June 2014 Article:

June 9, 2014 by on

Citizens Property Insurance Corporation v. Demetrescu, 39 Fla. L. Weekly D629a (Fla. 4th DCA March 26, 2014)

Citizens Property Insurance Corporation was successful in convincing the Fourth DCA that the trial court erred by granting the insured’s motion to compel an appraisal when all underlying coverage disputes were not resolved.

Citizens issued a homeowners’ policy to the insureds, Adrian and Elena Demetrescu, for the period from December 15, 2009 to December 15, 2010. On August 31, 2010, the insureds reported a claim to Citizens for damage to their home and some of its contents as a result of a roof leak that occurred following a series of wind and rain events earlier that month. Citizens denied coverage, citing multiple policy provisions. Citizens repeatedly refused the insureds’ demands for an appraisal.  The insureds filed suit against Citizens for breach of contract and to compel an appraisal.  Citizens answered the complaint, denied that the loss was covered, and asserted multiple affirmative defenses. Citizens relied upon policy provisions excluding coverage for, among other things, wear and tear, constant or repeated seepage or leakage of water over a period of 14 or more days, faulty or defective design or maintenance, neglect, and preexisting damage. Citizens also asserted that the insureds failed to comply with their post-loss duties under the policy. In their reply to Citizens’ affirmative defenses, the insureds claimed that Citizens was not prejudiced by any alleged deficiency in the insureds’ compliance with policy conditions and that Citizens had waived the right to raise, or should be estopped from raising, any such deficiency.

After some discovery, the insureds filed a motion to compel appraisal. The trial court granted the motion and directed the parties to proceed to appraisal. In its written order, the trial court ruled that “water leaks are covered under the policy” and that Citizens’ “affirmative defenses dealing with specific exclusions under the policy are appropriate for appraisal as the defenses deal with the causation of the damages.”

In reversing the lower court’s order, the Fourth DCA reaffirmed that the purpose of an appraisal was for the limited purpose of determining the amount of a loss and that proper procedure requires that all coverage defenses be addressed by motion for summary judgment or trial.  Specifically, the Appellate Court found that the trial court violated Citizens’ due process rights when it arbitrarily found coverage for the water leaks under the policy despite the lack of substantial competent evidence on the issue.   Because the trial court failed to resolve all underlying coverage disputes in a procedurally proper manner prior to ordering an appraisal, its order compelling appraisal was reversed and the matter was remanded for further proceedings.