Proposals for Settlement – Knowing the Rules

Feb 1, 2019

January 2019

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.


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.


Proposals for Settlement – Knowing the Rules

The Florida Supreme Court has resolved the conflict between district courts of appeal and held that proposals for settlement are not required to be served on the opposing party by email. Therefore, the failure to comply with the email formatting requirements of the rule of judicial administration (Rule 2.516), does not render a proposal unenforceable. Rule 2.516 requires strict formatting of the subject line message and the information contained in the body of the email. The Supreme Court also reaffirmed that although strict compliance is required with the substantive requirements of the statute and civil rules, a procedural rule should not be allowed to trump the statute. Wheaton v. Wheaton, Fla. Sup. Ct. (Jan. 4, 2019)

Tips & Lessons

  • A “PFS” is a significant litigation tool that serves to curb excessive litigation with a financial risk exposure to insureds (or assignees) when they do not accept reasonable settlement offers. Nearly every week the appellate courts decide issues regarding the enforceability of a PFS and defense counsel must be vigilant in staying up-to-date on the law for proposals for settlement.
  • An invalid and unenforceable PFS may lead an insurance company into a false sense of security that it could recover its own fees at the end of the case and, in fact, may expose the carrier to excessive litigation and even greater financial risk if the carrier does not ultimately prevail.

Appraisal panel determines both causation and amount-of-loss when coverage for the loss not “wholly denied”

Insured who sustained damage from a roof leak filed a claim with her homeowner’s insurer for damage. The insurer afforded coverage for the loss “as a whole” but did not include the roof within its “scope” of covered damages after determining that the roof leaked from age-related wear and tear. The insurer’s policy contained an appraisal provision wherein either party could demand an appraisal “as to the amount of loss and the scope of repairs”.

The insured submitted a proof of loss which included damage outside the scope of the loss as determined by the insurer. The insurer demanded appraisal but the insured objected to appraisal and filed suit. Once in court, the insurer moved to compel an appraisal.

The trial court declined to order an appraisal and held that the issue was one of coverage, not amount-of-loss. The appellate court reversed and held that when an insurer has not wholly denied coverage, the issue of causation (that is, how much of the damage was caused by a covered peril) is for the appraisers.

People’s Trust Ins. Co. v. Garcia, 3d DCA (Jan. 23, 2019)

Tips & Lessons

  • Causation is a coverage question for the court only when an insurer “wholly denies” there is a covered loss; and an amount-of-loss question for the appraisal panel when an insurer admits there is a covered loss, but the amount of the loss is disputed.
  • Both the Third and Fourth DCAs have ruled consistently on this issue, however, the Third DCA did not address its prior opinions that allow cases to proceed on a “dual track” basis where the appraisal panel determines the amount of the loss, but all coverage defenses are preserved for judicial determination and issues of coverage may proceed in court at the same time.
  • The appellate court ordered the trial court to compel appraisal, but did not address procedural matters, such as whether the action should be stayed pending the outcome of appraisal and if so, whether the case may thereafter proceed as to coverage under the policy after the appraisal panel determines causation.

Insured Held Responsible for Loss Consultant’s Fraudulent Estimate

Colodny Fass partner, Matt Scarfone, obained a significant appellate victory for insurers in Olympus Ins. Co. v. The Estate of Yaimi Gandul, a case involving a fraudulent and inflated repair estimate. The Fourth DCA affirmed summary judgment for our client based upon the “concealment or fraud” provision of the policy, and held the insured responsible for a fraudulent estimate prepared by his loss consultant. The insured appointed the loss consultant as his agent at the inception of the claim. During the litigation, the insured relied on the estimate in his complaint and sworn interrogatory answers. When the fraudulent nature of the estimate was revealed, the insured pled ignorance and deflected blame to his loss consultant.

Matt argued that the insured was responsible for the fraudulent estimate because (1) the insured adopted the loss consultant’s estimate as his own statement, and (2) the loss consultant was an agent of the insured. The trial court agreed and entered summary judgment on both grounds, and the Fourth DCA affirmed.

Although the appellate court upheld the judgment in the insurer’s favor without a written opinion, this victory should reassure carriers that an insured may not avoid responsibility for submitting a fraudulent estimate simply by pleading ignorance.

For more information, contact Matt Scarfone at 954-492-4010 or via email