Court Opinion

ID: 5716504
Source: CourtListenerOpinion
Date Created: 2022-01-12 16:03:08.856959+00
Date Added: 2024-06-11T09:17:34.935493
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                             FOURTH DISTRICT

               PEOPLE’S TRUST INSURANCE COMPANY,
                            Appellant,

                                     v.

                 AVROHOM CHEN and SHIFRA CHEN,
                           Appellees.

                              No. 4D21-1060

                            [January 12, 2022]

   Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; David A. Haimes, Judge; L.T. Case No. CACE18-007499.

   David C. Borucke of Cole, Scott & Kissane, P.A., Tampa, for appellant.

  Melissa A. Giasi and Erin M. Berger of Giasi Law, P.A., Tampa, for
appellees.

GERBER, J.

    In this first-party homeowners’ insurance dispute, the insurer appeals
from the circuit court’s final summary judgment in the insureds’ favor.
The insurer primarily argues the circuit court erred in finding the insurer
had breached the insurance policy by initially proposing to undertake
repairs to the insureds’ home which would not have restored the home to
its pre-loss condition. According to the insurer, no breach occurred
because, in the event of disagreement between the parties over the scope
of repairs, the policy provided that an appraisal panel would determine the
scope of repairs, and the insurer had agreed to perform the scope of repairs
outlined in the appraisal award. We agree with the insurer’s argument
and therefore reverse the final summary judgment.

             Factual Background and Procedural History

   The underlying facts are undisputed. During the contract period, a
hurricane damaged the roof and interior of the insureds’ home. The
insureds reported the damage to the insurer.
   The insurer sent the insureds an initial coverage determination letter.
The letter pertinently stated: “We have completed our investigation … and
determined that there is coverage for your loss ….” The letter also advised
that the insurer, pursuant to a policy endorsement, was electing to use its
preferred contractor to repair the insureds’ home to its pre-loss condition
“by making repairs to all covered damages, once there is a determination
of what those damages are ….” The letter also explained “[h]ow … repairs
continue if there is a disagreement on what is to be repaired”:

         Once we are placed on notice by you that a dispute exists
      as to [the insurer’s] Estimate and Scope of Repairs, your
      policy’s [Preferred Contractor] Endorsement provides a
      method by which either of us may submit the dispute to an
      appraisal process, and an appraisal panel will make the
      determination of what will be repaired. The appraisal panel
      will provide both of us with an “Appraisal Award” which
      specifies what will be repaired, and how much we will pay our
      preferred contractor to make those repairs. Upon receipt of
      the appraisal panel’s award, we will continue forward with
      repairs based upon the scope outlined in the appraisal award.

    The insurer later sent the insureds a second letter which limited the
scope of covered damages. More specifically, the second letter stated:
“[T]he scope of covered damages does not include your roof, the screens
on your screen enclosure or damages to the interior of your home.”
(emphasis omitted). The second letter further included an estimate
indicating that the preferred contractor would be replacing the insureds’
existing hardwood flooring with “laminate – simulated wood flooring.” The
second letter, like the first letter, noted that, pursuant to the policy, any
disagreement as to the scope of repairs would be resolved by an appraisal
award, to which both the insurer and the insureds would be bound.

    Nine days after the insurer sent the second letter, the insureds filed the
underlying breach of contract action against the insurer. The complaint
pertinently alleged the insurer had breached the policy by failing to agree
to repair the insureds’ home to its pre-loss condition. The insureds sought
money damages to enable them to effectuate repairs on their own.

  The insurer filed an answer, affirmative defenses, and counterclaims.
One of the insurer’s affirmative defenses pertinently alleged:

         [The insurer] was ready, willing, and able to perform under
      the Policy …. [However,] [i]nstead of … allowing repairs as
      estimated by [the insurer], the [i]nsureds sued for money

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      never owed on the Claim irrespective of any disputes as to
      scope of covered repairs.

   The insurer later filed a motion to compel appraisal and motion to
compel the insurer’s right to repair. The insureds, in turn, filed a motion
for summary judgment.        The insureds’ summary judgment motion
pertinently alleged:

          The [insurer] contends that the [i]nsureds denied its right
      to repair under the policy; however, this is … not true. The
      [i]nsureds agreed to allow the [insurer] to perform repairs for
      all of the portions of the Property it contends are covered;
      however, based on the [insurer’s second letter], those portions
      would not contain the roof, screens on the screen enclosure,
      and the damages to the interior of the Property, which the
      [insureds] allege[] were damaged due to a peril insured
      against.

         ….

         The present lawsuit is brought to repair damages to the
      roof and interior damages. The present lawsuit is also
      brought to force the [i]nsurer to replace the affected flooring
      using the proper flooring material – hard wood flooring, and
      not simulated laminate flooring.

         ….

         The [i]nsured[s] [are] now left in a peculiar predicament:
      either they sit by idly, allowing the [insurer] to perform work
      using the wrong materials, or [the insureds] attempt[] to
      prevent the [insurer] from completing the repairs [which the
      insureds] believe[] are covered until [the insureds] agree as to
      the flooring material.

   The insurer filed a response, arguing that the policy’s designated
dispute resolution mechanism was appraisal, and the insureds had
prematurely filed suit.

   The circuit court entered an order deferring ruling on the insureds’
motion for summary judgment, and entered a separate order granting the
insurer’s motion to compel appraisal and staying the action pending the
appraisal’s completion.

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   The appraisal panel determined, contrary to the insurer’s initial
estimate, that the roof damages were within the scope of covered damages
to be repaired, and that the hardwood flooring should be replaced with
hardwood flooring, not laminate simulated wood flooring. The appraisal
panel also determined the total dollar amount for the covered repairs.

   The insureds filed the appraisal award with the circuit court. The
insureds also filed a motion to lift the stay, and a response to the insurer’s
motion to compel its right to repair. In the response, the insureds
maintained that the insurer’s initial estimate breached the policy. The
insureds requested that the insurer “be forced to tender the amount
awarded through appraisal, allowing the insureds to effectuate repairs on
their own.”

   The insureds then filed an amended summary judgment motion. The
insureds’ amended motion made the same arguments as in their original
motion, but added the following:

         It wasn’t until after the filing of the present lawsuit that the
      [insurer] decided to invoke appraisal.

        The parties attended appraisal, and a mutually agreed[-]to
      appraisal award was entered based on the scope of covered
      damages.

        This appraisal award includ[ed] the damaged flooring,
      which was determined to be “pre-finished solid wood flooring”
      and not simulated laminate flooring.

         The [insurer] was set to perform repairs with the wrong
      materials, which is a breach of both the Florida Statutes and
      the new contract created in invoking the [insurer’s] right to
      repair.

         This appraisal award vindicates the argument made by the
      [insureds] and shows that the lawsuit was necessary to
      prevent the repairs with improper materials.

(paragraph enumeration omitted).

   The circuit court held a hearing on the insurer’s motion to compel its
right to repair and the insureds’ summary judgment motion. At the
hearing’s start, the circuit court expressed confusion to the insurer’s
counsel as to why the insurer was seeking to invoke the right to repair:

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   I don’t understand why [the insurer is seeking to invoke the
   right to repair]. [The insureds] [are] willing to just take the
   money, even a lesser amount, and go. You want [the insurer]
   on the hook not only to repair, but if there’s any issues … [the
   insurer is] basically insuring the repairs.

The insurer’s counsel responded:

       [I]t’s [the insurer’s] position that the right to repair is …
   contractual …. [The insureds] … signed up for it. It’s a term
   of the policy that must be complied with.

      [The insureds’ position] … is that … [the insurer’s] initial
   determination … constitutes a breach and I suppose an
   anticipatory breach because the repairs themselves had never
   been conducted, that would relieve the insureds of having to
   comply with the election to repair.

      That argument is not legally sound … because … the
   election to repair endorsement contains a dispute resolution
   mechanism, appraisal.      If the insureds think that [the
   insurer’s] initial assessment is wrong, they contracted away
   their right to seek a judicial determination in favor of an
   extrajudicial dispute resolution which is appraisal, and that
   that dispute would be resolved via appraisal which has
   occurred.

      ….

      … It binds both parties, and … the insureds should
   otherwise be obligated to comply with the contract that they
   signed up for ….

The insureds’ counsel disagreed:

      [W]hat happened is … the appraisal award … which wasn’t
   compelled until after the filing of this lawsuit, that constitutes
   a confession of judgment where [the insurer] got the objective
   cash value wrong, which also vindicates the lawsuit as a
   whole. … [I]n addition to [the insureds] letting [the insurer]
   know that [the insurer] got the materials wrong in the flooring,
   … [the insureds] sued [the insurer] over the scope of the areas
   that [the insurer] said were not covered which as [the

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      insurer’s] counsel just admitted [the insurer] paid for a whole
      new roof which [the insurer] said wasn’t covered. So … that’s
      [the insureds’] argument as to how [the insurer] [has]
      breached in that sense.

         ….

         … [T]he point that [the insureds] [are] trying to make … is:
      At what point do [the insureds] have to wait for that sufficiency
      standard to be triggered? … [T]he issue isn’t whether [the
      insureds] will be satisfied … it’s that [the repairs] will be done
      improperly.

         And so [the insureds’] argument is that that sufficiency
      standard has already been triggered when the only thing that
      caused [the insurer] to change [its] mind was the filing of this
      lawsuit and the subsequent invocation of appraisal.

   At the end of the hearing, the circuit court entered an order granting
the insureds’ amended summary judgment motion and denying the
insurer’s motion to compel the right to repair. The circuit court found the
insurer’s initial estimate breached the policy, which, in turn, forfeited the
insurer’s contractual right to make any repairs, and required the insurer
to make a loss payment to the insureds pursuant to the appraisal award.

   The circuit court later entered a final judgment in the insureds’ favor
consistent with the foregoing order.

                                This Appeal

    This appeal followed. The insurer argues it did not breach the policy
by providing the insureds with an initial estimate which was later
overridden by the appraisal award. According to the insurer, the policy
did not impose a legal duty to provide the insureds with a mistake-free
initial estimate, nor were the insureds damaged by the initial estimate,
because the insurer consistently indicated its intention to abide by the
appraisal award’s scope of repairs. Thus, the insurer argues, the circuit
court erred in re-writing the policy by awarding a loss payment when the
circuit court should have compelled the insureds to allow the insurer’s
preferred contractor to complete the appraisal award’s directed repairs.

   The insureds respond that the circuit court properly found the insurer
breached the policy by initially opting to undertake repairs which would
not restore the property to its pre-loss condition.

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   Our review is de novo. Rodrigo v. State Farm Fla. Ins. Co., 144 So. 3d
690, 692 (Fla. 4th DCA 2014) (“The standard of review governing a [circuit]
court’s ruling on a motion for summary judgment based upon the
interpretation of an insurance policy is de novo.”) (citation omitted).
“Summary judgment is proper if there is no genuine issue of material fact
and if the moving party is entitled to a judgment as a matter of law.”
Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla.
2000) (citation omitted).

   Applying a de novo standard of review, we conclude the circuit court
erred in entering summary judgment in the insureds’ favor because,
contrary to the circuit court’s finding, the insurer did not breach the policy.
The insureds alleged the insurer had breached the policy merely by
providing an initial estimate with which the insureds did not agree.
However, the policy did not confer upon the insureds, in the event of such
a disagreement, the immediate right to sue the insurer for breach of
contract.

   Rather, the policy included an endorsement which provided the
insureds with a lower premium and, in exchange, designated an appraisal
panel to resolve any dispute as to the scope of repairs and gave the insurer
the contractual right to have its preferred contractor repair any covered
damage to the insureds’ home in lieu of issuing a loss payment. The
preferred contractor endorsement pertinently provided:

        In consideration of the premium credit shown on your
      Declarations Page, you agree to the following:

         ….

         You agree that in the event of a covered loss to your
      dwelling or other structures on the residence premises … we
      at our option may select [our preferred contractor] to repair
      your damaged property as provided by the policy and its
      endorsements.

         ….

         When we have exercised our option to repair your damaged
      property pursuant to this Preferred Contractor Endorsement,
      we will repair the damaged property with material of like kind
      and quality without deduction for depreciation. Such repair is

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      in lieu of issuing any loss payment that would otherwise be due
      under the policy.

         ….

         Where we elect to repair:

         If you and we fail to agree on the amount of loss, which
      includes the scope of repairs, either may demand an appraisal
      as to the amount of loss and the scope of repairs. … The
      appraisers will separately set the amount of loss and scope of
      repairs. If the appraisers submit a written report of an
      agreement to us, the amount of loss and scope of repairs agreed
      upon will be the amount of loss and scope of repairs. …

          The scope of repairs shall establish the work to be
      performed and completed by [our preferred contractor]. Such
      repair is in lieu of issuing any loss payment to you that
      otherwise would be due under the policy. The amount of loss
      shall establish only the initial amount paid to [our preferred
      contractor] by us, and any additional amounts required to
      complete repairs shall be our responsibility and will be paid
      to [our preferred contractor] without regard to policy limits or
      the amount of initial payments.

(emphasis added; internal quotation marks and paragraph enumeration
omitted).

   The insureds appear to have simply disregarded the policy-designated
appraisal process by prematurely filing suit only nine days after the
insurer sent its second letter describing the work which the insurer’s
preferred contractor intended to perform and the material which the
preferred contractor intended to use, with which the insureds disagreed.
In the face of that prematurely-filed suit, the insurer properly sought to
enforce the policy-designated appraisal process by filing a motion to
compel appraisal. Cf. Johnson v. Nationwide Mut. Ins. Co., 828 So. 2d
1021, 1025 (Fla. 2002) (“[W]hen the insurer admits that there is a covered
loss, but there is a disagreement on the amount of loss, it is for the
appraisers to arrive at the amount to be paid.”) (citation and emphasis
omitted).

   The fact that the appraisal award supported the insureds’ claim did not
confer upon the insureds the immediate right to resume their breach of
contract action. Rather, as the insurer argued to the circuit court, the

                                     8
policy provided that upon receipt of the appraisal award, the insurer would
be given the opportunity to continue forward with repairs based upon the
scope outlined in the appraisal award.

   We acknowledge the circuit court appears to have attempted to impose
what it believed was a less antagonistic resolution by requiring the insurer
to pay the appraisal award’s loss payment amount to the insureds, who
then could effectuate their own repairs.          However, such a ruling
contravened the policy by imposing a remedy which the policy’s plain
language expressly stated was not available. Instead, the policy’s plain
language provided the insurer with the opportunity to proceed with repairs
based upon the scope outlined in the appraisal award.

    Our conclusion as expressed in this opinion should not be construed
to suggest the insureds may never be able to pursue a breach of contract
action against the insurer. For example, if the insurer fails to continue
forward with repairs based upon the scope outlined in the appraisal award,
or if the repairs are defective, then the insureds’ ability to pursue a breach
of contract action may ripen, provided the insureds have complied with all
other required conditions precedent under the contract before filing suit.
See Vainberg v. Avatar Prop. & Cas. Ins. Co., 321 So. 3d 231, 235 (Fla. 4th
DCA 2021) (“[I]n a situation where the option to repair has been invoked
… the insurer is obligated to perform repairs which will adequately return
the insured property to its pre-loss condition.”); Drew v. Mobile USA Ins.
Co., 920 So. 2d 832, 835 (Fla. 4th DCA 2006) (“[W]hen the insurer makes
its election to repair, that election is binding upon the insured and … the
insurer is bound to [perform repairs] within a reasonable time.”). Those
possibilities, however, have yet to ripen because of the error which
occurred below.

                                Conclusion

   Based on our reasoning above, we reverse the circuit court’s order
granting the insureds’ amended summary judgment motion and denying
the insurer’s motion to compel its right to repair. We remand for the circuit
court to: (1) vacate both the order and the final judgment; (2) enter an
order denying the insureds’ amended summary judgment motion and
granting the insurer’s motion to compel its right to repair; and (3) conduct
any necessary further proceedings, so long as those further proceedings
remain consistent with this opinion.

   In addition to the foregoing relief, the insurer has requested that we
pass upon the insurer’s affirmative defense alleging that the insureds had
not complied with the policy’s other required conditions precedent. We

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cannot consider that additional defense in this appeal because the circuit
court has not ruled on that defense in the first instance.

   Reversed and remanded with instructions.

MAY and FORST, JJ., concur.

                           *        *         *

   Not final until disposition of timely filed motion for rehearing.

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