Morejon v. American Security Insurance

829 F. Supp. 2d 1258, 2011 U.S. Dist. LEXIS 144255, 2011 WL 6287946
CourtDistrict Court, M.D. Florida
DecidedDecember 9, 2011
DocketCase No. 8:11-cv-2510-T-26TGW
StatusPublished
Cited by5 cases

This text of 829 F. Supp. 2d 1258 (Morejon v. American Security Insurance) is published on Counsel Stack Legal Research, covering District Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Morejon v. American Security Insurance, 829 F. Supp. 2d 1258, 2011 U.S. Dist. LEXIS 144255, 2011 WL 6287946 (M.D. Fla. 2011).

Opinion

ORDER

RICHARD A. LAZZARA, District Judge.

THIS CAUSE comes before the Court on Defendant’s Motion to Stay Action Pending Completion of Neutral Evaluation Process and Incorporated Memorandum of Law with exhibits (Dkt. 6), Plaintiffs’ Response in Opposition and Incorporated Memorandum of Law with exhibits (Dkt. 7) and Defendant’s Reply with exhibit (Dkt. 14).

On September 29, 2011, Plaintiffs, Augustin and Martha Morejon, filed this lawsuit in the Circuit Court of the Thirteenth Judicial Circuit, in and for Hillsborough County, Florida, against Defendant, American Security Insurance Company, for its alleged failure to pay for covered sinkhole damage to property located at 948 Allegro Lane, Apollo Beach, Florida 33603 (the “Property”) under a homeowner’s insurance policy. On November 4, 2011, pursuant to 28 U.S.C. §§ 1332 and 1446, Defendant timely removed the action to this Court on the basis of diversity jurisdiction.

In investigating Plaintiffs’ sinkhole damage claim, Defendant received reports from two separate engineering firms indicating that sinkhole activity was not present at the Property. Plaintiffs also hired an engineering firm to investigate the property and that firm concluded that sinkhole activity was the primary cause of damage at the Property. Plaintiffs ultimately filed this lawsuit, which was served upon Defendant on October 20, 2011. On November 7, 2011, Defendant invoked the neutral evaluation process pursuant to section 627.7074 of the Florida Statutes.

In accordance with section 627.7074, Defendant now seeks to stay this action pending the resolution of the neutral evaluation process. Section 627.7074(4) provides that:

Neutral evaluation is nonbinding, but mandatory if requested by either party. A request for neutral evaluation may be filed with the department by the policyholder or the insurer on a form approved by the department....
Filing a request for neutral evaluation tolls the applicable time requirements for filing for a period of 60 days following the conclusion of the neutral evaluation process or the time prescribed in s. 95.11, whichever is later.

(emphasis added). Moreover, section 627.7074(10) expressly provides that:

Regardless of when noticed, any court proceediny related to the subject matter of the neutral evaluation shall be stayed [1260]*1260pending completion of the neutral evaluation and for 5 days after the filing of the neutral evaluator’s report with the court.

(emphasis added).

As Defendant asserts, the Florida Legislature explicitly enacted the neutral evaluation process to efficiently resolve sinkhole disputes, in order to accelerate the timeline by which sinkhole activity is mitigated, where verified at the property, and to minimize, if not avoid, the costs associated with unnecessary litigation. See Fla. Stat. § 627.7074, n. 1. Allowing a case to proceed without a stay during neutral evaluation would not serve the legislative purpose underlying the statutory requirement of neutral evaluation since it will make it more, not less, expensive to resolve a claim. Cf. Edelson v. Soricelli, 610 F.2d 131, 135 (3d Cir.1979) (enforcing state’s arbitration requirement as a condition precedent to federal action based in diversity); Clark v. Sarasota County Public Hosp. Bd., 65 F.Supp.2d 1308, 1313-14 (M.D.Fla.1998) (holding that conditions precedent to adjudication of a medical malpractice action were to be followed in a diversity action in federal court). As such, section 627.7074, when invoked, mandates the completion of the neutral evaluation process as a condition precedent to proceeding with litigation on any related matter until such time as the neutral evaluation process has been completed. The statute requires that any court proceeding related to the subject matter of the neutral evaluation shall be stayed pending completion of the neutral evaluation.

Plaintiffs urge that section 627.7074(10) is procedural in nature and, therefore, has no application in a case pending in federal court based upon diversity jurisdiction. Plaintiffs’ argument is unfounded. It is established in this Circuit that where a condition precedent to proceed applies without discrimination to both state court and federal court actions, the Erie1 doctrine requires that courts give effect to the condition precedent. See Woods v. Holy Cross Hospital, 591 F.2d 1164 (5th Cir.1979).2 In Woods, the Court enforced a Florida statute requiring that medical malpractice claims be heard by a mediation panel prior to institution of court action, finding that the alternative dispute resolution process constituted a condition precedent to be enforced by a federal court sitting in diversity pursuant to Erie. The Court found that Erie requires federal courts to treat diversity claims in a manner that discourages forum shopping and to reach results identical to the state court, noting that as a condition precedent, the arbitration requirement in that case, did not differ materially from other preconditions that states may impose on a plaintiffs right to sue in state court, the applicability of which federal courts have recognized to diversity plaintiffs. Woods, 591 F.2d at 1168-1170. Therefore, the provisions of section 627.7074 do apply in this case.

Section 627.7074 provides a substantive right of parties to have a neutral evaluator review the claim and render a nonbinding report before the matter is adjudicated by a court. As Defendant asserts, the statute is substantive rather than procedural inasmuch as it will not [1261]*1261impact in any manner Plaintiffs’ method of proceeding with litigation once the condition precedent of neutral evaluation is met. See Caple v. Tuttle’s Design-Build, Inc., 753 So.2d 49 (Fla.2000) (finding that procedural law encompasses the form, manner, means, method and steps to enforce substantive rights). Florida law is well-settled that substantive statutes may permissibly include procedural elements without violating the separation of powers clause. Id. at 54 (holding that the statute at issue creates substantive rights and any procedural provisions were directly related to those rights and did not infringe on the court’s rulemaking authority); Smith v. Dep’t of Insurance, 507 So.2d 1080, 1092 n. 10 (Fla.1987) (finding that when procedural sections are directly related to the substantive statutory scheme, then those provisions do not violate the separation of powers clause of the Florida Constitution).

In addition, the Florida Supreme Court has recognized that the Legislature can statutorily mandate parties to participate in alternative dispute resolution and that findings from such a proceeding can be admissible at trial. See McCarthy v. Mensch, 412 So.2d 343, 345 (Fla.1982). In McCarthy,

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Bluebook (online)
829 F. Supp. 2d 1258, 2011 U.S. Dist. LEXIS 144255, 2011 WL 6287946, Counsel Stack Legal Research, https://law.counselstack.com/opinion/morejon-v-american-security-insurance-flmd-2011.