People's Trust Ins. Co. v. Garcia, 3D18-742

263 So.3d 231

PEOPLE'S TRUST INSURANCE COMPANY, Appellant,

v.Esperanza GARCIA, Appellee.

No. 3D18-742

District Court of Appeal of Florida, Third District.

Opinion filed January 23, 2019

White & Case, and Raoul G. Cantero and Ryan A. Ulloa ; Brett R. Frankel and Jonathan Sabghir (Deerfield Beach), for appellant.

Mintz Truppman, P.A., and Timothy H. Crutchfield ; Marin, Eljaiek, Lopez & Martinez, P.L., and Anthony M. Lopez and David F. Garcia, for appellee.

Before LOGUE and SCALES, JJ., and LAGOA, Associate Judge.

LAGOA, Associate Judge.

People's Trust Insurance Company ("People's Trust") appeals from a non-final order denying its motion to compel appraisal. Because People's Trust did not wholly deny coverage, the issue of causation is an amount-of-loss question subject to appraisal. We therefore conclude that the trial court erred by not compelling appraisal, and we reverse and remand with directions to the trial court to compel appraisal.

I. FACTUAL AND PROCEDURAL HISTORY

Garcia owns property located in Miami-Dade County (the "property"). The property was insured under a homeowner's insurance policy issued by People's Trust that included a Preferred Contractor Endorsement (the "endorsement"). Under the endorsement, Garcia agreed that in the event of a covered loss, People's Trust may, at its option, repair the property.¹ The endorsement's appraisal provision further stated that where People's Trust elected to repair the property, "[i]f [Garcia] and [People's Trust] 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." Under the appraisal provision, once the appraisers set the amount of loss and scope of repairs, "[t]he scope of repairs shall establish the work to be performed and completed by Rapid Response Team, LLC™."

The property suffered water damage as a result of a roof leak on October 1, 2016, and Garcia reported the claim to People's Trust. In its December 30, 2016, letter, People's Trust informed Garcia as follows:

THERE IS COVERAGE UNDER THE POLICY FOR THIS LOSS AS A WHOLE; HOWEVER, THE SCOPE OF DAMAGES COVERED BY YOUR POLICY INCLUDES ONLY THE INTERIOR DAMAGES BUT DOES NOT INCLUDE YOUR ROOF

We have completed our investigation of your claim, and based upon what we were provided and what you reported, and additionally, based upon our claim investigation, there is generally coverage for your loss as a whole. However, and more specifically, our investigation revealed that the roof leak you reported stemmed from age-related wear and tear and deterioration; general mechanical breakdown or latent defect; and/or faulty, inadequate or defective maintenance of the roofing system—none of which are covered causes of loss. Therefore, in our opinion, the scope of covered damages would not include your roofing system because those damages were caused by uncovered or excluded causes, but would provide coverage for resulting ensuing damages to the interior of your home. Therefore, we believe our obligation is to repair only those damages to the interior of the home. If you are not in agreement with that assessment, the question of whether the scope of repairs should include the roof, can be resolved in appraisal ....

The December 30 letter stated that People's Trust was exercising its election to repair the property and that People's Trust would "repair your property to its pre-loss condition by making repairs to all covered damages, once there is a determination of what those damages are, either by agreement or by submitting the matter to an appraisal panel as set forth in the policy."

In a subsequent letter dated February 1, 2017, People's Trust acknowledged receipt of Garcia's Sworn Proof of Loss and stated that "[b]ased upon our ... inspection of the damages, [People's Trust] disputes the scope of loss and/or the amount of damages identified in your Sworn Proof of Loss. Specifically, your Sworn Proof of Loss is predicated upon a repair estimate which includes repairs that fall outside the scope of your loss." People's Trust demanded appraisal "of the amount of loss and scope of repairs in accordance with" the Endorsement.

On March 16, 2017, Garcia filed a complaint for breach of contract (Count I) and declaratory judgment (Count II) against People's Trust. On November 28, 2017, People's Trust filed a motion to dismiss Count II of the complaint and a motion to compel appraisal and stay the current lawsuit. The trial court sua sponte set the motion for a January 19, 2018, hearing. Garcia's counsel did not appear at this hearing. After the hearing, the trial court entered an order denying People's Trust's motion to dismiss Count II, but granting its motion to compel appraisal and staying the action. Garcia moved for reconsideration, arguing that her counsel's failure to appear at the hearing was due to a clerical error. On March 14, 2018, the trial court granted Garcia's motion for reconsideration, vacated its January 19 order, and denied People's Trust motion to compel appraisal. The trial court's order states that "[t]he Court finds the issue is one of coverage, not amount-of-loss."

People's Trust appeals from the March 14 non-final order denying its motion to compel appraisal.²

II. STANDARD OF REVIEW

In reviewing a trial court's order denying a motion to compel appraisal, "factual findings are reviewed for competent, substantial evidence, and the application of the law to the facts is reviewed de novo." Fla. Ins. Guar. Ass'n v. Waters, 157 So.3d 437, 439-40 (Fla. 2d DCA 2015) ; accord Fla. Ins. Guar. Ass'n v. Castilla, 18 So.3d 703, 704 (Fla. 4th DCA 2009) (applying the same standard of review for a denial of a motion to compel arbitration to a motion to compel appraisal and holding that a trial court's factual findings are reviewed under a competent, substantial evidence standard and its application of the law to those findings is reviewed de novo).

Where the facts are undisputed, a de novo standard of review applies. See Mora v. Abraham Chevrolet–Tampa, Inc., 913 So.2d 32, 33-34 (Fla. 2d DCA 2005) (stating that a trial court's ruling on a motion to compel arbitration when the facts are undisputed is reviewed de novo); see also People's Trust Ins. Co. v. Tracey, 251 So.3d 931, 933 (Fla. 4th DCA 2018) (applying a de novo standard of review to trial court's order denying insurer's motion to compel appraisal "as the issue is a legal one").

III. ANALYSIS

On appeal, People's Trust argues that the trial court erred in refusing to compel appraisal. We agree.³

It is undisputed that the issue of coverage is one for the court, State Farm Fire & Cas. Co. v. Licea, 685 So.2d 1285, 1287 (Fla. 1996) (" ‘A challenge of coverage is exclusively a judicial question ....’ " (emphasis in original) (quoting Midwest Mut. Ins. Co. v. Santiesteban, 287 So. 2d 665, 667 (Fla. 1974) ) ); Fla. Ins. Guar. Ass'n, Inc. v. Olympus Ass'n, Inc., 34 So.3d 791, 794 (Fla. 4th DCA 2010) ("Issues relating to coverage challenges are questions exclusively for the judiciary."), while the issue of the amount of loss is one for appraisers. As such,

The division of responsibility between the appraisers and court is therefore clear. The appraisers determine the amount of the loss, which includes calculating the cost of repair or replacement of property damaged, and ascertaining how much of the damage was caused by a covered peril .... [and] [t]he court decides whether the policy provides coverage for the peril which inflicted the damage, and for the particular property at issue; in other words, all coverage matters.

Citizens Prop. Ins. Corp. v. River Manor Condo. Ass'n, Inc., 125 So.3d 846, 854 (Fla. 4th DCA 2013) (citations omitted); see also State Farm Fla. Ins. Co. v. Cardelles, 159 So.3d 239, 241 (Fla. 3d DCA 2015) (" ‘A challenge to coverage is, as the Florida Supreme Court has confirmed, a matter for determination by a court; whereas, a challenge to the amount of a covered loss is for determination by an appraisal panel.’ " (quoting Citizens Prop. Ins. Corp. v. Mango Hill Condo. Ass'n 12 Inc., 54 So.3d 578, 581 (Fla. 3d DCA 2011) ) ).

The issue of causation, however, may be either one of coverage for the court or one of the amount of loss for the appraisers. In Johnson v. Nationwide Mutual Insurance Co., 828 So.2d 1021 (Fla. 2002), the Florida Supreme Court held that where an insurer has not wholly denied coverage, causation is an amount of loss issue for appraisal. In Johnson, the Supreme Court resolved the conflict between this Court's decision in Gonzalez v. State Farm Fire & Insurance Co., 805 So.2d 814 (Fla. 3d DCA 2000), and the Second District's decision in Nationwide Mutual Insurance Co. v. Johnson, 774 So.2d 779 (Fla. 2d DCA 2000).

In Gonzalez, the homeowners claimed that cracks in the walls and tiles of their home were caused by blasting, for which the relevant insurance policy provided coverage. 828 So.2d at 1023. Their insurer, State Farm, denied coverage, asserting that the cracks were caused by settlement of the foundation, which fell within a policy exclusion. Id. The trial court ruled that the " ‘[a]ppraiser[s] should give an opinion as to causation and damages.’ " Id. at 1024 (quoting Gonzalez, 805 So.2d at 815 ). This Court reversed, concluding "that the appraisers impermissibly decided whether the entire claim was within the coverage of the insurance policy." 805 So.2d at 815. In reaching its conclusion, this Court reasoned that "[s]ince State Farm's position is that this entire loss falls within a policy exclusion, this defense is a judicial question and not a question for the appraisers." 805 So.2d at 816.

In Nationwide Mutual, the Johnsons reported damage to their home to their insurer, Nationwide, contending that the loss was caused by a sinkhole, a covered peril. Johnson, 828 So.2d at 1023. Nationwide determined that the loss was caused by earth movement, which was not a covered cause of loss. Id. The trial court concluded that it...