Florida Insurance Guaranty Association, Inc. v. Castilla, No. 4D09-103, ___ So. 3d ___ (Fla. 4th DCA, September 30, 2009)

The Castillas filed an insurance claim with Florida Preferred Property Insurance Company (PPI), alleging their home was damaged by Hurricane Wilma in October, 2005. PPI issued a check for the claim, but the Castillas found it insufficient and objected. PPI was liquidated and taken over by FIGA, and the Castillas raised their claim with FIGA. FIGA inspected the property and denied their claim, finding that the damages were not caused by Wilma.

The Castillas filed suit against FIGA for breach of the insurance contract, claiming they furnished FIGA with timely notice of loss and performed all conditions precedent to recover under the policy and Florida law. FIGA filed a motion to dismiss, arguing the Castillas failed to fulfill their contractual obligations, citing to the provisions of the policy that permitted appraisal.

Two months after the Castillas filed suit, FIGA determined that the patio damage was covered and informed them that it would formally withdraw its previous denial of the claim. FIGA then filed an amended motion to dismiss or abate the action, arguing that the Castillas failed to satisfy all conditions precedent, including appraisal, documentation to substantiate their claim, and examination under oath. The trial court denied FIGA’s the motion, ordering it to answer the complaint.

In its answer, FIGA raised its right to appraisal under the insurance policy as an affirmative defense. The Castillas moved to strike the answer and affirmative defenses as a sham, arguing that FIGA twice denied their claim without reserving any rights under the policy. FIGA then filed a motion to compel appraisal pursuant to the insurance policy, asserting that its denial of the claim was not a waiver of its right to appraisal. The trial court denied the motion.

The Fourth District Court of Appeal reversed. Relying on precedent from the Third District, the Court explained that an appraisal clause may be asserted for the first time after litigation has commenced, so long as it is asserted in a timely manner. The Court further found that FIGA never acted inconsistently with its right to appraisal; FIGA raised its right to appraisal at the earliest opportunity in the suit and continued to claim it through its subsequent pleadings. The Court explained that arguing that the insured meet all other conditions precedent to claiming a loss is not inconsistent with demanding an appraisal. Nor is claiming that the loss is not covered inconsistent with a demand for an appraisal.

Because the appraisal process was provided for in the insurance policy and FIGA did not waive its right to an appraisal by participating in the lawsuit, the appellate court ruled that the trial court erred in denying FIGA's motion to compel appraisal.

Court Slip Opinion