Is it possible for a public adjuster to be considered disinterested in the outcome of a case, yet get paid based on the outcome of that same case? Florida’s Third District Court of Appeal says yes, for now! The appellate court reversed its prior opinion at a rehearing on the highly contested issue as to whether a public adjuster with a contingency fee agreement can act as a “disinterested” appraiser. In Sanders, the court held that a direct or indirect financial or personal interest in the outcome of an insurance appraisal does not require the disqualification of the party appointed appraiser. See State Farm Florida Insurance Company v. Sanders, et. al., Case No.: 3D19-927, 2020 WL 1870776 (Fla. 3rd DCA April 15, 2020) (per curiam).  

Like many homeowners in Florida, the insureds filed an insurance claim with their homeowners insurance carrier for damages sustained to their home as a result of Hurricane Irma. The appraisal condition in State Farm’s Homeowner Policy provided that, “[e]ach party will select a qualified, disinterested appraiser …”Id. On December 12, 2018, the parties entered into an agreed order granting State Farm’s Motion to Invoke Appraisal. Id. The Order named a 3^rd party company as State Farm’s appraiser and required the insureds to designate their “qualified, disinterested appraiser,” as stated in State Farm’s policy. Id. The insureds selected their public adjuster as the appraiser. Of note, the insureds contract with the public adjuster provided in pertinent part that the public adjuster will “be the agent and representative, under the insurance contract by State Farm Insurance … to adjust, appraise, advise and assist in the settlement of the loss.” Id.  Also, the contract assigns 10% of the amount recovered to the appraiser. Id. State Farm argued that the public adjuster was not “disinterested” because of his agent/principal relationship with the insureds, his contingency fee, and his prior estimate of damages. Id. On April 9, 2019, the trial court entered an order permitting the public adjuster to act as the insureds’ “disinterested” appraiser. State Farm then filed a petition for writ of certiorari.

In the Third District Court of Appeals original opinion, issued July 24, 2019, the panel granted the writ of certiorari and quashed the trial court’s order. Id. The court held that a fiduciary, such as a public adjuster who is in a contractual agent-principal relationship with the insureds, cannot be a disinterested appraiser as a matter of law. Id. Thereafter, Respondents/ insureds moved for rehearing.

The court’s opinion upon rehearing the issue changed and it relied heavily on the Rousso opinion. See Rousso v. Hannon, 146 So. 3d 66, 69 (Fla. 3d DCA 2014)(stating “[t]o invoke an appellate court’s certiorari jurisdiction, the petitioning party must demonstrate that the contested order constitutes (1) a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the case[,] (3) that cannot be corrected on post-judgment appeal”). The Sanders court reasoned that the trial court’s order was “faithful to the existing and binding precedent of this Court.” See Sanders, WL 1870776 at 3. Specifically, the court cited the Rios opinion to support its position. In Rios  the court opined that the appointment of an insurer’s agent  as a “disinterested” appraiser, which holds a “direct or indirect financial or personal interest in the outcome of the appraisal, does not require the disqualification of the party appointed appraiser.”  See Rios v. Tri-State Insurance Company, 714 So. 2d 547 (Fla. 3d DCA 1998). Further, the Rios Court held that if the appraiser’s financial interest is disclosed, it is acceptable for that appraiser to participate in the appraisal process. Id. 

Although the outcome is unfavorable for insurance carriers, there is a silver lining. Florida’s  Third District Court of Appeal certified the following question to the Florida Supreme Court as a matter of great public importance: “[C]an a fiduciary, such as a public adjuster or appraiser who is in a contractual agent-principal relationship with the insureds and who receives a contingency fee from the appraisal award, be a disinterested appraiser as a matter of law?” The end of this exciting story has not yet been written, but it has been a bumpy ride to this point. As of today, it appears the Florida Supreme Court has not yet reviewed this issue.