Kelley Kronenberg - In the Know - First-Party Property Appellate - October 2023 by Kelley Kronenberg

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FIRST- PARTY PROPERTY APPELLATE EDITION IN THIS ISSUE: • Appraisal – Ripeness • Trial Issues – Improper Admission of Expert Testimony • Policy Interpretation – Application of Water Damage Exclusion • Fraud on the Court • Unenforceable Public Adjuster Contract

FIRST-PARTY PROPERTY APPELLATE TEAM

For any questions, please contact: Jeffrey M. Wank Chair of First-Party Property and Insurance Coverage Fort Lauderdale T: (954) 370-9970 jwank@kklaw.com

ADMISSIONS Florida • Georgia • United States Court of Appeal, Eleventh Circuit

SELECTED OPINIONS w Expert Inspections, LLC d/b/a ITest d/b/a Moldexpert.com a/a/o Pat Beckford v. United Property & Casualty Insurance Company, 333 So.3d 200 (Fla. 4th DCA 2022) (holding that an insurer cannot be required to follow the terms of an AOB contract where the insurer is not a party to that contract). w The Kidwell Group, LLC d/b/a Air Quality Assessors of Florida a/a/o Maria Amadio v. Olympus Insurance Company, Case No. 5D21-2955 (Fla. 5th DCA July 22, 2022) (interpreting section 627.7152, F.S., as applying to AOB contracts executed after the enactment of the statute, finding the policy inception date irrelevant to the analysis).

Partner

w Saunders v. Florida Peninsula Insurance Company, 314 So.3d 592 (Fla. 3d DCA 2020) (interpreting the “faulty workmanship” policy exclusion to include the workmanship process as well as the finished product in affirming the insurer’s denial of a property damage claim).

Tallahassee | Atlanta T: (850) 577-1301 kfernandes@kklaw.com

w The Kidwell Group, LLC d/b/a Air Quality Assessors of Florida a/a/o Benjamin Kivovitz, Case No. 4D212843 (Fla. 4th DCA June 15, 2022) (enforcing the new section 627.7152, F.S., requirement of including a line-item estimate with an AOB contract at the time of execution)

Kimberly J. Fernandes

ADMISSIONS Florida • U.S. District Court, Northern District of Florida • U.S. District Court, Middle District of Florida

SELECTED OPINIONS w Progressive American Insurance Company v. Glassmetics, LLC, No. 2D21-488, 2022 WL 1592154 (Fla. 2d DCA 2022) (“we reverse the trial court’s order and its conclusions (1) that the appraisal provision was against the public policy underlying section 627.428; (2) that the appraisal provision failed to provide sufficient procedures and methodologies; (3) that Progressive waived its appraisal right; (4) that the appraisal provision was unenforceable because Progressive failed to prove that the insured knowingly, voluntarily, and intelligently waived his rights of access to courts, to a jury trial, and to due process; and (5) that the appraisal provision contains an ambiguity.”).

Daniel Montgomery Partner Jacksonville T: (904) 549-7700 dmontgomery@kklaw.com

w All Auto Glass v. Progressive American Ins. Co., Case No. 2018-SC-3126, 2019-33-AP (Fla. Seminole Cnty. Appellate Division.) (“reversing trial court, holding ruling of district court of appeal in jurisdiction other than where trial court is located is binding upon trial court absent conflict with another district court of appeal. ) w Progressive Am. Ins. Co. v Broward Ins. Recovery Ctr., LLC, 322 So. 3d 103 (Fla. 4th DCA 2021) (“reversing trial court, holding prohibitive cost doctrine inapplicable to appraisal”).

TABLE OF

CONTENTS Appraisal – Ripeness HERITAGE PROPERTY & CASUALTY INS. CO. v. WELLINGTON PLACE HOA, INC., 4D2022-2749 (Sept. 13, 2023) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Trial Issues – Improper Admission of Expert Testimony UNIVERSAL PROPERTY & CASUALTY INS. CO. v. EDWARD NAVLEN and SAUNEE NAVLEN, 4D2022-1590 (Sept. 20, 2023) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Policy Interpretation – Application of Water Damage Exclusion PEOPLE’S TRUST INS. CO. v. SHEILA BANKS, et. al., 3D22-1436 (Sept. 13, 2023) . . . . . . . . . . . 6

Fraud on the Court SYNERGY CONTRACTING GROUP, INC. A/A/O JAMES MCGINITY v. HOMEOWNER’S CHOICE PROPERTY & CASUALTY CO., INC., 2D22-125 (Sept. 27, 2023) . . . . . . . . . . . . . . . . . . . . . 7

Appraisal – Ripeness HERITAGE PROPERTY & CASUALTY INS. CO. v. WELLINGTON PLACE HOA, INC., 4D2022-2749 (Sept. 13, 2023) KK TAKEAWAY: Once coverage is opened, appraisal is ripe to address disputes over the amount of loss.

KK TAKEAWAY: Submission of a competing estimate, even years after, may not affect the appraisal’s ripeness.

BACKGROUND: Insured sought coverage for a Hurricane Irma loss in 2017. In November 2017, Heritage issued a coverage determination that coverage was in place, but the loss fell below deductible. However, Heritage’s 4 | IN THE

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coverage letter expressly allowed for review of supplemental payment upon submission of a contractor estimate. In September 2019, Insured’s claim consulting company sought an extension to complete repairs within the two-year time limit based on its position that the claim was originally underpaid. Heritage requested the Insured’s estimate and supporting documentation for consideration. After reinspection by an independent adjuster on behalf of Heritage, the Insured’s public adjuster submitted for more than 6 million dollars, which included for the first time a portion to replace all windows and sliding doors. Multiple record requests and examinations under oath occurred between August 2020 and October 2021, leading to the Insured demanding appraisal. In April 2022, the Insured filed a breach of contract action, then moved to stay and compel appraisal. Heritage responded that the supplemental claim was not ripe for appraisal because there was yet to be a coverage determination.

At the hearing, the Insured admitted that it originally sought coverage for roof damage and later sought coverage for additional roof damage, windows, and doors. However, the Insured argued these requests were part of the original claim submission because the Insured disputed the original determination regarding the amount of loss. The trial court agreed with the Insured, finding that the appraisal was ripe as Heritage originally determined a covered loss occurred, thus, the appraisal could address the amount of loss. The Fourth District Court of Appeals agreed with the trial court that the policy is silent about whether a new coverage decision is required for a reopened or supplemental claim when coverage was opened for the original claim. The Fourth District distinguished the Second District Court of Appeals holding in American Coastal Ins. Co. v. Ironwood, Inc., 330 So. 3d, 570 (2d DCA 2021), in which the supplemental claim precluded appraisal until further investigation. In Ironwood, coverage was opened, and payments were issued on the original claim that was solely for roof damage. However, the Insured later sought a supplemental claim, including windows and doors not part of the original claim. Insured then invoked its right to appraisal for the windows and doors claim alone, albeit before the claim investigation was complete. The Fourth District clarified that the original coverage decision letter did not close the claim but invited the submission of a competing estimate. As such, the claim

was not settled, and the supplemental submissions were not a supplemental claim but a submission of additional damage. The Fourth District expressly held that since coverage was opened, any dispute regarding the amount of loss, including causation, is a dispute that can be addressed via appraisal.

Trial Issues – Improper Admission of Expert Testimony UNIVERSAL PROPERTY & CASUALTY INS. CO. v. EDWARD NAVLEN and SAUNEE NAVLEN, 4D2022-1590 (Sept. 20, 2023) KK TAKEAWAY: Experts must rely on data, and show it has undergone proper analysis of potential for error and scientific standard.

KK TAKEAWAY: Expert cannot guestimate without connecting how their experience reached the conclusion and how the conclusion is supported through experience.

BACKGROUND: Before trial, Universal sought to exclude Insured’s expert due to failure to disclose the written report. The trial court allowed the expert’s deposition rather than strike the witness. After the deposition, Universal sought to exclude the expert’s testimony as it: IN THE

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1) Did not inspect the roof before replacement; 2) Formed opinions based on inspecting neighboring adjoining roofs; 3) Did not form an opinion on the percentage of roof damage; 4) Opined that wind speeds were 60-70 mph but taken over 17 miles away 5) Relied upon benchmark data that was not contained within his report The trial court rejected the challenges and allowed the expert to testify. On appeal, the Fourth District Court of Appeal affirmed in part, reversed in part, and remanded, taking issue with issues 3 and 5. First, relying on benchmark data for the sole reason that it was commonly relied upon in the field was insufficient to meet the standard required to show the data had been tested, was subject to peer review, an acknowledgment of error rate, or the existence of maintenance records. Second, the expert’s general conclusion that the roof suffered more than 25% damage without a calculation or method to determine the percentage damaged was nothing more than a guestimated determination based upon a review of photographs. While an expert can rely on personal experience and knowledge, they must show how such led to their conclusion, why it is sufficient to reach the conclusion he did, and how their experience was reliably applied to the facts.

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Policy Interpretation – Application of Water Damage Exclusion PEOPLE’S TRUST INS. CO. v. SHEILA BANKS, et. al., 3D22-1436 (Sept. 13, 2023) KK TAKEAWAY: Wear and tear, and deterioration are the result of acts of nature.

KK TAKEAWAY: A natural process is not separate nor distinct from acts of nature.

KK TAKEAWAY: Policy language excluding coverage for water loss due to an act of nature includes wear and tear, and deteoration.

BACKGROUND: People’s Trust (“PTI”) appealed a final summary judgment in favor of the Insureds, finding that wear, tear, and deterioration were not acts of nature, thus covered. After, the parties went to appraisal, and an award was entered for $113,318.17.

The crux of the issue was that PTI claimed the Water Damage Exclusion (“WDX”), which excluded water damage from overflow or discharge of water from a plumbing system due to any act of nature. PTI claimed that although the Insureds purchased a limited coverage that expressly excluded tear-out, it paid the $10,000 limit, thus, the Insured was not entitled to any additional benefit as the remainder was tear-out, not a direct accidental loss. Insureds argued that wear and tear, and deterioration were not excluded under the WDX endorsement as they were a natural process, not an act of nature.

Fraud on the Court

PTI argued that Insureds did purchase limited coverage of $10,000, which it paid.

KK TAKEAWAY:

The Third District Court of Appeals reversed and remanded with instruction to enter summary judgment in favor of PTI. The Third expressly held that it would not separate the ordinary meaning of “act of nature” from “natural processes” as it would lead to an absurd result. An act of nature is a natural process rather than an extraordinary event.

SYNERGY CONTRACTING GROUP, INC. A/A/O JAMES MCGINITY v. HOMEOWNER’S CHOICE PROPERTY & CASUALTY CO., INC., 2D22-125 (Sept. 27, 2023) KK TAKEAWAY: Dismissal for fraud on the court should only be applied in extreme circumstances.

Although the evidence may demonstrate inconsistencies and possible misrepresentations,the opposing party should be allowed to explain.

BACKGROUND:

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Insureds retained Synergy for restoration work under an assignment of benefits. After Synergy submitted estimates, the Homeowner’s opened covered, but only for the portion of the submitted estimates. Synergy filed a breach of contract action to which the Homeowner’s denied any additional benefits were due and owing. In response to a request for admissions, Synergy denied that line items on the estimate were not performed or were already paid in full. At deposition, Mr. Insured testified that during the restoration project, upgrades were made with the understanding that the Insureds would be responsible for the additional costs. Homeowner’s filed a motion to dismiss for fraud on the court asserting that Synergy knowingly relied upon estimates containing either paid items or work that was not completed. The trial court conducted a nonevidentiary hearing and granted the motion to dismiss.

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On appeal, the Second District Court of Appeals reversed the order granting dismissal, holding that the facts of the case did not meet the stringent standard for dismissal. Although there were inconsistencies and maybe even false statements, the limited evidence relied upon was insufficient to show that Synergy set in motion an “unconscionable scheme calculated to interfere with the judicial system’s ability to impartially adjudicate a matter by improperly influencing the trier of fact or unfairly hampering the presentation of the other party’s claim or defense.” While there were inconsistencies, the lack of evidentiary hearing did not allow Synergy to explain the discrepancies, nor was the evidence sufficient to show the discrepancies were anything more than discrepancies.

Unenforceable Public Adjuster Contract MONARCH CLAIMS CONSULTANTS, INC. v. CLIFF FLEMING and JANE K. FLEMING, UNIVERSAL PROPERTY & CASUALTY INS. CO., 1D22-601 (Sept. 6, 2023) KK TAKEAWAY: A public adjuster contract cannot require a statutory percentage rate and a provision requiring a public adjuster to be appointed as appraiser for additional consideration.

BACKGROUND: Insureds filed a petition for declaratory relief regarding the validity of a public adjuster contract executed for a Hurricane Michael claim. During the claim process, the Insureds terminated the contract and later independently settled with Universal. Monarch, the public adjusting firm, sought payment based on its contract. Monarch further sought to enforce the contract’s venue selection clause, which set MiamiDade County as the venue for disputes. The Insureds argued to the trial court that the contract was void as it exceeded the statutory maximum contingency permitted pursuant to section 626.854, Florida Statutes. The Insureds also argued the

venue selection process was unenforceable for other reasons not addressed on appeal. The trial court found that although there was a valid venue selection clause, the contract was unenforceable as it allowed the public adjuster to exceed the ten percent maximum under a declaration of emergency by having an additional ten percent if it served as the appraiser. The First District Court upheld the trial court findings, holding that the contract exceeded the permissible statutory rates. While Monarch tried to argue that the contract only converted to an appraisal fee contract if the appraisal was triggered, therefore removing public adjuster contingency. The First District made clear that whether the event occurred or not, the promise exceeded the permissible statutory rate, thus making the contract unenforceable.

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NOTABLE

CASE WINS Kelley Kronenberg Receives Full Defense Verdict Following 3-Day Jury Trial Read More Charles M. Prior

Alan H. Swindoll

Caey B. Mullin

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Kelley Kronenberg Prevails on Summary Judgment and Defeats Underlying Breach of Contract Suit Jake D. Huxtable

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For additional successes in First-Party Property cases, please click here. 10 | IN THE

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AWARDS AND

ACCOLADES FIRM AWARDS Kelley Kronenberg has been the recipient of numerous awards and honors both firm-wide and for a number of our practices, including individual accolades. Below is a select list of recognition and awards:

2021 – 2023 Top Workplaces USA Energage

2020 – 2023 Top Workplaces Sun Sentinel

2019 – 2023 Best Law Firms U.S. News - Best Lawyers

2022 Best Places To Work New Orleans CityBusiness

2020 – 2022 Compass Award Leadership Council on Legal Diversity

2021 – 2022 Top Places To Work Ragan Communications

2019, 2021 – 2023 Women In Law Scorecard The National Law Journal

2016 – 2023 Largest Law Firms Tampa Bay Business Journal

2017 – 2022 Biggest Law Firms in Florida Florida Trend

2012 – 2023 NLJ 500 The National Law Journal

2020 – 2022 Business of the Year South Florida Business Journal

2012 – 2023 Top Law Firms South Florida Business Journal

2017 – 2022 400 Largest Law Firms Law360

2011 – 2022 100 Largest Law Firms Daily Business Review

2016 – 2022 Largest Central Florida Law Firms Orlando Business Journal

2022 Best Midsize Law Firm To Work For Vault

2021 Diversity Scorecard The American Lawyer

2021 Diversity Team Award Profiles in Diversity Journal

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MEET THE

CONTRIBUTORS Jeffrey M. Wank Chair of First-Party Property and Insurance Coverage Email Jeffrey M. Wank

Jeffrey Wank is Chair of First-Party Property

Jeffrey also has experience in handling complex

and Insurance Coverage focusing his practice on

civil and commercial matters, including the defense

first-party property insurance Defense, including

of personal injury, premises liability, employment

coverage and bad faith litigation. Jeffrey also

discrimination, medical malpractice, nursing home

handles the defense of a wide array of third-party

liability, homeowner and condominium association

insurance defense claims.

claims, and construction defect cases.

Jeffrey assists insurers in all aspects of coverage

Jeffrey has been named a Florida Super Lawyer

disputes, including responses to civil remedy

Rising Star since 2014. In 2011, he was elected

notices of insurer violations, pre-suit investigations

to the Broward Bar Association Young Lawyers

and coverage evaluations, declaratory judgment

Section Board of Directors, where he served as

and bad faith litigation. He defends property

Secretary on the organization’s Executive Board

insurers throughout Florida in first-party coverage

and moved up to President in June 2015. Jeffrey

matters, where many of the claims involve sinkhole,

was also named the Chair on the Board of Directors

windstorm, fire, mold, theft and water losses.

of Legal Aid Service of Broward County & Coast to

In addition, Jeffrey serves as coverage and bad faith counsel in third-party actions, including monitoring the defense of litigation. As part of this role, he is

Coast Legal Aid of South Florida for the 2019 term and previously served as the Vice Chair for the 2018 term.

often asked to draft detailed coverage opinions,

Jeffrey earned his Bachelor of Science in Political

reservation of rights letters, declinations, and

Science from Florida State University and went

prosecute declaratory relief actions.

on to earn his Juris Doctor degree from Nova Southeastern University Shepard Broad Law Center.

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Daniel Montgomery Partner Email Daniel Montgomery

Kelley

Daniel received his Bachelor of Science degree

Kronenberg where he assists in handling matters

in Criminal Justice, summa cum laude, with a

related to first-party property insurance defense.

Certificate of Crime Scene Investigation, from

Daniel handles all aspects of first-party property

Colorado Technical University. He then went on to

defense, including coverage disputes, pre-suit

earn his Juris Doctor degree from Florida Coastal

investigations, fraud investigations, and CRN

School of Law, graduating cum laude.

Daniel

Montgomery

Partner

responses. Additionally, our clients frequently engage Daniel to assist with the development of claims processes and procedures. Daniel’s practice is also focused on the highly-specialized areas of first-party property appeals and auto glass defense. Prior to joining Kelley Kronenberg, Daniel worked as an Associate Attorney with an Am Law 200 firm, focusing his practice on first-party auto coverage and litigation, general liability litigation, and appellate law. Daniel also practiced as an Assistant State Attorney for Florida’s Fourth Judicial Circuit, in Jacksonville, where he litigated a variety of criminal proceedings through trial and served as a liaison for UVISA Certifications.

Since Law School, Daniel continued his education by obtaining a Master of Science, summa cum laude, from Florida State University, with a Certificate in U.S. Intelligence. Daniel acquired an additional LL.M. in Executive Litigation Management from Baylor Law School. During Daniel’s career he has served on several committees and groups continually working to develop awareness, knowledge, and best practices in a variety of areas including mental health, utilizing technology to drive efficiencies, special investigations, and litigation management best practices.

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A Firm Built on Relationships KELLEY KRONENBERG IS A MULTI-PRACTICE BUSINESS LAW FIRM.

with over

400

Employees

more than

the convenience of

Attorneys

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Founded in 1980, the firm is one of the fastest-growing law firms in Florida and amongst the largest in the U.S. The firm serves all types and sizes of public and private companies, including small businesses and individuals nationwide.

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