28 Fla. L. Weekly Supp. 407a

Online Reference: FLWSUPP 2805SPRI

Insurance — Automobile — Windshield replacement — Appraisal — Clear and unambiguous policy provision that provides simple and informal appraisal process for windshield replacement is enforceable against assignee of insured — There is no basis for claim that insurer waived right to appraisal where insurer invoked appraisal provision at start of litigation — Prohibitive cost doctrine is inapplicable to breach of contract action — Further, affidavits submitted by plaintiff are insufficient to satisfy burden to show that cost of appraisal is prohibitively expensive as compared to cost of litigation — If insurer’s appraiser is found to be partial, correct course of action is to appoint another appraiser, not to invalidate appraisal provision — No merit to argument that appraisal provision violates right of access to courts where agreement to appraisal provision relinquished that right — Where plaintiff failed to satisfy condition precedent of appraisal, dismissal is required

SPRINGBOK COLLECTIONS, LLC, a/a/o CHWR, LLC, d/b/a SMART RIDE WINDSHIELD REPAIR, a/a/o Clara Guzman, Plaintiff, v. PROGRESSIVE AMERICAN INSURANCE COMPANY, PROGRESSIVE CASUALTY INSURANCE COMPANY, PROGRESSIVE DIRECT INSURANCE COMPANY, PROGRESSIVE EXPRESS INSURANCE COMPANY AND PROGRESSIVE SELECT INSURANCE COMPANY, Defendants. County Court, 10th Judicial Circuit in and for Polk County. Case No. 2017-SC-000128-0000-LK. November 14, 2019. Mary Catherine Green, Judge. Counsel: Sean M. Amorginos, Amorginos, PLLC., Altamonte Springs, for Plaintiff. Daniel Montgomery, Cole, Scott & Kissane, P.A., Jacksonville, for Defendant.

ORDER ON DEFENDANT’S MOTION TO DISMISS OR COMPEL APPRAISAL

THIS CAUSE having come before the Court on October 28, 2019, on DEFENDANT’S MOTION TO DISMISS, OR ALTERNATIVELY MOTION TO STAY AND COMPEL APPRAISAL and the Court, having heard argument from the attorneys for the respective parties, having reviewed Defendant’s Motion To Dismiss, Plaintiff’s Memorandum in Opposition, Defendant’s Memorandum in Support of Appraisal, and the case law presented, and being otherwise fully advised in the premises, the Court finds as follows:

1. Plaintiff, as an assignee of Progressive’s Insured, brings a complaint for breach of contract against Defendant. Defendant argues, in pertinent part, that the complaint should be dismissed because Plaintiff failed to satisfy a condition precedent to bringing this lawsuit by failing to participate in the appraisal process as expressly required by the applicable Florida Automobile Insurance Policy (“Policy”).

2. Plaintiff’s Response in Opposition to Defendant’s Motion to Dismiss, or Alternatively, Motion to Stay and Compel Appraisal argues as follows: 1) the invocation of appraisal is improper as it is permissive and not binding due to the retention of rights provision of the policy; 2) appraisal is invalid due to Defendant’s failure to select an impartial appraiser; 3) Defendant waived its right to appraisal 4) under the retention of rights provision, Plaintiff is exercising its right to decline appraisal; 5) Defendant’s Notice of Confession of Judgment in a different matter precludes Defendant from challenging that there is a valid dispute as to the value of loss;

BACKGROUND

3. Defendant insured CLARA GUZMAN (“Insured”) and the policy included comprehensive coverage for damage to the vehicle.

4. SmartRide Windshield Repair (“SmartRide”) repaired Insured’s windshield and submitted an invoice to Defendant for windshield repairs that are covered under the comprehensive coverage policy. Defendant in turn, made a payment to SmartRide Windshield Repair and invoked appraisal.

5. SmartRide subsequently assigned their benefits as an assignee of the Insured to Plaintiff. Plaintiff in turn filed suit.

OPINION

6. To the extent the Plaintiff seeks to attack or requests the Court to rewrite any contractual provisions in the Policy, this Court is powerless to rewrite the contract or interfere with the freedom of contract. If the insured had not assigned this claim to the auto glass vendor, then the insured would have been bound by the appraisal provision contained within the Policy. As an assignee of the insured, the auto glass vendor is subject to all equities and defenses that could have been asserted against the assignor (i.e. the right to appraisal).

7. In Florida, appraisal clauses are enforceable unless the clause violates statutory law or public policy. See The Cincinnati Insurance Company v. Cannon Ranch Partners, Inc., 162 So.3d 140, 143 (Fla. 2d DCA 2014) [40 Fla. L. Weekly D78a]; see also Green v. Life & Health of America, 704 So.2d 1386, 1390-91 (Fla. 1998) [23 Fla. L. Weekly S42a] (“It is well settled that, as a general rule, parties are free to ‘contract-out’ or ‘contract around’ state or federal law with regard to an insurance contract, so long as there is nothing void as to public policy or statutory law about such a contract.”), citing King v. Progressive Ins. Co., 906 F.2d 1537, 1540 (11th Cir. 1990); see also Foster v. Jones, 349 So.2d 795, 799-800 (Fla. 2d DCA 1977). In this case, Plaintiff does not point to any statute or public policy considerations that are violated by this “retained rights” provision.

“Moreover, controlling Florida law permits ‘retained rights’ provisions, and these provisions do not render the appraisal clause unenforceable.” Cincinnati Ins., 162 So.3d at 143 (“Hence, the trial court erred to the extent it found that Cincinnati Insurance could not demand an appraisal due to the language of the appraisal clause being unenforceable as inconsistent or violative of public policy.”)

8. Upon review of the appraisal language at issue, this Court finds that such language is clear, unambiguous, and provides a simple and informal appraisal process, which, if followed, would provide both parties an easy, fair, efficient, and inexpensive means of determining the value of the loss. Not only is informal appraisal an appropriate alternative to ligation in determining the reasonable cost of replacing a windshield in the instant case, an informal appraisal clause is the best course of action. See e.g., Johnson v. Nationwide Mut. Ins., Co., 828 So.2d 1021, 1025 (Fla. 2002) [27 Fla. L. Weekly S779a] and Cincinnati Ins. Co. v. Cannon Ranch Partners, Inc., 162 So.3d 140, 143 (Fla. 2d DCA 2014) [40 Fla. L. Weekly D78a].

9. In contrast to Plaintiff’s argument that Progressive waived its right to appraisal, there are numerous Florida cases standing for the proposition that there is no basis for a claim of waiver where an appraisal provision is invoked at the start of litigation. See Gonzalez v. State Farm Fire & Cas. Co., 805 So. 2d 814, 817 (Fla. 3d DCA 2000) [26 Fla. L. Weekly D390a] (holding that insurer did not waive right to appraisal by participating in the litigation where it “promptly answered and in the answer, demanded appraisal”); Fla. Ins. Guar. Ass’n v. Castilla, 18 So. 3d 703, 705 (Fla. 4th DCA 2009) [34 Fla. L. Weekly D2000a] (“[I]n this case FIGA has never acted inconsistently with its right to an appraisal, having raised that right at the earliest opportunity in this suit and continu[ing] to claim it through its subsequent pleadings.”); U.S. Fire Ins. Co. v. Franko, 443 So. 2d 170, 172 (Fla. 1st DCA 1983) (holding that petitioner’s motion to dismiss constituted a demand for arbitration sufficient to trigger arbitration clause); Balboa Insurance Co. v. W.G. Mills, Inc., 403 So.2d 1149 (Fla. 2d DCA 1981) (holding that where the allegations of a motion to dismiss are based on a contractual right to arbitration, the motion to dismiss is, in substance, also a motion to compel arbitration)

10. Defendant and Insured freely contracted for the right to appraisal. Arbitration is a remedial mechanism that is binding on an assignee of a contract containing an arbitration clause, and thus, even an assignment only of contract rights not entailing any duty of performance must be deemed to include the bargained-for remedial procedure. Kong v. Allied Professional Ins. Co., 750 F.3d 1295 (11th Cir. 2014) [24 Fla. L. Weekly Fed. C1330a]. A party cannot attempt to hold another party to the terms of an agreement while simultaneously trying to avoid the agreement’s arbitration clause, as allowing such would “fly in the face of fairness.” Marcus v. Florida Bagels, LLC, 112 So.3d 631 (Fla. 4th DCA 2013) [38 Fla. L. Weekly D896b] citing Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524 (5th Cir. 2000).

11. This Court rejects Plaintiff’s argument that the subject appraisal is invalid as prohibitively costly and in violation of the Prohibitive Cost Doctrine. The Prohibitive Cost Doctrine is inapplicable to matters where a party has filed a breach of contract action and wishes to void an appraisal provision in the underlying contract they are purportedly seeking enforcement of, as no statutory rights are inherently implicated therein. The Prohibitive Cost Doctrine is intended to apply only in actions that seek to vindicate a statutory right. Plaintiff’s reliance on the statutory rights enumerated under F.S. 627.428 is unavailing, as the right to obtain attorney’s fees should Plaintiff ultimately prevail in this action is only an ancillary right. Plaintiff’s legal cause of action is seeks to enforce a contract, not to vindicate a statutory right. Further, in matters where it is applicable, the Prohibitive Cost Doctrine must be proven by evidence, put forth by the party contesting the alternative dispute resolution mechanism, that the cost of the contested alternative dispute resolution mechanism is prohibitively expensive as compared against the cost of litigation, and the affidavits submitted by Plaintiff are insufficient to satisfy Plaintiff’s evidentiary burden.¹

12. Moreover, this Court is unable to find any binding precedent in Florida supporting the application of the Prohibitive Cost doctrine to an informal appraisal provision contained within a contract.

13. While Plaintiff asserts that their challenge to the application of the limits of liability to the payment issued by Defendant presents a coverage question, when an insurer admits that there is a covered loss, any dispute is appropriate for appraisal. Cincinnati Ins. at 143; see also Midwest Mut. Ins. Co. v. Santiesteban, 287 So.2d 665, 667 (Fla. 1973). In Cincinnati Ins., the Second DCA explains:

Notably, in evaluating the amount of loss, an appraiser is necessarily tasked with determining both the extent of covered damage and the amount to be paid for repairs. Id. Thus, the question of what repairs are needed to restore a piece of covered property is a question relating to the amount of “loss” and not coverage. Ipso facto, the scope of damage to a property would necessarily dictate the amount and type of repairs needed to return the property to its original state, and an estimate on the value to be paid for those repairs would depend on the repair methods to be utilized. The method of repair required to return the covered property to its original state is thus an integral part of the appraisal, separate and apart from any coverage question. Because there is no dispute between the parties that the cause of the damage to Cannon Ranch’s property is covered under the insurance policy, the remaining dispute concerning the scope of the necessary repairs is not exclusively a judicial decision. Instead, this dispute falls squarely within the scope of the appraisal process — a function of the insurance policy and not the judicial system. Therefore, Cincinnati Insurance acted within its rights when it demanded an appraisal, and the trial court erred in denying the motion on this basis.

14. Further, a party cannot refuse to participate in appraisal once an insurer has admitted to liability. New Amsterdam Cas. Co. v. J.H. Blackshear, Inc. 156 So. 695 (Fla. 1934)

15. It is clear that the issue in this dispute is one regarding the value of the loss, not one of coverage. Defendant has admitted that there is a covered loss, thus this issue should go to appraisal to determine the value of the loss. Defendant properly invoked the appraisal provision and has acted consistently with that invocation. Plaintiff ignored this demand for appraisal and filed a lawsuit instead of complying with mandatory language from the policy regarding appraisal.

16. While Plaintiff asserts that the appraisal provision is invalid due to the allegation of a partial appraiser, in the event that an appraiser is found partial the correct course of action is to permit the party to appoint another appraiser, not invalidate the appraisal provision. Travelers of Fla. v. Stormont, 43 So. 3d 941, 945 (3d DCA 2010) [35 Fla. L. Weekly D2059a].

17. The Policy further contains express language requiring that Plaintiff comply with all the terms of the Policy before Plaintiff may sue Defendant. Thus, the amount of loss should be determined by appraisal and the proper action at this time is dismissal. United Community Insurance Company v. Lewis, 642 So. 2d 59 (Fla. 3d DCA 1994); see also U.S. Fire Ins. Co. v. Franko, 443 So.2d 170 (Fla. 1st DCA 1983).

18. Plaintiff has further alleged that their right of access to courts, to a jury trial, and due process are violated by compliance with the appraisal clause. However, by contractually agreeing to arbitration, a party relinquishes the right of access to courts. See Kaplan v. Kimball Hill Homes Fla., Inc., 915 So.2d 755, 761 (Fla. 2d DCA 2005) [30 Fla. L. Weekly D2787a], review denied, 929 So. 2d 1053 (Fla. 2006); see also Infinity Design Builders, Inc. v. Hutchinson, 964 So. 2d 752 (Fla. 5th DCA 2007) [32 Fla. L. Weekly D2032a]. Parties that agree to arbitration [appraisal in this instance] clauses waive the right of access to courts and the right to jury trial. Terminix Intern. Co., LP v. Ponzio, 693 So. 2d 104 (Fla. 5th DCA 1997) [22 Fla. L. Weekly D1184a].

19. While Plaintiff is not a signatory to the Policy, the appraisal clause is not limited to the contracting party, nor just their claim, but also to non-signing plaintiffs who hold third party beneficiary status to the contract, which were intended to benefit from the contract. See Technicable Video Systems v. Americable of Greater Miami, Ltd., 479 So.2d 810 (Fla. 3d DCA 1985). As third party beneficiaries, these additional plaintiffs are bound by the arbitration provision. See Raffa Assoc., at 1096 (Fla. 4th DCA 1993); Zac Smith & Co., Inc., at 1324. Contractual arbitration, [appraisal], of a specific controversy is mandatory “where the subject matter of the controversy falls within what the parties have agreed will be submitted to [appraisal]”. Hirshenson v. Spaccio, 800 So.2d 670, 673 (Fla. 5th DCA 2001) [26 Fla. L. Weekly D2828a] (quoting Ocwen Federal Bank FSB v. LVWD, Ltd., 766 So.2d 248, 249 (Fla. 4th DCA 2000) [25 Fla. L. Weekly D379a]). If an insurer admits to liability, an insured may not refuse to submit to appraisal. New Amsterdam Cas. Co., at 696.

20. This Court is bound by the ruling in Progressive Am. Ins. Co. v. SHL Enters., LLC, 264 So. 3d 1013 (Fla. 2d DCA 2018) [43 Fla. L. Weekly D2434a] (concluding that the circuit court departed from the essential requirements of law by failing to properly analyze and interpret § 627.7288 and because that error resulted in a manifest injustice, granting Progressive’s second-tier certiorari petition and quashing circuit court’s order denying the petitions filed below.). The Second DCA found no merit in allegations that costs of appraisal violate F.S. 627.7288. More specifically the Second District Court of Appeals held:

If the legislature intends for insurers to solely bear the costs of appraisal in windshield damage claims, it knows how to express that intention. But the statute as currently written, only forbids the imposition of a deductible as applied to a windshield damage claim. It does not forbid a requirement for each party to bear its own appraisal costs in an insurance payment dispute. Thus, where the contracting parties have freely contracted for such a requirement, such as in this case, they or their assignees may not rely on section 627.7288 to avoid their responsibility to pay such costs.

Id. at 1018.

Based on the foregoing, it is ORDERED AND ADJUDGED as follows:

1. Defendant’s Motion to Dismiss, or Alternatively Motion to Compel Appraisal and Stay Discovery is Granted.

2. This case is Dismissed without prejudice for the parties to comply with the appraisal clause of the policy.

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¹See Zephyr Haven Health & Rehab Center, Inc. v. Hardin 122 So. 3d 916 (Fla. 2nd DCA 2013) [38 Fla. L. Weekly D2070a]; Fi-Evergreen Woods, LLC v. Estate of Vrastil, 118 So. 3d 859 (Fla. 5th DCA 2013) [38 Fla. L. Weekly D1710g]; Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000)