Analysis and Interpretation by Michael A. Cassel

On February 15, 2017, the Third District Court of Appeals in and for the State of Florida (hereinafter the “3d DCA”) released their decision in State Farm Fla. Ins. Co. v. Fernandez, No. 3D16-1441, 2017 Fla. App. LEXIS 2004 (3d DCA 2017) (hereinafter “Fernandez”).  The Fernandez opinion discusses the trial court’s ability to compel appraisal when there is a question regarding the insureds’ compliance with post-loss conditions.


On October 24, 2005, Jose and Sandra Fernandez sustained property damage to their home as a result of Hurricane Wilma and, subsequently, filed a claim with their insurer on October 28, 2005.  In November 2005, State Farm investigated the insureds’ claim and eventually sent correspondence advising that, although some of the damages were covered, the covered damages fell below the applicable policy deductible.  State Farm then denied coverage for the remainder of the alleged damages.  

In April 2010, the insureds’ public adjuster sent State Farm a demand for appraisal alleging $142,733.81 in total damages as a result of Hurricane Wilma.  On April 24, 2010, State Farm sent reservation of rights correspondence requesting documents pertaining to the repairs effectuated to the alleged damages in question.  A week later, the insureds submitted a Sworn Proof of Loss but did not attach any documents supporting same nor any documents responsive to the request outlined in the reservation of rights correspondence.  State Farm proceeded to adjust the supplemental claim, including conducting an inspection of the property and examinations under oath (hereinafter “EUO”).  Following the EUO, due to the insureds’ failure to provide any documents at the time of the EUO, State Farm sent two follow-up correspondences requesting documentation supporting the supplemental claim.  The insured did not respond to said requests and, ultimately, on June 8, 2011, State Farm sent correspondence denying coverage.  

On November 27, 2013, over two years later, the insureds filed a lawsuit alleging breach of contract.  During the course of the litigation, the insureds moved to abate the action and compel appraisal.  State Farm argued that the insureds were not entitled to appraisal because the insureds failed to comply with their post-loss conditions.  The trial court held an evidentiary hearing on the motion to compel appraisal in August 2016 and, after hearing arguments of counsel, granted the motion.  The instant appeal followed. 

3d DCA Opinion 

Upon review, the 3d DCA opined that the trial court incorrectly granted the motion to compel appraisal as the insureds failed to comply with all of their post-loss obligations.  The court further stated “that all post-loss obligations must be satisfied before a trial court can exercise its discretion to compel appraisal.”  Fernandez at 4 citing to State Farm Florida Ins. Co. v. Hernandez, 172 So. 3d 473 (Fla. 3d DCA 2015); State Farm Florida Ins. Co. v. Cardelles, 159 So. 3d 239 (Fla. 3d DCA 2015); United States Fidelity & Guaranty Co. v. Romay, 744 So. 2d 467 (Fla. 3d DCA 1999).

Analysis, Impact, and Effect       

It seems troublesome that, despite well-established case law regarding the requirement that post-loss conditions be complied with prior to the ripening of appraisal, the trial courts are consistently ruling in manners contrary to same.  Since as far back as 2010, the 3d DCA has been finding that “[u]ntil [the policy's post-loss] conditions are met and the insurer has a reasonable opportunity to investigate and adjust the claim, there is no ‘disagreement’ (for purposes of the appraisal provision of the policy)…”  Citizens Prop. Ins. Corp. v. Mango Hill Condo. Ass'n 12, 54 So. 3d 578, 581-582 (Fla. 3d DCA 2011) citing to Citizens Prop. Ins. Corp. v. Galeria Villas Condo. Ass’n, 48 So. 3d 188, 191-92 (Fla. 3d DCA 2010). 

In the Hernandez opinion, supra, the court explained that Alfredo Hernandez was paid to replace his roof and failed to do so until a year later which caused additional damage to the home.  Moreover, he then remodeled the majority of the interior of the home and was unable to provide many of the documents to substantiate the amount of money claimed and confirm the repairs made relating to Hurricane Wilma.  Although the home was remodeled in 2007, State Farm was not put on notice until 2010, approximately five years after the date of loss and three years after the repairs were completed.  Not only did the court find that he failed to protect the property from further damage but he also failed to put State Farm on timely notice of the loss and lacked the receipts to substantiate the repairs.  

Additionally, in State Farm Ins. Co. v. Xirinachs, 163 so. 3d 559 (Fla. 3d DCA 2015), the Court determined that the Plaintiffs failed to comply with all post-loss obligations as they failed to produce documentation and protect the property from further damage as required by the policy of insurance.  The 3rd DCA, in its appellate capacity, found that the lower trial court had erred in ordering appraisal and held that, until there is compliance with all of the post-loss conditions, there cannot be a disagreement as to the amount of loss. 

The most interesting point to come from the Fernandez opinion is the appellate court’s finding that the insureds failed to comply with the requirement to provide timely notice of the insureds’ supplemental claim.  The policy provisions requiring prompt notice have been read as meaning “as soon as practicable” and “call[s] for notice to be given with reasonable dispatch and within a reasonable time” in light of the facts of the case.  LoBello v. State Farm Fla. Ins. Co., 152 So. 3d 595, 596 (Fla. 2d DCA 2014) citing Am. Fire & Cas. Co. v. Collura, 163 So. 2d 784 (Fla.  2d  DCA  1964).  Previously, there has been a question in Florida as to whether the late notice defense may be applied to supplemental hurricane claims as many trial courts are hesitant to rule in line with the Fernandez court and, instead, find that the timeliness of the initial notice is sufficient to constitute prompt notice under the terms of the insurance policy.  The Fernandez opinion may assist in the application of the same maxims to supplemental claims being reported in untimely manners regardless of the facts surrounding the reporting of the initial claim.  

Echoing last week’s case law analysis, the question still remains, however, as to how the trial court in Fernandez will deal with the appellate court’s findings that the insureds failed to comply with post-loss conditions.  On one hand, the courts may rule that a total failure to comply with a policy provision amounts to a breach of the policy precluding recovery.  See Haiman v. Federal Insurance Co., 798 So.2d 811 (Fla. 4th DCA 2001); see also  Starling v. Allstate Floridian Ins. Co., 956 So. 2d 511, 513 (Fla. 5th DCA 2007) (“[a] material breach of an insured's duty to comply with a policy's conditions precedent relieves the insurer of its obligations under the contract.”).  Conversely, the courts may find that a presumption of prejudice is a more proper route so as to provide the insureds with the opportunity to rebut same at the time of trial.  See Kramer v. State Farm Fla. Ins. Co., 95 So. 3d 303, 306 (Fla. 4th DCA 2012); see also LoBello v. State Farm, 152 So. 3d at 596.  Regardless of how the Fernandez court interprets this issue, it seems as though Florida is long overdue for the courts to settle this issue and provide a comprehensive roadmap with regards to the penalty for failing to comply with post-loss conditions precedent so as to rectify the inconsistencies in the existing case law and avoid the confusion inevitably suffered during the course of litigation.