26 Fla. L. Weekly Supp. 428a
Online Reference: FLWSUPP 2605TOSCInsurance — Automobile — Windshield replacement or repair — Appraisal — Enforcement of appraisal clause for windshield damage claims violates statutory scheme prohibiting any deductible or any other out-of-pocket expense from being required from an insured in connection with windshield repairs — Issue raises question of policy interpretation and falls within the authority of court to decide
BROWARD INSURANCE RECOVERY CENTER, LLC (a/a/o Joe Toscano), Plaintiff, v. PROGRESSIVE AMERICAN INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. COCE 17-9298 (53). March 15, 2018. Robert W. Lee, Judge. Counsel: Emilio R. Stillo and Andrew B. Davis-Henrichs, Emilio Stillo, P.A.; and Joseph R. Dawson and Rowena M. Racca, Joseph Dawson, P.A., for Plaintiff. Kevin Sincerbox, Progressive PIP House Counsel, for Defendant.
[Editor’s note: Notice of appeal has been filed.]
OMNIBUS ORDER ON DEFENDANT’S MOTIONTO DISMISS, OR ALTERNATIVELY,DEFENDANT’S MOTION TO ABATE OR STAYAND MOTION TO ENFORCE APPRAISAL
THIS CAUSE having come on to be heard on February 26, 2018, on Defendant’s Motion to Dismiss, or Alternatively, Defendant’s Motion to Abate or Stay and Motion to Enforce Appraisal, the Court having reviewed the filings, received argument of counsel and having otherwise been duly advised in the Premises, finds as follows:
Findings of Fact
This is a consolidated hearing arising out of seven (7) separate cases involving seven (7) separate incidents of property damage. Each case involves the same parties and similar facts wherein the insurer suffered windshield damage and sought repair. The insured assigned to the repair facility the right to collect the costs of repair directly from Progressive. In turn, the repair facility billed Progressive, but did not receive the full amount it believed was due.
On or about the same time the reduced payment was made, Progressive notified the repair facility and the insured through correspondence that the insurance contract provides that appraisal is the method to be used to resolve any disagreement with respect to the amount of the payment. Thereafter, the repair facility assigned to the Plaintiff the right to seek the unpaid portion of the bill which ranges between the amounts of $26.50 and $26.75, which are significantly less than the cost associated with appraisal which was $55.001, at a minimum and it can go up to $250.002 per claim.
Plaintiff filed a breach of contract action against Progressive seeking payment for the remaining balance and alleging that a full payment was owed to them as the language contained in the applicable Limits of Liability section is vague and it is ambiguously written in that it is susceptible to more than one reasonable interpretation. In response to the Complaint, Progressive sought to dismiss, or alternatively, abate or stay the case, and to enforce the appraisal clause also contained in the insurance contract. Plaintiff disputed the right to enforce the appraisal provision, based upon the following legal theories:
1. Defendant’s request to compel appraisal creates a de facto deductible in that it obligates the Plaintiff to pay a charge, i.e. an appraisal fee, in order to be reimbursed for a windshield repair, which is contrary to Florida Statute §627.7288, as insurers are not permitted to impose a deductible related to the payment for repair of windshield damage.
2. Because the cost for the appraisal exceeds the amount in controversy, it would effectively deny the insured’s constitutional right to access the Courts by rendering it economically prohibitive to seek meaningful means of redress to those who suffer windshield damage.
3. The dispute in these cases arise out of the interpretation of the Limit of Liability provision in Progressive’s policy where Plaintiff argues that additional amount is owed to the Plaintiff by Progressive under the vague and ambiguous terms contained in that provision of the Policy.
Legal Analysis
The argument of the Plaintiff that the imposition of a charge for an appraisal, which would significantly exceed the damages sought by the Plaintiff, and which would not be taxable even if the Plaintiff prevailed, creates an economic deterrent which would deleteriously affect the right of insureds of the Defendant to contest the amount of reimbursement paid by the Defendant for windshield repair. Whether couched as a violation of the De Facto Deductible argument, or the Prohibitive Cost Doctrine, the result is the same — an unlawful requirement for payment by an insured related to windshield repair which runs afoul of the clear statutory scheme requiring insured to cover the cost of windshield repair without any payment required by an insured as a deductible. The costs of appraisal would also result in the creation of a chilling effect to any insured seeking to contest the application of the Limitation of Coverage on a windshield claim.
The De Facto Deductible doctrine is articulated by Judge Berkowitz in Lloyds of Shelton Auto Glass, LLC (Jedidiah Thomas) v. Progressive, 25 Fla. L. Weekly Supp. 379a (Judge Berkowitz, Hillsborough County, July 26, 2017), wherein that court found that:
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 the statute to obtain such results would render meaningless the stated intent of the statute. (Citation omitted). Therefore, the imposition of these costs and expenses constitutes a de facto unenforceable deductible, notwithstanding any specific nomenclature used or omitted.”
(Affirmed, Progressive v. Lloyds of Shelton Auto Glass (Jedidiah Thomas), 25 Fla. L. Weekly Supp. 302a, (Fla. 13th Cir. Ct. Appellate Division July 28, 2017).
The Prohibitive Cost Doctrine also provides a basis for concluding that appraisal is not an appropriate remedy in windshield damage cases. As was stated in Zephyr Haven Health Cntr. v. Hardin, 122 So. 3d 916 (Fla. 2d DCA 2013) [38 Fla. L. Weekly D2070a]:
[T]he Court acknowledged that large arbitration costs can preclude litigants from vindicating their rights through arbitration. To that end, the Court held that where “a party seeks to invalidate in arbitration agreement on the ground that arbitration would be prohibitively expensive, that party bears the burden of showing the likelihood of incurring such costs. P. 5
[T]he court rejected the argument that fee-splitting provisions are per se unenforceable. Instead it held that the case-by-case analysis is appropriate, 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 the cost differential is so substantial as to deter the bringing of claims.
The Court is also mindful of the statutory scheme regarding insurance coverage of windshield claims, which includes a requirement of no deductible for any loss. In mandating no deductible, the legislature recognized a compelling public policy in ensuring that insureds could get their windshields repaired without the invocation of any ancillary expense. The cost of the appraisal creates equitable challenges whether scrutinized by the De Facto Deductible analysis or the Prohibitive Cost Doctrine. An insurance contract cannot limit coverage in a way which would conflict with the rights provided to an insured by statute, including the ability to have a damaged windshield repaired and the repairs covered by insurance, without any out-of-pocket expense being incurred by the insured. See Mullis v. State Farm Mut. Auto. Ins. Co., 252 So. 2d 229, 232-34 (Fla. 1971)(stating that automobile liability insurance and uninsured motorist coverage obtained it to comply with her conform to the law cannot be narrowed by the insurer through exclusions and exceptions contrary to the law); Diaz-Hernandez v. State Farm Fire & Cas. Co., 19 So. 3d 996, 1000 (Fla. 3d DCA 2009) [34 Fla. L. Weekly D1046a] (concluding that a provision in the policy was invalid because it was against the public policy of the statute); Vasques v. Mercury Cas. Co., 947 So. 2d 1265, 1269 (Fla. 5th DCA 2007) [32 Fla. L. Weekly D363a] (stating that restrictions on statutorily mandated coverage must be carefully examined because exclusions that are inconsistent with the purpose of the statute are invalid).
Additionally, appraisal is not an appropriate mechanism of dispute resolution for insurance coverage issues. Specifically, the Plaintiff argues that the Limitation of Liability provision of the insurance contract, which states that the amount to be paid by the Petitioner “will not exceed the prevailing competitive labor rates charged . . . and the cost of repair or replacement parts and equipment as reasonably determined by us,” presents a question of policy interpretation which must be addressed by the court and not resolved by way of an appraisal. Atencio v. U.S. Sec. Ins. Co., 676 So.2d 489, 490 (Fla. 3d DCA 1996) [21 Fla. L. Weekly D1472a], (“[Q]uestions of policy interpretation and coverage are ordinarily for the court, rather than arbitrators or appraisers, to decide.” See Roe v. Arnica Mut. Ins. Co., 533 So.2d 279 (Fla. 1988); Meade v. Lumbermens Mut. Casualty Co., 423 So.2d 908 (Fla.1982); State Farm Fire & Casualty Co. v. Wingate, 604 So.2d 578 (Fla. 4th DCA 1992); Bruno v. Travelers Ins. Co., 386 So.2d 251 (Fla. 3d DCA 1980).
Conclusion
The Court finds that the enforcement of the appraisal clause for windshield damage claims violates the statutory scheme prohibiting any deductible, or other out-of-pocket expense being required from an insured by the Defendant regarding windshield repairs. Further, since a question of policy interpretation exists, this falls within the sole authority of the Court to decide, rather than an appraiser.
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1The Plaintiff’s Response to Defendant’s Motion to Dismiss, or Alternatively, Defendant’s Motion to Abate or Stay and Motion to Enforce Appraisal attaches Progressive’s Answer to Interrogatory ¶10 in the case, Clear Vision Windshield Repair, LLC (a/a/o Jennifer Beckles) v. Progressive American Ins. Co., Case Number, COCE14-018722 [23 Fla. L. Weekly Supp. 486a] which states the following:
Question: Please state what AGIS [Progressive’s selected appraiser] charges the Defendant [Progressive] per appraisal.
Answer: $55 per appraisal. If the appraisal process proceeds to a neutral umpire, an additional $75 is charged.
2Affidavit of Plaintiff’s Corporate Representative, Steven A. Schaet ¶8 stating that an appraiser’s fee is between $150.00 and $250.00 per claim.
