In the Supreme Court of Florida

In the Supreme Court of Florida CASE NO.: SC11-258 STATE FARM FLORIDA INSURANCE COMPANY, Petitioner, v. LLOYD BEVERLY and EDITH BEVERLY, Respondents. ON DISCRETIONARY REVIEW FROM THE SECOND DISTRICT COURT OF APPEAL PETITIONER S BRIEF ON JURISDICTION Respectfully submitted, BUTLER, PAPPAS, WEIHMULLER KATZ, CRAIG, LLP 777 South Harbour Island Boulevard, Suite 500 Tampa, Florida 33602 Telephone (813) 281-1900 Facsimile (813) 281-0900 -and- RUSSO APPELLATE FIRM, P.A. 6101 Southwest 76th Street Miami, Florida 33143 Telephone (305) 666-4660 Facsimile (305) 666-4470 Counsel for Petitioner

TABLE OF CONTENTS Page TABLE OF AUTHORITIES... ii SUMMARY OF ARGUMENT... 1 STATEMENT OF THE CASE AND FACTS... 2 ARGUMENT... 6 CONCLUSION...10 CERTIFICATE OF SERVICE...11 CERTIFICATE OF COMPLIANCE WITH FONT STANDARD...11 i

TABLE OF AUTHORITIES Page CASES: Arab Termite & Pest Control of Florida Inc. v. Jenkins 409 So. 2d 1039 (Fla. 1982)... 6 Clifton v. United Cas. Ins. Co. of America 31 So. 3d 826 (Fla. 2d DCA 2010)... 6 Vest v Travelers Ins. Co. 753 So. 2d 1270 (Fla. 2000)... 6 Wollard v. Lloyd s and Companies of Lloyd s 439 So. 2d 217 (Fla. 1983)... passim OTHER AUTHORITIES: 627.428, Fla. Stat.... passim ii

SUMMARY OF ARGUMENT The Second District s decision creates express and direct conflict with this Court s decision in Wollard v. Lloyd s and Companies of Lloyd s, 439 So. 2d 217, 219 (Fla. 1983). In Wollard, this Court held that where an insured is forced to sue an insurer to recover policy benefits and the insurer thereafter settles the suit before judgment is entered, the insured may recover attorney s fees under 627.428, Fla. Stat., even though that statute only provides for an award of fees [u]pon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of an insured. The Wollard rationale was that an insurer should not be able to avoid the fee statute through the simple expedient of settling the suit to avoid rendition of a judgment. Here, the Second District has reversed a judgment in favor of the insurer and remanded for the trial court to consider awarding 627.428 fees to the insureds despite the fact that the decision affirmatively shows (a) that the insureds were not forced to sue as they had a contractual appraisal clause available to them and their claim was paid in full pursuant to appraisal; and (b) that the insurer did not avoid rendition of a judgment by settling a suit, but rather paid the appraisal award in accordance with the provisions of the parties insurance contract. The Second District s decision thus conflicts on its face with Wollard, indicating that an insurer may be required to pay fees under 627.428 even though 1

its insured has not been forced to sue to recover policy benefits, and even though the insurer did not thereafter settle to avoid a judgment. Resolution of the conflict is needed to halt an ever increasing abuse of both Wollard and 627.428. Wollard was an expansion beyond the actual wording of 627.428 in the first instance. The Second District s decision goes well beyond Wollard, creating conflict as to what must be shown to justify a 627.428 award of fees. A statute intended to discourage unnecessary litigation with attorney s fees as a penalty has come full circle to where it encourages such litigation with attorney s fees as the reward. STATEMENT OF THE CASE AND FACTS This case arose out of a claim for property insurance benefits by the Respondents Lloyd and Edith Beverly ( Beverlys or insureds ), as a result of damage to their residence property from Hurricane Charley on August 13, 2004. (A 2). 1 On August 19, 2004, the Beverlys reported the claim to Petitioner State Farm Florida Insurance Company ( Petitioner or State Farm ), seeking benefits under their homeowner s policy. (A 2). The Beverlys claim that an initial adjuster told them there was no coverage for a barn and shed, an account disputed by State Farm as was confirmed by State Farm s payment for the barn and shed along with 1 Reference to the Second District s Opinion is made by page number, and a copy of the Opinion has been attached hereto as an Appendix for ease of reference. Unless otherwise indicated, all emphasis in this brief has been supplied by undersigned counsel. 2

the rest of the building amounts awarded in appraisal. (A 2,5). The Beverlys policy contained terms as to post-loss obligations and conditions that were to be fulfilled by the insureds to assist State Farm in adjusting the loss (A 3, n 1), stating that: No action shall be brought unless there has been compliance with the policy provisions. (A 3, n 1). The policy also has an appraisal clause which may be invoked by either party to set the loss amount if, after fulfillment of post-loss conditions, the parties disagree on the amount. (A 5, n 2). One of the policy post-loss conditions required the insureds to provide State Farm a sworn proof of loss, with enumerated details that a property insurer needs to evaluate a claimed loss, including verification of the insureds interest in the property, the date and cause of the loss, specifications of building damages and estimates for repair, an inventory of damaged personal property, and receipts for additional living expenses (which are paid on an as incurred basis). (A 3, n 1). Viewing the facts in the insureds favor on this point, the insureds delivered a sworn proof of loss to State Farm on September 29, 2004, with some but not all of the required information. (A 4). Two days later, on October 1, 2004, the insureds opted to file a lawsuit although State Farm had been given no time to process the proof of loss and adjust the claim and although the insureds also had the option of 3

having the loss amount set by the parties out-of-court appraisal process. (A 4). 2 Despite the insureds filing of a suit, State Farm continued on with the loss adjustment process throughout October and November 2004, meeting and corresponding with the insureds and their public adjuster and making payments as various aspects of the loss were verified. (A 4). Receipt of an engineering report resulted in State Farm making a payment of $46,014.11 on November 5, 2004. (A 4). And, [o]n November 22, 2004, State Farm met the Beverlys and [public adjuster] Epic to inspect some of the damaged personal property and to review ALE receipts. The next day, State Farm paid the Beverlys $65,217.98 for building damage and ALE of $266.16. (A 4). After receipt of the November 23, 2004 payment, the insureds did not communicate again with State Farm for six months. (A 5). Then, in May of 2005 the Beverlys sent State Farm an estimate claiming $594,993.20 in damages. (A 5). State Farm invoked appraisal in July of 2005 when the parties had clearly reached a point of disagreement as to the loss amount. (A 5). The insureds agreed to appraisal, and asked that all coverages be set by appraisal, meaning the coverages for building, personal property, and additional living expenses. (A 5). 2 The appraisal clause provides in part: Appraisal. If you and we fail to agree on the amount of loss, either one can demand that the amount of loss be set by appraisal. If either makes a written demand for appraisal, each shall select a competent, independent appraiser. (A 4, n 2). 4

The coverages then were determined in appraisal. (A 5-6). The appraisers issued three separate awards - one as to each of the three types of coverage - and State Farm timely paid the awards upon issuance. (A 5-6). All policy benefits having been paid pursuant to the contractual appraisal process, State Farm sought to end the lawsuit that the insureds had filed just six weeks after the hurricane. (A 6-7). State Farm noted that it had not breached the contract; that appraisal had resolved the insureds claims in full; and that State Farm had timely paid the appraisal awards when issued by the appraisal panel. (A 7). State Farm also noted that the suit had been premature in any event and that the insureds had not complied with the post-loss obligations imposed on them by the policy as conditions precedent to filing any lawsuit. (A 7). The insureds responded saying that State Farm had initially denied coverage for the barn and shed, and that State Farm waived the policy post-loss conditions. (A 7). The main focus of the insureds response, however, was that State Farm could not avoid its obligation to pay attorney s fees and that it had confessed judgment by tendering additional benefits after the lawsuit was filed. (A 7). The trial court granted State Farm s motion, and entered final summary judgment in its favor. (A 7). The insureds then filed an appeal to the Second District. (A 1). As the insureds had been paid in full for all hurricane losses, the only item at stake in the appellate proceedings was - and is - attorney s fees, as the 5

Second District noted: We surmise that, at its core, this case is about attorney s fees under section 627.428. (A 7). Citing its own decisions interpreting Wollard, including Clifton v. United Cas. Ins. Co. of America, 31 So. 3d 826 (Fla. 2d DCA 2010), the Second District reversed the trial court. Although the insureds did not have a judgment in their favor as a basis for 627.428 fees, and had no showing of a forced suit and confession of judgment to seek the fees via Wollard, the Second District remanded for further proceedings on the claim for attorney s fees saying that fact issues remain. (A 10). Because conflict has been created by the misapplication of Wollard, Petitioner initiated these discretionary review proceedings. ARGUMENT Conflict subject to review by this Court is created by a district court s misapplication of rules announced in this Court s decisions. See, e.g., Vest v Travelers Ins. Co., 753 So. 2d 1270, 1272 (Fla. 2000); Arab Termite & Pest Control of Florida Inc. v. Jenkins, 409 So. 2d 1039,1041 (Fla. 1982). Just such a misapplication has occurred in the Second District s decision. Where, as here, the record shows that the insured had an available appraisal clause and that the insured received all policy benefits pursuant to appraisal, then as a matter of law Wollard does not - and should not - be applied to create entitlement to attorney s fees under 627.428. Under the actual wording of that 6

statute, attorney s fees may only be awarded to an insured [u]pon the rendition of a judgment... against an insurer and in favor of any... insured[.] In Wollard, this Court decided that, despite the statute s upon rendition of a judgment language, the statute should be interpreted also to allow fees where insureds have been forced to sue due to an insurer s wrongful withholding of benefits, and the insurer has settled the claim after suit merely to avoid the rendition of a judgment that would trigger the right to attorney s fees. When the insurance company has agreed to settle a disputed case, it has, in effect, declined to defend its position in the pending suit. Thus, the payment of the claim is, indeed, the functional equivalent of a confession of judgment or a verdict in favor of the insured. 439 So. 2d at 218. Thus, to fit within Wollard s interpretation of the term judgment in 627.428 as including a confession of judgment, there must be showings that the insured was forced to sue to obtain policy benefits, and that the insurer settled the claim before entry of an actual judgment thus indicating that it had declined to defend its position in the pending suit. 439 So. 2d at 218. The face of the Second District s Opinion, however, affirmatively reflects for the reader that neither showing was - or could be - made here. The Opinion recites that the insureds had an appraisal clause in their insurance contract with State Farm that either party could invoke to get the loss paid: If you 7

and we fail to agree on the amount of loss, either one can demand that the amount of loss be set by appraisal. (A 5, n 2). The factual recitals in the Opinion thus show that the insureds opted to file a lawsuit (a mere six weeks after the hurricane), but not that they were forced to file a lawsuit. The Opinion further reflects that there was no settlement by State Farm indicating that it had declined to defend its position in a lawsuit. On the contrary, the Opinion shows that State Farm simply proceeded with adjusting the loss and then invoked appraisal when a point of disagreement as to the amount of loss was reached - just as provided in the parties contract. And, the Opinion affirmatively shows, State Farm paid the appraisal awards when they were issued, including the amounts designated for the barn and the shed. (A 5). Payment of an appraisal award pursuant to contract is in no way a Wollard confession of judgment. The Second District has profoundly misapprehended the Wollard confession of judgment doctrine and confounded its purpose. Wollard - and 627.428 - are intended to cut down on litigation over insurance claims. So, too, for that matter, are appraisal clauses. The Legislature, this Court, and the insurers themselves are trying to keep property cases out of the courts. Within the meaning and intent of Wollard, a showing that an insured had an available appraisal clause and a claim paid in full through appraisal should result in the conclusion that as a matter of law there is no Wollard entitlement to fees. In such cases, the insured was not forced to 8

sue and the insurer did not confess judgment. The Second District has instead created a whole new series of cases that will present court labor-intensive fact issues on entitlement to fees. Under the Second District s decision, insureds attorneys who file lawsuits despite the availability of appraisal are allowed to argue that they were forced to sue to obtain policy benefits even though the insureds claims were paid in full through appraisal. And, the Second District holds, a forced to sue contention creates a fact issue for the trial court (whether for evidentiary hearing or jury trial is not stated), when the Wollard rule is designed to further the statute s intent to discourage litigation. The availability of 627.428 attorney s fees is the only motivating factor behind the filing of lawsuits for insureds who have appraisal clauses and are shown to have had their claims resolved in full through appraisal. And, it is motivating only to attorneys with no corresponding benefits for their clients, the insureds. The Second District s misapplication of the Wollard rule has given insureds counsel renewed motivation to file lawsuits on insureds claims that can be - and are - resolved through appraisal. Petitioner thus respectfully submits that the Court should accept this case for review. In insurance property disputes, insureds with appraisal clauses have nothing to gain from the unnecessary lawsuits filed on their behalf for the sole purpose of allowing their attorneys to create a basis for getting attorney s fees. The 9

insureds just need their claims paid as soon as possible and under circumstances where they can keep all or most of the proceeds for repairing their property damage. A contractual appraisal as a matter of law gives an insured an alternative to litigation, and creates no Wollard basis for seeking fees if the contract benefits are paid in full through appraisal. The Second District s holding to the contrary should be addressed by the Court CONCLUSION Based on the foregoing facts and authorities, Petitioner respectfully prays that the Court accept the case for discretionary review. Respectfully submitted, BUTLER, PAPPAS, WEIHMULLER KATZ, CRAIG, LLP 777 South Harbour Island Boulevard Suite 500 Tampa, Florida 33602 Telephone (813) 281-1900 -and- RUSSO APPELLATE FIRM, P.A. 6101 Southwest 76th Street Miami, Florida 33143 Telephone (305) 666-4660 Counsel for Petitioner By: ELIZABETH K. RUSSO Florida Bar No. 260657 10

CERTIFICATE OF SERVICE WE HEREBY CERTIFY that a true and correct copy of the Petitioner s Brief on Jurisdiction was sent by U.S. mail this 18th day of February, 2011 to: David J. Pettinato, Esquire, Merlin Law Group, P.A., 777 South Harbour Island Boulevard, Suite 950, Tampa, Florida 33602; and Raymond T. Elligett, Jr., Esquire, Buell & Elligett, P.A., 3003 West Azeele Street, Suite 100, Tampa, Florida 33609. CERTIFICATE OF COMPLIANCE WITH FONT STANDARD Undersigned counsel hereby respectfully certifies that the foregoing Brief on Jurisdiction complies with Fla. R. App. P. 9.210 and has been typed in Times New Roman, 14 Point. 11