28 Fla. L. Weekly Supp. 535a
Online Reference: FLWSUPP 2806MUSA
Insurance — Automobile — Windshield repair — Appraisal — Prohibitive cost doctrine — Prohibitive cost doctrine is not applicable to appraisal provision where appraisal costs that were agreed to in policy and over which repair shop has significant control would not render shop unable to pursue claim — Clear and unambiguous appraisal clause that does not violate statutory law and is not contrary to public policy is enforceable
BROWARD INS. RECOVERY CENTER (LLC), a/a/o Mario Musa, Plaintiff, v. PROGRESSIVE AMERICAN INS. CO., Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 2018-026437-SP-23, Section ND02. June 8, 2020. Natalie Moore, Judge. Counsel: Emilio R. Stillo, Emilio Stillo, P.A., Davie, and Joseph Dawson, Law Offices of Joseph R. Dawson, P.A., Fort Lauderdale, for Plaintiff. Randi B. Franz, Antonio Roldan, and Jessica L. Pfeffer, Progressive PIP House Counsel, Fort Lauderdale, for Defendant.
ORDER GRANTING DEFENDANT’SMOTION TO DISMISS
This matter comes before the Court on Defendant’s Motion to Dismiss Plaintiff’s Amended Complaint, Or Alternatively, Defendant’s Motion to Abate or Stay and Motion to Compel Appraisal. After hearing the argument of the parties, reviewing the filed documents and briefs, and considering the applicable law, it is hereby:
ORDERED AND ADJUDGED that Plaintiff’s motion to dismiss is GRANTED. The motion to stay and compel appraisal is denied as moot.
This lawsuit involves a dispute between an insurance company and an auto glass vendor regarding the cost of replacing an insured’s windshield. As is common in the industry, Plaintiff, an auto glass vendor, obtained an assignment of benefits relating to the insurance claim for the replacement of the insured’s windshield. This assignment allows a vendor to “step into the shoes” of the insured. The vendor is then able to negotiate with and collect from the insurer.
The insurance contract in this case requires Defendant to pay “the amount necessary to repair the damaged property to its pre-loss physical condition.” The policy further states: “In determining the amount necessary to repair damaged property to its pre-loss physical condition, the amount paid by us: will not exceed the prevailing competitive labor rates charged . . .and the cost of repair or replacement parts and equipment, as reasonably determined by us . . . .” The contract also states that if the insurer and the insured cannot agree on an amount of loss then either party may demand an appraisal.
Defendant has admitted there is a covered loss and argues that the only remaining issue is the amount of loss. Defendant argues that this a dispute that is appropriate for appraisal and is specifically identified in the contract as an issue for which appraisal can be demanded. Defendant made a timely demand for appraisal and has not acted inconsistently with that right at any time. This motion to dismiss seeks to enforce that right.
Appraisal clauses are enforceable in Florida. Parties are free to create contracts that they deem appropriate to their needs unless the form or content of the contract conflicts with law or public policy. Green v. Life and Health of America, 704 So.2d 1386 (Fla. 1998) [23 Fla. L. Weekly S42a]. Courts cannot and should not interfere with the freedom to contract, and a court should not substitute its judgment for that of the parties to the contract.
Plaintiff initially argues that the issue here is not just the amount of loss. Plaintiff suggests that the contract was breached not only because Defendant did not pay the replacement cost as charged, but also that they calculated the replacement cost in a manner inconsistent with the contract. Plaintiff argues that this issue, how the calculation was made, is not an issue which is proper for appraisal. This might be a compelling argument, but it fails. Contrary to Plaintiff’s position here, a careful reading of the complaint shows that the only breach alleged is “Defendant’s failure and/or refusal to pay the aforesaid benefits due. .” [Complaint p. 5]. If Plaintiff believes the amount determined by Defendant was not “reasonably determined” by the insured then the remedy is to contest that amount of loss. That contest is one appropriate for appraisal.
Next, Plaintiff argues that the Court should not enforce the appraisal provision of the contract. The contract language calling for appraisal is clear and unambiguous. It describes a detailed process for appraisal. The parties freely contracted for the right of appraisal, the terms described do not violate statutory law, and they are not contrary to public policy needs.
Finally, Plaintiff argues that the prohibitive cost doctrine renders the appraisal clause unenforceable. The Prohibitive Cost Doctrine is derived from the United States Supreme Court’s ruling in Green Tree Financial Corp v. Randolf, 531 U.S. 79 (2000). In Green Tree a litigant sought to invalidate a contractual arbitration clause, arguing that it was prohibitively expensive. Id. The arbitration clause in Green Tree was silent as to how the costs associated with arbitration would be paid. Id. The Supreme Court held 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 federal statutory rights and that a party seeking to avoid arbitration bears the burden of showing the likelihood of such costs. Id. at 522.
Plaintiff requests an evidentiary hearing to determine whether the appraisal cost would be a prohibitive cost. Here, Defendant does not seek to invoke a formal, expensive arbitration process. And, contrasted with the silence as to costs in Green Tree, the contractual language here specifies that each party is to select and pay for its own appraiser (ostensibly allowing each party to choose an appraiser they can afford) and, if required, to share the cost of an umpire to resolve any disagreement between appraisers.
The Court declines to extend the Prohibitive Cost Doctrine to cover the contractual provision in this case. There is no binding legal precedent that supports such an application. Further, where a party is forewarned by the language in the contract as to what costs they will bear, as Plaintiff clearly was here, and where a party has significant control as to the costs, as here, this Court cannot conclude that the costs they themselves agreed to would render them unable to pursue their claim. To do so would require the Court to substitute its judgment for that of a contracting party. Plaintiff agreed that if there was a dispute as to an amount of loss it would proceed with, and could afford, the described appraisal process if demanded. This Court declines to conclude otherwise.
For the forgoing reasons, Defendant’s motion is granted and this case is DISMISSED.
