JULY 2017

Here’s your update on Florida insurance-related legal developments from the Colodny Fass Insurance Litigation Practice.

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.

About the Author

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.

Insurer Authorized to Seek a Court Declaration to Determine Whether Umpire Was Truly Impartial

The 3d DCA reinstated Heritage’s lawsuit filed against its insured seeking a declaration that the previously agreed-upon umpire was not impartial. Heritage and its insured were unable to agree on the damages in a covered water loss and their respective estimates were largely divergent. After submitting the loss to appraisal, the parties each appointed appraisers who then agreed upon an umpire. The policy required the umpire to be “competent and impartial.” The umpire issued an appraisal award for more than the amount of the loss consultant’s estimate. Heritage objected to the award, claiming it was grossly inflated and included damages for items not at issue.

Heritage filed suit for declaratory relief challenging the “integrity of the appraisal process” after discovering the umpire had ties with the insureds’ appraiser and the water mitigation company hired by the insureds. Heritage thus sought a new appraisal process. The trial court dismissed the action for failure to state a valid cause of action. The appellate court reversed holding that an insurer may purse a declaratory judgment action to determine “any fact” upon which the insurer’s rights and obligations depend.

Heritage Prop. and Cas. Co. v. Romanach, 3d DCA, July 12, 2017.

• Although the court affirmed an insurer’s right to obtain a declaration on the factual issue of the umpire’s impartiality, the court expressly stated it was not deciding at this time whether the remedy of a new appraisal process was available.
• Do your due diligence upfront when agreeing to an umpire and consider your legal options to challenge an award if there is reason to question the umpire’s competency or impartiality, or compliance with the terms of the policy.
• Click here to see the allegations of the affiliations between the parties involved (Strems/AIRS and others)

Summary Judgment Reversed Where Material Disputes Over the ACV Amount

The appellate court reversed a summary judgment in favor of the insurer in a roof leak claim finding material issues of fact remained regarding the value of the loss. The insured submitted a claim for benefits resulting from rainwater damage to the interior of her home caused by roof leaks. Tower Hill covered the interior damages, paid the ACV amount, and notified the insured that she could submit supplemental claims for damages as repairs are made. Tower Hill, however, denied any claim for roof damage based on wear and tear. The insured used the money to repair her roof, and then sued Tower Hill for breach of contract for paying less than the true ACV of the interior damages.

Tower Hill argued the Slayton case governed the outcome since Tower Hill paid the amount of its estimate and the insured had yet to perform repairs. The appellate court held that the “widely-divergent” estimates for the covered repair costs created a genuine issue of material fact regarding the ACV value, and precluded summary judgment. Additionally, the insured’s claim for roof damage had not yet been presented or the facts crystalized and, therefore, was not appropriate for resolution by summary judgment.

Frances v. Tower Hill Prime Ins. Co. (3d DCA July 12, 2017).

• Claims where interior rainwater damage is covered, but the roof damage is denied, may present unique issues that should be carefully examined when evaluating the strengths and weaknesses of the case.
• The appellate court’s holding distinguished this case from “Slayton” finding the insured here argued the carrier violated 672.7011 (that is, the insured disputed the carrier’s ACV payment). This case may impact the strength of a “Slayton” argument claiming “no breach” when the insured properly raises a dispute over the ACV amount.

For over 40 years, Colodny Fass has represented insurers in complex and high-risk litigation including class actions, bad faith, insurance fraud, multi-jurisdictional cases, coverage matters, and fact-intensive, multi-party lawsuits. The Daily Business Review has recognized Colodny Fass as having the Insurance Litigation Department of the Year in South Florida.

About Amy L. Koltnow

Amy L. Koltnow, a Colodny Fass Shareholder, focuses her practice on insurance disputes from trial through appeals. She has represented insurance companies in federal and state courts, as well as in mediation and administrative forums. Ms. Koltnow oversees complex litigation matters and has successfully defended numerous class actions and insurance bad faith cases. She is a member of the Claims and Litigation Management Alliance, a national, invitation-only organization committed to furthering high standards of litigation and claims management in pursuit of client defense.

To view Ms. Koltnow’s complete professional biography, click here.

Contact Amy at akoltnow@colodnyfass.com or (954) 492-4010.