allstate Ins. Co., 721 So.2d 421 (Fla. 3d DCA 1998) [23 Fla. L. Weekly D2594a], for the proposition that an appraiser who receives a contingency fee falls within the policy provision of “competent and disinterested”.3 In that case, the Third District Court of Appeal held that a contingency fee appraiser was competent and disinterested and thus qualified.
Conversely, Defendant cites to Florida Insurance Guaranty Ass’n v. Branco, 148 So.3d 488 (Fla. 5th DCA 2014) [39 Fla. L. Weekly D2020a],4 which held as a matter of first impression that an insureds’ attorney could not serve as a disinterested appraiser. In that case, the Fifth District Court of Appeal reasoned that because the attorney owed a duty of loyalty to the client, the attorney could not be a disinterested appraiser.
When there is no binding precedent from the Supreme Court or Appellate Court for district in which trial court sits, the trial court is bound to follow decisions of other appellate courts which are on point. Dawkins, Inc. v. Huff, 836 So.2d 1062 (Fla. 5th DCA 2003) [28 Fla. L. Weekly D350a].
Both the Third District Court of Appeal and the Fifth District Court of Appeal analyzed the same clause, “competent and disinterested”, but arrived at different conclusions. Here the applicable clause is “competent and impartial”. Giving the apparent conflict between the District Court of Appeals and no current guidance in the Fourth District Court of Appeal, this Court relies, in part, on secondary sources. Black’s Law Dictionary (10th ed. 2014) defines adjuster as an impartial person who estimates the value of something. Black’s Law Dictionary (10th ed. 2014) defines impartial as not favoring one side more than another, unbiased and disinterested, unswayed by personal interest. Black’s Law Dictionary defines disinterested as “free from bias, prejudice, or partiality . . . not having a pecuniary interest in the matter at hand.”
This policy provision is only invoked when the insurer and insured cannot agree on the amount of the loss. The Court interprets the policy to mandate that each party retain its selected appraiser who will be free from an interest in the amount the loss. An appraiser whose fee is based on the total amount of the loss has an interest in the amount of the loss, and therefore cannot be impartial.
Based on the foregoing, it is hereby
ORDERED AND ADJUDGED
1. Defendant’s Motion for Summary Judgment is hereby GRANTED, solely as to the definition of competent and impartial adjuster.
2. Plaintiff’s Cross-Motion for Summary Judgment as to Defendant’s Second, Third, and Fourth Affirmative Defenses as to Count 11 of Plaintiffs’ Complaint is hereby DENIED, as questions of fact remain.
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1The policy does not define competent and impartial.
2Affirmative defenses two, three, and four concern Defendant’s allegations of Plaintiffs’ failure to comply with the appraisal clause of the subject policy.
3In Galvis, the issue before the Third District was the term “competent and disinterested.”
4Like Galvis, the issue before the Fifth District in Branco, was the term “competent and disinterested”.
