Opinion ID: 1670168
Heading Depth: 1
Heading Rank: 2

Heading: appraisal clause

Text: In Florida Farm Bureau Casualty Insurance Co. v. Sheaffer, 687 So.2d 1331 (Fla. 1st DCA 1997), the Sheaffers' roof was damaged by hurricane, and, because matching tiles for their roof were no longer being made, they sought to have their insurer cover the replacement cost for an entirely new roof. See id. at 1331-32. The insurance company refused, stating that the roof could still be repaired with inconsistent tiles. See id. The Sheaffers filed suit seeking a declaratory judgment for the full coverage and replacement of their roof and a judgment for damages. See id. The insurance company sought to have the suit dismissed, claiming that the Sheaffers' suit should be handled according to the policy's appraisal clause. [3] See id. The insurance company further argued that the policy's appraisal clause required the parties to arbitrate the matter, pursuant to the Florida Arbitration Code, as a condition precedent to the Sheaffers maintaining their lawsuit. See id. The Sheaffers countered that the issue of replacing the entire roof was a coverage issue, which would require judicial construction of the policy. See id. The trial court denied the insurance company's motion to dismiss, concluding that the parties' dispute involved an issue of policy coverage. See id. The First District reversed and remanded the trial court's ruling, finding that the appraisal provision constituted an arbitration agreement, stating: The determination of whether an appraisal provision should be construed as an agreement to arbitrate not only establishes the basis of our jurisdiction over the case on appeal, it also establishes the procedures which govern this type of alternative dispute resolution. Here, as the insurance company concedes, the appraisers will be involved in more than a simple computation of repair costs to determine the amount of loss. Rather, they must resolve whether the language of this replacement cost policy requires a calculation of loss which would consider the subjective value the Sheaffers placed on the unique qualities of their tile roof, or whether replacement of the roof should be ordered only if it is necessary to prevent the roof from leaking.... Thus, the nature of the appraisers' duties will require the exercise of quasi-judicial authority to resolve the dispute. Further, these issues are likely to be beyond the knowledge and expertise of the appraisers and will require examination of witnesses to make a correct and fair determination of the loss suffered. Id. at 1334-35. In Hoenstine v. State Farm Fire & Casualty Co., 736 So.2d 761 (Fla. 5th DCA 1999), the Fifth District considered an appraisal provision nearly identical to the one in Sheaffer. Id. at 761. [4] The Hoenstines and their insurance company disagreed about the values of property damaged by a tornado. Id. After the trial court ruled that the appraisal clause in the insurance policy contemplated an informal procedure instead of a formal arbitration hearing, the Fifth District reversed, agreeing with the holding in Sheaffer that the appraisal clause in the Hoenstine's policy should be treated as a binding arbitration agreement. See id. at 761-62.