October 2018

Florida Insurance Matters is a monthly update on Florida insurance-related legal developments by the Colodny Fass Insurance Litigation Practice, recently recognized as the Insurance Litigation Department of the Year in South Florida by the Daily Business Review.

About the Author

Amy L. Koltnow, a Colodny Fass Shareholder, focuses her practice on representing insurance companies in complex insurance litigation and counseling insurers on claims resolution. She has represented insurers in connection with property damage and first-party coverage litigation, claims of “bad faith,” high-risk exposures, class actions and multi-district litigation.

For more information about Ms. Koltnow, click here.

Dismissal Based on Fraud Reversed Because Trial Court Failed to Hold Evidentiary Hearing

The Third District Court of Appeal reversed the dismissal of an insured’s homeowner insurance claim for on fraud on the court based on the trial court’s failure to conduct an evidentiary hearing before imposing the ultimate sanction of dismissal. The fraud was based on the record evidence where the insured testified she did not contact the water mitigation company until after the water leak, but telephone records showed the water mitigation company contacted the insured before the reported date of the leak. The appellate court recognized the insurer raised “serious questions” about the legitimacy of the insured’s claim. However, since it was requested by the opposing party, the trial court was required to conduct an evidentiary hearing to afford the insured the opportunity to refute the evidence or explain any inconsistencies.Robinson v. SafePoint Ins. Co. (3d DCA, Oct. 3, 2018 )

TIPS AND LESSONS

• Fraud on the court must be proven by “clear and convincing evidence” after an evidentiary hearing.
• This case reveals the fraudulent scheme between insureds and water mitigation companies but also demonstrates the heavy burden that insurers must overcome to fight fraud in courts.

Insurer’s Option to Repair Not Enforceable By Mandatory Injunctive Relief

Insurer filed a proactive petition against its insured seeking mandatory injunctive relief requiring the insured to comply with the policy provisions to sign work authorization papers and allow the insurer to exercise its option to repair the property damage. The trial court granted the relief, but the appellate court reversed finding that, as a matter of law, the insurer was not irreparably harmed and had other remedies. Peoples Trust Ins. Co. v. Acosta (3d DCA, Oct. 10, 2018

TIPS AND LESSONS

• The court distinguished the facts of this case with prior decisions upholding the abatement of an insured’s lawsuit until after the insurer’s designated contractor completed repairs.
• The case does not invalidate or diminish the insurer’s election to repair damages, but states only that if the insured fails to comply, the remedies are abatement of a pending lawsuit, declaratory relief and money damages.

An Appeals Court Finally Addresses the “Impartiality” of a Party’s Chosen Appraiser

An appellate court upheld an order compelling appraisal. An issue in the case was whether the insurer’s appointed appraiser was “impartial” since he worked for the building consultant hired by the insurer. The trial court held the insurer’s chosen appraiser did not warrant disqualification, and the appellate court agreed. The appellate court held that “impartiality” meant something other than the “dictionary definition” as it relates to an appraiser appointed and paid for by a party. The court held a “workable approach to this issue” is to encourage financial disclosures rather than disqualify a chosen appraiser based on how the appraiser is compensated. Brickell HarbourCondominium Assoc., Inc. v. Hamilton Specialty Ins. Co. (3d DCA, Oct. 10, 2018 )

TIPS AND LESSONS

• Most policies contain an appraisal provision which requires each side appoint a “competent and impartial appraiser”; in practice, however, each side typically appoints an appraiser who is “favorable” to the respective positions of the parties.
• Finally, a court has addressed the issue of an appraiser’s “impartiality” and acknowledged that the real impartiality lies with the appointment of a neutral umpire.