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Waterford Condominium Association of Collier County, Inc. v. Empire Indemnity Insurance Co.

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

August 16, 2019


          OPINION AND ORDER[1]


         Before the Court is United States Magistrate Judge Douglas Frazier's Report and Recommendation (R&R), recommending that the Court grant Waterford Condominium Association of Collier County, Inc.'s Motion to Compel Appraisal and Stay Proceedings. (Doc. 39). Defendant Empire Indemnity Insurance Company filed Objections (Doc. 41) and requested oral argument (Doc. 42), and Waterford responded to both (Doc. 43; Doc. 44). After independently examining the file and on consideration of Judge Frazier's findings and recommendations, the Court will accept and adopt the R&R for the reasons stated.


         In 2017, Hurricane Irma damaged Waterford's property in Naples, Florida. Empire insured the property at the time. When Waterford reported the damage, Empire's adjustor inspected the property and found the anticipated repair cost to be $551, 732.72. After subtracting depreciation and deductibles, Empire paid Waterford $51, 817.37. Waterford then submitted a repair estimate of $2, 144, 858.31. Empire continued its investigation and commissioned a second estimate of $595, 098.00. Waterford sued in state court a few months later.

         After Empire removed the case to this Court, Waterford moved to stay the case and compel appraisal under the insurance policy. Judge Frazier found appraisal appropriate because the parties dispute the amount of the loss and Waterford has not acted inconsistently with its right to appraisal. (Doc. 39). Judge Frazier rejected Empires' arguments that the Court should apply a summary judgment standard to Waterford's motion and that appraisal cannot occur because Empire requested mediation. Judge Frazier also declined to recommend a line-item appraisal because the parties did not agree to one in the policy. Empire now objects to the R&R and requests oral argument.


         A district judge “may accept, reject, or modify in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1). The district judge “shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” Id. This requires that the district judge “give fresh consideration to those issues to which specific objection has been made by a party.” Jeffrey S. v. State Bd. of Educ. of Ga., 896 F.2d 507, 512 (11th Cir.1990) (quoting H.R. 1609, 94th Cong., § 2 (1976)). And “[t]he district judge reviews legal conclusions de novo, even in the absence of an objection.” See Cooper-Houston v. Southern Ry. Co., 37 F.3d 603, 604 (11th Cir.1994).


         Empire raises seven objections to the R&R: (1) a motion to compel appraisal must be supported by summary judgment evidence; (2) Waterford's claim is not ripe for appraisal; (3) if the claim is ripe, appraisal should be limited to the amount demanded pre-suit; (4) Waterford waived its right to appraisal; (5) mediation must occur before appraisal; (6) Empire is entitled to a line-item appraisal; and (7) there is no reason to stay discovery.

         1. Summary-Judgment Evidence

         Empire first argues that a motion to compel appraisal is equivalent to a motion for summary judgment and must be supported by summary-judgment evidence. Empire tried this argument two months ago in a case before Judge Steele, who explained the difference between summary judgment and appraisal: an “appraiser determine[s] the amount of loss[, ]” while “the purpose of summary judgment is to dispose of the merits of claims and defenses that are factually unsupported.” CMR Constr. & Roofing, LLC v. Empire Indem. Ins. Co., No. 2:18-CV-779-FTM, 2019 WL 2281678, at *3 (M.D. Fla. May 29, 2019). The case Empire cites in its objection, Indian Harbor Ins. Co. v. Int'l Studio Apartments, Inc., No. 09-CIV-60671, 2009 WL 10668574 (S.D. Fla. Sept. 22, 2009), accords with Judge Steele's analysis. One of the counts in Indian Harbor was a demand for appraisal, so the court treated a motion to compel appraisal as a request for summary judgment on that claim. Indian Harbor, 2009 WL 10668574, at *3. Because appraisal will not dispose of any claims or defenses, the Court will not treat Waterford's motion to compel appraisal as one for summary judgment. See CMR Constr. & Roofing, LLC, 2019 WL 2281678, at *3 (“Unlike a summary judgment motion, a determination of whether appraisal is appropriate does not determine whether there is a genuine disputed material fact or whether the moving party is entitled to judgment.”).

         2. Ripeness

         Empire's next argument is based on a provision in the policy that allows Waterford to elect between two measures of damages: replacement cost or actual cash value. Empire asserts that Waterford cannot compel appraisal because repairs have not been performed, making a replacement-cost claim unripe, and because Waterford has not made an actual-cash-value claim, there is no dispute as to that amount. But these arguments have nothing to do with the appraisal provision, which allows either party to compel appraisal if they “disagree on the value of the property or the amount of loss.” (Doc. 3 at 43). In its Answer, Empire specifically “[d]enied that there was an agreement as to the extent and value of…damage and amounts needed to repair the damage.” (Doc. 8 at 2). Waterford is thus entitled to invoke the appraisal clause. Failure to claim actual-cash-value or replacement-cost damages “may be defenses to the amount of damages that [the insured] may obtain, but [they] are not bases for denying appraisal.” CMR Constr. & Roofing, 2019 WL 2281678, at *4.

         Empire also argues that appraisal is not ripe because it has not investigated Waterford's most recent estimate of $5 million. (Doc. 41 at 9-11). For this point, Empire relies on Galindo v. ARI Mut. Ins. Co., 203 F.3d 771, 777 (11th Cir. 2000), in which the insureds sought to compel appraisal on supplemental claims made five years after they settled their initial claims without allowing their insurers to first investigate the new supplemental claims. Galindo, 203 F.3d at 773-4. The Eleventh Circuit held that the “insureds must comply with the post-loss terms of their respective homeowner's policies, which ...

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