27 Fla. L. Weekly Supp. 754a
Online Reference: FLWSUPP 2708LINAInsurance — Automobile — Appraisal — Prohibitive cost doctrine — Inability of plaintiff to pay costs of appraisal can be element of invoking prohibitive cost doctrine, but it is not necessary element
BROWARD INSURANCE RECOVERY CENTER, LLC (a/a/o Albert Linares), Plaintiff, v. PROGRESSIVE AMERICAN INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. CONO17-001287. September 17, 2019. Steven P. Deluca, 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. Daniel Montgomery, Cole, Scott & Kissane, P.A., for Defendant.
ORDER REGARDING THE COST PROHIBITIVEDOCTRINE AS A DEFENSE TO DEFENDANT’SMOTION TO COMPEL APPRAISAL
THIS CAUSE having come on to be heard on August 14, 2019, on Defendant’s Objections to Plaintiff’s Discovery Requests, the Court having received extensive oral argument, and having reviewed the Plaintiff’s Memorandum of Law in support of its Motion to Invoke the Cost Prohibitive Doctrine as a Defense to Defendant’s Motion to Compel Appraisal and the Court having been duly advised in the Premises, finds as follows:Background
1. This Order is solely limited to a determination of the scope of the hearing to be conducted regarding applicability of the Cost Prohibitive Doctrine as articulated by the United States Supreme Court in Green Tree Financial Corp. Alabama v. Randolph, 531 U.S. 79 (2000), and its progeny, including Zephyr Haven Health & Rehab Ctr., Inc., v. Hardin, 122 So. 3d 916 (Fla. 2d DCA 2013) [38 Fla. L. Weekly D2070a]. See also, Bradford v. Rockwell Semiconductor Systems, Inc., 238 F. 3d 549 (4th Cir. 2001).
2. Plaintiff has filed an amended complaint against the Defendant seeking declaratory relief and damages alleging, generally, that the Defendant has implemented a flawed reimbursement analysis emanating from a policy provision which is vague and ambiguous and which has resulted in an underpayment in this and in many other claims. The Plaintiff further alleges that the continued failure of the Defendant to provide the data and method of computation it utilizes to determine whether the amount it reimbursed the Plaintiff violates the provision of the policy requiring the paid amount not to exceed the “prevailing competitive labor rates charged in the area where the property is to be repaired . . . .”1
3. On June 4, 2019, the Defendant filed its Motion to Dismiss the Amended Complaint and to Compel Appraisal of the claim under the appraisal provision of the subject insurance policy essentially claiming that this provision requires that the dispute be resolved by appraisal as the preferred non-judicial mechanism of dispute resolution.
4. The Plaintiff has responded with several different arguments as to why this claim is not one for which appraisal is legally appropriate. Amongst those arguments is the assertion that the appraisal clause violates the Prohibitive Cost Doctrine because of the inherent unfairness of compelling a settlement procedure which would cost the Plaintiff more than the amount in controversy.
5. Plaintiff sought a preliminary hearing on whether the inability to pay was not a necessary element to the invocation of the doctrine, but rather a factor as the parties would benefit from this preliminary ruling as it could affect the scope of the evidence submitted if the Court granted the request for an evidentiary hearing. If the Court agreed with Plaintiff, Plaintiff’s position would instead focus on the other factors cited in the case law in that it would be an imprudent business decision to participate in the appraisal process as the cost of appraisal greatly exceeds the amount in liquidated damages even if Plaintiff is awarded the full amount sought as the Policy of insurance requires each party to bear its own appraisal costs.
6. Defendant argues that an inability to pay the appraisal cost is one of the elements necessary to the Prohibitive Cost Doctrine and thus, Plaintiff must show that it can not afford to pay the appraisal costs.Legal Analysis
7. The Prohibitive Cost Doctrine is an equitable doctrine which serves to invalidate arbitration agreements under specific circumstances. And since appraisal provisions in insurance policies such as the one at issue have been generally treated as arbitration provisions, the same logic should apply.
8. In Zephyr Haven, the Second District Court of Appeals accepted the rejection of the argument that arbitration agreements which provide for a sharing of the costs of the procedure are per se unenforceable, but “held that a case-by-case analysis is appropriate, focusing on, 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.” Id., at 922. (emphasis added).
9. While the inability to pay was an element in Zephyr Haven, as the plaintiff in that case claimed an inability to pay the costs of the arbitration clause in a contract she executed when becoming a resident at an assisted living facility, the inability to pay is not a necessary element of the Prohibitive Cost doctrine, but a factor to be considered, if raised, and established factually.
10. Therefore, this Court finds that the Plaintiff’s ability to pay the appraisal costs is not an element necessary to invoke the Prohibitive Cost Doctrine.
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1The Limits of Liability provision in the Policy of insurance pertaining to windshield damage reflects the following language:
LIMITS OF LIABILITY
……..
2. Payments for loss to a covered auto, non-owned auto, or custom parts or equipment are subject to the following provisions:
d. 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, including, but not limited to:
(a) original manufacturing parts of equipment; and
(b) nonoriginal manufacturing parts or equipment.
