State Farm Fla. Ins. Co. v. Buitrago, 2012 WL 2471601 (Fla. 2d DCA June 29, 2012).
This case arises out of a coverage dispute between State Farm and its insureds, Jairo and Nohora Buitrago. The Buitragos sued State Farm for breach of contract, alleging that State Farm failed to pay for covered sinkhole damage to their home. State Farm moved to stay the proceedings and invoked the neutral-evaluation provision of section 627.7074, Florida Statutes (2010). Invocation of the provision began a process where the Department of Financial Services (the Department) appointed a neutral evaluator to conduct an evaluation of the Buitragos’ home. The Buitragos objected to the neutral- evaluation process as unconstitutional and moved for a protective order. The trial court agreed, denied State Farm’s motion for a stay, and granted the Buitragos’ motion for a protective order. State Farm filed a petition for writ of certiorari in the Second District Court of Appeal seeking review of the trial court’s determination.
Whether the neutral-evaluation statute is unconstitutional for violating the separation of powers doctrine or for violating the due process rights of the parties by allowing admission of a neutral evaluator’s report regardless of whether it complies with the Florida Evidence Code.
The neutral-evaluation process neither encroaches upon a trial court’s authority nor does it prevent a trial court from considering the admissibility of a trial court’s report under the rules of evidence. Consequently, the trial court departed from the essential requirements of law in holding that the neutral-evaluation statute was unconstitutional.
The trial court determined that the neutral-evaluation statute was unconstitutional because it permitted an executive agency, the Department, to become a trier of fact and allowed the Department to adopt rules that may not comply with any rules of evidence or procedure. On reviewing State Farm’s petition for writ of certioriari, the Court focused on whether the trial court’s ruling departed from the essential requirements of law. Section 627.7074 states that “[n]eutral evaluation is nonbinding” and “[t]he recommendation of the neutral evaluator is not binding on any party.” Florida courts have upheld other statutorily-created alternative dispute resolution measures where those measures did not bar access to courts, even when the results of those measures were admissible in evidence in subsequent court proceedings. Based upon those cases, the Court found “no basis to conclude that the neutral evaluation procedures outlined in section 627.7074 are unconstitutional in this instance.” Additionally, the court held that the statute did not prevent a trial court from applying the rules of evidence to determine the admissibility of a neutral evaluator’s written recommendation. Consequently, the Court granted State Farm’s petition and quashed the trial court’s order.
The neutral-evaluator process provided in section 627.7074, Florida Statutes, remains a valid alternative procedure to resolve disputed sinkhole insurance claims in Florida.