SFR's self-generated sworn statement in proof of loss was for $1,289,977.34, while Empire's investigation concluded that damage to five of the six buildings was below the deductible.

On April 18, 2019, SFR sued Empire, asserting that it had breached the insurance policy it had issued to Ibis Point.

On May 29, 2019, Empire sent a letter to SFR invoking the right to appraisal and identifying its own appraiser. SFR did not select its own appraiser and instead requested proof of notice to Ibis Point or SFR of the right to participate in a mediation program pursuant to a policy provision and Fla. Stat. § 627.7015. The policy provision required that Empire notify Ibis Point of a right to participate in "the mediation program" as a condition precedent to appraisal.

Empire argued that the provision did not apply because Ibis Point, the policyholder, was not involved.

SFR followed up seeking confirmation of compliance with the notice requirement, while also selecting an appraiser.

Empire objected to the choice of appraiser and also formally responded that notice was not required because it had no bearing on appraisal with SFR, as assignee from Ibis Point.

Ultimately, SFR agreed in writing to participate in the appraisal process but on the condition that it be permitted to use its chosen appraiser.

Empire moved to compel appraisal under the policy, including the requirement to select a competent, impartial appraiser, and to stay the litigation.

Empire argued that notice of the program did not apply to an assignee such as SFR, only to the policyholder.

SFR countered that because Empire failed to notify it of the right to participate in the mediation program, it was not required to submit to the appraisal process as a precondition to suit.

The Empire Policy

The Empire policy provided that if the parties:

Disagree on the value of the property or the amount of loss, either may request an appraisal of the loss, in writing. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:

1. Pay its chosen appraiser; and

2. Bear the other expenses of the appraisal and umpire equally.

If there is an appraisal, we will still retain our right to deny the claim.

However, you are not required to submit to, or participate in, any appraisal of the loss as a precondition to action against us for failure to pay the loss, if we:

1. Requested mediation and either party rejected the mediation result; or

2. Failed to notify you of your right to participate in the mediation program.

(Emphasis added.)

The District Court's Decision

The district court granted Empire's motion.

In its decision, the district court explained that an insurer's failure to provide notice to the policyholder relieved the policyholder of the obligation to participate in the appraisal process as a precondition to suit. According to the district court, "once a dispute has arisen, an insurer may not demand appraisal under the policy and pursuant to [Fla. Stat. §] 627.7015, prior to providing the insured with notice of the right to mediate." It added that an insurer that did so waived its right to appraisal.

The district court then ruled that "policyholder" did not include an assignee.

Accordingly, it concluded, because the notice requirement did not apply to a third-party or assignee, the appraisal process "must move forward" between Empire and SFR.

The case is SFR Services, LLC v. Empire Indemnity Ins. Co., No: 2:19-cv-369-FtM-99NPM (M.D. Fla. Sep. 5, 2019). Attorneys involved include: For SFR Services, LLC, Plaintiff: Aaron B. Thalwitzer, Justin R. Falatek, LEAD ATTORNEYS, Gordon & Thalwitzer, Cocoa Beach, FL. For Empire Indemnity Insurance Company, Defendant: David Thayer Burr, LEAD ATTORNEY, Phillip S. Howell, Galloway, Johnson, Tompkins, Burr & Smith, PLC-Tampa, Tampa, FL.