Case: 13-12249       Date Filed: 12/23/2014       Page: 1 of 12


                                                                      [DO NOT PUBLISH]


                  IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT

                                _______________________

                                      No. 13-12249
                                _______________________

                          D. C. Docket No. 0:10-cv-61985-WPD

GARDEN-AIRE VILLAGE SOUTH CONDOMINIUM
ASSOCIATION, a Florida Corporation,

                                                                   Plaintiff – Appellant,

                                             versus

QBE INSURANCE CORPORATION,
a Pennsylvania Corporation,

                                                                   Defendant – Appellee.

                                _______________________

                      Appeal from the United States District Court
                          for the Southern District of Florida
                            ________________________
                                 (December 23, 2014)

Before MARTIN, Circuit Judge, and EATON, ∗ Judge, and HINKLE, ∗∗ District
Judge.

       ∗
          Honorable Richard K. Eaton, United States Court of International Trade Judge, sitting
by designation.
       ∗∗
           Honorable Robert L. Hinkle, United States District Judge for the Northern District of
Florida, sitting by designation
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HINKLE, District Judge:

      An insured who disagrees with a property insurer’s determination of the

amount of a covered loss may have a right under the insurance policy to compel an

appraisal. In this action to compel an appraisal, the parties have debated recurring

questions of Florida law. The recurring questions include these: if the insured does

not comply with the policy’s terms on things like submitting to an examination

under oath or providing an inventory of—or otherwise identifying—the damaged

property, may the insured nonetheless compel an appraisal? Does the answer

depend on whether the noncompliance prejudiced the insurer? If so, who has the

burden of proof on the prejudice issue?

       After a bench trial, the district court ruled for the insurer. On the unusual

facts of this case, this was the correct result, regardless of which side is correct on

the recurring legal questions. We affirm.

                                            I

      Garden-Aire is a 7-story, 126-unit condominium complex in Pompano

Beach, Florida. The complex includes a main building and a separate clubhouse.

The appellant Garden-Aire Village South Condominium Association, Inc. is

responsible for maintaining the complex. The Association obtained insurance

coverage from the appellee QBE Insurance Corporation. On October 24, 2005,

while the policy was in effect, Hurricane Wilma damaged the complex.

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      On October 25, 2005, the Association provided QBE a written notice of loss,

asserting there was damage to the buildings, roofs, windows, and fences. On

November 2, 2005, an adjuster preliminarily inspected the property. He noted

damage, some of which had already been repaired. The adjuster contacted an

expert—a building engineer—to obtain a better assessment of the roofs. The

adjuster also expected to obtain from the Association a further indication of any

damage not visible from the initial inspection.

      By January 24, 2006, the adjuster had received no further specification of

damages from the Association. The Association had spent $12,000 to repair

screens and $16,000 to repair the roofs. Based on information received to that

point, the adjuster later estimated total damages at $45,940.57, not including any

interior damage (the adjuster had not yet inspected the interior) and not including

any further roof damage (the engineer had not yet inspected the roof). The

estimate included the full $16,000 in completed roof repairs, even though the

contractor who did the work attributed only about half of that amount to the

hurricane.

      On January 24, the adjuster called the Association’s president. The

president told the adjuster that the Association “had made various repairs and that

the damages would be well below the deductible.” The deductible was $255,355,

many times higher than the damages calculated to that point. The president

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expressly withdrew the Association’s claim. The adjuster sent the president a letter

confirming the withdrawal, and the adjuster canceled the engineer’s planned

inspection of the roof. So far as QBE knew, the matter was at an end.

      On December 14, 2006, more than a year after the hurricane, the Association

applied for insurance with an unrelated insurer. The Association said the complex

had no unrepaired damage and had suffered no insurance loss within the prior two

years (an accurate statement if, as appeared to be the case, the damage from

Hurricane Wilma was below the deductible).

      In April 2010, more than four years after the hurricane, the Association

began replacing the main building’s roof.

      In the summer of 2010, a public adjuster, who was cooperating with an

attorney, made an unsolicited visit to the Association, asking to investigate a

possible claim against QBE. The Association accepted the entreaty.

      On October 18, 2010, the Association filed this action, demanding an

appraisal of the damage caused by Hurricane Wilma. This was QBE’s first

indication that the Association’s express withdrawal of its claim on January 24,

2006, did not end the matter.



                                          II




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      The policy is written in the first person from QBE’s perspective. It thus

refers to QBE as “we” and the Association as “you.” The policy requires the

Association to “see that the following are done in the event of loss or damage” to

the complex:

               ....

      (2)    Give us prompt notice of the loss or damage. Include a
             description of the property involved.

             ....

      (5)    At our request, give us complete inventories of the damaged
             and undamaged property. Include quantities, costs, values and
             amount of loss claimed.

             ....

      (7)    Send us a signed, sworn proof of loss containing the
             information we request to investigate the claim.

             ....

      (8)    Cooperate with us in the investigation or settlement of the
             claim.

The policy adds: “We may examine any insured under oath . . . about any matter

relating to this insurance or the claim . . . .” The policy says that legal action

cannot be brought against QBE unless there has been “full compliance” with all the

policy’s terms.

      The policy also includes an appraisal provision: “If we and you disagree on

the value of the property or the amount of loss, either may make written demand
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for an appraisal of the loss.” The policy sets out the procedures that will govern an

appraisal.

                                         III

      After filing this lawsuit, the Association provided a sworn proof of loss, but

it included amounts that plainly should not have been included: the roofing

contractor’s estimate for repairing damage the contractor said was unrelated to the

hurricane; the cost of replacing every window in the complex, including those that

were not damaged; and the cost of replacing the windows with higher-cost

“impact” glass rather than with glass of the original quality. The Association

refused to provide an inventory of damaged property—asserting the policy’s

requirement to provide an inventory did not apply to buildings or their

components—and did not otherwise identify the damaged windows. The

Association said the proof of loss should not be taken as a representation that the

identified losses in fact resulted from Hurricane Wilma.

      The Association produced its current president for an examination under

oath. But he knew virtually nothing about the claim, having come to the

Association after the hurricane, and having made no effort to learn even the most

basic information about the claim. So QBE faced a claim that was asserted

roughly five years after the hurricane, after significant repairs, from a now

uncooperative insured who refused to provide even basic information about the

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damage purportedly caused by the hurricane and who submitted a sworn proof of

loss but simultaneously disclaimed its reliability. The Association asserted then,

and asserts now, that the obligation to figure out what was damaged fell solely to

QBE.

                                            IV

       After the bench trial, the district court entered thorough and accurate

findings of fact. The court addressed the significant legal issues raised by the

recurring pattern of a claim and an insured’s alleged failure to comply with terms

of the policy. The issues are governed by Florida law. And the Florida authorities

do not all point one way.

       When the issue is whether an insured may compel an appraisal despite the

insured’s failure to comply with the policy’s terms, there are at least three possible

approaches.

       First, at least when, as here, the policy explicitly calls for this result, the rule

could be that an insured must comply with the policy’s terms and cannot compel

an appraisal without doing so. See U.S. Fid. & Guar. Co. v. Romay, 

, 471 (Fla. 3d DCA 1999) (en banc) (“No reasonable and thoughtful

interpretation of the policy could support compelling appraisal without first

complying with the post-loss obligations.”); see also Goldman v. State Farm Fire

Gen. Ins. Co., 

, 306 (Fla. 4th DCA 1995) (holding that an

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examination under oath was “a condition precedent to suit” under a homeowner’s

policy and that the insured’s failure to comply “preclude[d] an action on the policy

regardless of a showing of prejudice by the insurer”).

      Second, the rule could be that an insured may compel an appraisal if the

insured shows that the failure to comply with the policy’s terms caused no

prejudice. See, e.g., Bankers Ins. Co. v. Macias, 

, 1218 (Fla. 1985)

(holding that a presumption of prejudice arises from an insured’s failure to give

timely notice of a claim and that an insured thus cannot recover unless the insured

proves lack of prejudice); Rodrigo v. State Farm Fla. Ins. Co., 

, 692

(Fla. 4th DCA 2014) (holding that an insured who failed to submit a timely proof

of loss could not recover under a homeowner’s policy because the insured did not

rebut the presumption that the insurer suffered prejudice); Soronson v. State Farm

Fla. Ins. Co., 

, 952-53 (Fla. 4th DCA 2012) (same).

      Or third, the rule could be that an insured may compel an appraisal unless

the insurer shows that the failure to comply with the policy’s terms caused

prejudice. For this proposition the Association cites State Farm Mutual

Automobile Insurance Co. v. Curran, 

(Fla. 2014), though that case

involved a compulsory medical examination for uninsured-motorist coverage—a

requirement the court held not to be a condition precedent to suit—and only three

justices joined the opinion on which the Association relies. See also Whistler’s

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Park, Inc. v. Fla. Ins. Guar. Ass’n, 

, 845 (Fla. 5th DCA 2012)

(holding that the failure of an insured under a homeowner’s policy to sit for an

examination under oath precludes recovery only if the insurer proves prejudice).

      The choice among these approaches makes no difference here. When the

Association filed this lawsuit seeking to compel an appraisal, it had no pending

claim with QBE, and there was no pending disagreement about the amount of loss

caused by the hurricane. Especially given the unusual factual background, QBE’s

requests for information and a meaningful examination under oath were

reasonable. The Association stonewalled. It even refused to stand behind its own

(plainly inaccurate) proof of loss. The district court found as a fact that the

Association’s failure to comply with its obligations under the policy caused

prejudice—QBE had to go through the entire complex looking for damage, without

guidance, more than five years after the storm. If not a search for a lost city, it

must have seemed close. The district court’s finding of prejudice is not clearly

erroneous.

      The Association says looking for damage was QBE’s obligation and that the

Association owed QBE nothing more. But when, through no fault of the insurer,

more than five years have passed and substantial evidence has been lost to time, an

insured’s failure to comply with the policy’s post-loss obligations cannot be so

easily explained. The policy provides for an appraisal when the parties are unable

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to agree on the amount of a loss. Here the Association prevented QBE from

getting to that point.

      On any view of Florida law, the district court correctly ruled that the

Association was not entitled to an appraisal.

                                           V

      The Association says that even if its claim for an appraisal was properly

rejected, the judgment should be altered to make clear that the Association will not

be precluded from bringing a new claim for an appraisal if, before doing so, it

complies with the policy’s terms. The Association says that under Florida law, the

Association will be allowed to bring such a new claim. That may or may not be so,

but either way, Florida law does not require alteration of this judgment.

      First, in Romay, the en banc Third District Court of Appeal addressed three

separate actions in which an insured failed to comply with a policy’s terms but

sought to compel an appraisal. The trial courts ruled for the insureds in two cases

but for the insurer in the third. The Third District held that the insureds were not

entitled to compel an appraisal. The court remanded the two cases in which the

trial courts had ruled for the insureds, directing the trial courts to allow the insureds

to comply with the policies and again seek an appraisal, as part of the same action.

But in the third case—the one in which, as in our case, the trial court entered

judgment for the insurer—the Third District affirmed. The case ended. 

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at 471. Our disposition here tracks Romay by affirming the judgment for the

insurer.

      Indeed, the grounds for affirming the judgment are stronger here than in

Romay, because here the case has been tried on the merits. The disposition of two

of the actions in Romay indicates at most that a court applying Florida procedural

law may allow an insured to cure its failure to comply with the policy’s conditions

before judgment is entered for the insurer. The disposition of the third action in

Romay shows that the same is not true after judgment is entered for the insurer.

And even more clearly, Romay does not mean that a court applying federal

procedural law must, after a bench trial and entry of judgment for the insurer,

allow an insured to cure a failure to comply with the policy’s terms.

      Our ruling also tracks the treatment of this issue in the litigation that

culminated in Chimerakis v. Sentry Insurance Mutual Co., 

(3d

DCA 2001) (“Chimerakis II”). When that litigation first reached the Third

District, the insured had not complied with the policy’s terms, and the court

rejected the insured’s appraisal claim, citing Romay. Chimerakis v. Sentry Ins.

Mut. Co., 

(Fla. 3d DCA 1999) (“Chimerakis I”). The insured

later complied with the policy’s terms and brought a second action to compel an

appraisal. The Third District held that this was proper—that the judgment in the

first case did not preclude the second case, at least in part because the insured had

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relied on later-rejected Florida authority in initially seeking to compel an appraisal

without complying with the policy’s terms. Chimerakis 

.

      The Association says Chimerakis II indicates that the judgment in our case

will not be binding in a later case. QBE disagrees, asserting that Chimerakis II is

different because there the insured complied with the extant Florida law at each

step of the process. Either way, the critical point here is what the Third District did

in Chimerakis I—that is, on the first appeal, the one that is procedurally analogous

to our case. On the first appeal, the Third District affirmed the judgment for the

. We do the same.

                                          VI

      As set out above, on the unusual facts of this case, and on any proper view

of Florida law, the district court properly rejected the Association’s demand for an

appraisal. The judgment is affirmed.




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