When the insured had not complied with his post-loss obligations, the insurer could not conduct a meaningful investigation in order to adjust the claim, and it was error to grant the insured’s motion to compel appraisal.

In State Farm Fla. Ins. Co. v. Hernandez, 2015 Fla. App. LEXIS 9215, State Farm appeals the trial court’s non-final order compelling appraisal of Alfredo Hernandez’s supplemental Hurricane Wilma claim. This appeal stems from a supplemental Hurricane Wilma insurance claim that was filed after the homeowner obtained a public insurance adjuster. This particular supplemental claim was filed five years after the insurer paid the initial claim of loss filed by Hernandez. The record reflects that Hurricane Wilma struck Miami on October 24, 2005, and that within one month of Hernandez’s claimed loss, State Farm paid Hernandez $36,858.80 (after subtracting the $5260 deductible) to cover the repairs, which included $27,800 for a full roof replacement. Hernandez did not complete the roof repair until nearly a year later because he was unable to acquire the proper roof tiling. Hernandez claims he noticed additional damage, including water stains, damage to the wiring and walls, and leaking in the roof sometime after State Farm’s initial payment. Allegedly based on these additional damages, Hernandez renovated his entire home by replacing the floor tiles throughout the house; replacing the sinks, tubs, toilets, faucets, tiles, and lighting fixtures in the three bathrooms; replacing all of the cabinets and appliances in the kitchen; replacing some windows and window sills; and repainting various areas in and around the home. Although these renovations were completed in early 2007, Hernandez did not contact State Farm before, during, or after these repairs were made to allow inspection by State Farm. Hernandez only sparsely documented his costs with checks and receipts for only a few of the claimed repairs, and he claims that he paid cash for a substantial portion of the renovations.

In November 2010, Hernandez contacted State Farm claiming he was entitled to supplemental damages under the terms of the policy. In response, State Farm requested a sworn proof of loss and any supporting documentation. Hernandez submitted his initial sworn proof of loss claiming he was entitled to an additional $201,038.84 in damages. Hernandez’s sworn proof of loss included the public adjuster’s estimate to replace Hernandez’s roof in the amount of $53,000 even though State Farm had already paid Hernandez $27,865 within one month of the storm to replace his roof and Hernandez had fully replaced his roof by 2006.

Recognizing that his first sworn proof of loss for the supplemental claim had falsely included a claim for $53,000 to replace the roof, which had already been replaced in 2006 for $27,865—not the $53,000 sworn to by Hernandez—Hernandez filed a second sworn proof of loss for his supplemental claim wherein he reduced his supplemental claim from $201,038.84 to $168,346.12. This second sworn proof of loss, however, still included a claim to replace the roof for $27,800, which Hernandez admits State Farm had already paid in 2006.

In May 2011, Hernandez’s supplemental claim changed again. When Hernandez testified at his Examination Under Oath (“EUO”), he stated that, in addition to the roof replacement and repairs for which he had already been compensated based on his original 2005 claim, he spent approximately $65,000 to make additional repairs to his home rather than the $201,038.84 he claimed in his first sworn proof of loss or the $168,346.12 he claimed in his second sworn proof of loss.

In October 2011, State Farm paid Hernandez an additional $1300 based on the additional costs Hernandez claimed he had incurred to replace his roof—damages to which State Farm had already admitted coverage and timely paid. State Farm did not pay the remainder of Hernandez’s supplemental claim. Thereafter, Hernandez filed suit for breach of contract and then moved to compel appraisal based on an appraisal clause in his insurance policy, which states, in relevant part: “Appraisal. If you and we fail to agree on the amount of loss, either one can demand that the amount of the loss be set by appraisal.” After conducting an evidentiary hearing, the trial court found that Hernandez had “sufficiently” complied with his post-loss obligations and granted Hernandez’s motion to compel appraisal. State Farm timely appealed.

The Third District Court of Appeal of Florida found the record reflected that Hernandez had not complied with several of his post-loss obligations under the insurance policy. Hernandez did not provide immediate notice or keep records of the claimed supplemental loss, did not notify State Farm within 60 days after his repairs were completed, did not provide sufficient documentation of the damages and repairs, and he had submitted three different sworn statements regarding his supplemental claim. These breaches were both substantial and material, especially since Hernandez completed the repairs to his home nearly five years before submitting his supplemental claim, and the breaches entirely foreclosed State Farm’s ability to investigate and adjust Hernandez’s claim. Additionally, the Court noted that State Farm was denied a meaningful opportunity to investigate Hernandez’s supplemental claim to determine if the claimed losses were, in fact, based on damages as opposed to the owner’s mere desire to renovate his home. Further, if the claimed losses were based on actual damages to the house, State Farm did not have the opportunity to investigate whether the damages were as a result of Hurricane Wilma, negligence by Hernandez, negligence by the roofer who installed the new roof, or due to some other cause. Because Hernandez had not complied with his post-loss obligations, State Farm cannot conduct a meaningful investigation in order to adjust the claim. Therefore, the Court reversed the trial court’s order under review and remanded this case back to the trial court for proceedings consistent with this opinion.