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SFR Services, LLC v. Empire Indemnity Insurance Co.

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

September 5, 2019

SFR SERVICES, LLC, Plaintiff,
v.
EMPIRE INDEMNITY INSURANCE COMPANY, Defendant.

          OPINION AND ORDER

          JOHN E. STEELE UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on defendant's Motion to Compel Appraisal and Stay Litigation (Doc. #18) filed on July 25, 2019. Plaintiff filed a Response (Doc. #20) on August 5, 2019, opposing the motion.

         SFR Services, LLC (plaintiff) is the assignee of benefits under a policy of insurance issued by Empire Indemnity Insurance Company (defendant or Empire) to Ibis Point III at Carlton Lakes, Inc. to cover six buildings in Naples, Florida. (Doc. #20, ¶ 1.) The buildings in question were damaged as a result of a storm in September 2017, and on September 14, 2017, the insured reported wind and water damage to all six buildings caused by Hurricane Irma. (Doc. #18, ¶¶ 2-3.) On October 8, 2018, the insured executed an Assignment of Benefits in favor of SFR Services, the plaintiff in this case. (Id., ¶ 3.) Plaintiff's self-generated Sworn Statement in Proof of Loss was for $1, 289, 977.34, while defendant's investigation concluded that damage to five of the six buildings was below the deductible. (Id., ¶¶ 4, 6.)

         On April 18, 2019, plaintiff filed a Complaint (Doc. #3) against Empire for breach of the residential commercial policy of insurance. On May 29, 2019, defendant sent a letter to plaintiff invoking the right to appraisal and identifying its own appraiser. (Doc. #18, 1, 8; Doc. #20, ¶¶ 1, 8.) On May 31, 2019, defendant Empire Indemnity Insurance Company (defendant or Empire) removed the case to federal court. (Doc. #1.)

         Plaintiff did not select its own appraiser, and instead requested proof of notice to the insured or plaintiff of the right to participate in a mediation program pursuant to a policy provision and Fla. Stat. § 627.7015. The policy provision requires defendant to notify the policyholder of a right to participate in ‘the mediation program' as a condition precedent to appraisal, which defendant argues does not apply because the policyholder is not involved. (Doc. #18, ¶¶ 10-11.) When defendant did not respond, plaintiff followed up seeking confirmation of compliance with the notice requirement, while also selecting an appraiser. Defendant objected to the choice of appraiser, Ricky McGraw, and also formally responded that notice was not required because it has no bearing on appraisal with the assignee plaintiff. (Id., ¶¶ 12-15.) Ultimately, plaintiff agreed in writing to participate in the appraisal process but on the condition that it be permitted to use its chosen appraiser. (Id., ¶ 18.)

         Empire seeks to have the appraisal provision of the Policy enforced, including the requirement to select a competent, impartial appraiser. Under the policy, if the parties:

Disagree on the value of the property or the amount of loss, either may request an appraisal of the loss, in writing. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:
1. Pay its chosen appraiser; and
2. Bear the other expenses of the appraisal and umpire equally.
If there is an appraisal, we will still retain our right to deny the claim.
However, you are not required to submit to, or participate in, any appraisal of the loss as a precondition to action against us for failure to pay the loss, if we:
1. Requested mediation an|d either party rejected the mediation result; or
2. Failed to notify you of your right to participate in the mediation program.

         (Doc. #18-1, p. 39) (emphasis added). Empire argues that notice of the program does not apply to an assignee like plaintiff, only the policyholder. Empire seeks to enforce the appraisal provision and stay litigation. Plaintiff argues that Empire failed to notify it of the right to participate in the mediation program, ...


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