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In Heritage Property and Casualty Insurance Co. v. Romanach, 42 Fla. L. Weekly D1563, Case No. 3D16-995 (Fla. 3^rd DCA 2017), the appellate court held that a homeowner insurer’s declaratory judgment action against its policyholder to determine the facts of whether the umpire who sided with the homeowner’s appraiser in making an appraisal award for a water loss was “competent and impartial” as required by the policy agreement.

In 2013, the insurer issued a homeowner’s insurance policy to the homeowners. A leak damaged the insured home. The loss consultant hired by the homeowner estimated the damage to be $147,257.07, whereas the insurer determined there were $62,257.41 in damages. The policy’s appraisal clause permitted both appraisers to choose a competent and impartial umpire to appraise the loss. Both parties agreed upon Carlos Guerrero to be the umpire. Mr. Guerrero sided with the policyholder’s appraiser and signed off on an appraisal award setting the replacement value cost for the loss at $149,040.25.

The insurer filed a Petition for Declaratory Judgment against the insured in the Miami-Dade County Circuit Court seeking relief that they are entitled to a new appraisal because: (1) the umpire determined coverage issues outside the scope of the appraisal process established by the policy; and (2) collusion between the appraiser selected by the homeowner and the umpire undermined the integrity of the appraisal process. The insurer alleged that it discovered professional and familial relationships between the homeowner’s appraiser, the umpire, and the owner of a water mitigation company hired by the homeowner.

The appellate court focused on the insurance company’s second argument on appeal, which was that its petition stated a valid cause of action for declaratory relief. Relying on Higgins v. State Farm Fire & Casualty Co., 894 So.2d 5 (Fla. 2004), the 3^rd DCA highlighted that “the courts have the general power to issue declaratory judgments … in suits solely seeking a determination of any fact affecting the applicability of an ‘immunity, power, privilege, or right.’” Id, at 12. Since the determination of whether the chosen umpire was “competent and impartial” as required by the policy would affect the existence of some immunity, power, privilege or right of the insurer, the appeals court held the trial court should make an evidentiary determination as to whether the umpire was competent and impartial. Accordingly, the trial court’s dismissal of the  declaratory judgment action was reversed and remanded for further proceedings.