Travelers Indem. Ins. Co. v. MEADOWS MRI

Citation: 900 So. 2d 676Docket: 4D04-1702

Court: District Court of Appeal of Florida; April 13, 2005; Florida; State Appellate Court

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The case involves Travelers Indemnity Insurance Company of Illinois (Appellant) appealing an award of attorney's fees to Meadows MRI, LLP, and associated entities (Appellees) following an insurance claim related to damage to an MRI machine. The trial court confirmed an appraisal award and granted attorney's fees based on Florida Statute Section 627.428(1). 

In July 2001, Meadows' MRI equipment suffered damage from an explosion, prompting Meadows to notify Travelers. After a protracted investigation, Travelers acknowledged coverage but disputed the loss amount. Despite attempts to settle, the matter remained unresolved, leading Travelers to invoke the appraisal clause on May 20, 2002. Prior to the appraisal, Meadows, through counsel, inquired about the procedures and potential entitlement to attorney's fees, but Travelers did not respond.

On November 20, 2002, Meadows filed a declaratory judgment suit to ensure the appraisal adhered to the Florida Arbitration Code and to secure attorney's fees should it prevail. The appraisal ultimately determined that Travelers owed Meadows a substantial amount, which was subsequently paid. However, prior to payment, Meadows motioned to confirm the appraisal award. During the proceedings, Travelers contested Meadows' status as the prevailing party, but the trial court confirmed the appraisal without ruling on that issue.

Meadows later filed a motion for attorney's fees, leading to a stipulation of $19,600 as reasonable fees if entitlement was established. The court affirmed the award of fees, aligning with existing case law and statutes.

The trial court awarded Meadows $19,600 in attorney's fees and $1,255 in costs following the judgment against Travelers. According to Florida Statute § 627.428(1), courts must award reasonable attorney's fees to insured parties when they prevail against an insurer. Travelers contended that Meadows' lawsuit was primarily for the purpose of obtaining attorney's fees rather than for a legitimate claim, referencing Nationwide Property & Casualty Ins. v. Bobinski, where the court denied attorney's fees because the suit was filed after the insurer's payment and did not result in a final judgment. However, the court distinguished Meadows' case from Nationwide, noting that Meadows filed the suit before the appraisal was completed and obtained a final judgment confirming the appraisal award. Furthermore, Travelers did not appeal this confirmation, and the time to do so had expired. The court emphasized that Meadows' use of the judicial system was justified, as it involved necessary legal steps to compel coverage and protect its rights throughout the appraisal process. Meadows had made efforts to resolve the issues without litigation, and the lawsuit ultimately influenced the payment of the appraisal award, justifying the attorney's fees under the statute.

The trial court's award of attorney's fees aligns with the purpose of section 627.428(1), which aims to restore the insured or beneficiary to their position had the insurance carrier timely paid the claim, thereby avoiding the necessity of hiring counsel and incurring fees. Florida courts, as established in *Insurance Co. of North America v. Lexow* and *Clay v. Prudential Ins. Co. of America*, emphasize that section 627.428 is designed to discourage the contesting of valid insurance claims and to reimburse insured parties for attorney's fees incurred in enforcing their contracts. Additionally, the payment of a settlement claim is viewed as equivalent to a confession of judgment in favor of the insured, allowing for the recovery of attorney's fees associated with settlement efforts, as recognized by the Eleventh Circuit.

The court found no justification for excluding attorney's fees related to an extensive appraisal process necessitated by Travelers' disputed valuation estimates, reinforcing that the legislative intent of section 627.428 should ensure insurers compensate prevailing insureds for attorney's fees, regardless of whether disputes are resolved through arbitration or litigation. A contrary ruling would leave Meadows undercompensated, as it would have to allocate part of its policy proceeds to cover legal costs. The court affirmed the award, dismissing Travelers' arguments. Additional notes mention that Meadows' breach of contract claim was paused pending appraisal results, and clarify that a recent supreme court ruling classified appraisal as an informal process, distinct from formal arbitration.