Connecting the dots on what might have happened to property insurance appraisal and those acting as appraisers in Florida

But first some background.  Steve Scott is a Gainesville, Florida attorney I have known for a number of years, which goes back to our first meeting when he called me to help him with a fire loss in his home. Following the successful adjustment and settlement of his claim, Steve and I became friends and that relationship has evolved over the years to the point that I get calls or emails from Steve on issues he has or claims his clients need help on. He’s a smart guy, has some strong opinions and will get your brain going! So I thoroughly enjoy our discussions.

What started our most recent conversation and debate was an email I received from Steve asking my opinion on a Florida Third District Court of appeals case Dynamic Public Adjusters vs. Henry Rodriguez  he had just read. This case came out in late November and was a turkey that was served cold to one side as you will read. 

The case was about a late filed Hurricane Wilma claim where a public adjusting firm and an apprentice working at the firm discovered millions of dollars of damages some years later after Citizens had apparently closed their file. That in and of itself is in my opinion simply amazing, but I will leave it at that.  A fight soon developed regarding who was entitled to the appraisal fee.  From the case we read that the apprentice took on the appraisal for the condo association and subsequently a sum was awarded of which Citizens then offered a compromise that was accepted. The public adjusting firm that hired the apprentice at the time the contract was signed with the client claimed the fee and of course the apprentice having left the firm made his own claim for the total fee.  The appellate court reversed the order and awarded the entire fee to the public adjusting firm.

Steve’s email centered on the question of how could an appraiser charge a contingency fee?  After a few exchanges, Steve sent the following to me.

Dick -

I reviewed the two cases you sent me concerning the selection of an appraiser to resolve a dispute over the proper measure of damages to be paid for a covered loss and offer the following comments.

The recent opinion [FIGA v. Hanse (5th DCA 2014)] holding that an attorney may not be considered an "independent" appraiser in his own client's case was neither surprising nor new law. Been there... done that... ho hum....

The other case [Rios v. Tri-State Ins. Co. (3d DCA 1998)] holding that an appraiser to be paid by a contingent fee percentage of his client's award may nonetheless be considered an "independent" appraiser was interesting, but it no longer reflects current Florida law.

The same appellate court that decided Rios v. Tri-State Ins. Co. also decided Galvis v. Allstate Ins. Co. (3d DCA 1998) five months later, which held that where the policy required a "disinterested" instead of an "independent" appraiser, the same result would obtain. No surprise there.

However, the 5th DCA's Oct. 15, 2014 opinion in Florida Ins. Guar. Ass'n v. Branco, 148 So.3d 488 (Fla. 5th DCA 2014) was a game-changer. Because Branco involved a "disinterested" instead of an "independent" appraiser, the Branco court did not expressly overrule Rios. However, it so clearly called Rios into doubt, that I don't think I could even argue with a straight face that Rios is still good law.

The Branco court explained why it completely changed how a "disinterested" or "independent" appraiser must be defined at Headnote 8 (page 495) of its opinion (see page 7 of the WestLaw version.) Two key statements by the court are:

    a.    "...  the revised Code of Ethics adopted by AAA and ABA, effective since March 1, 2004, changes the landscape considerably, thus, undercutting the continued viability of the holding in Rios." and

     b.    "Unlike the Code of Ethics relied upon in Rios, the current Code of Ethics establishes a presumption of neutrality for all arbitrators, including party-appointed arbitrators. This fundamental change undermines the Rios holding, particularly when, as here, the contract requires the appointment of “disinterested” appraisers."

So, whadda you think about that?

    Steve Scott

Steve called me last week and we had a lengthy conversation on this subject while I was doing some hurricane work in the Caribbean. As I have not seen anything in blogs or other professional publications regarding what Steve wrote to me, I am going to see if I get any responses or opinions about this issue from readers of my blog.  So let me know what you all think about this by commenting below to this blog.

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