Guzman v. Am. Sec. Ins. Co.

Citation: 377 F. Supp. 3d 1362Docket: Case No. 18-cv-61195-BLOOM/Valle

Court: District Court, S.D. Florida; March 27, 2019; Federal District Court

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Plaintiffs Lazaraly Guzman and Larry Rosado, insured under a policy from Defendant American Security Insurance Company, are seeking to confirm a September 5, 2018 appraisal award of $121,800.30 as binding. Their claim arises from wind and water damage due to Hurricane Irma, with both parties agreeing the policy was active at the time of loss. Initially filed in state court, the lawsuit was removed to federal court, where it was stayed pending an appraisal process per the policy terms.

Conflicts arose between the parties' appraisers, Emery Kunzman and Scott Thomas, leading to the appointment of Umpire Lawrence Leiby. After inspections and discussions, Umpire Leiby issued a Disputed Award on September 5, 2018, which Kunzman contested. Following additional communications and requests for clarification, Umpire Leiby indicated the Disputed Award was not final. Subsequently, on September 17, 2018, Leiby presented a Revised Award of $90,704.27, which Kunzman accepted, and the Defendant paid this amount to the Plaintiffs.

In their Motion, Plaintiffs argue that the original Disputed Award should be confirmed as binding despite the Defendant's contention that it was preliminary and had been effectively modified by the subsequent Revised Award. The Defendant opposes the Motion, asserting it should be denied based on the preliminary nature of the first award.

Courts in Florida confirm appraisal awards under the Florida Arbitration Code, while acknowledging differences between appraisal and arbitration processes. Under Florida Statutes § 682.12, courts must confirm an arbitration award unless an insurer seeks to vacate, modify, or clarify it per § 682.13, which outlines specific conditions for vacating an award that do not apply in this case. § 682.10 allows an arbitrator to modify or correct an award based on set conditions, including failure to make a definitive award or for clarification. A motion for modification must be filed within 20 days of receiving notice of the award, with objections due within 10 days. If court proceedings are ongoing, the court may refer the claim back to the arbitrator for potential modification.

Interpretation of insurance contracts is determined by the court, applying Florida law due to diversity jurisdiction. According to Florida Supreme Court precedent, appraisal proceedings invoked under an insurance contract must follow the policy's provisions rather than the Arbitration Code. Once a trial court confirms the invocation of the appraisal provision, subsequent proceedings must align with those provisions.

The parties agree the insurance policy covers the loss but dispute the interpretation of the appraisal provisions. The relevant provision requires appraisers to separately determine the property's value and loss amount, with any disagreements submitted to an umpire, whose decision is binding if agreed upon by at least two appraisers. The plaintiffs assert that the binding award in question is the Disputed Award.

The Defendant contends that the Disputed Award was not final and that Umpire Leiby could modify it within 20 days of issuance. Florida Supreme Court precedent mandates that appraisal proceedings under an insurance contract adhere to the contract's provisions, rather than the Florida Arbitration Code. Once appraisal provisions are properly invoked by a trial court, subsequent actions must follow those terms. While the confirmation process for an appraisal award aligns with the Arbitration Code, Florida Statute 682.10 allows an arbitrator to modify or clarify an award only if a final and definite award has not been made or to clarify an existing award within 20 days of delivery. The Plaintiffs argue that the requirements of this statute were not met before the Revised Award was issued, a position the Court supports. The Court concluded that Umpire Leiby lacked authority to unilaterally modify the award, as the policy stated that a decision agreed upon by any two parties is binding. Evidence shows that the Disputed Award was final and agreed upon by the parties involved, as Umpire Leiby indicated in his communication that the award required signatures for confirmation. Appraiser Thomas signed and returned the award, making it binding under the policy's clear terms. The Court noted that no motions were filed to correct or clarify the award, thus there was no basis for modification. The Defendant's reliance on A.L. Gary and Associates, Inc. v. Travelers Indemnity Company of Connecticut is misplaced, as that case established that without a timely motion for modification or clarification, an umpire cannot revisit an award.

Umpire Leiby lacked the authority to unilaterally modify the Disputed Award, which became final upon Appraiser Thomas' signature. The Defendant's reliance on J.P.F.D. Investment Corporation v. United Specialty Insurance Company was misplaced, as that case did not address confirming an appraisal award. The Eleventh Circuit's ruling in International Brotherhood of Electrical Workers v. Verizon Florida established that an arbitrator loses the power to revise a final award. No motion for modification was submitted by either party, and the record does not support any basis for correction. Although the Defendant claimed Umpire Leiby circulated a preliminary award for review, the evidence contradicts this, showing that Umpire Leiby’s communication indicated the award was final unless signed. Umpire Leiby's electronic signature constituted approval, and once signed, the award became binding. The Defendant’s objections were noted, but no requests for modification were made. The subsequent claims by Umpire Leiby that the award was non-final did not negate its binding effect. Florida Statute 682.12 mandates confirmation of arbitration awards unless a valid motion to vacate, modify, or clarify is filed, which the Defendant did not do. Consequently, the Plaintiffs' Motion to Confirm the September 5, 2018 Appraisal Award was granted, ordering the Defendant to pay the additional funds due to the Plaintiffs. The Court also retained jurisdiction to determine reasonable attorneys' fees and costs, with a deadline for the Plaintiffs to file their application set for April 10, 2019, and instructed the Clerk to close the case.