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Evanston Insurance Co. v. Etcetera, Etc Inc.

United States District Court, M.D. Florida, Fort Myers Division

July 23, 2018

EVANSTON INSURANCE COMPANY, Plaintiff,
v.
ETCETERA, ETC INC., KLAS ETCETERA, LLC and GOLF ETCETERA, INC., Defendants.

          OPINION AND ORDER

          JOHN E. STEELE UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on defendants' Motion to Compel Appraisal and Stay Proceedings (Doc. #24) filed on May 15, 2018. Plaintiff filed a Response in Opposition (Doc. #27) on June 5, 2018, and defendants filed a Reply (Doc. #30) on June 19, 2018. For the reasons set forth below, the Motion is granted.

         I.

         On September 10, 2017, Hurricane Irma made landfall on Southwest Florida. This declaratory judgment action involves an insurance dispute regarding the amount of damage to commercial property located at 175 Kings Highway, Port Charlotte, Florida (the “Property”) that is attributable to Hurricane Irma. (Doc. #1.)

         Evanston provided general liability and property insurance coverage on the Property to defendants (the “Insureds”) with an $800, 000 policy limit. (Doc. #1, ¶ 10; Doc. #1-1, the “Policy.”) Following submission of a claim by the Insureds, Evanston investigated the loss. (Id., ¶ 13.) During the time when Evanston was investigating, Charlotte County issued a “Notice of Unsafe Building” with respect to the Property dated November 9, 2017, noting that the building on the Property “was in danger of collapse.” (Doc. #1-2.) The Notice states that the Property was inspected by the County on October 25, 2017. The Notice informed defendants they had two options - repair or demolish the building:

If you decide to repair the building, you must, within 30 days of your receipt of this notice, secure all necessary permits and commence the work. All work must fully comply with the provisions of the applicable building codes.
If you decide to demolish the building, you must, within 30 days of your receipt of this notice, secure all necessary permits and complete the demolition, including debris removal.

(Id.) The Notice further stated that if the foregoing actions were not commenced or completed within 30 days, the County would demolish the building. (Id.) Defendants had the right to appeal the County's Notice or seek modification, but it does not appear that they did so. (Id.) Despite the absence of any law or ordinance that would have prevented defendants from repairing the building, defendants decided to demolish the building. The record is unclear what the motivations were for their decision to demolish the building rather than repair it.

         Evanston disagreed with the County's assessment and the Insured's decision to demolish the building. After receiving a copy of the County's Notice, Evanston issued a letter to the Insureds on December 5, 2017 (just shy of the Insured's 30-day deadline from the County), dated November 28, 2017. (Doc. #1, ¶ 16; Doc. #1-3.) Evanston's letter stated that it “serve[d] as a follow up after learning that Etcetera, Etc. Inc. and Klas Etcetera, LLC intend to undertake the demolition of the insured property.” (Id.) Evanston took the position that the County's Notice makes clear that the Property could be repaired. (Id.) Evanston had employed its own engineer, who found that the building could be repaired and there was no reason to demolish the building, and thus “any decision by you to demolish the building would be a voluntary decision and not related to the covered loss.” (Id.)

         Through counsel, in a letter dated January 2, 2018, the Insureds responded that although there was some pre-existing damage to the Property, Hurricane Irma caused additional damage, rendering it a “total loss.” (Doc. #1-5.) The letter ended by stating:

Furthermore, please be advised that the local municipality has ordered the demolition of the subject property. We believe that the property will be torn down within the next few weeks, possibility sooner. Therefore, should Evanston Insurance Company wish to re-inspect the loss, we urge that it do so immediately.

(Id., p. 2) (emphasis in original).

         Evanston responded to the letter, stating that it would “reopen the claim” and would coordinate a re-inspection of the Property on January 15, or 16, 2018. (Doc. #24-4.) Evanston stated that it would require the re-inspection before considering any advance payment of the claim. (Id.) It is not clear whether the re-inspection took place.

         Despite Evanston's letter stating that a re-inspection of the Property would take place on January 15 or 16, 2018, Evanston issued a letter to the Insureds on January 11, 2018, which was dated December 29, 2017, advising them that Evanston had completed its investigation, reiterating its belief that the building could be repaired, and although there was some covered loss, the damage estimate ($9, 334.67) was below the applicable deductible for windstorm or hail ($24, 000). (Doc. #1, ¶ 17; Doc. #1-4.) Evanston told its Insureds to submit documentation reflecting the cost of repair of damages caused by Hurricane Irma if it disagreed with Evanston's conclusion that the claimed damage does not exceed the Policy's applicable deductible. (Doc. #1-4.)

         The Insureds state that they did not respond to Evanston's letter because they believed that Evanston was still attempting to negotiate and resolve the claim; that is until Evanston filed the instant suit on February 14, 2018. (Doc. #24 p. 1). Coincidentally, the demolition of the building was completed on the same day the Complaint was filed. Defendants filed an Answer on March 12, 2018 and sent Evanston a demand for “appraisal of the loss” under the terms of Policy the same day. (Doc. #9; Doc. #24-1.) Evanston never responded to the demand for appraisal.

         II.

         In its Complaint for Declaratory Judgment, Evanston disputes that the Property is a total loss and believes that its liability for the Insureds' claim is limited to any coverage caused by Hurricane Irma, subject to the Policy deductible and other terms and conditions. (Doc. #1, ¶ 20.) Evanston also alleges that to the extent the loss was caused by the enforcement of an ordinance or law regulating the construction, use, or repair of any property or requiring the tearing down of any property, ...


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