No Attorney’s Fees for Insured in Suit Relating to Selection of an Umpire for Appraisal for Florida First-Party Property Claims

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In a recent first-party coverage claim, an insurer invoked its homeowner’s policy’s appraisal provision pre-suit when the parties could not agree on the scope of loss. The appraisal provision required both parties to select an appraiser, who were in turn required to agree mutually upon a neutral umpire for appraisal. The policy’s appraisal provision stated further that in the event the appraisers could not agree upon a neutral umpire, either party could initiate a legal action to request that the court appoint an umpire.  When the appraisers could not agree upon an umpire the insurer filed a petition requesting the court to appoint an umpire, which the court did. After appraisal was completed, the insured’s attorney moved for attorneys’ fees and costs pursuant to Section 627.428, Florida Statutes.

Florida, unlike most states, has a fee statute wherein an insured may recover attorneys’ fees or costs for “prevailing” in an insurance dispute against the insurer.  However, this fee statute has historically applied only where the insured has initiated litigation for breach of the insurance contract, or where the insurer loses in a legal action involving the availability of coverage in a liability action.  Section 627.428 states in relevant part: “Upon the rendition of a judgment or decree by any of the courts of this state against and insurer and in favor of any named or omnibus insured…the appellate court shall adjudge or decree…a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had” (emphasis added).

The insured’s fee demand was without merit, for two primary reasons. First, the insurer conceded coverage by invoking appraisal, and did so pre-suit; since the policy requires an insured’s compliance with post-loss conditions precedent to suit, completion of pre-suit appraisal — and an insurer’s timely payment of the appraisal award — nullifies a breach of contract claim. Second, and more important, it was the insurer, and not the insured, which filed suit for the court to appoint an umpire.  Since the court appointed an umpire as requested by the insurer it was the insurer which “prevailed” and not the insured, and as such the insured would not be entitled to statutory fees under 627.428 under those circumstances.  It is well-settled in Florida that where an appraisal is completed prior to any breach of contract action, an insured cannot subsequently file suit and seek fees solely to “confirm” the appraisal award.

While Florida’s fee statute for insurance claims has a very broad scope, insurers should be mindful that an insured’s fee entitlement is not automatic when any litigation is initiated — especially where the dispute involves litigation initiated by an insurer and the court grants the relief sought.