Consistent with its general support of Alternate Dispute Resolution (“ADR”) procedures, Florida promulgated a mediation procedure for property insurance claims. Fla. Stat. § 627.7015 (2010). This statute contains a provision which, should the insurer fail to comply with mediation notice requirements, can result in a waiver of the insurer’s appraisal rights under the insurance policy. § 627.7015(7). In American Integrity Ins. Co. v. Patricia Gainey, No. 2D11-5118 (Fla. 2nd DCA, September 28, 2012), the court held that the notice requirement under Fla. Stat. § 627.7015(7) does not apply under circumstances where the insured prematurely commenced litigation against the insurer. In short, a party cannot circumvent post-loss appraisal policy provisions by commencing litigation prematurely.
In Gainey, Patricia Gainey (“insured”) brought a water leak claim under her homeowner’s insurance policy. After inspection, American Integrity Ins. Co. (“insurer”) issued a $16,349.13 check for damages to the insured and the insured responded that the payment was “significantly inadequate” to cover the losses. During that same month, the insured filed a breach of contract action against the insurer. The insurer asserted by letter that its investigation was ongoing, reserved its right to demand appraisal, and requested a sworn proof of loss from the insured. The insurer also filed a motion to dismiss in response to the insured’s Complaint, seeking abatement of the litigation in favor of appraisal. Thereafter, upon receipt of the insured’s sworn proof of loss statement, the insurer issued correspondence to the insured which requested appraisal to resolve the amount of loss dispute and provided statutory notice of mediation under § 627.7015(2).
The trial court initially granted the insurer’s motion to abate the proceedings in favor of appraisal. However, the insured later argued that the insurer had waived its right to appraisal by failing to provide timely notice of mediation under § 627.7015 (7). The trial court granted the insured’s motion to enjoin appraisal, and the insurer appealed. Ruling that the trial court erred by concluding that the insurer waived its right to appraisal, the appellate court reversed and remanded for further proceedings. Construing the plain and unambiguous meaning of the statute, the appellate court held that:
…section 627.7015 permits insureds and insurers “to use the mediation process to encourage an inexpensive and speedy resolution of insurance claims ‘prior to commencing the appraisal process, or commencing litigation.’” (citation omitted) Here, because [the insured] prematurely commenced litigation against [the insurer], we conclude that the notice requirement under section 627.7015(1) does not apply. Accordingly, [the insured] cannot rely on the statute to avoid appraisal proceedings where her filing of the lawsuit rendered the statute inapplicable.
In summary, the parties in Gainey took competing positions on the resolution forum for the disputed homeowner’s property claim: the insured seeking litigation and the insurer seeking appraisal. The insured engaged in a rush to the courthouse before specific loss estimates were established. This was inconsistent with the post-loss resolution procedures under the appraisal and sworn proof of loss provisions of the policy. In Florida, appraisal remains a viable option for the insurer under such circumstances.