28 Fla. L. Weekly Supp. 162a

Online Reference: FLWSUPP 2802HEAM

Insurance — Automobile — Windshield repair — Appraisal — Prohibitive cost doctrine is not applicable to automobile insurance policy’s appraisal provision where breach of contract claim under insurance policy does not involve statutory right — Furthermore, plaintiff erred in comparing cost of appraisal to amount in controversy; correct analysis under prohibitive cost doctrine is to compare cost of appraisal to cost of litigation — Motions to enforce appraisal and to dismiss are granted

BROWARD INSURANCE RECOVERY CENTER LLC a/a/o Chakevia Heams, Plaintiff, v. PROGRESSIVE SELECT INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. Coce18020383, Division 52. April 10, 2020. Giuseppina Miranda, Judge. Counsel: Emilio R. Stillo and Andrew Davis-Henrichs, Emilio Stillo, P.A., Davie, for Plaintiff. Randi B. Franz, Antonio Roldan, and Jessica L. Pfeffer, Progressive PIP House Counsel, Fort Lauderdale, for Defendant.

ORDER GRANTING DEFENDANT’S MOTIONTO DISMISS AND DENYING PLAINTIFF’S MOTIONFOR EVIDENTIARY HEARING

This matter is before the Court for consideration of Defendant’s Motion to Dismiss, or Alternatively, Defendant’s Motion to Stay and Motion to Enforce Appraisal, and Plaintiff’s Motion for Evidentiary Hearing.

The Court having reviewed the Motions, relevant case law and having considered argument of counsel, makes the following finds of fact and conclusions of law:

Plaintiff has filed a Statement of Claim alleging Defendant breached the terms of the insurance policy by failing to pay the full amount charged by Plaintiff’s assignor (Clear Vision Windshield Repair, LLC) when making repairs to windshield of Defendant’s insured (Chakevia Heams). Defendant responded to the Statement of Claim by filing the instant Motion alleging that they afforded coverage, made payment to Clear Vision and that Defendant properly invoked the appraisal provisions of the policy. Defendant asserts that Plaintiff has failed to comply with a condition precedent to maintain this lawsuit.

Defendant is asking the Court to dismiss this lawsuit and require Plaintiff’s participation in the appraisal process.

In response to Defendant’s Motion to Dismiss, Plaintiff has filed a Motion for Evidentiary Hearing arguing that the appraisal provision of the policy is unenforceable due to the Prohibitive Cost Doctrine espoused in the case of Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 121 S.C. 513, 148 L.Ed. 2d 373 (2000).

There is no dispute that the insurance policy contains a valid written agreement for appraisal. The Court finds that the issue of the cost of repairs made to the insured’s windshield and the proper reimbursement for said repair is appropriate for appraisal and that Defendant has not waived the right to appraisal. See Progressive American Insurance Company v. Broward Insurance Recovery Center, LLC, a/a/o Michelle Campbell (Case No. CACE 16-021931 (AP) (17th Judicial Circuit Appellate Court, April 2, 2020) (finding that the issue of the cost of the windshield repair to be “purely a question about ‘the amount of loss’ which falls within the scope of the appraisal provision.”)

The question presented to this Court is whether Plaintiff can invalidate the appraisal provision of the contract by utilizing the Prohibitive Cost Doctrine (hereinafter referred to as the “Doctrine’).

The U.S. Supreme Court, in the case of Green Tree, 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 federal statutory rights.

Typically, courts compel arbitration when the parties have agreed to arbitrate pursuant to a contract. Notably, all cases interpreting the Doctrine and Green Tree confine their analysis to lawsuits involving statutory rights. See Citibank (South Dakota) N.A. v. Desmond, 114 So.3d 401 (Fla. 4th DCA 2013) [38 Fla. L. Weekly D1175a] (addressing class action waiver involving an alleged violation of Florida Security in Communications Act, Chapter 934, Fla. Stat.); see also McKenzie Check Advance of Florida, LLC v. Betts, 112 So.3d 1176, 1186 (2013) [38 Fla. L. Weekly S223a] (case involving claims based on the Florida lending practices statute (Chapter 687), Florida Consumer Finance Act (Chapter 516), Florida Deceptive and Unfair Trade Practices Act (Chapter 501) (FDUTPA), and the Florida Civil Remedies for Criminal Practices Act (Chapter 772) (FCRCPA) citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (“Having made the bargain to arbitrate, the party should be held to it unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue.)

In their efforts to apply the precepts of Green Tree, federal courts have developed the following framework to be utilized in a “costs” analysis:

We agree with Williams that the crucial inquiry under Gilmer is whether the particular claimant has an adequate and accessible substitute forum in which to resolve his statutory rights and that Gilmer does not call for the conclusion that fee splitting, in all cases, deprives the claimant of such a forum. We believe that the appropriate inquiry is one that evaluates whether the arbitral forum in a particular case is an adequate and accessible substitute to litigation, i.e., a case-by-case analysis that focuses, 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 that cost differential is so substantial as to deter the bringing of claims. See Williams, 197 F.3d at 764 (focusing upon the inability to pay; whether the forum fees created a prohibitive expense; whether Williams had a full opportunity to vindicate his claims; and whether the forum fees prevented the arbitral forum from providing an adequate substitute for the judicial forum). . .

Bradford v. Rockwell Semiconductor Systems, Inc., 238 F.3d 549, 556 (4th Cir. 2001) (citations omitted) (emphasis added).

Therefore, after establishing that a claim involving a statutory right is at issue, the balancing test is the differential between the costs of arbitration vs. the costs of litigation. See also Zephyr Haven Health & Rehab Center, Inc., v. Hardin ex rel. Hardin, 122 So.3d 916 (Fla. 2d DCA 2013) [38 Fla. L. Weekly D2070a] (This case involved claims arising out of the care Hardin received at the nursing facility and whether the arbitration clause of the admission documents was enforceable. Though not specifically addressed in the opinion, these claims appear to be related to the statutory rights espoused in Fla. Stat. §400.022, Residents’ Rights).

Here, Hardin has not met her burden under Green Tree. First, she has not presented evidence of the likely cost of arbitrating her claim. … Second, even if Hardin’s evidence had addressed the cost of arbitrating this specific claim, she did not attempt to compare that cost with what she would pay in litigation.

Id. at 922.

Plaintiff incorrectly asks this Court to apply the Doctrine to a contract not involving a statutory right. Plaintiff further compounds this error by misapplying the differential between the costs of appraisal vs. the amount of damages sought[¹] instead of the cost of litigation. Plaintiff wrongly emphasizes the cost of appraisal being more than the amount in controversy.

Ultimately, the proper context for the application of the Prohibitive Cost Doctrine is in matters where there is a question as to the enforceability of arbitration agreements involving statutory rights, not in matters, such as here, involving a breach of contract claim where a party is seeking to avoid appraisal pursuant to the terms of a governing contract.

Thus, this Court declines to apply the Prohibitive Cost Doctrine to the instant small claims case involving a contractual appraisal provision, the terms of which were freely contracted for between the insured and the Defendant.

Furthermore, the question of the Prohibitive Cost Doctrine was been fully brief as part of the recent ruling in favor of Defendant in the 17th Circuit Appellate Court case of Progressive American Insurance Company v. Broward Insurance Recovery Center, supra.[²]

In its Answer Brief, the instant Plaintiff framed its argument as follows:

The Court properly recognized the logical application of the Cost Prohibitive Doctrine to the facts of the case given that the cost of appraisal greatly exceeds the amount in controversy rendering appraisal to act as a deterrent to those who suffered windshield damage and seeking to enforce the promise contained in the policy of insurance.

(See Answer Brief of Appellee, Broward Insurance Recovery Center, LLC (a/a/o Michelle Campbell, IV at page 32-35.)

Though the 17th Circuit Appellate Court ultimately appears to base its ruling on the interpretation of Fla. Stat. §627.7288 and Progressive American Insurance Company v. SHL Enterprises, LLC, 264 So.3d 1013 (Fla. 2d DCA 2018) [43 Fla. L. Weekly D2434a], the Appellate Court clearly rejects Plaintiff’s argument “that the amount of loss is less than the amount it would cost for an insured to pay for an appraisal; and, therefore makes the appraisal cost prohibitive.” Id. at page 4.[³]

Accordingly, it is hereby ORDERED AND ADJUDGED as follows:

1. Plaintiff’s Motion for Evidentiary Hearing is hereby DENIED.

2. Defendant’s Motion to Enforce Appraisal is GRANTED. The parties shall participate in the appraisal process, pursuant to the terms of the subject policy.

3. Defendant’s Motion to Dismiss is GRANTED, without prejudice. The Court retains jurisdiction for the purpose of completion of the appraisal process, specifically the appointment of an umpire and determination of entitlement to fees and costs.

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¹Plaintiff’s Statement of Claim seeks “damages in an amount less than $100.00, exclusive of interest, costs and attorneys’ fees.”

²The Doctrine was also fully brief in CACE 16-021757 Progressive American Insurance Company v. Broward Insurance Recovery Center, LLC, a/a/o Isabella Cardona (Fla. 17th Cir. Ct. May 26, 2017 (appellate capacity) and the appellate court found in Progressive’s favor, without commenting on the application of the Doctrine.

³A ruling from the 17th Circuit Appellant Court is pending in CACE 19-20706 Progressive American Insurance Company v. Broward Insurance Recovery Center, LLC, a/a/o Laura Florez. The questions presented there are more directly on point with the instant lawsuit.