27 Fla. L. Weekly Supp. 736a

Online Reference: FLWSUPP 2708HAMMInsurance — Automobile — Windshield repair — Appraisal — Motion to dismiss repair shop’s complaint or to compel appraisal is denied — Appraisal provision in insurance policy violates public policy by purporting to eliminate plaintiff’s right to recover attorney’s fees and costs — Provision is invalid and unenforceable due to lack of procedures and methodologies governing appraisal process and determinations of appraisers and umpire — Even if provision were valid and enforceable, insurer waived right to compel appraisal by seeking to dismiss suit due to lack of standing, which position is inconsistent with appraisal remedy — Even if insurer did not waive right to compel appraisal, disputed factual issues regarding whether assignor of repair shop who is not named insured knowingly and voluntarily waived right to access to courts and whether appraisal provision violates prohibitive cost doctrine prevent court from compelling appraisal before discovery and evidentiary hearing on those issues

GLASSMETICS, LLC, a/a/o Devan Hammond, Plaintiff, v. PROGRESSIVE AMERICAN INSURANCE COMPANY, Defendant. County Court, 13th Judicial Circuit in and for Hillsborough County, Civil Division. Case No. 1 6-CC-042084, Division U. October 3, 2019. Frances M. Perrone, Judge. Counsel: Anthony T. Prieto, Morgan & Morgan, P.A., Tampa; Christopher P. Calkin and Mike Koulianos, The Law Offices of Christopher P. Calkin, P.A., Tampa; and David M. Caldevilla, de la Parte & Gilbert, P.A., Tampa, for Plaintiff. Chad C. Guzzo, Tampa, for Defendant.

ORDER ON DEFENDANT’S FIRST AMENDED MOTIONTO DISMISS, OR ALTERNATIVELY, DEFENDANT’SMOTION TO ABATE OR STAY AND COMPEL APPRAISAL

THIS CAUSE came before the Court on June 3, 2019 concerning “Defendant’s First Amended Motion to Dismiss, or Alternatively, Defendant’s Motion to Abate or Stay and Motion to Compel Appraisal” dated March 18, 2019. Having considered the motion, the Plaintiff’s response in opposition, the arguments of counsel, and relevant case law, the Court finds as follows:

A. Introduction

1. This is a small claims lawsuit involving the alleged underpayment of an insurance claim for repairing a damaged windshield.

2. The facts alleged in the complaint are straightforward, and for purposes of this order those alleged facts must be deemed to be true. See, Cook v. Sheriff of Collier County, 573 So. 2d 406, 408 (Fla. 2d DCA 1991); Murphy v. Bay Colony Prop. Owners Ass’n, 12 So. 3d 924, 926 (Fla. 2d DCA 2009) [34 Fla. L. Weekly D1467a]; Simon v. Tampa Elec. Co., 202 So. 2d 209 (Fla. 2d DCA 1967); Maciejewski v. Holland, 441 So. 2d 703, 704 (Fla. 2d DCA 1983).

3. At all material times, Devan Hammond (the “Insured”) was insured by the Defendant, Progressive American Insurance Company. While insured by the Defendant, the Insured’s vehicle suffered a covered loss in the form of a damaged windshield.

4. The Insured hired the Plaintiff to repair his damaged windshield. As part of the transaction, the Insured assigned his insurance benefits to the Plaintiff. The Plaintiff repaired the windshield and submitted its bill to the Defendant for payment. Thereafter, the Defendant disagreed with the billed amount, and unilaterally decided to pay an amount that was less than the Plaintiff’s full invoiced amount.

5. Thereafter, on December 27, 2016, Plaintiff filed the instant lawsuit seeking full payment. On February 16, 2017, the Plaintiff filed an amended complaint. Both the original and amended complaint expressly demanded a jury trial. The amount in controversy (the difference between the billed amount and the Defendant’s partial payment) is $123.05, exclusive of interest, attorneys’ fees, and costs.

6. On February 16, 2017, the Defendant filed a “Notice Invoking Appraisal Provision of Policy,” which quotes an appraisal provision of the insurance policy. Footnote 1 of the notice states, “Progressive previously invoked appraisal prior to the subject lawsuit being filed via written correspondence to both the named insured and Glassmetics.” The notice also states the Defendant selects “Auto Glass Inspection Services” as its appraiser.

7. On February 16, 2017, the Defendant also filed its first “Motion to Dismiss, or Alternatively, Defendant’s Motion to Abate or Stay and Motion to Compel Appraisal.” Copies of the insurance policy and the Defendant’s letter dated December 8, 2016 are attached to that first motion. The insurance policy identifies two different named insureds — Frank Hammond and Devan Hammond. However, only the Insured (i.e., Devan Hammond) was the Plaintiff’s customer in this case. This is significant because the Defendant’s letter is addressed to “Frank Hammond” and to Glass Metics [sic], but not to the Insured (Devan Hammond). In addition, Plaintiff filed an affidavit from the owner of Glassmetics attesting to no physical record and no memory of receipt of said letter.

8. Putting aside that the letter is not addressed to the Insured and that the Plaintiff has no record of receiving it, the first two paragraphs of that state:

A payment was recently made to the glass repair shop (“Shop”) with respect to the above referenced claim. This payment represents the amount that the above referenced underwriting company (“Company”) has determined to be the reasonable amount that is necessary to repair or replace windshield.

Although you may have provided a purported assignment of benefits, this correspondence does not waive any of the defenses we may have regarding the same. Specifically, we are hereby treating the assignment of benefits as a direction to pay and have issued the payment due pursuant to the policy language. Should you file suit, we reserve the right to assert defenses pertaining to the purported assignment of benefits.

Thereafter, the remaining portions of the letter purport to invoke the “appraisal” provision of the insurance policy, and states that the Defendant has selected “Auto Glass Inspection Services” as its appraiser.

9. According to paragraph 6 of the Defendant’s first motion (filed February 16, 2017), “. . . Defendant paid Plaintiff the maximum amount it was obligated to pay pursuant to the terms and conditions of the applicable policy of insurance.” Similarly, the Defendant’s December 8, 2016 letter states the Defendant’s payment “represents the amount that the above referenced underwriting company . . . has determined to be the reasonable amount that is necessary to repair or replace [the] windshield.”

10. On March 18, 2019, the Defendant filed its “First Amended Motion to Dismiss, or Alternatively, Defendant’s Motion to Abate or Stay and Motion to Compel Appraisal.” That amended motion makes two different and separate requests:

a. Paragraph 14 of the Defendant’s motion contends that “Plaintiff’s Complaint should . . . be dismissed for lack of standing, failure to state a cause of action/failure to comply with Florida Civil Rule of Procedure 1.130 or Small Claims Rule 7.050(a)(1).”

b. The remaining portions of the Defendant’s motion contend the Court should refer this case to the appraisal process described in the Insured’s insurance policy.

B. Defendant’s request to dismiss the complaint

11. As previously noted, paragraph 14 of the Defendant’s motion contends “Plaintiff’s Complaint should . . . be dismissed for lack of standing, failure to state a cause of action/failure to comply with Florida Civil Rule of Procedure 1.130 or Small Claims Rule 7.050(a)(1).” This portion of the Defendant’s motion must be addressed before addressing the Defendant’s “alternative” request to compel an appraisal.

12. A motion to dismiss tests the legal sufficiency of a complaint. See, Bess v. Eagle Capital, Inc., 704 So. 2d 621 (Fla. 4th DCA 1997) [22 Fla. L. Weekly D2571a; clarified at 23 Fla. L. Weekly D268a]. On a motion to dismiss, the moving party is deemed to admit all matters alleged in the complaint and the reasonable inferences arising therefrom and may not speculate as to whether the plaintiff’s allegations will ultimately be proven. See, Cook v. Sheriff of Collier County, 573 So. 2d 406, 408 (Fla. 2d DCA 1991); Murphy v. Bay Colony Prop. Owners Ass’n, 12 So. 3d 924, 926 (Fla. 2d DCA 2009) [34 Fla. L. Weekly D1467a]; Simon v. Tampa Elec. Co., 202 So. 2d 209 (Fla. 2d DCA 1967); Maciejewski v. Holland, 441 So. 2d 703, 704 (Fla. 2d DCA 1983). A complaint does not need to anticipate the defendant’s affirmative defenses. Rather, any affirmative defenses should be raised by the defendant in an answer. In deciding whether a cause of action is stated, this Court must not consider any affirmative defenses raised by the defendant or any evidence likely to be produced by either side. See, Susan Fixel, Inc. v. Rosenthal & Rosenthal, Inc., 842 So.2d 204, 206 (Fla. 3d DCA 2003) [28 Fla. L. Weekly D847a]; Martin v. Principal Mutual Life Ins. Co., 557 So. 2d 128, 128-129 (Fla. 3d DCA 1990); Grove Isle Ass’n, Inc. v. Grove Isle Assocs., LLP, 137 So. 3d 1081, 1089 (Fla. 3d DCA 2014) [39 Fla. L. Weekly D648a].

13. Upon review of the complaint, this Court finds the Plaintiff’s allegations, which must be deemed true at this juncture, adequately plead the Plaintiff’s standing to maintain this lawsuit, and the necessary elements of a breach of contract claim. Although a copy of the insurance policy and the Plaintiff’s invoice are not attached to the complaint, the Defendant clearly has copies of those documents and they are otherwise in the record.¹ Therefore, the Defendant’s request to dismiss the complaint is denied.

C. Insurance policy and appraisal provision

14. As alleged in paragraph 16 of the Defendant’s amended motion, the subject insurance policy (which is attached to the Defendant’s first motion) includes the following provision:

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 an 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 a qualified and impartial umpire chosen by the appraisers. 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.

15. Although the Defendant seeks to invoke the foregoing approval provision, the Plaintiff has asserted several arguments in opposition to that request.

16. First, the Plaintiff contends the appraisal provision is ambiguous. On one hand, the appraisal provision states that the appraisal process “will be binding” but on the other hand, the last sentence states neither party waives any right under the insurance policy by agreeing to an appraisal. When an insurance policy is susceptible to more than one reasonable interpretation, the insurance policy is considered ambiguous. See, e.g., Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000) [25 Fla. L. Weekly S211a]. Ambiguous insurance policy provisions are construed against the drafter and in favor of the insured. Id. Thus, assuming arguendo the appraisal provision is enforceable and lawfully invoked, these two conflicting provisions of the appraisal provision must be construed as preserving (and not waiving) the Insured’s contractual right to insist upon receiving full payment up to the maximum amount allowable under the other terms and conditions of the insurance policy.

D. Whether the appraisal provision is valid and enforceable

17. The Plaintiff also raises several arguments challenging the validity and enforceability of the appraisal provision. With respect to those arguments, both the Plaintiff and the Defendant cite to case law addressing “arbitration” proceedings. Case law governing arbitration proceedings does not always apply to appraisal proceedings.

18. Florida appellate courts have repeatedly recognized an “appraisal” process is materially different from an “arbitration” process. See, e.g., Allstate Insurance Co. v. Suarez, 833 So.2d 762, 765 (Fla. 2002) [27 Fla. L. Weekly S1028a]; Cotton States Mut. Ins. v. D’Alto, 879 So.2d 67 (Fla. 1st DCA 2004) [29 Fla. L. Weekly D2026f]; Nationwide Mut. Fire Ins. Co. v. Schweitzer, 872 So.2d 278 (Fla. 4th DCA 2004) [29 Fla. L. Weekly D659e]. For example, in Suarez, the Florida Supreme Court held appraisal clauses call for an informal, independent determination of value by appraisers, while arbitration calls for a formal trial-like hearing and resolution with notice and due process. Id., 833 So.2d at 765. See also, Citizens Prop. Ins. Corp. v. Mango Hill #6 Condo. Ass’n, Inc., 117 So.3d 1226, 1229 (Fla. 3d DCA 2013) [38 Fla. L. Weekly D1507c] (describing many material differences between arbitration and appraisal). Moreover, the arbitration process is expressly protected by the Federal Arbitration Act (i.e., 9 USC §§ 1-16) and the Florida Arbitration Act (i.e., Ch. 682, Fla. Stat.). There is no similar statutory protection afforded to an appraisal process.

19. Case law explains arbitration agreements are required to explain the procedures associated with the arbitration process. The “form and procedure for arbitration” is one of the “essential terms of an enforceable arbitration agreement.” Greenbrook NH, LLC v. Estate of Sayre, ex rel. Raymond, 150 So.3d 878, 881 (Fla. 2d DCA 2014) [39 Fla. L. Weekly D2348a]. The arbitration agreement must set forth procedures by which the arbitration is to be effected. Id. at 878; Premier Real Estate Holdings, LLC v. Butch, 24 So. 3d 708, 711 (Fla. 4th DCA 2009) [35 Fla. L. Weekly D3b]

20. In this case, the Defendant is seeking to invoke its appraisal provision, but has not proffered any evidence demonstrating the Insured knowingly, voluntarily, and intelligent waived his constitutional rights to access to the courts, to a jury trial, and to due process. Although the Plaintiff has raised this as an issue and has propounded preliminary discovery, the Defendant has not yet provided any responses and the discovery process has not concluded. Thus, at this juncture, the Court is not in a position to determine whether or not the Insured knowingly, intelligently, and voluntarily waived his constitutional rights. Because the Plaintiff has not conceded that the Insured knowingly, voluntarily, and intelligent waived his constitutional rights to access to the courts, to a jury trial, and to due process, and because the Defendant has not come forward with any evidence in this regard, the Court is unable to enforce the appraisal provision at this juncture.

21. In Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999) [24 Fla. L. Weekly S540a], the Florida Supreme Court explained that enforcing a poorly drafted arbitration clause may violate a party’s fundamental constitutional rights of access to the courts, to a jury trial, and to due process. Id., 750 So.2d at 642. In addition, Justice Overton’s concurring opinion strongly recommended arbitration clauses should clearly explain they will result in a waiver of the right to jury trial. Id., 750 So.2d at 643 (Overton, concurring). Siefert is instructive here because the Defendant’s appraisal provision does not include any mention of the right to jury trial or any other constitutional rights are supplanted by an appraisal process. Instead, the last sentence of the Defendant’s appraisal provision states there is no waiver of rights under the insurance policy. Thus, even if the Insured actually knew about and read the Defendant’s appraisal provision, this Court could not justifiably enforce that appraisal provision unless the Defendant demonstrated the Insured (or any reasonable lay person) would have a reasonable expectation he or she was waiving the constitutional rights of access to the courts, to due process, and to a jury trial, in a knowing, intelligent, and voluntarily manner. At this juncture, no such demonstration has been made.

22. In response, the Defendant cites to case law which stands for the general proposition that a party is presumed to know and understand the provisions of a contract before signing that contract, and that a party cannot defend against the enforcement of a contract on the grounds that he or she signed the contract without reading it. Tara Woods SPE, LLC v. Cashin, 116 So. 3d 492, 501 (Fla. 2d DCA 2013) [38 Fla. L. Weekly D1151a]; Kinko’s, Inc. v. Payne, 901 So. 2d 354, 356 (Fla. 2d DCA 2005) [30 Fla. L. Weekly D1180a]; Bill Heard Chevrolet Corp., Orlando v. Wilson, 877 So. 2d 15, 18 (Fla. 5th DCA 2004) [29 Fla. L. Weekly D1119b]. However, insurance policies are not routinely signed by the insured, and typically, an insured is not even provided a copy of the insurance policy until long after he or she has already paid the premium. Moreover, in this case, the Insured (Devan Hammond) appears to be an additional insured or resident relative or omnibus insured — not the “named insured” (Frank Hammond), who typically would have been the person who actually applied for and purchased the Insurance Policy. There is no evidence in this case that the Plaintiff’s customer (Devan Hammond) was a signatory to any documents associated with the Insurance Policy, or that the Defendant ever even provided a copy of the Insurance Policy to him. The Defendant has not cited any legal authority suggesting that one insured is lawfully authorized to waive the constitutional rights of another insured. So, even if the “named insured” (Frank Hammond) waived his own constitutional rights, that does not necessarily mean the named insured is authorized to waive the constitutional rights of any other persons who may be insured under same insurance policy.

D. Whether the appraisal provision violates public policy

23. The Plaintiff contends the Defendant’s appraisal provision also cannot be enforced because it violates public policy.

24. Parties may freely contract, but a contractual provision that “contravenes legislative intent in a way that is clearly injurious to the public good violates public policy and is thus unenforceable.” Hernandez v. Crespo, 211 So.3d 19, 24 (Fla. 2016) [41 Fla. L. Weekly S625a] (quoting, Franks v. Bowers, 116 So.3d 1240, 1247 (Fla. 2013) [38 Fla. L. Weekly S416a]). See also, Green v. Life & Health of America, 704 So.2d 1386, 1390 (Fla. 1998) [23 Fla. L. Weekly S42a] (parties can contract around state or federal law, except when contrary to public policy).

25. The Legislature has the “final word” on declarations of public policy, which are entitled to “great weight.” Univ. of Miami v. Echarte, 618 So.2d 189, 196 (Fla. 1993). If a contractual provision defeats the purpose of a remedial statute, or limits or undermines or diminishes specific statutory remedies created by the Legislature, it violates the public policy of the State of Florida and is unenforceable. See, e.g., Shotts v. OP Winter Haven, Inc., 86 So.3d 456, 474 (Fla. 2011) [36 Fla. L. Weekly S665b]; Gessa v. Manor Care of Fla., Inc., 86 So.3d 484, 492-93 (Fla. 2011) [36 Fla. L. Weekly S676a].

26. Just like all other types of contracts, insurance policies must comply with public policy. Insurance companies cannot limit their liability or impose conditions upon their obligations when their right to do so is “restricted by statute or public policy[.]” See, Washington National Insurance Corporation v. Ruderman, 117 So.3d 943, 951 (Fla. 2013) [38 Fla. L. Weekly S616b]. See also, Am. Equity Ins. Co. v. Van Ginhoven, 788 So.2d 388, 390 (Fla. 5th DCA 2001) [26 Fla. L. Weekly D1630a] (exclusions in an insurance policy are to be enforced as long as they are clear, unambiguous and do not violate public policy). The provisions of an insurance policy which have the effect of defeating the purpose and intent of a statute are against public policy and must be considered “nugatory and void.” See, Travelers Indem. Co. v. Powell, 206 So.2d 244, 246 (Fla. 1st DCA 1968). Consequently, the courts have declared insurance policy provisions void and unenforceable for violating public policy. See, e.g., Mullis v. State Farm Mut. Auto. Ins. Co., 252 So.2d 229, 235 (Fla.1971) (insurance policy provision limiting uninsured motorist protection provided in statute held void as contrary to public policy); The Praetorians v. Fisher, 89 So.2d 329, 331 (Fla. 1956) (provisions in life insurance policies are invalid when opposed to public policy); Travelers Ins. Co. v. Spencer, 397 So.2d 358, 360 (Fla. 1st DCA 1981) (“any provision in an insurance policy attempting to limit a named insured’s right to UM benefits only as to automobiles listed in his policy must be condemned as contrary to the public policy as expressed in Section 627.727(1)”); Aetna Ins. Co. v. King, 265 So.2d 716, 718 (Fla. 1st DCA 1972) (“public policy of this state renders an insurance policy invalid when the insured has no insurable interest in the property”); First Nat. Ins. Co. of Am. v. Devine, 211 So.2d 587, 589 (Fla. 2d DCA 1968) (restriction upon the coverage provided by uninsured motorists provisions of automobile insurance policies is against public policy and void).

27. The need to comply with public policy is especially pronounced in the context of motor vehicle insurance policies. Because “automobile insurance litigation is infused with considerations of public policy,” a court’s determination of insurance disputes “must also take into consideration relevant legislative enactments, established custom and usage in the insurance industry, and the body of case law touching upon coverage questions. . . .” Nat’l Merck Co., Inc. v. United Serv. Auto. Ass’n, 400 So.2d 526, 530 (Fla. 1st DCA 1981). See also, Mullis v. State Farm Mut. Auto. Ins. Co., 252 So. 2d 229, 233 (Fla. 1971) (uninsured motorist coverage intended by the statute to protect the described insureds is not to be whittled away by exclusions and exceptions).

28. Even though arbitration agreements enjoy significant protection under the Federal Arbitration Act and the Florida Arbitration Act, arbitration agreements are still required to comply with public policy. No valid agreement exists if the arbitration clause is unenforceable on public policy grounds. Global Travel Marketing, Inc. v. Shea, 908 So.2d 392, 398 (Fla. 2005) [30 Fla. L. Weekly S511a]. As such, if an arbitration agreement attempts to limit or undermine or diminish specific statutory remedies created by the Legislature, it violates the public policy of the State of Florida and is unenforceable. Shotts, 86 So.3d at 474.

29. So, for example, in Hernandez and Bowers, the Florida Supreme Court held that an arbitration agreement was void as against public policy because it substantially altered “the cost, award, and fairness incentives” which the Florida Legislature had enacted in the Florida Medical Malpractice Act. Hernandez, 211 So.2d at 27; Bowers, 116 So.3d at 1248. Because the Legislature had found that the Florida Medical Malpractice Act’s provisions were necessary to address the rising costs of medical care in Florida, a healthcare provider could not avoid those provisions by attempting to contract around them in an arbitration agreement. Bowers, 116 So.3d at 1248.

30. As another example, in Holt v. O’Brien Imp. of Fort Myers, Inc., 862 So.2d 87 (Fla. 2d DCA 2003) [28 Fla. L. Weekly D2608a], the Second District held that an arbitration agreement between car buyers and a car dealership violated public policy and was unenforceable with respect to the buyers’ claims under the Florida Deceptive and Unfair Trade Practices Act, because the buyers sought injunctive relief which was available under the Act but was not available under the arbitration agreement, and because the arbitration agreement purported to eliminate the buyers’ statutory right to recover their attorney’s fees and costs when they prevailed on their claims.

31. As another example, in Flyer Printing Co., Inc. v. Hill, 805 So. 2d 829, 832-833 (Fla. 2d DCA 2001) [26 Fla. L. Weekly D1780b], the Second District held that an arbitration agreement which required an employee to bear half the fees and costs associated with the arbitration of her discrimination action was unenforceable, on grounds the arbitration agreement contravened employee’s statutory right to seek a full award of her attorneys’ fees and costs and defeated the remedial purposes of those statutes.

32. If an arbitration agreement must comply with public policy, it certainly stands to reason that an appraisal agreement must also comply with public policy — just like all other types of contracts. See generally, Cincinnati Ins. Co. v. Cannon Ranch Partners, Inc., 162 So. 3d 140, 143 (Fla. 2d DCA 2014) [40 Fla. L. Weekly D78a] (trial court “could not have found the appraisal clause to be unenforceable unless the clause violated either statutory law or public policy”).

33. In this case, the Plaintiff contends that Defendant’s appraisal provision violates public policy for several reasons. One reason advanced by the Plaintiff is that the appraisal provision purports to defeat the Insured’s statutory right to recover “one-way” prevailing party attorneys’ and costs under Section 624.428, Florida Statutes. See, e.g., Danis Indus. Corp. v. Ground Improvement Techniques, Inc., 645 So.2d 420, 421 (Fla. 1994) (Section 627.428 is a “one-way street offering the potential for attorneys’ fees only to the insured or beneficiary”).

34. “[T]he public policy behind section 627.428, is to discourage insurers from contesting valid claims.” Citizens Prop. Ins. Corp. v. Bascuas, 178 So.3d 902, 905 (Fla. 3d DCA 2015) [40 Fla. L. Weekly D2342b]. Section 627.428 reflects Florida’s public policy to require the insurer to pay for its insured’s attorney’s fees and costs when the insured is forced to dispute the insurer’s refusal to make full payment under an insurance policy. Ins. Co. of N. Am. v. Lexow, 602 So.2d 528, 531 (Fla. 1992). Stated another way, “Florida courts have consistently held that the purpose of section 627.428 . . . is to discourage the contesting of valid claims against insurance companies and to reimburse successful insureds for their attorney’s fees when they are compelled to defend or sue to enforce their insurance contracts.” Lexow, 602 So.2d at 531.

35. “. . . Florida law is clear that in ‘any dispute’ which leads to judgment against the insurer and in favor of the insured, attorney’s fees shall be awarded to the insured.” Ivey v. Allstate Ins. Co., 774 So. 2d 679, 684 (Fla. 2000) [25 Fla. L. Weekly S1103a]. “If a dispute arises between an insurer and an insured, and judgment is entered in favor of the insured, he or she is entitled to attorney’s fees.” Id. The purpose of Section 627.428 “is to level the playing field so that the economic power of insurance companies is not so overwhelming that injustice may be encouraged because people will not have the necessary means to seek redress in the courts.” Ivey, at 684.

36. Another important purpose of Section 627.428 is to “make an already financially burdened insured whole again.” Johnson v. Omega Ins. Co., 200 So. 3d 1207, 1209 (Fla. 2016) [41 Fla. L. Weekly S415a]; See also, Brass & Singer, P.A. v. United Auto. Ins. Co., 944 So. 2d 252, 253 (Fla. 2006) [31 Fla. L. Weekly S762a] (“the intent behind section 627.428(1) is to make the insured whole”).

37. The insured’s statutory right to recover its legal expenses is especially important in cases where the amount of insurance benefits in dispute is relatively small. In this particular case, the Defendant underpaid the Plaintiff’s invoice by $123.05. While that amount is small when viewed in the context of an isolated case, when a small business such as Plaintiff receives underpayments in multiple windshield replacements, it is clear that significant amounts of money are in play. At the same time, no windshield shop could ever sensibly or economically afford to pay an attorney to sue an insurance company for such a small amount of money, absent the attorney’s agreement to seek recovery of his or her attorneys’ fees and costs pursuant to Section 627.428. As a result, windshield claims are typically pursued by attorneys who are retained by insureds on a pure contingency fee contract, where the attorney is only paid if the insured is the prevailing party and recovers attorneys’ fees and costs pursuant to Section 627.428. Absent the right to recover those attorneys’ fees and costs under Section 627.428, the windshield shop cannot be made whole and would be economically unable to pursue collection litigation against an insurance company who underpays the claim by a small amount, and the public policy behind Section 627.428 (i.e., to discourage insurance companies from contesting valid claims and to make the prevailing insured whole) is defeated.

38. By practical application, Section 627.428 provides a free-of-charge judicial dispute resolution process to an insured who prevails against an insurance company that underpaid an insurance claim. In contrast, under the Defendant’s appraisal provision, the Defendant can challenge or underpay a valid claim. In that event, the only way for the insured to recover full payment of the insurance claim is to participate in an appraisal process in which the insured must pay its own expenses for hiring an appraiser and one-half of the expenses for hiring an umpire — even if the insured ultimately wins the appraisal process. In that scenario, any recovery of insurance benefits is reduced (or even subsumed) by the insured’s appraisal expenses, and the insured can never be made whole for the covered loss. As previously explained above, in Holt and Flyer Printing, the Second District invalidated — as being against public policy — an arbitration provision that purported to eliminate the plaintiff’s otherwise applicable statutory right to recover attorneys’ fees and costs from the defendant. The Defendant’s appraisal provision in this case clearly accomplishes that same result, and therefore, it violates public policy.²

E.

Whether the appraisal provision violates the “prohibitive cost doctrine”

39. The Plaintiff also argues that the Defendant’s appraisal provision violates the “prohibitive cost doctrine,” and has made a preliminary proffer of evidence to the Court in support of that argument.

40. The prohibitive cost doctrine is derived from Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (2000), where the U.S. Supreme Court acknowledged that an arbitration clause could be rendered unenforceable where the existence of substantial arbitration costs would otherwise prohibit a litigant from effectively vindicating his or her statutory rights. Id. at 90. See also, Cohen v. D.R. Horton, Inc., 121 So.3d 1121 (Fla. 5th DCA 2013) [38 Fla. L. Weekly D1800a]; Fi-Evergreen Woods, LLC v. Estate of Vrastil, 118 So.3d 859 (Fla. 5th DCA 2013) [38 Fla. L. Weekly D1710g]. Green Tree recognizes that the costs of arbitration can be prohibitive and render an arbitration agreement unenforceable by denying a plaintiff access to the forum. This Court can think of no legitimate reason why the same standard should not also apply to an appraisal provision.

41. The applicability of the prohibitive cost doctrine must be determined on a case-by-case basis and requires an evidentiary showing of individualized prohibitive expense. Zephyr Haven Health & Rehab Center, Inc. v. Hardin, 122 So.3d 916 (Fla. 2d DCA 2013) [38 Fla. L. Weekly D2070a] (citing Bradford v. Rockwell Semiconductor Systems, Inc., 238 F 3d 549 (4th Cir. 2001)); FI-Tampa, LLC v. Kelly-Hall, 135 So.3d 563, 567 (Fla. 2d DCA 2014) [39 Fla. L. Weekly D748a].

42. According to Zephyr Haven, the evidentiary hearing must focus on plaintiff’s ability to pay the appraisal fees and costs, the expected cost differential between appraisal and litigation in court, and whether the cost differential is so substantial as to deter the bringing of claims. Id. at 922 (citing Bradford, 238 F. 3d at 556). See also, FI-Tampa, LLC, 135 So.3d at 567.

43. Here, the Defendant’s appraisal provision requires the Plaintiff to appoint and pay its own appraiser, and to pay for other appraisal expenses. Additionally, if Plaintiff’s and Defendant’s chosen appraisers do not agree, the Plaintiff and Defendant must also split the costs of hiring an umpire to decide any differences.

44. As previously noted, this case involves a small claims court dispute over $123.05. In contrast to the rather small amount in controversy, the Plaintiff has proffered evidence, including two expert affidavits, which indicate the Plaintiff’s entire repair invoice in this case was $187.25, and the Defendant underpaid that invoice by $123.05. In contrast, the Plaintiff’s two expert affidavits demonstrate the expected cost of participating in the appraisal process will be in the range of $2,000 to $3,000. So, if the Plaintiff were to win the appraisal process and recover the full $123.05, the expected expense of participating in the appraisal process would not only exceed the $123.05 amount in controversy, but would also exceed the entire billed amount by somewhere between $1,825 to $2,825. This appears to be a sufficient proffer of prima facie evidence to meet all or at least some of three factors described in Zephyr Haven.

45. However, at this juncture, the hearing on the Defendant’s motion was not an evidentiary hearing, and the Defendant has not yet offered any opposing evidence. Nor have the parties engaged in any meaningful discovery. Consequently, even if the appraisal provision were valid and enforceable, this Court would not be in a position to grant the Defendant’s motion to compel arbitration without affording the parties a fair opportunity to engage in discovery and without conducting an evidentiary hearing to resolve the Plaintiff’s invocation of the prohibitive cost doctrine. See, e.g., Lloyd’s of Shelton Auto Glass, LLC, a.a.o. Jeffrey Carbin v. Progressive Select Ins. Co., Case No. 18-CC-44844, Order on Defendant’s First Amended Motion to Dismiss, or Alternatively, Defendant’s Motion to Abate or Stay and Motion to Compel Appraisal (Hillsborough County Ct. April 5, 2019) [27 Fla. L. Weekly Supp. 314a] (Hon. Alissa Ellison) (requiring parties to set an evidentiary hearing concerning application of the prohibitive cost doctrine in opposition to Progressive’s attempt to invoke its appraisal provision).

F.

Whether the Defendant has invoked and/or waived its rights to an appraisal

46. The Plaintiff contends, even if the appraisal provision is valid and enforceable, the Defendant has waived its right an appraisal. Before reaching that issue, the Court must first determine whether the Defendant has lawfully invoked its right to an appraisal.

47. Case law provides when an insurance company makes a timely demand for appraisal and does not otherwise act inconsistently with that demand, then neither party has the right to deny that demand once it is made. See, e.g., United Cmty. Ins. Co. v. Lewis, 642 So. 2d 59, 60 (Fla. 3d DCA 1994). However, once invoked, the right to an appraisal “may be waived if a party maintains a position inconsistent with the appraisal remedy.” Gray Mart, Inc. v. Fireman’s Fund Ins. Co., 703 So. 2d 1170, 1172 (Fla. 3d DCA 1997) [23 Fla. L. Weekly D1c]. It is not necessary to show prejudice to establish waiver of the right to an appraisal. Donald & Co. Sec., Inc. v. Mid-Florida Cmty. Services, Inc., 620 So. 2d 192, 194 (Fla. 2d DCA 1993).

48. In this case, the Defendant’s amended motion contends the Plaintiff was required to participate in the appraisal process as a condition precedent to filing this lawsuit. As previously noted, a copy of a presuit letter from the Defendant dated December 8, 2016 is attached to the first motion to dismiss. However, that presuit letter is addressed to “Frank Hammond” and to the Plaintiff, but not to the Insured (Devan Hammond). Although the Defendant has filed an affidavit authenticating the letter as a business record, the Defendant has not offered any evidence demonstrating the letter was actually mailed or otherwise delivered to the Insured (Devan Hammond) or to the Plaintiff. In contrast, the Plaintiff has filed an affidavit of its owner indicating that the Plaintiff has no record in its files or memory of having received the letter.

49. The appraisal provision itself is clearly permissive in nature, and states that either party “may” demand an appraisal. At this juncture, there is a disputed issue of material fact which precludes this Court from determining that the Defendant properly invoked the appraisal provision before this lawsuit was filed by the Plaintiff. Absent undisputed evidence that the Defendant properly demanded an appraisal before the lawsuit was filed, this Court has no factual or legal basis to conclude the Plaintiff was under any obligation to participate in the appraisal process as a condition before filing this lawsuit.

50. As noted by the Defendant, Florida law permits a party to invoke an appraisal provision for the first time during suit. See, Gonzalez v. State Farm Fire & Cas. Co., 805 So.2d 814, 817-818 (Fla. 3d DCA 2000) [26 Fla. L. Weekly D390a]. In this case, although there is insufficient evidence for this Court to conclude the Defendant made a proper presuit demand for appraisal, the Defendant has at least invoked that process during the lawsuit by virtue of its alternative motion to compel appraisal. Id. Accordingly, it is necessary to address the Plaintiff’s contention the Defendant has waived its right to an appraisal by maintaining a position that is inconsistent with the appraisal remedy. See, Gray Mart, 703 So. 2d at 1172.

51. “The question of waiver of appraisal is not solely about the length of time the case is pending or the number of filings the appraisal-seeking party made. Instead, the primary focus is whether [the party seeking to invoke the appraisal process] acted inconsistently with their appraisal rights.” Florida Ins. Guar. v. Sill, 154 So. 3d 422, 424 (Fla. 5th DCA 2014) [39 Fla. L. Weekly D2575a].

52. Here, the Plaintiff contends that the Defendant acted inconsistently with its appraisal rights and thereby waived its right to an appraisal by: (a) unilaterally disagreeing with the billed amount and making a partial payment before invoking the appraisal process, (b) by failing to select an “impartial” appraiser as required by the appraisal provision, and (c) by seeking dismissal of the complaint for lack of standing and for failure to state a cause of action.

53. Based on the bare allegations contained in the complaint and the Defendant’s motions, the record evidence reflects the Plaintiff billed the Defendant, and the Defendant disagreed with the billed amount and paid a partial amount before demanding an appraisal. In addition, the Plaintiff challenges the impartiality of the Defendant’s selected appraiser. Plaintiff cites to trial level decisions which indicate the appraiser identified in the Defendant’s presuit letter and in its ‘Notice Invoking Appraisal Provision of Policy” (i.e., “Auto Glass Inspection Services,” also known as “AGIS”) supported the insurance industry. See, e.g., Auto Glass America, LLC, a.a.o. Joe Johnson v. Allstate Ins. Co., 25 Fla. L. Weekly Supp. 833a (Fla. Broward County Ct. Nov. 21, 2017); Clear Vision Windshield Repair LLC, a.a.o. Neville Gibbs v. Progressive Select Ins. Co., 23 Fla. L. Weekly Supp. 480a (Fla. Broward County Ct. Sept. 2, 2015); Clear Vision Windshield Repair LLC, a.a.o. Jennifer Beckles v. Progressive American Ins. Co., 23 Fla. L. Weekly Supp. 486a (Fla. Broward County Ct. Sept. 2, 2015); Clear Vision Windshield Repair LLC, a.a.o. Toniann Ariad v. Progressive Select Ins. Co., 23 Fla. L. Weekly Supp. 859b (Fla. Broward County Ct. Dec. 14, 2015); Clear Vision Windshield Repair LLC, a.a.o. Regiena Aradanas v. Progressive Select Ins. Co., 23 Fla. L. Weekly Supp. 788a (Fla. Broward County Ct. Dec. 14, 2015); Clear Vision Windshield Repair LLC, a.a.o. Frances Soto v. Progressive American Ins. Co., 23 Fla. L. Weekly Supp. 862a (Fla. Broward County Ct. Dec. 15, 2015). However, at this preliminary juncture, the Court has no undisputed evidence upon which to reach a factual determination about these issues.

54. Next, the Plaintiff contends the Defendant waived its right to an appraisal by seeking dismissal of the complaint for lack of standing and for failure to state a cause of action. Assuming the appraisal provision is enforceable, the scope of the appraisal process is exclusively limited to determining the amount of the loss. Unlike an arbitration case, where all issues unrelated to arbitrability of the claim are decided by the arbitrators, the scope of the appraisal process is limited only to the amount of the loss. “[A]ll issues other than those contractually assigned to the appraisal panel are reserved for determination in a plenary action” by the Court. See, e.g., Mango Hill, 117 So.3d at 1229. In this case, the Defendant’s amended motion clearly seeks a judicial remedy that the appraisal process cannot provide.

55. Assuming arguendo that the appraisal provision is valid and enforceable, the Defendant could either invoke this Court’s jurisdiction to challenge its liability for the Plaintiff’s claim, or accept liability for that claim and invoke the appraisal process to determine the amount of the loss — but not both. By invoking this Court’s jurisdiction to challenge the Plaintiff’s standing to assert its claim, the Defendant is requesting relief that is within the exclusive province of a court to provide, and that relief is inconsistent with the Defendant’s “alternative” request to compel the appraisal remedy described in the Insurance Policy. Consequently, even if the Defendant’s appraisal provision were valid and enforceable, this Court finds the Defendant has waived its right to compel an appraisal.

G. Conclusion

56. Based on the foregoing analysis, this Court concludes the Defendant’s appraisal provision violates public policy and is otherwise invalid and unenforceable due to its lack of any procedures and methodologies governing the appraisal process and the determinations of the appraisers and the umpire. Even if the appraisal provision were valid and enforceable, the Defendant has waived its right to compel an appraisal by seeking a remedy that can only be provided by a court and by maintaining a position that is inconsistent with the appraisal remedy that it seeks in the alternative. Even if that does not constitute a waiver, there are many unresolved and disputed factual issues that would prevent this Court from compelling an appraisal without affording the parties an opportunity to conduct reasonable discovery and without conducting an evidentiary hearing to resolve those disputed factual issues.

57. Accordingly, the “Defendant’s First Amended Motion to Dismiss, or Alternatively, Defendant’s Motion to Abate or Stay and Motion to Compel Appraisal” is hereby DENIED, without prejudice.

__________________

¹With respect to the Defendant’s contention that the complaint to comply with Rules 1.130 and Rules 7.050(a)(1), the Defendant has offered no explanation concerning this contention. Both rules govern documents that should be attached to a complaint, but the Defendant has not identified any documents that it contends should have been attached to the complaint.

²The Defendant cites to Progressive American Ins. Co. v. SHL Enterprises, LLC, et al., 264 So.3d 1013 (Fla. 2d DCA 2018) [43 Fla. L. Weekly D2434a] to suggest that it is not unlawful for an insurance company to require an insured to share the costs of the appraisal process. However, that decision involved the issue of whether the Defendant’s appraisal provision constituted a “de facto deductible” in violation of Section 627.7288, Florida Statutes. The decision did not decide whether the Defendant’s appraisal provision violates any public policy, and did not involve any analysis of Section 627.428, Florida Statutes or the public policy associated with that statute.