Which Comes First, the Coverage or the Costs? Unraveling Florida’s “Dual Track Basis” Approach to Appraisal Where Coverage Has Not Been Determined


I know this is unfair, but off the top of your head, answer me this:

Should coverage of a disputed loss be determined BEFORE the amount of loss is calculated? Should it be the other way around?

Or should we be free to explore the determination of both exclusively in conjunction, or better stated, at the same time?

If you’re conflicted, I have (great?) news for you: you’re not alone! Florida courts have been struggling to find a consistent response to such a determination. And it all started with a 2010 appellate decision issued from Florida’s 3rd District Court of Appeals (DCA) arising from a dispute between an insured and insurer. In Sunshine State Ins. Co. v. Rawlins, the issue on appeal was whether the lower court of Miami-Dade Circuit Court had properly issued its Order allowing appraisal to go forward while preserving the insurer’s right to contest coverage. Rawlins, relying on its earlier decision in Paradise Plaza, determined that having a bright-line rule of placing the issue of coverage first before arbitration “might have adverse effects on the expeditious, out of court disposition of litigation, which is the reason arbitration is a favored remedy.”[1] Thus, the term of art “dual track basis” came into fruition in the context of allowing appraisal to go forward while simultaneously attempting to determine coverage as a matter of law.

Later that same year, in Broward County Circuit Court, another appeal was underway, this time headed to the 4th DCA for an action between an insurer and its insured. However, this Court relied on its own decision, which came to a different conclusion regarding appraisal. In Citizens Prop. Ins. Corp. v. Mich. Condo Ass’n, the issue on appeal was similarly the lower court granting an insured’s motion to compel appraisal before resolving the underlying coverage dispute. Citizens, relying on its earlier decision in Sunshine State Ins. Co. v. Corridori, however, determined that a trial court “must resolve all underlying coverage disputes prior to ordering appraisal.”[2] The insured here attempted to rely on Rawlins to argue the dual track basis be employed. However, the 4th DCA affirmed its prior decision which it contended was supported by the holding in Engle v. Liggett Group, Inc., 945 So.2d 1246, 1262-63 (Fla. 2006), (holding that a finding of liability must “precede[s] a determination of damages”) and officially certified conflict with the 3rd DCA.[3]

Since then, there has been a constant disconnect of the DCA’s regarding which method should be enacted all throughout the process. Now, let me be clear: Florida has determined that the issue of coverage (when in dispute) falls into the purview of the Court and outside the scope of appraisal.[4] However, where coverage has been admitted by the insurer, amount of loss determinations may be made within the scope of the appraisal process.[5] Despite this ruling, these conflicting positions exist.

Several courts have attempted to weigh in on the subject matter, and in some cases, even caused further confusion (pay attention to the language, because here is where it gets a bit difficult to see what reasoning is being followed).

  • In one matter, the United States District Court for the Southern District of Florida ruled in accordance with Corridori, citing to Johnson, recommending that while any challenge of coverage exists, the claim should not be submitted to appraisal until coverage has been determined by the Court.[6]
  • In another matter, the United States District Court for the Middle District of Florida ruled that, where the loss is covered for SOME of the damage, and the parties simply disagree as to the EXTENT of the coverage (i.e., admitting interior damages were covered, but not the roof, since both damages arise from the same loss), the matter CAN go to appraisal.[7]

Finally, in 2020, the 2nd DCA joined the 3rd DCA’s adoption of the dual track approach in Am. Capital Assur. Corp.[8] when it relied on its former opinion in Admiralty House, which echoed the 3rd’ DCA’s holding in Mango Hill[9] that a trial court could compel appraisal when it determines that post-loss conditions have been met, the insurer has had a reasonable opportunity to investigate and adjust the claim, and there is a disagreement as to the VALUE of the loss.

So, it seems like the standard as set forth in Johnson by the Florida Supreme Court is still the standard when it comes to a trial court’s discretion to refer a case to appraisal. This standard is being retained and defended vehemently by the 4th DCA. However, the 2nd and 3rd DCA have created what they believe is a legitimate carve-out when reading Johnson, in conjunction with their own previous rulingss, and create a question for the trial court where coverage for a loss has been conceded by the insurer, but what remains is the extent of that concession in the context of what damages are to be afforded payment. This can lead to great amounts of time being spent reviewing the most minute details of a covered claim, and ultimately go against the intent of the court, which ultimately was judicial economy. Especially when DCA’s are having to review the legitimacy of an argument and having to differentiate between the claim of coverage versus extent of damage. Nonetheless, one thing is for certain: any attorney you employ in such a claim must readily be aware of the ever-shifting landscape and be adept at differentiating your claim in the light most favorable for you, and whether appraisal is the best avenue to relief in your case.

If you have a question regarding this article, or your claim in general, follow the link here, email us at info@schirmerlaw.com, call us at 754-260-5410, or stop by our Fort Lauderdale office for a free consultation. Your Loss is Our Concern.

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[1] Sunshine State Ins. Co. v. Rawlins, 34 So. 3d 753, 755 (Fla. 3d DCA 2010) (quoting Paradise Plaza Condo. Assoc., Inc., v. The Reinsurance Corp. of New York, 685 So. 2d 937 (Fla. 3d DCA 1996))

[2] Citizens Prop. Ins. Corp. v. Mich. Condo. Ass’n, 46 So. 3d 177, 178 (Fla. 4th DCA 2010) (quoting Sunshine State Ins. Co. v. Corridori, 28 So. 3d 129, 131 (Fla. 4th DCA 2010)).

[3] The 4th DCA appreciated the 3rd’s rationale of judicial economy but felt bound by their interpretation of the holding in Engle v. Liggett Group, Inc., 945 So.2d 1246, 1262-63 (Fla. 2006), a Florida Supreme Court case.

[4] Johnson v. Nationwise Mutual Ins. Co., 828 So.2d 1021, 1025 (Fla. 2002)

[5] Id., (quoting and adopting Gonzalez v. State Farm Fire & Cas. Co., 805 So.2d 814 (Fla. 3rd DCA 2000)).

[6] James D. Nall Co. v. Hartford Cas. Ins. Co., No. 10-24215-CIV, 2011 U.S. Dist. LEXIS 169031, at *4 (S.D. Fla. Nov. 15, 2011)

[7] In Fouladi v. Geovera Specialty Ins. Co., No. 6:18-cv-326-Orl-40KRS, 2018 U.S. Dist. LEXIS 135787, at *13 (M.D. Fla. Apr. 30, 2018), the Court relied on Arvat Corp. v. Scottsdale Ins. Co., No. 14-22774-GAYLES/TUR, 2015 U.S. Dist. LEXIS 146092, at *8 (S.D. Fla. Oct. 28, 2015) (holding that where Insurer acknowledges that a covered peril caused PART of the damage, and only disputes the extent of those costs, the matter is ripe for appraisal).

[8] Am. Cap. Assurance Corp. v. Leeward Bay at Tarpon Bay Condo. Ass’n, 306 So. 3d 1238, 1242 (Fla. 2d DCA 2020)

[9] Citizens Prop. Ins. Corp. v. Mango Hill Condo. Ass’n 12 Inc., 54 So. 3d 578, 581 (Fla. 3d DCA 2011)