UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT CASE NO B

Transcription

1 UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT CASE NO B CHUBB CUSTOM INSURANCE COMPANY, Appellant, Appeal from the United States District Court for the Southern District of Florida; Miami Division Case No Civ-King v. VISTA VIEW APARTMENTS, LTD., Appellee. AMICUS CURIAE BRIEF OF AMERICAN INSURANCE ASSOCIATION IN SUPPORT OF APPELLANT PERRY IAN CONE Fla. Bar No JEFFREY T. KUNTZ Fla. Bar No GrayRobinson, P.A. 301 S. Bronough Street Tallahassee, FL Tel: Fax: Counsel for Amicus Curiae American Insurance Association, Supporting Appellant s Request for Reversal

2 Case No B Chubb Custom Ins. Co. v. Vista View Apartments, Ltd. CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOSURE STATEMENT In compliance with Federal Rule of Appellate Procedure 26.1 and Eleventh Circuit Rules to , the following is a complete list of all persons and entities known to the Amicus Curiae American Insurance Association ( AIA ) to have an interest in the outcome of this appeal and are not included in the certificate contained in the first brief filed: i AIA, which has no parent corporation and issues no stock. i Cone, Perry Ian, attorney for American Insurance Association i GrayRobinson, P.A., attorneys for American Insurance Association i Kuntz, Jeffrey T., attorney for American Insurance Association Page C-1 of 1

3 TABLE OF CONTENTS CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOSURE STATEMENT...C-1 TABLE OF CONTENTS... i TABLE OF CITATIONS... iii INTEREST OF AMICUS CURIAE... vi STATEMENT OF THE ISSUES... 1 SUMMARY OF ARGUMENT... 1 ARGUMENT... 2 I. THE TRIAL COURT S DECISION WOULD UNJUSTLY ENRICH VISTA VIEW II. THE TRIAL COURT S DECISION IS SQUARELY AT ODDS WITH RECENT FLORIDA CASE LAW A. FIGA v. Olympus Requires the Trial Court to Decide Whether Portions of the Award are Uncovered... 3 B. Recent Florida Case Law Holds That Three Palms Pointe, Relied Upon By The Trial Court Here, Misinterprets Florida Law... 4 III. THERE ARE COMPELLING PUBLIC POLICY REASONS FOR THIS COURT TO RECONSIDER ITS INTERPRETATION OF FLORIDA.LAW IN THREE PALMS POINTE i

4 A. Subjecting Insurers to Liability for Uncovered Losses Contributes to Abuse, Fraud, and Higher Costs of Insurance... 8 B. Allowing the Trial Court Decision to Stand Places an Insurer in an Untenable, Conflicting Position... 8 C. Three Palms Pointe Weakens the Appraisal Process in Florida...10 IV. THIS COURT SHOULD ERASE THE DISAPPEARING INK OF THREE PALMS POINTE...13 CONCLUSION...14 CERTIFICATE OF COMPLIANCE...15 CERTIFICATE OF SERVICE...16 ii

5 TABLE OF CITATIONS CASES Alexander Proudfoot Co. World Headquarters v. Thayer, 877 F.2d 912 (11th Cir. 1989)...13 Fisher v. Certain Interested Underwriters, 930 So. 2d 756 (Fla. 4th DCA 2006)...6, 9 Florida Insurance Guaranty Association, Inc. v. Olympus Association, Inc., 34 So. 3d 791 (Fla. 4th DCA 2010)...4, 7, 10, 13 Jablonski v. St. Paul Fire & Marine Insurance Co., No. 2:07-cv-00386, 2009 WL (M.D. Fla. July 24, 2009)... 7 Johnson v. Nationwide Mutual Insurance Company, 828 So. 2d 1021 (Fla. 2002)...5, 6 Jones v. United Space Alliance, L.L.C., 494 F.3d 1306 (11th Cir. 2007)...13 Liberty American Insurance Co. v. Kennedy, 890 So. 2d 539 (Fla. 2d DCA 2005)...6, 13 McMahan v. Toto, 311 F.3d 1077 (11th Cir. 2002)...13 Muckenfuss v. Hanover Ins. Co., 2007 WL (M.D. Fla. Apr. 18, 2007)...10 iii

6 Perera v. U.S. Fidelity & Guar. Co., 35 So. 3d 893 (Fla. 2010)... vi Pino-Santoro v. Citizens Property Ins. Corp., 15 Fla. L. Weekly Supp. 463b (Circuit Court, 17th Judicial Circuit, Broward County, Case No (08). Feb. 25, 2008)...11 Sands on the Ocean Condominium Ass'n v. QBE Ins. Corp., No CIV, 2009 WL (S.D. Fla. Mar. 24, 2009)... 7 St. Fort v. Post, Buckley, Schuh & Jernigan, 902 So.2d 244 (Fla. 4th DCA 2005)...11 State Farm Fire & Cas. Co. v. Middleton, 648 So. 2d 1200 (Fla. 3d DCA 1995)...10 State Farm Fire & Casualty Co. v. Licea, 685 So. 2d 1285 (Fla. 1996)... 5 State Farm Florida Insurance Company v. Seville Place Condominium Ass n, No. 3D , 2009 WL (Fla. 3d DCA, Oct. 14, 2009)... 7 Three Palms Pointe, Inc. v. State Farm Fire & Casualty, 362 F.3d 1317 (11th Cir. 2004)...1, 5 Velez v. Metropolitan Property and Cas. Ins. Co., No. 4:09-CV-49-SPM/WCS, 2009 WL (N.D. Fla., Aug. 24, 2009)... 9 iv

7 STATUTES (2)(m), Fla. Stat. (2009) (1)(b), Fla. Stat. (2009) (1)(i)4., Fla. Stat. (2009) (2)(b)1., Fla. Stat. (2009) (6)(a)1, Fla. Stat. (2009)...11 OTHER AUTHORITIES Executive Summary to Actuarial and Underwriting Committee, Disputed Claims/Appraisal Policy Form Changes (May 11, 2009)...11 Florida Insurance Consumer Advocate, Claims Dispute Resolution Roundtable and Alternative Dispute Resolution Roundtable, Recommendations/Summaries (Mar. 2010)...12 REGULATIONS Fla. Admin. Code R. 69O (8)(l)... 9 v

8 INTEREST OF AMICUS CURIAE The American Insurance Association ( AIA ) is a leading national trade association representing major property and casualty insurers issuing insurance policies in Florida, nationally, and globally. AIA members, based in Florida and most other states, range in size from small companies to the largest insurers with global operations. AIA members provide property coverage in Florida and will be impacted by the decision of the Court in the instant case. On issues of importance to the property and casualty insurance industry and marketplace, AIA advocates sound and progressive public policies on behalf of its members in legislative and regulatory forums at the federal and state levels. AIA files amicus curiae briefs in significant cases before federal and state courts, including cases involving issues of Florida law. 1 As a trade association with a broad outlook on insurance and public policy considerations, AIA is uniquely positioned to address the issues the Court will determine here. Pursuant to Fed. R. App. P. 29(a), AIA represents that all parties have consented to its filing this amicus curiae brief. 1 AIA recently participated as amicus in Perera v. U.S. Fidelity & Guar. Co., 35 So. 3d 893, 894 (Fla. 2010), involving certified questions from this Court, 544 F.3d 1271 (11th Cir. 2008). vi

9 STATEMENT OF THE ISSUES Whether this Court should reverse and order the trial court below to rule on the contested insurance coverage issues, to eliminate the amounts of uncovered losses from the appraisal award, and (in so doing) clarify or recede from its prior opinion in Three Palms Pointe, Inc. v. State Farm Fire & Casualty, 362 F.3d 1317, 1319 (11th Cir. 2004). SUMMARY OF ARGUMENT Recent Florida appellate decisions show that this Court incorrectly interpreted Florida law in its 2004 decision, Three Palms Pointe (see Argument II.B. infra). This matters in the instant case because the trial court here relied on Three Palms Pointe in refusing to eliminate uncovered losses from the appraisal award. If this Court declines to reconsider its interpretation of Florida law in Three Palms Pointe, insurers subject to federal court jurisdiction continue to be in an untenable position: either insurers pay for losses that are not covered by the policy, which increases the opportunities for fraud and abuse by the policyholder to submit uncovered claims, resulting in higher premiums being paid by all policyholders; or insurers deny coverage of the entire claim, which slows down the claims payment process and subjects insurers to additional potential liability for bad faith. As a matter of Florida law and sound public policy, AIA urges this 1

10 Court to reconsider its reasoning in Three Palms Pointe and reverse the trial court s decision, thereby allowing insurers to challenge uncovered claims after the appraisal award is issued. ARGUMENT I. THE TRIAL COURT S DECISION WOULD UNJUSTLY ENRICH VISTA VIEW. Assume that a homeowner has a fire in her home and an automobile accident on the same day. She has no automobile insurance, so she submits a claim for both losses under her homeowner s policy. Her insurance company denies the automobile loss because it is not covered under the homeowner s policy. There is a dispute about the dollar value of the fire claim. The homeowner makes a single demand for appraisal for both the fire and automobile losses. The court twice refuses to get involved in the coverage issue: First, it denies the insurer s motion to eliminate the automobile portion of the claim from the appraisal. Second, it declines the insurer s request to consider whether uncovered automobile losses are included in the appraisal award. While this example may seem exaggerated, it reflects the necessary result of the trial court s reasoning here. Under Chubb s commercial property insurance policy, Vista View sought coverage for (1) the clean-up of the common area walkways, corridors and entrance tiles where Chubb had acknowledged coverage but disputed the amount of loss; and (2) the replacement of the sewer pipes... 2

11 where Chubb had consistently denied the existence of coverage. [Appellant Chubb Custom Insurance Company s Initial Brief ( Initial Brief ) at 15]. The trial court refused to decide the coverage issue either before or after the appraisal, and declined to even consider eliminating uncovered losses that were itemized in the appraisal award. [See id. at 15 (citing DE 26 at pp. 3-4)]. A unanimous appraisal panel [id. at 15] recognized that there was a coverage issue and broke down the amounts of loss as follows: (1) $65,000 2 for damage to the common area walkways, corridors and entrance tiles as a result of the sewage backup; and (2) $850,000 3 for replacement of the sewer pipes [id. at 16 (citing DE 63-66)]. If the trial court s decision stands, and if Chubb is correct that there is no coverage for the replacement of sewer pipes that were valued in the appraisal, then Chubb will be perversely obliged to pay for uninsured losses, and Vista View will be unjustly enriched in the amount of some $850,000. II. THE TRIAL COURT S DECISION IS SQUARELY AT ODDS WITH RECENT FLORIDA CASE LAW. A. FIGA v. Olympus Requires the Trial Court to Decide Whether Portions of the Award are Uncovered. 2 The exact amount was $65, The exact amount was $851,534.32, consisting of $484, for tear out and repair of the building necessary to replace the entire sanitary plumbing system; $175, for the labor, materials and permits necessary to replace the old cast iron pipes of the entire sanitary plumbing system with PVC lines; and $191, for physically unearthing and accessing the old sanitary lines. 3

12 Florida Insurance Guaranty Association, Inc. ( FIGA ) v. Olympus Association, Inc., 34 So. 3d 791 (Fla. 4th DCA 2010), was issued after the trial court s decision in the instant case. In Olympus, the appraisal award included a separate sheet indicating that, of the total amount of loss, $3,785,000 was allotted for waterproofing and painting. Id at FIGA asserted that the waterproofing and painting were excluded (not covered) by the policy s Windstorm Exterior Paint and Waterproofing Exclusion. Id. The trial court affirmed the entire award. After analyzing Florida decisions regarding appraisal and coverage, the Florida Fourth District Court of Appeal reversed and held: [W]e conclude that the trial court erred by entering final judgment in favor of Olympus and awarding it the amount set forth in the appraisal (less the deductibles), without first deciding the issue of coverage liability. Id. at 796 (emphasis added). B. Recent Florida Case Law Holds That Three Palms Pointe, Relied Upon By The Trial Court Here, Misinterprets Florida Law. The Fourth District in FIGA v. Olympus specifically declined to follow Three Palms Pointe, Inc. v. State Farm Fire & Casualty, 362 F.3d 1317, As noted by the Olympus court: When an appraiser uses a line-item appraisal form, as was done here, a court can readily identify any coverage issues that arise during the course of appraisal and resolve these without having to try and decipher what value the appraiser assigned for a particular type of damage. FIGA v. Olympus, 34 So. 3d at 796 note 1 (quoting Bonafonte v. Lexington Ins. Co., No CIV, 2008 WL , at *2 (S.D. Fla. July 9, 2008)). 4

13 (11th Cir. 2004). In contrast, the trial court in the instant case based its decision on Three Palms Pointe. In Three Palms Pointe, this Court interpreted State Farm Fire & Casualty Co. v. Licea, 685 So. 2d 1285 (Fla. 1996) ( Licea ), to hold that the appraisal clause allowed the insurer to dispute coverage for the claim as a whole, and not anything less, and denied State Farm s attempt to challenge coverage with respect to part of the appraisal award. Three Palms Pointe, 362 F.3d at 1319 (citing Licea, 685 So. 2d at 1288). 5 Reasoned Florida decisions make clear, however, that Three Palms Pointe incorrectly applied Licea. The most compelling explanation of Licea is contained in Johnson v. Nationwide Mutual Insurance Company, 828 So. 2d 1021 (Fla. 2002) ( Johnson ), in which the Florida Supreme Court stated: Very simply, the Licea court was saying that when the insurer admits that there is a covered loss, but there is a disagreement on the amount of loss, it is for the appraisers to arrive at the amount to be paid. In that circumstance, the appraisers are to inspect the property and sort out how much is to be paid on account of a covered peril. In doing so, they are to exclude payment for a cause not covered such as normal wear and tear, dry rot, or various other designated, excluded causes. Thus, in the Licea situation, if the homeowner's insurance policy provides coverage for windstorm damage to the roof, but does not provide coverage for dry rot, the appraisers are to inspect the roof and arrive at a fair value for the windstorm damage, while excluding payment for the repairs required by preexisting dry rot. 5 According to Three Palms Pointe, under Licea once an award has been made, the only defenses that remain for the insurer to assert are lack of coverage only for the entire claim, or violation of one of the standard policy conditions (fraud, lack of notice, failure to cooperate, etc.). 362 F.3d at

14 Id. at 1025 (quoting Gonzalez v. State Farm Fire & Casualty Co., 805 So. 2d 814 (Fla. 3d DCA 2000)). The instant case is akin to the Licea situation described in Johnson, in that Chubb acknowledges coverage for part of the claim and denies coverage for another part (what Chubb describes as a separate claim). 6 The logical extension of the Johnson analysis of Licea is that, if the appraisal award includes (in the above circumstance) dry rot damage excluded by the policy, the insurer should be able to challenge the appraisal award on that basis. Indeed, FIGA v. Olympus and other Florida state and federal district court decisions have concluded that Three Palms Pointe misinterpreted Licea, thereby recognizing the insurer s right to challenge coverage either before or after the appraisal. See, e.g., Liberty American Insurance Co. v. Kennedy, 890 So. 2d 539, 541 (Fla. 2d DCA 2005) ( Kennedy ) ( the court in Three Palms Pointe, Inc. misinterpreted the holding of Licea ; To the extent that the reference to whole loss can be understood to limit an insured's right to dispute the scope of coverage where a claim has been submitted to appraisal, it is dictum. ); Fisher v. Certain Interested Underwriters, 930 So. 2d 756, (Fla. 4th DCA 2006) ( Fisher ) 6 AIA notes the characterization by Appellant Chubb, that there is a third option, not directly addressed by Licea or Johnson, where the insurer admits coverage for one claim of loss and only disputes the amount of that loss, but also completely denies coverage for a second claim of loss arising out of the same event. [Initial Brief at 31]. Regardless of whether this Court views this as a Licea situation or a third option, the result is the same; the trial court is required to resolve coverage issues. 6

15 (approving action of the trial court, which ordered the homeowner to return that portion of an appraisal award that represented the non-covered portion of the loss, after the insurer paid the non-covered loss because of the trial court decision in Three Palms Pointe). A federal district court cited Kennedy for the proposition that Three Palms misinterpreted Licea, relying improperly on dicta. Sands on the Ocean Condominium Ass'n v. QBE Ins. Corp., No CIV, 2009 WL , at *3 (S.D. Fla. Mar. 24, 2009) ( Sands ). 7 Recognizing the state of Florida law, the appraisers here itemized the award in a manner that would have enabled the trial court below to eliminate any uncovered amounts from the award. Under Florida law, the trial court should have ordered the appraisers to identify or itemize amounts of the award that were subject to disputed coverage and then determined what portion of the award was not payable as uncovered loss. 7 See also FIGA v. Olympus, 34 So. 3d at (discussing the rejection of Three Palms Pointe in other state appellate and federal trial court decisions); Jablonski v. St. Paul Fire & Marine Insurance Co., No. 2:07-cv-00386, 2009 WL , at *8, n.4 (M.D. Fla. July 24, 2009) (noting criticism of Three Palms Pointe in Kennedy, Fisher, and Sands and indicating that Three Palms Pointe had been disapproved by Florida state courts ); State Farm Florida Insurance Company v. Seville Place Condominium Ass n, No. 3D , 2009 WL , at *6 note 7 (Fla. 3d DCA, Oct. 14, 2009) (Shepherd, J., dissenting) (criticizing majority for relying on Three Palms Pointe and stating that, given that Three Palms Pointe has been expressly disapproved by one of our sister courts in Kennedy and at least impliedly disapproved [in Fisher]... it is no longer binding authority on the United States District Courts in the Circuit and is instructive of nothing here ). 7

16 III. THERE ARE COMPELLING PUBLIC POLICY REASONS FOR THIS COURT TO RECONSIDER ITS INTERPRETATION OF FLORIDA LAW IN THREE PALMS POINTE. A. Subjecting Insurers to Liability for Uncovered Losses Contributes to Abuse, Fraud, and Higher Costs of Insurance. Under the trial court s decision, Vista View stands to receive a gift of $850,000 for non-existent coverage for which it paid no premium. By refusing to disturb an appraisal valuation that includes uninsured loss, federal courts would invite fraud and abuse by unscrupulous policyholders, and may incentivize others to inflate the settlement value of their claims. Indeed, Three Palms Pointe would tend to encourage policyholders to submit claims with uncovered losses with the expectation that they would win, in effect, what might be viewed as the appraisal lottery. It is ultimately Floridians who stand to suffer the consequences of higher premiums that result from this practice. See (2)(b)1., Fla. Stat. (2009) (factors that Florida insurance regulator considers in reviewing filing for property insurance rates include "[p]ast and prospective loss experience..."). Such needless costs can only burden Florida s economy, which is already under stress in the current economic crisis. B. Allowing the Trial Court Decision to Stand Places an Insurer in an Untenable, Conflicting Position. Three Palms Pointe places an insurer in an untenable position: On the one 8

17 hand, if the insurer follows Three Palms Pointe and disputes coverage for the entire claim, it avoids the appraisal process for the uncovered portion of the loss. This, however, leads to the undesirable consequence of delaying the entire appraisal pending the outcome of the coverage dispute. 8 And this discourages insurers and policyholders from quickly resolving the portion of a loss that is clearly covered and susceptible to appraisal. As a result of delaying the appraisal process, the insurer inadvertently may expose itself to liability for bad faith in the claims settlement process, 9 as well to being fined by the Florida insurance regulator A district court applied Three Palms Pointe to order the delay of an appraisal in Velez v. Metropolitan Property and Cas. Ins. Co., No. 4:09-CV-49-SPM/WCS, 2009 WL , at *1 (N.D. Fla., Aug. 24, 2009). 9 See Fisher, 930 So. 2d at , in which State Farm submitted an uncovered part of a loss to appraisal, and then paid the entire appraisal award (including the uncovered loss), because (as the court recognized) it wanted to avoid a bad faith claim. Liability for bad faith against an insurer in Florida is governed by Section (1)(b), Fla. Stat. (2009), which provides, in part, that "[a]ny person may bring a civil action against an insurer when such person is damaged by the insurer s 1. Not attempting in good faith to settle claims or 3... failing to promptly settle claims, when the obligation to settle a claim has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage...." 10 Under Regulation 69O (8)(l), Florida Administrative Code, an insurer may be fined for [v]iolation of the Unfair Trade Practices Act, pursuant to Part IX, Section , F.S., which includes [f]ailing to pay undisputed amounts of partial or full benefits owed under first-party property insurance policies within 90 days after an insurer receives notice of a residential property insurance claim, 9

18 On the other hand, to avoid the above consequences, the insurer may submit the entire claim to appraisal. In this circumstance, however, Three Palms Pointe then requires the insurer to pay uncovered losses included in the appraisal award, opening up the claims process to fraud and abuse, the appraisal lottery, and higher premiums (as discussed above in Argument III.A). By receding from the interpretation of Florida law in Three Palms Pointe, insurers would no longer be subject to these conflicting consequences. C. Three Palms Pointe Weakens the Appraisal Process in Florida. Like the trial court here, a few other courts have neglected to thoroughly analyze Florida law, declining to eliminate uncovered losses from an appraisal award. 11 AIA believes that these court decisions have been a factor contributing to undermining the appraisal process, notwithstanding its demonstrable benefits and positive public policy attributes. 12 This is reflected in recent Florida public proceedings. determines the amounts of partial or full benefits, and agrees to coverage (1)(i)4., Fla. Stat. (2009). 11 See, e.g., Muckenfuss v. Hanover Ins. Co., 2007 WL (M.D. Fla. Apr. 18, 2007) (following Three Palms Pointe s interpretation of Licea). 12 Appraisal clauses are preferred, as they provide a mechanism for prompt resolution of claims and discourage the filing of needless lawsuits. FIGA Olympus, 34 So. 3d at 794; cf. State Farm Fire & Cas. Co. v. Middleton, 648 So. 2d 1200, (Fla. 3d DCA 1995) ( the general, even overwhelming, 10

19 Citizens Property Insurance Corporation is a government entity 13 and Florida s largest writer of property insurance. Last year, Citizens staff recommended removal of the appraisal clause from its policy forms, in part because of the appraisal coverage issue. 14 As stated in the staff report: [A]ppraisal remains very flawed and subject to abuse by third-party stakeholders. The standard language used by Citizens and the industry is problematic because it provides virtually no rules for the process. As a result, insurers (including Citizens) are legally required to pay damages that may not be covered by the policy form, nor caused by a covered peril, nor supported by substantial evidence, and without recourse to meaningful judicial review. The process is so problematic that some carriers have eliminated appraisal from their policy forms (and some others are in the process of doing so). 15 preference in Florida for the resolution of conflicts through any extra-judicial means, especially arbitration, for which the parties have themselves contracted ). 13 See (6)(a)1, Fla. Stat. (2009). (Citizens is a government entity that is an integral part of the state, and that is not a private insurance company ). 14 It is AIA s understanding that Citizens was responding in part to the adverse decision in Pino-Santoro v. Citizens Property Ins. Corp., 15 Fla. L. Weekly Supp. 463b (Circuit Court, 17th Judicial Circuit, Broward County, Case No (08). Feb. 25, 2008), aff d., 10 So.3d 1128 (Fla.4 th DCA 2009) (per curium), although this decision has no precedential value. See St. Fort v. Post, Buckley, Schuh & Jernigan, 902 So.2d 244 (Fla. 4th DCA 2005) (per curiam affirmance without written opinion has no precedential value). 15 Executive Summary to Actuarial and Underwriting Committee, Disputed Claims/Appraisal Policy Form Changes (May 11, 2009) (emphasis added), available at the following link: tinyurl.com/38kesaj. 11

20 Appraisal has become so problematic that even the Office of the Florida Insurance Consumer Advocate 16 advocated changes to the process. See Florida Insurance Consumer Advocate, Claims Dispute Resolution Roundtable and Alternative Dispute Resolution Roundtable, Recommendations/Summaries (Mar. 2010). 17 According to the Consumer Advocate: [T]he appraisal process, which had long been viewed as a costeffective alternative claims dispute resolution process, has become almost as costly as the litigation process. Insurers were also becoming increasingly frustrated with the appraisal process because of the increased abuse of the system. As a result, several insurance companies have removed or filed to remove the appraisal provision from their residential insurance policies. Id. at 2 (emphasis added). Given that policyholders benefit from the prompt resolution of valuation disputes provided by appraisal, it would be to their detriment if any more insurers eliminated appraisal provisions from their policies. A decision by this Court to adopt the position of FIGA v. Olympus and similar decisions can only have the salutary effect of encouraging insurers to retain appraisals, to the benefit of their policyholders and an efficient insurance market in Florida. 16 The Insurance Consumer Advocate is part of the Executive Branch of the State of Florida. See (2)(m), Fla. Stat. (2009). 17 The report and other roundtable information are available on the public website of the Insurance Consumer Advocate at this link: tinyurl.com/36zv9fk. 12

21 IV. THIS COURT SHOULD ERASE THE DISAPPEARING INK OF THREE PALMS POINTE. If this Court recedes from Three Palms Pointe, the law in federal court will mirror that in state court, as the Erie doctrine 18 requires it to do. As happens occasionally, when this Court decides a state law issue, it 'write[s] in faint and disappearing ink. McMahan v. Toto, 311 F.3d 1077, 1079 (11th Cir. 2002) (quoting Sultenfuss v. Snow, 35 F.3d 1494, 1504 (11th Cir. 1994) (en banc) (Carnes, J., dissenting)). In Three Palms Pointe, because there was no Florida decision directly on point, this Court interpreted dicta 19 from the Licea decision. The opinions of FIGA v. Olympus and other Florida district courts of appeal cases, however, now represent the law of Florida unless and until they are overruled by [the Florida Supreme Court]. Jones v. United Space Alliance, L.L.C., 494 F.3d 1306, 1310 (11th Cir. 2007) (quoting Pardo v. State, 596 So. 2d 665, 666 (Fla.1992)) (internal citation omitted)). 18 See Alexander Proudfoot Co. World Headquarters v. Thayer, 877 F.2d 912, 916 (11th Cir. 1989) ( By deciding that a federal court sitting in diversity must apply the law of the state in which it sits, the Court in Erie primarily sought to discourage forum shopping by having federal decisions mirror those of a court in the forum state. ) (citing Erie R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817 (1938)). 19 See Kennedy, 890 So. 2d at 541 ( the court in Three Palms Pointe, Inc. misinterpreted the holding of Licea ; To the extent that the reference to whole loss can be understood to limit an insured's right to dispute the scope of coverage where a claim has been submitted to appraisal, it is dictum. ) (emphasis added)); FIGA v. Olympus, 34 So. 3d at (agreeing with Kennedy); see also other cases cited pages 6-7 and note 7. 13

22 CONCLUSION For the reasons set forth herein, AIA respectfully urges this Court to reconsider its interpretation of Florida law in Three Palms Pointe, in favor of the interpretation of Florida law followed in FIGA v. Olympus, Kennedy, and other cases discussed supra pages 6-7 and note 7. AIA further urges this Court either to reverse the trial court, ordering it to determine whether the insurance policy at issue covered the cost of replacing the sewer pipe, and exclude any uncovered loss from the appraisal award, or to certify to the Florida Supreme Court a question as to whether Three Palms Pointe correctly applied Florida law. Respectfully submitted, BY: /s/ Perry Ian Cone PERRY IAN CONE Fla. Bar No perry.cone@gray-robinson.com JEFFREY T. KUNTZ Fla. Bar No jeffrey.kuntz@gray-robinson.com GrayRobinson, P.A. 301 S. Bronough Street Tallahassee, FL Tel: Fax: Counsel for amicus curiae American Insurance Association 14

23 CERTIFICATE OF COMPLIANCE I HEREBY CERTIFY that this brief complies with the type-volume limitation set forth in FRAP 32(a)(7)(B). This brief contains 3,640 words. /s/ Perry Ian Cone 15

24 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on August 26, 2010, a true and correct copy of the foregoing was served by mail on: Leo A. Manzanilla, Esq. LAW OFFICES OF LEO A. MANZANILLA, P.A. 770 Ponce de Leon Blvd., Suite 101 Coral Gables, FL Tel: 305/ Fax: 305/ lawmanzanilla@hotmail.com Attorney for Appellee CINDY L. EBENFELD Florida Bar No cebenfeld@mhickslaw.com ERIK P. BARTENHAGEN Florida Bar No ebartenhagen@mhickslaw.com HICKS, PORTER, EBENFELD & STEIN, P.A. Sheridan Professional Centre Sheridan Street, Suite 104 Cooper City, FL Tel: 954/ Fax: 954/ Counsel for Appellant Chubb /s/ Perry Ian Cone 16