PEOPLE'S TRUST INSURANCE COMPANY v. EDOUARD MARZOUKA AND MARIE MARZOUKA

Third District Court of Appeal
State of Florida

Opinion filed May 19, 2021.
Not final until disposition of timely filed motion for rehearing.

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No. 3D19-1988
Lower Tribunal No. 18-15382
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People's Trust Insurance Company,
Appellant,

vs.

Edouard Marzouka and Marie Marzouka,
Appellees.

An Appeal from a non-final order from the Circuit Court for Miami-Dade
County, Pedro P. Echarte, Jr., Judge.

Cole, Scott & Kissane, P.A., and Mark D. Tinker (Tampa); Brett Frankel
and Jonathan Sabghir (Deerfield Beach), for appellant.

Tirado-Luciano & Tirado and Monica Tirado, for appellees.

Before LINDSEY, MILLER and LOBREE, JJ.

LOBREE, J.

People’s Trust Insurance Company (the “insurer”) appeals from a non-
final order denying its motion to dismiss and compel appraisal, as well as

repairs, in the first party proceedings commenced by Edouard and Marie

Marzouka (the “insureds”) below. For the following reasons, we dismiss in

part and affirm in part.

Factual and Procedural Background

The insureds made a claim of property damage due to Hurricane Irma

in 2017. The insurer only partially denied coverage for the alleged loss and

elected to exercise its option to repair the property in lieu of issuing a loss

payment, pursuant to the policy’s relevant endorsement. The insurer also

required the insureds to provide, among other things, an executed form

authorizing work to be performed by the insurer’s preferred contractor,

relying on the policy’s endorsement to that effect. Following receipt of a

proof of loss by the insureds that included an estimate of damage higher

than the insurer’s, the latter demanded appraisal, pursuant to the same

preferred contractor endorsement.

Instead of participating in appraisal, the insureds filed suit, originally

alleging a sole count for breach of contract, but later amending their

complaint to add several other counts seeking declaratory judgment that,

among other things, the policy’s preferred contractor endorsement was

unenforceable due to ambiguity and unconscionability, and the insureds

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were not required to allow the insurer’s preferred contractor to perform any

work. The insurer moved to dismiss the complaint and compel appraisal, the

insureds’ payment of the deductible, and repairs, or to abate the action in the

alternative. It relevantly argued that the repair option, preferred contractor

endorsement, and appraisal provisions were enforceable and, under the

facts, either abatement or dismissal was required. The insureds mainly

responded that the motion should not be granted unless and until the

declaratory judgment counts raising the enforceability issues were fully

disposed of. They argued that, since compelling appraisal or repairs would

logically require or presume a determination of the issues concerning the

enforceability of the very provisions upon which said relief was sought,

granting the insurer’s motion would be the functional equivalent of summary

judgment in the latter’s favor on the declaratory counts challenging those

same provisions. In an unelaborated order, the trial court denied the motion

and ordered the insurer to answer the complaint. This appeal follows.

Jurisdiction

To the extent that the trial court’s order denied appraisal, we have

jurisdiction under Florida Rule of Appellate Procedure 9.130(a)(3)(C)(iv). 1

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The insureds argue that we should dismiss those portions of this appeal
that concern the issues of payment of the deductible and compelling repairs.
Based upon Baptiste v. People’s Trust Insurance Co., 299 So. 3d 1148, 1150

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 Standard of Review

“In reviewing a trial court’s order denying a motion to compel appraisal,

‘factual findings are reviewed for competent, substantial evidence, and the

application of the law to the facts is reviewed de novo.’” People’s Tr. Ins.

Co. v. Garcia, 263 So. 3d 231, 233 (Fla. 3d DCA 2019) (also noting that,

“[w]here the facts are undisputed, a de novo standard of review applies”)

(quoting Fla. Ins. Guar. Ass’n v. Waters, 157 So. 3d 437, 439-40 (Fla. 2d

DCA 2015)).

Analysis

The insurer argues that the trial court erred in failing to order appraisal,

where it timely invoked its right under the policy, and it is undisputed that the

parties disagree on the amount of loss and scope of repairs. The insureds

respond that it would have been premature for the trial court to order

appraisal prior to allowing discovery concerning—and even the resolution

of—their declaratory judgment counts challenging the repair option,

preferred contractor endorsement, and appraisal provisions. This is

because “[t]he appraisal provision [the insurer] seeks to invoke requires the

parties, after appraisal, to resort to the very same repair process to which

(Fla. 3d DCA 2020), we agree and dismiss without prejudice all portions of
this appeal not involving the appraisal determination below.

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the [insureds] have objected on grounds of enforceability, conscionability,

and public policy.”

As we have recently noted, “[t]he election-to-repair endorsement has

been an established option for various Florida insurance policy forms for

several years.” People’s Tr. Ins. Co. v. Franco, 305 So. 3d 579, 582 (Fla. 3d

DCA 2020). Here, upon the insurer’s election to repair and demand of

appraisal, the insureds instead decided to sue for breach of contract on the

indemnity obligation, not the election-to-repair endorsement, and additionally

sought declaratory judgment that the election-to-repair endorsement was not

enforceable, whether as to appraisal or the insurer’s choice of contractor.

As framed by the briefs, the main issue is whether the trial court erred

in denying appraisal as premature on the basis that the insureds’ complaint

partly sought a declaration that the policy provisions requiring appraisal were

unenforceable, which merits determination was deemed necessary before

appraisal could be compelled. We answer this question in the negative.

As a preliminary determination in ruling on a motion to compel

appraisal, a trial court must assess “whether an arbitrable issue exists.”

Citizens Prop. Ins. Corp. v. Mango Hill Condo. Ass’n 12 Inc., 54 So. 3d 578,

581 (Fla. 3d DCA 2011) (reversing order compelling appraisal where no

exchange of information, pursuant to post loss obligations, had yet taken

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place). Additionally, as we have previously explained, such motions “should

be granted whenever the parties have agreed to [appraisal] and the court

entertains no doubts that such an agreement was made.” Preferred Mut.

Ins. Co. v. Martinez, 643 So. 2d 1101, 1103 (Fla. 3d DCA 1994) (reversing

denial of motion to compel appraisal) (emphasis added).

Here, it was clear below that the parties disagreed as to the amount

and scope of loss and that a written agreement to submit such a dispute to

appraisal existed. Accordingly, appraisal was required. See People’s Tr.

Ins. Co. v. Fernandez, 46 Fla. L. Weekly D444, D444 (Fla. 3d DCA Feb. 24,

2021) (“The facts are undisputed: PTI conceded coverage, and Fernandez

timely submitted his scope of loss estimate which disagreed with PTI’s scope

of loss estimate. At that point, the trial court needed to evaluate whether all

post-loss obligations had been met and whether appraisal was ripe before

proceeding further.”).

The insureds respond that appraisal was premature because they

challenged the validity of the provision itself through several counts for

declaratory judgment. Although no opinion squarely addresses the issue,

we find several authorities to be instructive and in support of the conclusion

that the insureds’ argument is correct under these facts.

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 In Cincinnati Insurance Co. v. Cannon Ranch Partners, Inc., 162 So.

3d 140 (Fla. 2d DCA 2014), the insured sued its insurer for breach of contract

only but, in successfully opposing the insurer’s motion to compel appraisal,

they argued—and the trial court concluded—that the appraisal provision’s

language was not mandatory. Id. at 142. The trial court explained that the

provision was not mandatory because it “allowed [the insurer] to retain the

right to deny the claim following a proper appraisal.” Id. at 143. In rejecting

the argument, the Second District Court of Appeal explained:

While the trial court did not expound on the reasoning
behind its decision, it could not have found the
appraisal clause to be unenforceable unless the
clause violated either statutory law or public policy.
[The insured] points to no statutes or public policy
considerations that are violated by this “retained
rights” provision. Moreover, controlling Florida Law
permits “retained rights” provisions, and these
provisions do not render the appraisal clause
unenforceable. Hence, the trial court erred to the
extent it found that [the insurer] could not demand an
appraisal due to the language of the appraisal clause
being unenforceable as inconsistent or violative of
public policy.

Id. (citations omitted) (reversing denial of motion to compel appraisal and

remanding for appraisal and abatement of suit). Similarly, in Paradise Plaza

Condominium Ass’n v. Reinsurance Corp. of New York, 685 So. 2d 937, 939

(Fla. 3d DCA 1996) (holding that reservation of insurer’s right to contest

coverage does not render damage appraisal clause “void for lack of

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mutuality”), we affirmed an order compelling appraisal despite the insured’s

argument that the appraisal clause was “invalid on its face.”

However, trial courts ordinarily have the discretion to decide the order

in which appraisal and coverage determinations are made. Barbato v. State

Farm Fla. Ins. Co., 46 Fla. L. Weekly D597, D597 (Fla. 3d DCA Mar. 17,

2021). Analogously, where declaratory counts challenging the enforceability

of an appraisal clause exist, courts must enjoy no less power to decide

whether to address such arguments in an adjudication of the merits of such

counts, or in response to a motion to compel appraisal, before the appraisal

can be enforced, as well as to decide whether an evidentiary hearing is

warranted. Cf. Higgins v. State Farm Fire & Cas. Co., 894 So. 2d 5, 18 (Fla.

2004) (holding declaratory judgment was viable vehicle to try coverage

issues, including duty to defend, and recognizing “the trial court’s exercise

of discretion in allowing the declaratory action to be tried prior to the

resolution of the underlying liability action”). This is especially so where

challenges against the enforceability of such clauses require a fact-intensive

inquiry into allegations sounding in fraud, which the trial court is called to

settle before they can be enforced. See, e.g., Shotts v. OP Winter Haven,

Inc., 86 So. 3d 456, 464-65 (Fla. 2011) (holding that trial court, not arbitrator,

was responsible for making any determination “[w]ith respect to . . .

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defenses,” such as “fraud, duress or unconscionability,” and even violation

of public policy, “for if an arbitration agreement violates public policy, no valid

agreement exists”).

Here, the complaint sought declaratory judgment in addition to the

breach of contract claim in response to which the insurer sought appraisal.

It alleged that the preferred contractor endorsement was unconscionable or

otherwise unenforceable because: (1) “the insured has no choice but to

accept [the insurer’s] contractor,” “cannot choose the materials used,” and

the insureds were not provided with the contractor’s insurance information,

licensure, or qualifications; (2) it does not specify how the repairs would take

place and is void of basic information; and (3) it is unclear whether the repair

option provision is material to the policy.

Because these are challenges targeting the enforceability of the

appraisal and other policy provisions themselves, the trial court could not

have granted the motion to compel appraisal as to the breach of contract

claim without improperly and prematurely adjudicating these issues with

regard to the declaratory judgment claims. Cf. Express Damage

Restoration, LLC v. First Cmty. Ins. Co., 45 Fla. L. Weekly D2750b, D2750b

(Fla. 3d DCA Dec. 9, 2020) (“[T]o the extent that the trial court decided the

very question of construction that was the subject of the declaratory action,

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the assignee is correct that the court procedurally erred in failing to deny the

motion [to dismiss and compel appraisal].”) (citing Royal Selections, Inc. v.

Fla. Dep’t of Revenue, 687 So. 2d 893, 894 (Fla. 4th DCA 1997) (holding

that, “[i]n determining that the appellant did not state a cause of action, the

trial court actually construed the various ordinances and administrative rules

[at issue],” which “is the very question sought to be answered in the

declaratory action,” and that “the trial court cannot dispose of it on a motion

to dismiss”); and Travelers Ins. Co. v. Emery, 579 So. 2d 798, 799 (Fla. 1st

DCA 1991) (reversing final judgment denying declaratory relief and

remanding for trial court to determine coverage issue requiring construction

of insurance policy)).

The fact that, here, the insureds raised those same enforceability

issues in response to the motion to dismiss and compel appraisal would not

have changed the premature nature of the trial court’s grant of the insurer’s

motion. Cf. Mills v. Ball, 344 So. 2d 635, 638 (Fla. 1st DCA 1977) (“In spite

of the fact that appellant, in his motion to dismiss, raised an issue on the

merits, a ruling by the trial court on the merits at that time was premature.”).

Such an order would have been, as argued by the insureds, the functional

equivalent of summary judgment on those issues for purposes of the

declaratory counts. See Wrightson v. ITT Fin. Servs., 617 So. 2d 334, 336

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(Fla. 1st DCA 1993) (reversing order compelling arbitration, in part, because

trial court erred in finding that no substantial issues of fact regarding validity

of arbitration agreements existed and such issues were not amenable to

resolution as matter of law at that stage). Neither Cannon Ranch Partners,

Inc., nor Paradise Plaza Condominium Ass’n, or any of the cases relied on

by the insurer held otherwise or even considered the specific question

presented to us. Relevantly, the Wrightson court’s implication that the trial

court could have compelled arbitration despite the enforceability challenge,

had no triable issues remained on that issue at that stage, so that a functional

equivalent of summary judgment would not amount to error, is dictum and

does not mean that the trial court was required to compel arbitration under

such circumstances. 617 So. 2d at 336.

Because our review of the record shows that, under these facts, the

trial court neither erred as a matter of law nor in exercising its discretion to

forgo appraisal until it reached the enforceability issues raised in the merits

of the declaratory counts, we affirm that portion of the order.

Dismissed in part; affirmed in part.

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