Third District Court of Appeal State of Florida
Opinion filed May 12, 2021. Not final until disposition of timely filed motion for rehearing.
________________
No. 3D19-1282 Lower Tribunal No. 18-14139 ________________
People's Trust Insurance Company, Appellant,
vs.
Pedro R. Ramos Santos, et al., Appellees.
An Appeal from the Circuit Court for Miami-Dade County, Spencer Eig, Judge.
Cole, Scott & Kissane, P.A., and Mark D. Tinker (Tampa), for appellant.
Shahady & Wurtenberger, P.A., and John J. Shahady (Fort Lauderdale); Duboff Law Firm, and Kenneth R. Duboff, for appellees.
Before SCALES, HENDON and LOBREE, JJ.
PER CURIAM. In this first-party insurance action, People’s Trust Insurance Company,
the defendant below, appeals entry of final judgment in favor of the plaintiffs
below, Pedro Ramos Santos and Yanela Arteaga Simon (“Insureds”), on
Insureds’ breach of contract claim. The trial court entered the final judgment
following the court’s grant of Insureds’ motion for summary judgment that
claimed People’s Trust had violated sections 627.7011, 627.70131, and
627.7142 of the Florida Statutes. Because we conclude under the particular
facts and circumstances of this case that People’s Trust did not violate the
statutes in question, and that, in light of People’s Trust’s exercise of its right
to repair option, the judgment is inherently inconsistent with the record, we
reverse the trial court’s April 18, 2019 summary judgment order and the May
30, 2019 final judgment and remand for further proceedings.
I. RELEVANT FACTS AND PROCEDURAL BACKGROUND
A. Insureds’ Insurance Policy
People’s Trust issued a homeowners’ policy covering Insureds’
Hialeah residence for the policy period between September 20, 2016 and
September 20, 2017. The policy insured the dwelling at replacement cost
and included a $6,800 hurricane deductible.
In return for a premium discount, the subject policy contained a
Preferred Contractor Endorsement (the “endorsement”). The endorsement
2 gave People’s Trust the option, following a covered loss, to elect to have its
own contractor, Rapid Response Team, LLC, repair Insureds’ property in lieu
of issuing a loss payment that would otherwise be due under the policy. The
endorsement required People’s Trust, within thirty days of its inspection of a
reported loss, to notify Insureds in writing of its election of the right to repair.
The endorsement also contained an appraisal clause that was applicable
where People’s Trust opted to exercise its right to repair:
Where “we” elect to repair:
1. If “you” and “we fail to agree on the amount of loss, which includes the scope of repairs, either may demand an appraisal as to the amount of loss and the scope of repairs. In this event, each party will choose a competent appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, “you” or “we” may request that the choice be made by a judge of a court of record in the state where the Described Location is located. The appraisers will separately set the amount of loss and scope of repairs. If the appraisers submit a written report of an agreement to “us,” the amount of loss and scope of repairs agreed upon will be the amount of loss and scope of repairs. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss and the scope of repairs. Each party will pay its own appraiser, and bear the other expenses of the appraisal and umpire equally.
This was the only appraisal clause contained within the policy.
B. Insureds’ Policy Claim
3 After Insureds’ home suffered damage during Hurricane Irma,
Insureds, through legal counsel, notified People’s Trust of the loss. People’s
Trust’s adjuster inspected the home and prepared an Estimate and Scope of
Repairs. The adjuster’s report estimated that the cost of repairing the
damage to Insureds’ home – at replacement cost value – was $3,059.80.
On October 27, 2017, 1 People’s Trust sent Insureds’ attorney a letter
notifying Insureds that their loss was covered and electing “to use its
preferred contractor, Rapid Response Team, LLC . . . to repair [Insureds’]
property to its pre-loss condition by making repairs to all covered damages .
. . .” The October 27, 2017 letter further stated that because People’s Trust’s
$3,059.80 repair estimate did not exceed Insureds’ $6,800 hurricane
deductible, the repairs would not commence until the parties either reached
an agreement as to the amount of the loss in excess of the deductible “or the
amount of loss, including the scope of repairs[,] has been determined by an
appraisal panel to exceed your deductible amount of $6,800.” To this end,
the letter notified Insureds that if they disagreed with the scope of repairs set
forth in the Estimate and Scope of Repairs, Insureds, within sixty days,
should provide People’s Trust with a sworn proof of loss “which provides the
1 Insureds claim they did not receive the October 27, 2017 letter until November 21, 2017.
4 details of what you believe the proper scope to be, including, but not limited
to, a scope prepared by you or your own behalf.” Finally, the October 27,
2017 letter informed Insureds that (i) “should you disagree with our
assessment of the cost and scope of repairs, your policy provides an
appraisal mechanism for resolving that disagreement,” and (ii) “[i]f after
participating in appraisal, it is determined by that process that your damages
do in fact exceed your deductible amount, we will proceed with repairs at that
time using [Rapid Response Team, LLC], including making arrangements
with you for the payment of your deductible.” Attached to the October 27,
2017 letter were People’s Trust’s Estimate of Scope of Repairs, a copy of
the endorsement, and a work authorization form.
On March 27, 2018, Insureds’ counsel sent People’s Trust a letter that
stated, in its entirety:
Dear [People’s Trust claims adjuster]:
Enclosed please find the following documentation:
1. Executed Work Authorization 2. Executed Sworn Proof of Loss with supporting estimate from [Insureds’ public adjuster]
The executed work authorization form had several provisions struck through,
including the provision requiring Insureds to pay the $6,800 deductible prior
to the commencement of the repairs. The report of Insureds’ public adjuster
5 estimated that the cost of repairing the damages to Insureds’ home – at
replacement cost value – was $48,153.78.
C. Insureds’ Complaint for Damages
On May 1, 2018, Insureds filed the instant breach of contract action
against People’s Trust, seeking damages for People’s Trust’s failure to make
a loss payment after People’s Trust acknowledged that their loss was
covered. Specifically, the complaint alleged that: (i) under the “terms of the
policy” and section 627.7011(3)(a) of the Florida Statutes, People’s Trust
was “obligated to initially pay at least the actual cash value[2] of the insured
loss, less the policy deductible;” (ii) People’s Trust had “made a payment of
[actual cash value] in an amount that was unilaterally based upon its own
adjuster’s estimate as to the scope of loss constituting the total amount due
for [actual cash value];” and (iii) after Insureds provided People’s Trust with
their sworn proof of loss and a repair estimate notifying People’s Trust of
“substantial differences in the respective parties’ evaluations as to the scope
of the loss constituting the amount of [actual cash value] that was required
to initially be paid,” People’s Trust breached the policy and section
627.7011(3)(a) by “refus[ing] to pay any more [actual cash value] than the
2 “Actual cash value” is generally defined as replacement cost minus depreciation. Trinidad v. Fla. Peninsula Ins. Co., 121 So. 3d 433, 438 (Fla. 2013).
6 amount of its own adjuster’s unilateral estimate . . . .” Importantly, the
complaint does not reference the subject endorsement, People’s Trust’s
exercise of its right to repair under the endorsement, or the endorsement’s
appraisal clause that either party may invoke once People’s Trust exercises
its right to repair. 3
D. People’s Trust’s Response and Ensuing Appraisal
After being served with the complaint, People’s Trust filed a motion to
dismiss Insureds’ complaint and, in the alternative, to compel an appraisal.
As to its motion to dismiss, People’s Trust argued that dismissal was
appropriate because (i) Insureds had breached the policy provisions by suing
People’s Trust rather than invoking their right to demand an appraisal to
resolve the parties’ dispute over the amount of loss and scope of repairs,
and (ii) Insureds had filed the lawsuit before People’s Trust could demand
an appraisal. In the alternative, People’s Trust requested the trial court to
order Insureds to participate in the appraisal process, to sign an unredacted
work authorization form, and, should the appraisal award exceed the $6,800
hurricane deductible, to pay the deductible before Rapid Response Team,
LLC commenced the repairs.
3 In fact, despite People’s Trust having exercised its right to repair in lieu of making a loss payment, Insureds’ complaint erroneously alleged that People’s Trust had actually made an inadequate loss payment to Insureds.
7 Insureds opposed both aspects of People’s Trust’s motion, claiming
that People’s Trust had failed to timely invoke the appraisal process after
People’s Trust first learned (upon receipt of Insureds’ counsels’ March 27,
2018 letter and attachments) of Insureds’ disagreement over the amount of
loss and scope of repairs. The trial court granted People’s Trust’s motion to
compel an appraisal, but reserved ruling on People’s Trust’s motion to
dismiss. The matter went to appraisal and, on December 12, 2018, the
appraisal panel entered an appraisal award for $25,204.70.
E. Insureds’ Summary Judgment Motion and Resulting Proceedings
After the appraisal panel entered its appraisal award, Insureds then
moved for summary judgment, asserting entitlement to money damages for
People’s Trust’s alleged breach of contract premised upon People’s Trust’s
purported violations of sections 627.7011, 627.70131 and 627.7142 of the
Florida Statutes. Namely, Insureds argued that (i) People’s Trust had
violated section 627.7011(3)(a) by failing to make an initial loss payment to
Insureds after acknowledging in its October 27, 2017 letter that Insureds’
loss was covered, 4 and (ii) People’s Trust had violated sections 627.7142
4 Although Insureds did not specifically reference section 627.7011 in their summary judgment motion, the statute was clearly the basis underlying this argument. See Assad v. Mendell, 550 So. 2d 52, 54 (Fla. 3d DCA 1989) (“The function of a motion for summary judgment is to determine if the
8 (insurer’s duty to provide policyholders with the Homeowner Claims Bill of
Rights) and 627.70131(1)(a) (insurer’s duty to acknowledge communications
regarding claims) by failing to respond to Insureds’ counsel’s March 27, 2018
correspondence that notified People’s Trust of their disagreement over the
amount of loss and scope of repairs. 5 According to Insureds, these claimed
statutory violations, combined with People’s Trust’s purported failure to
timely invoke its right to appraisal prior to Insureds filing the lawsuit,
constituted a policy breach entitling Insureds to judgment for damages on
their breach of contract action. Insureds further argued that the measure of
damages should be $18,404.70 – a figure arrived at by subtracting the
subject policy’s $6,800 hurricane deductible from the $25,204.70 appraisal
award. As with their complaint, Insureds’ summary judgment motion makes
no mention of the subject endorsement or People’s Trust’s exercise of its
right to repair thereunder.
respective parties can produce sufficient evidence in support of the operative issues made in the pleadings.”). 5 Although Insureds’ complaint neither cited to sections 627.70131 and 627.7142 nor contained any allegations with respect to People’s Trust’s purported violation of these statutes, People’s Trust did not object to Insureds’ summary judgment motion on the basis that Insureds had sought relief beyond the issues framed by the pleadings. See Reddy v. Zurita, 172 So. 3d 481, 484 (Fla. 5th DCA 2015). Consequently, People’s Trust consented to having these issues adjudicated. Id. at 484, n.5.
9 People’s Trust opposed Insureds’ summary judgment motion, arguing
that it did not violate section 627.7011(3)(a) because its estimate of the
covered damages fell below the $6,800 hurricane deductible and, in its
October 27, 2017 letter, People’s Trust had exercised its right to repair.
People’s Trust argued further that it did not violate section 627.7142 and that
any alleged violation of section 627.70131 was not a breach of the policy
and, therefore, could not form the basis of a breach of contract action. Finally,
People’s Trust argued that, because it had exercised its right to repair,
invoked the appraisal process, and the appraisal award established the
amount of loss and the scope of the repairs, the trial court “should compel
the completion of the repair process.”
After holding two hearings on Insureds’ summary judgment motion, the
trial court entered an April 18, 2019 order granting summary judgment in
favor of Insureds “for the reasons stated on the record at both hearings,” and
directing Insureds “to file a motion for final judgment setting forth the money
damages set forth in the appraisal award less deductible.” Neither hearing
was transcribed by a court reporter.
On May 30, 2019, the trial court entered final summary judgment in
favor of Insureds awarding Insureds $18,404.70 in damages, plus
prejudgment interest. Without further explication, the trial court determined
10 that “[People’s Trust’s] proffered evidence failed to rebut [Insureds’] evidence
– including that it failed to indemnify [Insureds] as required by the contract
policy of insurance.”
People’s Trust timely appealed the trial court’s April 19, 2019 summary
judgment order and the May 30, 2019 final judgment.
II. ANALYSIS 6
Insureds’ summary judgment motion asserted that People’s Trust
breached the insurance contract – thus, entitling Insureds to a final judgment
for repair damages – by violating three different statutory provisions. While
we have no transcripts of the summary judgment hearings, it appears the
trial court agreed with Insureds on each basis. We address each in turn, and
6 “We review the trial court’s orders granting final summary judgment de novo. Similarly, a trial court’s decision construing a contract presents an issue of law subject to de novo review.” Siegel v. Tower Hill Signature Ins. Co., 225 So. 3d 974, 976 (Fla. 3d DCA 2017) (citation omitted). We likewise review the trial court’s interpretation of statutes de novo. Health Options, Inc. v. Palmetto Pathology Servs., P.A., 983 So. 2d 608, 613 (Fla. 3d DCA 2008). The lack of hearing transcripts does not preclude our review. See Seal Prods. v. Mansfield, 705 So. 2d 973, 975 (Fla. 3d DCA 1998) (“Where the appeal is from a summary judgment, the appellant must bring up the summary judgment record, that is, the motion, supporting and opposing papers, and other matters of record which were pertinent to the summary judgment motion. Those are the portions of the record essential to a determination whether summary judgment was properly entered. . . . Consequently, it is not necessary to procure a transcript of the summary judgment hearing, . . . although it is permissible and often helpful to do so.”).
11 then generally address the propriety in this case of awarding Insureds a
judgment for repair damages, in light of People’s Trust’s election of the
policy’s right to repair option.
A. Section 627.7011 of the Florida Statutes
First, Insureds argued below that People’s Trust breached the
insurance contract by violating section 627.7011, governing loss payments
for dwellings insured at replacement cost.
Where, as here, the dwelling is insured for replacement cost, section
627.7011(3)(a) requires the insurer to “initially pay at least the actual cash
value of the insured loss, less any applicable deductible.” 7 This section,
though, is inapplicable when the insurance policy contains, and the insurer
validly exercises, a right to repair clause. See § 627.7011(5)(e) (“This section
does not . . . [p]rohibit an insurer from exercising its right to repair damaged
property in compliance with its policy and s. 627.702(7).”); Prepared Ins. Co.
v. Gal, 209 So. 3d 14, 17 (Fla. 4th DCA 2016) (“A ‘replacement cost policy’
is a policy where the insurer agrees to compensate for a loss without taking
into account depreciation. Such a policy does not prohibit repairing the
7 “The insurer shall pay any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred.” § 627.7011(3)(a), Fla. Stat. (2017).
12 damaged property. In fact, . . . [section 627.7011(6)(b)] expressly provide[s]
that an insurer may limit its liability to the ‘reasonable and necessary cost to
repair the damaged . . . property.’”) (citations omitted). The subject
endorsement gives People’s Trust the option to have its contractor repair the
covered loss in lieu of issuing a loss payment to Insureds, 8 and section
627.7011(5)(e) provides that section 627.7011(3)(a)’s requirement – that the
insurer initially pay its insured the actual cash value of the loss – is
inapplicable when the insurer has elected the policy’s repair option.
In this case, the record reflects that People’s Trust’s October 27, 2017
letter plainly and unambiguously exercised its right to repair the covered loss
under the endorsement. Hence, we are compelled to reverse the trial court’s
summary judgment to the extent it is premised upon People’s Trust’s
violation of section 627.7011.
B. Section 627.70131 of the Florida Statutes
Next, Insureds argued below that, by not responding within fourteen
days to Insureds’ counsel’s March 27, 2018 letter, People’s Trust breached
8 “The new contract formed between the insurer’s preferred and designated contractor under such an endorsement and the insured has been termed a ‘Drew agreement,’ a reference to Drew v. Mobile USA Ins. Co., 920 So. 2d 832 (Fla. 4th DCA 2006).” People’s Tr. Ins. Co. v. Franco, 305 So. 3d 579, 582 (Fla. 3d DCA 2020).
13 the insurance contract by violating section 627.70131(1)(a). This subsection
reads, in its entirety, as follows:
Upon an insurer’s receiving a communication with respect to a claim, the insurer shall, within 14 calendar days, review and acknowledge receipt of such communication unless payment is made within that period of time or unless the failure to acknowledge is caused by factors beyond the control of the insurer which reasonably prevent such acknowledgment. If the acknowledgment is not in writing, a notification indicating acknowledgment shall be made in the insurer’s claim file and dated. A communication made to or by an agent of an insurer with respect to a claim shall constitute communication to or by the insurer.
§ 627.70131(1)(a), Fla. Stat. (2018). This subsection, though, “shall not
apply to claimants represented by counsel beyond those communications
necessary to provide forms and instructions.” § 627.70131(1)(c), Fla. Stat.
(2018) (emphasis added). Further, “[i]f the communication constitutes a
notification of a claim, . . . the acknowledgment shall provide necessary
claims forms, and instructions, including an appropriate telephone number.”
§ 627.70131(2), Fla. Stat. (2018) (emphasis added). Thus, where the insured
is represented by an attorney, the statute requires only that the insurer
acknowledge receipt of those communications that notify the insurer that its
insured is making a claim under the policy. In such instances, the insurer’s
acknowledgment of the claim notification need only provide the insured’s
attorney with the necessary claim forms and instructions.
14 In this case, Insureds’ counsel notified People’s Trust of Insureds’ loss
on September 10, 2017. This communication was clearly a “notification of a
claim” under section 627.70131, triggering People’s Trust’s subsequent
investigation of Insureds’ claim. Insureds, however, made no argument
below with respect to People’s Trust’s acknowledgement of their September
10, 2017 claim notification. Instead, Insureds argued that their counsel’s
March 27, 2018 follow-up communication to People’s Trust – sent in
response to People’s Trust’s October 27, 2017 letter acknowledging that
their loss was covered, but below the policy’s hurricane deductible, and
exercising the right to repair – also constitutes a “notification of a claim”
under the statute. We disagree.
Insureds’ counsel’s March 27, 2018 communication merely provided
People’s Trust with additional information regarding a claim of which
People’s Trust had already been notified and for which it had already
acknowledged coverage. The communication served only to establish a
dispute between the parties over the amount of loss and scope of repairs of
this covered claim; it did not constitute a “notification of claim” for the
purposes section 627.70131. Hence, we are compelled to reverse the trial
court’s summary judgment to the extent that it was based upon Insureds’
15 erroneous interpretation and application of section 627.70131 to the facts of
this case.
C. Section 627.7142 of the Florida Statutes
Also, Insureds argued below that People’s Trust breached the
insurance contract by violating section 627.7142, governing an insurer’s
obligation to distribute the “Homeowner Claims Bill of Rights.”
The statute requires insurers of residential property to “provide a
Homeowner Claims Bills of Rights to a policyholder within 14 days after
receiving an initial communication with respect to a claim . . . .” § 627.7142,
Fla. Stat. (2018). Among other things, this document must inform claimants
that when they submit a sworn proof of loss to their insurer, they have the
right to make a written request that the insurer timely confirm whether their
claim is covered, denied or being investigated:
YOU HAVE THE RIGHT TO:
....
2. Upon written request, receive from your insurance company within 30 days after you have submitted a complete proof-of-loss statement to your insurance company, confirmation that your claim is covered in full, partially covered, or denied, or receive a written statement that your claim is being investigated.
Id. (emphasis added).
16 In this case, Insureds conceded in their motion for summary judgment
that the subject policy “contains no specific deadline for [People’s Trust’s]
response to a proof of loss.” Insureds argued below that People’s Trust
violated section 627.7142 by not responding within thirty days of its receipt
of Insureds’ sworn proof of loss that accompanied Insureds’ attorney’s March
27, 2018 follow up communication. We disagree.
First, the statute expressly provides that “[t]he Homeowner Claims Bill
of Rights does not create a civil cause of action by any individual policyholder
. . . against an insurer.” Id. Nor, as conceded by Insureds, is the statutory
provision incorporated into the subject policy. Hence, a violation of the
statute cannot form the basis for a breach of contract action.
Second, no statutory violation occurred here because Insureds’
counsel’s March 27, 2018 correspondence contained no written request for
confirmation as to the status of the insurance claim, as required by the
statute’s plain language. Rather, the letter merely stated that Insureds’
counsel had enclosed an executed work authorization form and a completed
sworn proof of loss form. Moreover, by virtue of its October 27, 2017 letter to
Insureds’ counsel, People’s Trust had already informed Insureds that their
claim was covered, but that the damages did not exceed their $6,800
hurricane deductible.
17 Therefore, we are compelled to reverse the trial court’s summary
judgment to the extent that it was based upon Insureds’ erroneous
interpretation and application of section 627.7142 to the facts of this case.
D. Inconsistency, Occasioned by People’s Trust Exercise of its Repair Option, between the Money Judgment for Repairs and the Allegations in Insureds’ Complaint
Finally, because we have reversed all three grounds upon which
Insureds’ summary judgment motion was premised, in order to provide some
limited guidance on remand, we note one additional ground that compels
reversal.
The policy’s appraisal provision – contained within the endorsement –
is available as a dispute mechanism to the parties only if People’s Trust
elects its right to repair option in lieu of making a loss payment. Insureds’
complaint, however, contains no allegations, and the challenged orders do
not contain any findings,9 that People’s Trust improperly exercised the right
to repair option or that the endorsement is otherwise invalid. Quite the
opposite: the trial court ordered an appraisal; Insureds did not appeal the
9 Insureds concede that the trial court entered summary judgment with “no reservation” regarding People’s Trust’s exercise of its right to repair under the policy endorsement. The final judgment also makes no mention of the endorsement or People’s Trust’s exercise of the repair option contained therein.
18 appraisal order;10 the appraisal occurred; and the trial court entered a repair
damage judgment for Insureds that relied upon the appraisal award to
calculate the judgment amount.
In light of our conclusions in sections II(A),(B), and (C), supra, in order
for Insureds to obtain money damages for repairs, Insureds, under the
particular facts and circumstances of this case, must plead and prove – and
the trial court must find – either that People’s Trust improperly exercised the
right to repair or that the endorsement is otherwise invalid, and that People’s
Trust breached the insurance contract. See, e.g., Diaz v. Fla. Peninsula Ins.
Co., 204 So. 3d 460, 462 (Fla. 4th DCA 2016); Robinson v. Fla. Peninsula
Ins. Co., 178 So. 3d 947, 948 (Fla. 4th DCA 2015). Because Insureds’
complaint contains no such allegations, 11 we also reverse the summary
judgment in light of the fundamental inconsistency – caused by the
invocation of appraisal as part of the policy’s right to repair option – between
10 A trial court’s interlocutory order compelling appraisal is an appealable, nonfinal order. See Fla. R. App. P. 9.130(a)(3)(C)(iv). 11 Obviously, on remand, we do not know whether: (i) Insureds will seek leave to file an amended complaint; (ii) People’s Trust will seek a ruling on its previously filed motion to dismiss upon which the trial court reserved ruling; (iii) the parties will proceed to allow Rapid Response Team, LLC to perform the repairs pursuant to the appraisal award; or (iv) the parties will pursue other courses of action. Such further proceedings will be left to the sound discretion of the trial court.
19 the trial court’s award of repair damages to Insureds and the breach of
contract action pled by Insureds. See Brumer v. HCA Health Servs. of Fla.,
Inc., 662 So. 2d 1385, 1387 (Fla. 4th DCA 1995) (reversing a summary
judgment that had been entered by the trial court because the pleadings
were inadequate, and remanding with instructions that the plaintiff be given
leave to amend to state a viable cause of action).
D. CONCLUSION
Based upon the summary judgment record, we conclude that, contrary
to the assertions in Insureds’ summary judgment motion (and implicit
conclusions by the trial court), People’s Trust did not violate sections
627.7011, 627.70131, or 627.7142 of the Florida Statutes. Further, because,
pursuant to the endorsement in the subject policy, People’s Trust exercised
its right to repair Insureds’ damages – and Insureds have not alleged any
infirmity in People’s Trust’s election of the endorsement or otherwise
challenged the endorsement’s validity – we are compelled to reverse the final
judgment awarding Insureds money damages because the remedy awarded
is inherently inconsistent with the record. We, therefore, reverse the trial
court’s April 18, 2019 summary judgment order and the May 30, 2019 final
summary judgment and remand for further proceedings.
Reversed and remanded.