Client Update – Florida Tort, Procedure, and Insurance Claims
By John Bond Atkinson and Tiffany A. Bustamante
Lowitz v. S. Ala. Brick Co., No. 1D21-1555, 2022 Fla. App. LEXIS 722 (Dist. Ct. App. Feb. 2, 2022)
In a wrongful death case centering around a discovery dispute wherein the defendant sought to discover the mental health records of the decedent, the 1st District Court of Appeal quashed a trial court order granting discovery of said mental health records for not including an in camera review of the records prior to discovery in order to screen for relevancy given the potential for irreparable harm.
Am. Coastal Ins. Co. v. S. Bay Plantation Condo. Ass’n, No. 2D21-794, 2022 Fla. App. LEXIS 958 (Dist. Ct. App. Feb. 11, 2022)
In an appeal of a nonfinal order from the trial court granting, in part, an insured’s motion to stay proceedings and compel appraisal, the 2nd District Court of Appeal reversed the order and remanded the case for an evidentiary hearing regarding ripeness, as the trial court had not determined that all post-loss obligations had been met by the insured.
Huertas v. Avatar Prop. & Cas. Ins. Co., 47 Fla. L. Weekly 277 (Dist. Ct. App. 2022)
In a case appealing a trial court’s grant of summary judgment in favor of an insurer, the 4th District Court of Appeal sided with the insureds, finding that the affidavit in support of the insurer’s motion for summary judgment was insufficient due to containing mostly hearsay, that there was an issue of material fact as to whether the insureds’ inability to answer key questions during their examination under oath substantially complied with their post-loss obligations, and that there was an issue of material fact as to whether the insureds’ sworn proof of loss substantially complied with the insureds’ post-loss obligations.
LOWITZ V. SOUTH ALABAMA BRICK COMPANY, INC. d/b/a W.R. TAYLOR & COMPANY and CHRISTIAN SENN, No. 1D21-1555, 2022 Fla. App. LEXIS 722 (Dist. Ct. App. Feb. 2, 2022)
In Lowitz v. South Alabama Brick Company, the Petitioner (Mr. Lowitz) sought review of a trial court’s grant of a motion to strike the objection of Mr. Lowitz to the discovery of decedent David Lowitz’s mental health records via subpoena. Ultimately, the court sided with Mr. Lowitz, finding that the trial court was required to conduct an in camera review of the subpoenaed mental health records to screen for relevancy, which the trial court failed to do.
Mr. Lowitz brought a wrongful death lawsuit against South Alabama Brick Company, Inc. and Christian Senn (“South Alabama”) for the death of David Lowitz. Alleged damages included loss of support and services, loss of companionship and protection, mental pain and anguish, and loss of prospective net accumulations. In the course of the proceedings, South Alabama raised comparative fault as an affirmative defense and filed a notice of production from non-parties and a subpoena ordering David Lowitz’s mental health care provider to produce records related to David Lowitz’s treatment. Mr. Lowitz objected and moved for a protective order. In turn, South Alabama moved to strike Mr. Lowitz’s objection. The trial court granted South Alabama’s motion, allowing the discovery of David Lowitz’s mental health records. Significantly, the order from the trial court did not require an in camera review of the mental health records prior to discovery. Therefore, Mr. Lowitz petitioned the 1st District Court of Appeal (“the DCA”).
The DCA ordered South Alabama to show cause. From the outset, the DCA noted that certiorari was the proper vehicle to review orders compelling the production of such privileged records. “If Petitioner shows a preliminary basis for relief, then Respondents bear the burden of showing why relief should not be granted.” The court, citing Bd. of Trs. of Internal Improvement Tr. Fund v. Am. Educ. Enters., LLC, 99 So. 3d 450, 454 (Fla. 2012), explained that there were three things a successful petition must demonstrate: “‘(1) a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the case[,] (3) that cannot be corrected on post-judgment appeal’” (internal citations omitted). The court first turned to the second and third factors, the “irreparable harm” prong of the test which determines whether the DCA has jurisdiction over the matter. Citing Zarzaur v. Zarzaur, 213 So. 3d. 1115, 1117 (Fla. 1st DCA 2017), the court found that an order requiring the disclosure of communications protected by psychotherapist-patient privilege constitutes irreparable harm.
Critically, the DCA also found that the trial court’s order allowing for the discovery of David Lowitz’s mental health records departed from the essential requirements of the law because it did not require an in camera review of the mental health records to ensure that only relevant records were produced. While the mental health records were found to be relevant and discoverable because of their relation to Mr. Lowitz’s alleged damages, the DCA, citing Whittington v. Whittington, No. 1D21-2117, 2021 WL 5915648 (Fla. 1st DCA Dec. 15, 2021), found that “the trial court must conduct an in camera review before Respondents may discover [David] Lowitz’s mental health records ‘to ensure that only relevant records are produced . . . .’” The DCA, therefore, quashed the trial court’s order and remanded the case.
While Lowitz involved psychotherapist-patient privilege, the case, nonetheless, is relevant to the attempted discovery of other kinds of privileged documents. Failure to ensure that sensitive documents receive an in camera review before the opposing party is given the opportunity to discover said records can be devastating to a client. If counsel fails to petition for review of an order like that at issue in Lowitz, then such irreparable harm may result.
AMERICAN COASTAL INSURANCE COMPANY V. SOUTH BAY PLANTATION CONDOMINIUM ASSOCIATION, INC, No. 2D21-794, 2022 Fla. App. LEXIS 958 (Dist. Ct. App. Feb. 11, 2022)
In American Coastal Insurance Company v. South Bay Plantation Condominium Association, American Coastal Insurance Company (“ACIC”) appealed a nonfinal order granting, in part, South Bay Plantation Condominium Association’s (“South Bay”) motion to stay proceedings and compel appraisal. ACIC argued that South Bay’s demand for appraisal was not ripe, and therefore the trial court erred. The Court of Appeal agreed with ACIC.
South Bay filed a claim with its insurer, ACIC, for property damage caused by Hurricane Irma. South Bay and ACIC were unable to agree on the amount of the loss, and ACIC ultimately denied the entire claim. The claim was denied on the grounds that South Bay allegedly failed to satisfy its post-loss obligations and made misrepresentations of fact regarding the loss. This prompted South Bay to demand an appraisal pursuant to the terms of the subject policy. ACIC refused, resulting in South Bay filing a lawsuit for breach of contract.
ACIC filed an amended answer, affirmative defenses, and counterclaim, wherein ACIC alleged that coverage was barred due to South Bay’s “gross inflation of its claim” and failure to satisfy the post-loss conditions. In response, South Bay moved to stay the proceedings and compel appraisal, which was granted by the trial court. ACIC appealed, arguing that the demand for appraisal was not yet ripe.
The 2nd District Court of Appeal (“DCA”) noted that “A demand [for appraisal] is ripe where postloss conditions are met, ‘the insurer has a reasonable opportunity to investigate and adjust the claim,’ and there is a disagreement regarding the value of the property or the amount of loss,” citing Am. Cap. Assur. Corp. v. Leeward Bay at Tarpon Bay Condo. Ass’n, 306 So. 3d 1238, 1240 (Fla. 2d DCA 2020). The DCA then cited State Farm Fla. Ins. Co. v. Hernandez, 172 So. 3d 473, 476-77 (Fla. 3d DCA 2015), to reiterate that the “party seeking appraisal must comply with all post-loss obligations before the right to appraisal can be invoked under the contract.”
The source of the trial court’s confusion seems to be Am. Capital Assurance Corp. v. Leeward Bay at Tarpon Bay Condo. Ass’n, 306 So. 3d 1238, 1239 (Fla. Dist. Ct. App. 2020), which allowed the parties in that case to proceed with discovery and appraisal simultaneously. In South Bay, the DCA clarified that their earlier Leeward Bay decision is distinguishable because it did not involve the insured’s alleged failure to comply with postloss conditions. The DCA found that “[b]ecause the trial court did not make a preliminary decision on whether South Bay complied with its postloss obligations, South Bay’s demand for appraisal was not ripe.” The DCA reversed the trial court’s order compelling appraisal and remanded the case for an evidentiary hearing regarding ripeness.
South Bay shows the importance of looking to whether an insured satisfied their post-loss conditions if the insured demands appraisal that an insurer believes is not ripe. It is vital that one has counsel knowledgeable in such procedural matters as ripeness unique to first-party claims in order to avoid needless costs such as the appraisal at issue in South Bay.
MARCO HUERTAS and MIOZOTI HUERTAS V. AVATAR PROPERTY & CASUALTY INSURANCE COMPANY, 47 Fla. L. Weekly 277 (Dist. Ct. App. 2022)
Huertas v. Avatar Property & Casualty Insurance Company saw insured homeowners appeal a grant of summary judgment in favor of their homeowner’s insurance carrier. The Court of Appeal determined that the trial court erred in granting summary judgment. This was both because the affidavit in support of the granted motion (which was the only justification given by the trial court for their decision to grant the insurer’s motion as opposed to the insured’s motion) was legally insufficient and because whether or not the insureds substantially complied with their post-loss requirements to submit a certified proof of loss and to sit for an examination under oath were matters of fact for the jury, precluding summary judgment.
The Huertas suffered a plumbing leak resulting in water damage to their home, and subsequently filed a claim with their insurer, Avatar. One of the conditions under the subject policy for stating a claim was that the insureds must file a sworn proof of loss (“SPOL”). After receiving the necessary SPOL and conducting an inspection, Avatar informed the Huertas that the property damage was a covered loss. Two months after the SPOL was submitted, however, Avatar informed the Huertas that their SPOL was insufficient and provided the Huertas with a form meant to act as a new SPOL. Avatar also asked them to submit to an examination under oath (“EUO”), which was then conducted.
Thereafter, Avater denied the claim, alleging that numerous post-loss procedures were violated by the Huertas, including due to the Huertas’ inability to answer all questions presented to them during their EUO and the failure to submit a fully compliant SPOL within the required timeframe. The Huertas responded by filing a complaint alleging breach of contract. During the proceedings, both parties filed motions seeking summary judgment. The trial court granted summary judgment in favor of Avatar. Unfortunately, the summary judgment order from the trial court provides virtually no analysis regarding its decision, but did indicate that Avatar “filed an affidavit in support of its motion . . . while [Homeowners] failed to provide an affidavit in opposition.” The Huertas did, however, attach an affidavit of their expert witness to their memorandum of law in support of their summary judgment motion. On appeal, the Huertas argued that Avatar’s evidence was insufficient to establish the lack of a genuine issue of material fact and appeal the summary judgment decision of the trial court.
At the time the summary judgment was issued, Avatar had the burden to show conclusively that no genuine issue of material fact existed, such that all reasonable inferences which may be drawn in favor of the Huertas are overcome. The 4th District Court of Appeal (“DCA”) noted that the standard has since changed and now mirrors the federal standard. The DCA found that the “fail[ure] to provide an affidavit in opposition” to Avatar’s motion for summary judgment is an insufficient basis upon which to grant summary judgment. The DCA explains that the party against whom a motion for summary judgment is filed is not required to make any showing in support of its position until the moving party has bet its burden of production. However, Avatar’s affidavit in support of its motion for summary judgment “contain[ed] primarily inadmissible hearsay.” The DCA cited Fla. R. Civ. P. 1.510(e), which provides that for an affidavit to be admissible, it “must be made on personal knowledge, must set forth such facts as would be admissible in evidence, and must show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all documents or parts therein referred to in an affidavit must be attached thereto or served therewith.” The DCA then noted Everett v. Avatar Prop. & Cas. Ins. Co., 310 So. 3d 536, 539 (Fla. 2d DCA 2021), which held that when a supporting summary judgment affidavit fails to comply with Rule 1.510(e)’s requirements, it is legally insufficient to support the entry of summary judgment in favor of the moving party.
The DCA additionally cited Rodriguez v. Avatar Prop. & Cas. Ins. Co., 290 So. 3d 560, 563 (Fla. 2d DCA 2020), which found that a similar affidavit filed by Avatar in that case “was insufficient as a basis for summary judgment” because it “include[d] matters upon which the affiant has failed to demonstrate a personal knowledge or competency, and it contains unsupported opinions and conclusions of fact and law.”
Subsequently, the DCA pointed out two significant questions of material fact raised by the Huertas: “(1) Homeowners’ purported failure to submit a valid SPOL in a timely manner, and (2) Homeowners’ purported failure to provide meaningful EUOs due to their inability to answer several key questions posed by Insurer at the examination.” The DCA again cited Rodriguez, which held that “for there to be a total forfeiture of coverage under a homeowner’s insurance policy for failure to comply with post-loss obligations (i.e. conditions precedent to suit), the insured’s breach must be material.” Elaborating, the DCA stated that “[f]ull compliance with all post-loss provisions is not necessary to recover under an insurance contract, only substantial compliance” is required. Lopez v. Avatar Prop. & Cas. Ins. Co., 313 So. 3d 230, 236 (Fla. 5th DCA 2021) found substantial compliance to be “performance ‘so nearly equivalent to what was bargained for that it would be unreasonable to deny’ the other party the benefit of the bargain.” (internal citations omitted).
Avatar argued that the Huertas did not substantially comply with their post-loss obligations, but the DCA recalled that Avatar had made a similar argument in a similar case, Himmel v. Avatar Property & Casualty Insurance Co., 257 So. 3d 488 (Fla. 4th DCA 2018). In Himmel, Avatar claimed that the insured has submitted a deficient SPOL and had failed to appear for this EUO. However, the insured presented extensive evidence that he had repeatedly attempted to reschedule the EUO but had been unsuccessful. In that case, the DCA, by their own description, “determined in no uncertain terms that both issues [of the failure to appear for the EUO given the attempts to reschedule and the deficient SPOL] present material questions of fact for the jury to address.” Elaborating on the EUO issue, the DCA held that if “the insured cooperates to some degree [with an insurer’s request for an EUO] or provides an explanation for its noncompliance, a fact question is presented for resolution by the jury.”
Because the Huertas had cooperated to some degree, this presented an issue of fact for the jury. Additionally, the DCA again cited Himmel to inform the parties that “[w]hen an insured does submit a sworn proof of loss, . . . the issue of whether the submitted document ‘substantially complie[s] with policy obligations is a question of fact’ which precludes the entry of summary judgment.” Therefore, the DCA found that the trial court’s grant of summary judgment was in error and reversed and remanded for further proceedings.
An EUO is one of the insurance carrier’s most effective tools for discovery and combating fraudulent claims. This case demonstrates the nuance under Florida law with respect the degree of an insured’s cooperation. Huertas also demonstrates the importance of a party supporting their summary judgment motions with affidavits which are admissible, and thus which rely on personal knowledge and facts which would be admissible as evidence. Failing to do so, as Huertas shows, can be fatal.
Atkinson, P.A. is committed to providing you with sound guidance, representation, and defense in response to these complex legal issues and we will continue to monitor noteworthy cases. Should you have any questions with respect to this update, please feel free to contact our partners directly.
John Bond Atkinson 305-376-8840
Tiffany A. Bustamante 305-376-8856