State Farm insurance office. Photo: Diego M. Radzinschi/ALM

Is an insurance adjuster, who receives a contingency fee, considered "disinterested" when it comes to appraisals?

Define "disinterested."

That was the challenge before the Florida Supreme Court in a case involving a homeowner and State Farm Florida Insurance Co., who were at odds over who should perform the appraisal.

The majority agreed with Florida's Second District Court of Appeal's finding that appraisers cannot be disinterested if they or their firms get "compensated for services as a public adjuster with a contingency fee."

However, in breaking away from his colleagues, Justice Jorge Labarga found "the term 'disinterested' is ambiguous."

"The majority's failure to recognize this ambiguity will result in a financial burden on insureds of limited economic means," Labarga wrote. "I respectfully dissent."

It was not the first time that judges disagreed.

In fact, the issue came before the Florida high court after two lower appellate panels reached conflicting conclusions.

Click here to read the full Florida Supreme Court opinion and Justice Labarga's Dissent

Firm also served as public adjuster

John Parrish, the petitioner, purchased homeowners insurance through State Farm. After damages from Hurricane Irma in 2017, he submitted a claim to the insurance company.

Parrish hired Keys Claims Consultants Inc. to provide public adjusting services, which involved assessing the damage and estimating the cost of repairs. Parrish agreed to pay Keys Claims Consultants a contingency fee equal to 10 percent of whatever amount he eventually recovered from State Farm, according to court documents.

But the insurer and Keys Claims Consultants could not agree on the value of the damages, leading Bobby Sims, a representative of Keys, to send a letter to State Farm.

In that letter, Sims demanded the parties use appraisal to determine the amount of the loss, if they couldn't agree. As part of that process, he said each side would select "a qualified, disinterested appraiser." Sims also noted that Keys Claims Consultants' president, George Keys, would serve as appraiser for Parrish.

State Farm pushed back, requesting that Keys Claims Consultants appoint another appraiser.

"According to State Farm, Mr. Keys could not be considered a disinterested appraiser since his firm was already serving as Mr. Parrish's public adjuster," the majority stated in the Supreme Court opinion.

The high court agreed.

Judge John D. Couriel of Supreme Court of Florida

The opinion's author, Justice John D. Couriel, wrote, "Finding no way around the plain meaning of  the word 'disinterested,' we approve the Second District's decision … and hold that an appraiser cannot be 'disinterested' if he or she, or a firm in which he or she has an interest, is to be compensated for services as a public adjuster with a contingency fee."

In a 5-to-1 decision with 1 non-participation, the court stated, "Mr. Parrish and State Farm did not agree to hire "independent" appraisers. They agreed to hire "disinterested" appraisers.

Chief Justice Carlos G. Muñiz concurred, along with Justices Charles Canady, Jamie R. Grosshans and Ricky Polston.

Justice Renatha Francis did not participate, and Labarga dissented.

The four justices in agreement continued, "From the text and structure of the policy, and in light of the Florida Insurance Code, we have no reason to think the parties' agreement was anything other than to require that each select an appraiser without an interest in the outcome of the claim."

'Can't do that'