People’s Trust Insurance Company v. Garcia

Based upon a recent decision, in Florida when a homeowner’s insurance carrier admits coverage of a portion of an insurance claim and causation is disputed, causation can now be determined by an appraisal panel, rather than solely a question of law to be determined by the court.

The Third District Court of Appeal of Florida has recently made this distinction in People’s Trust Insurance Company v. Garcia, No. 3D18-742, 2019 WL 287381 (Fla. 3d DCA Jan. 23, 2019). In Garcia, People’s Trust sent a letter to the insured that there was “generally coverage for [the] loss as a whole[]” following a roof leak, accepting coverage for the interior damages but excluding damages to the roof due to a wear and tear exclusion of the policy. Garcia, 2019 WL 287381 at *1.  The trial court denied People’s Trust’s Motion to Compel Appraisal and the appeal followed.

Florida’s case law is well established that coverage is a judicial question. See State Farm Fire & Ca. Co. v. Licea, 685 So. 2d 1285, 1287 (Fla. 1996); Fla. Ins. Guar. Ass’n, Inc. v. Olympus Ass’n, Inc., 34 So. 3d 791, 794 (Fla. 4^th DCA 2010). It is equally clear that the courts hold the issue of the amount of loss as one for appraisers to determine. See Citizens Prop. Ins. Corp. v. River Manor Condo. Ass’n, Inc. 125 So. 3d 846, 854 (Fla. 4^th DCA 2013); State Farm Fla. Ins. Co. v. Cardelles, 159 So. 3d 239, 241 (Fla. 3d DCA 2015).

However, there are conflicting opinions as to which entity, the court or appraisal panel, is to make the determination as to causation of damages. In Johnson v. Nationwide Mutual Insurance Co., 828 So. 2d 1021 (Fla. 2002), the Florida Supreme Court resolved conflict between the Third and Second Districts by ruling that “causation is a coverage question for the court when an insurer wholly denies that there is a covered loss and an amount-of-loss question for the appraisal panel when an insurer admits that there is a covered loss, the amount of which is disputed.” Id. at 1022.

In Kendall Lakes Townhomes Developers, Inc. v. Agricultural Excess and Surplus Lines Insurance Co., 916 So. 2d 12 (Fla. 3d DCA 2005), the Third District applied the Johnson rule to situations where coverage as a whole was acknowledged but the parties disputed causation for a portion of the damages and held that in instances where, like Garcia, coverage is not wholly denied “causation is an ‘amount-of-loss question for the appraisal panel,” not a coverage question that can only be decided by the trial court.” Id. at 16.

The Fourth District in People’s Trust Insurance Co. v. Tracey, 251 So. 3d 931 (Fla. 4^th DCA 2018), held, in a case factually similar to Garcia, that the trial court erred in denying the insurer’s motion to compel appraisal because “the insurer admitted coverage for the interior damage, but declined to repair the roof[,] . . . the insurer did not ‘wholly deny’ coverage[.]” Id.

The Third District in Garcia sets forth important precedent to clarify that when coverage is not wholly denied, “causation is an amount-of-loss question for the appraisal panel, not a coverage question that can only be decided by a court.”