Triton Renovation, Inc. v. Empire Indem. Ins. Co.

TRITON RENOVATION, INC., Plaintiff, v. EMPIRE INDEMNITY INSURANCE COMPANY, Defendant.

Case No. 2:20-cv-432-JLB-NPM

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION

June 4, 2021

ORDER

Currently before the Court in this Hurricane-Irma-insurance-coverage dispute are Plaintiff Triton Renovation, Inc.'s Motion to Compel Appraisal and Stay Discovery (Doc. 29), its related Motion to Stay Discovery Until Court Ruling on Appraisal (Doc. 43), and Defendant Empire Indemnity Insurance Company's Motion to Compel Expert Depositions (Doc. 45). For the reasons set forth below, the motion to compel appraisal and stay discovery is granted in part and denied in part, the motion to stay discovery is denied as moot both because the Court previously stayed all discovery and because the parties have agreed to the scope of discovery going forward, and the motion to compel expert depositions is also denied as moot because the parties have resolved that issue by agreement.

Factual and Procedural Background

On September 10, 2017, Hurricane Irma struck Naples, Florida, and inflicted substantial property damage to Empire's insured, St. Croix at Pelican Marsh Condominium Association. (Doc. 20, ¶ 7; Doc. 34, p. 1). At the time, St. Croix's insurance policy with Empire provided at least $36 million of coverage for fifteen condominium buildings and ten parking garages (Doc. 20-1, pp. 10-12, 17-21; see also Doc. 34-1 (representing the total amount of insurance as $44,780,850)). St. Croix promptly made a claim against the policy on September 14, 2017, and, on January 24, 2019, assigned its rights to proceeds due under the policy as well as any rights for "extra contractual damages" such as fees, costs and expert expenses to Triton. (Docs. 20-2; 29, p. 2).

With no dispute that Hurricane Irma was a covered peril and that it caused at least some covered losses, Empire investigated the claim and paid more than $2 million in benefits. (Docs. 29, p. 2; 34, pp. 1, 3). Disagreeing with Empire's valuation of the loss, St. Croix submitted to Empire a February 12, 2019 Sworn Statement in Proof of Loss claiming $6,799,120.85 as the full cost of repair or replacement. (Doc. 34-1). St. Croix in 2019 and Triton in 2020 also invoked the insured's unilateral right under the policy to have this amount-of-loss dispute referred to an appraisal panel for resolution. (Doc. 29-3). And meanwhile, Triton engaged various subcontractors and completed the repairs. (Doc. 34-2, p. 2).

One year after the insured's submission of its sworn proof of loss, Empire conducted its examination under oath of Triton as the insured's assignee on February 7, 2020. (Doc. 34-2, p. 1). In response to the testimony of the designees about potential records and other documents, Empire made follow-up requests for the production of information, and Triton produced additional documents in response. Id.

With still no movement by Empire toward assembling the appraisal panel,¹ Triton initiated a civil action on May 22, 2020, in state court against Empire by filing a Petition to Compel Appraisal, which sought an order appointing an umpire and requiring Empire to name its appraiser. (Doc. 4). On June 18, 2020, Empire removed the action to this Court and filed a motion to dismiss the petition. (Docs. 1, 3). The motion to dismiss argued that the petition constituted an "improperly and insufficiently pled action for mandatory injunctive relief," and that "it should be dismissed in its entirety for failure to state a proper action for declaratory judgment." (Doc. 3, p. 5).

In response, Triton agreed to amend its pleading (Doc. 12), and it filed a two-count Amended Complaint. Count I advanced a breach-of-contract claim based on Empire's alleged failures to comply with the appraisal provision and to pay all insurance proceeds for the covered damages. (Doc. 20, ¶¶ 19-20). And Count II continued to advance Triton's petition to compel appraisal. (Doc. 20, ¶¶ 23-34). In its overall prayer for relief for both counts, Triton requested an order to facilitate the appraisal process, or in the alternative, a monetary judgment. (Doc. 20, pp. 5-6).

Empire reasserted its previously advanced arguments for the dismissal of the petition-to-compel-appraisal claim (Doc. 22), and in response, Triton moved for leave to amend to recast its petition to compel appraisal as a claim for declaratory judgment² that Triton "is entitled to the resolution of the insurance claim via binding appraisal proceedings in accordance with the Policy" and other related declarations.³ (Docs. 25; 25-1, p. 6).

With the state of the pleadings in flux, Triton filed a motion for extension of time to serve its expert reports (Doc. 27), and its motion to compel appraisal and stay discovery. (Doc. 29). A scheduling order setting expert-disclosure deadlines had not yet been entered, and so the motion for more time to serve expert reports was denied as moot. (Doc. 32). But the Court conducted a conference with the parties to ascertain their positions related to whether any formal discovery should continue to proceed if the amount-of-loss question was referred to an appraisal panel. Triton reported that it would be able to serve its expert disclosures by October 30, 2020, and it indicated no objection to Empire conducting non-party discovery. Empire explained that it would want to continue to conduct discovery to inform the appraisal process. Accordingly, the Court entered a Case Management and Scheduling Order providing for the disclosure of expert reports and other deadlines, including a discovery cutoff of February 24, 2021. (Doc. 33).

Nevertheless, Triton resisted scheduling expert witness depositions until the Court ruled on whether the amount-of-loss question would be referred to an appraisal panel. In part, Triton was motivated by a concern that taking any expert-witness depositions could potentially be construed as a waiver of its right to appraisal. (Doc. 43, ¶¶ 10-15). On the other hand, and mindful of the discovery cutoff, Empire moved to compel the depositions of Triton's experts. (Doc. 45).

At this juncture, there was a change in counsel for Triton. (Docs. 46, 53, 58), and its new attorney requested a status conference (Doc. 49). Granting the motion, the Court vacated the CMSO and held a status conference on March 3, 2021. (Docs. 51, 55). The discussion during the conference primarily concerned whether the parties could resolve Empire's objection that appraisal was not ripe due to its outstanding document requests. By Empire's account, it had corresponded with Triton's former counsel in June and August of 2020 seeking documents mentioned during the examinations under oath and it had yet to receive a complete response. (See, e.g., Doc. 34-2). Triton agreed to produce all responsive documents in its possession within thirty days, and Empire agreed that within thirty days of receipt, it would confer with Triton about any remaining issues. On April 1, 2021, Triton filed a notice of compliance. (Doc. 60).

The Court conducted another status conference on May 3, 2021, during which it learned that Triton had produced nearly 2,000 pages of additional documents and that in the thirty days since, Triton had not heard anything from Empire about any purported deficiencies. Apparently, the widow of a now-deceased construction supervisor for Triton had disposed of some records that may have been responsive, but Triton had otherwise produced everything it could in response to Empire's requests. With no dispute that Hurricane Irma was a covered peril that caused at least some amount of covered loss; with a disagreement between the parties as to theamount of loss—both in the difference between Triton's sworn proof of loss statement and Empire's payments on the claim, and in the difference between the amount-of-loss opinions contained in the parties' expert disclosures; and with Triton's apparently reasonable compliance with its post-loss duties, Triton's request to refer the amount-of-loss dispute to an appraisal panel pursuant to the policy seemed entirely ripe.

So, the discussion during the status conference turned next to whether the parties could resolve any purported deficiencies in Triton's pleading—as a matter of both stating a valid cause of action and providing an appropriate vehicle for referring the amount-of-loss question to an appraisal panel. The parties reviewed Triton's (first) amended complaint (Doc. 20) during the conference. Triton offered to withdraw the second count labeled "Petition to Compel Appraisal," and Empire agreed that the first count for breach of contract stated a cause of action and that the absence of any other theory of recovery, such as a claim for declaratory or other equitable relief, did not serve as any impediment to referring the amount-of-loss question to appraisal.⁴ Accordingly, Triton subsequently filed a Notice of Withdrawal of Count II (Doc. 64), the Court denied as moot both Empire's motionto dismiss Count II and Triton's motion for leave to file a second amended complaint (Doc. 65), and Empire answered the one count for breach of contract in the amended complaint (Doc. 67).

The parties also agreed during the May 3, 2021 conference to exchange discovery that would inform the appraisal process. For example, they agreed that both sides would be able to depose any experts who offered opinions for the appraisal panel to consider. And they agreed that neither party would utilize an appraiser whose compensation might be contingent in any way on the outcome of this matter. See Landmark Am. Ins. Co. v. H. Anton Richardt, DDS, PA, No. 2:18-cv-600-FtM-29UAM, 2019 WL 2462865, *3 (M.D. Fla. June 13, 2019) (Steele, J.) (disqualifying public adjuster from acting as appraiser because his compensation was on a contingency fee basis).⁵

Analysis

"Appraisal is a form of alternative dispute resolution that sets a disputed loss amount." CMR Constr. & Roofing, LLC v. Empire Indem. Ins. Co., 843 F. App'x 189,...