[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUITU.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
March 19, 2004
No. 03-14183 THOMAS K. KAHN
CLERK
________________________
D. C. Docket No. 02-01169-CV-T-30-TBM
THREE PALMS POINTE, INC.,
individually and on behalf of its members,
Plaintiff-Appellee,
versus
STATE FARM FIRE & CASUALTY CO.,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(March 19, 2004)
Before BLACK, BARKETT and STAHL*, Circuit Judges.
PER CURIAM:
*
Honorable Norman H. Stahl, United States Circuit Judge for the First Circuit, sitting by
designation.
State Farm Fire and Casualty Company (State Farm) appeals the district
court’s ruling on summary judgment that Three Palms Pointe, Inc., a condominium
association, is entitled to recover insurance proceeds for the cost of relocating
residents while the condominium property is undergoing structural repairs. We
affirm.
We review de novo a district court’s grant of summary judgment, applying
the same legal standards as the district court. Whatley v. CNA Ins. Cos., 189 F.3d
1310, 1313 (11th Cir. 1999). Federal Rule of Civil Procedure 56(c) provides that
summary judgment is appropriate only if there are no genuine issues of material
fact. The trier of fact must view all evidence and make all reasonable inferences in
favor of the non-moving party. Haves v. City of Miami, 52 F.3d 918, 921 (11th
Cir. 1995). In a diversity action such as this, we apply the substantive standards of
state (here Florida) law. Erie R.R. Co v. Tompkins, 58 S. Ct. 817, 823 (1938). In
applying state law, we “must decide the case the way it appears the state’s highest
court would.” Ernie Haire Ford, Inc. v. Ford Motor Co., 260 F.3d 1285, 1290
(11th Cir. 2001) (internal quotation marks omitted).
State Farm issued an insurance policy to Three Palms Pointe to cover two of
the latter’s buildings located in St. Petersburg Beach, Florida. The balconies and
walls of the buildings were damaged by long-term exposure to nearby seawater,
2
and Three Palms Pointe submitted a loss claim for the “collapse” of the property.
Though the buildings never actually collapsed, State Farm agreed with Three
Palms Pointe that the “hidden decay” of the buildings constituted an “accidental
direct physical loss” of the property in accordance with the terms of the insurance
policy. In addition to covering such “accidental direct physical loss,” the policy
covered “the cost of replacing or repairing” the buildings.
The parties disagreed as to the amount of the loss and the costs covered by
the policy. Three Palms Pointe elected to enforce the appraisal provision of the
policy, under which the parties would nominate a pair of appraisers whose
determination of the disputed issues would bind both insurer and insured. The
appraisers awarded Three Palms Pointe $11,300,000 for the loss, a value that
included $700,000 to relocate the unit contents of both buildings and $560,000 to
relocate the unit residents while repairs were being made. The award specifically
found both relocation costs to be a “necessary and direct result of the construction
and repair process.” State Farm, however, refused to pay the cost of relocating the
residents, claiming that such an expense was not covered by the policy it issued.
Three Palms Pointe brought suit to enforce payment, and the district court found
that it was bound under Florida law to respect the binding nature of the appraisal
award, from which State Farm appeals.
3
Central to our analysis is the fact that an appraisal occurred.1 In State Farm
Fire & Casualty Co. v. Licea, 685 So. 2d 1285 (Fla. 1996), the Florida Supreme
Court held that if an insurer and an insured party go to appraisal, the insurer can
only dispute coverage for the “loss as a whole.” Id. at 1288.
At issue in Licea was the validity of an appraisal provision that allowed the
insurer to retain its rights to deny the claim even after an appraisal award had been
made. Id. at 1286. (This is the standard form of insurance contract appraisal
provisions and features in the State Farm policy here.) The Florida Supreme Court
held that the appraisal clause was valid despite the unilateral nature of the retained
rights clause, but only to the extent that the clause allowed the insurer to dispute
coverage for the claim as a whole, and not anything less. Id. at 1288. In short,
once an award has been made, the only defenses that remain for the insurer to
assert are lack of coverage for the entire claim, or violation of one of the standard
policy conditions (fraud, lack of notice, failure to cooperate, etc.)—none of which
are at issue here. Id.
In this case, State Farm seeks to challenge coverage with respect to part of
the appraisal award—i.e., the portion of it that deals with covering the costs of
temporarily relocating the persons affected. Licea, however, specifically
1
We reject State Farm’s contention that Azalea v. Am. States Ins. Co., 656 So. 2d 600
(Fla. 1st DCA 1995), should control, as that case did not involve an appraisal.
4
establishes that this is not permitted. Id. Accordingly, we conclude State Farm’s
appeal fails and affirm the result reached by the district court. 2
Given that an appraisal occurred, we hold State Farm may not seek to
challenge coverage with respect to part of the award on appeal.
AFFIRMED.
2
We need not and do not reach the coverage issue.
5