The battle over the Portofino Towers appraisal award has been one of many largest of its type in Florida. Its end result has carried huge stakes for each the condominium affiliation and its insurers. What started as a $187 million appraisal award has now unraveled as soon as the courtroom dissected how the method unfolded, in the end resulting in a ruling that stripped the award of its validity and despatched the case again for a brand new appraisal. 1 This story isn’t just about numbers, but additionally about how the appraisal course of issues and the way contractual provisions, beforehand undisputed, are interpreted.
The insurers’ central argument was that the appraisal course of was fatally flawed as a result of the appraiser for Portofino by no means fulfilled his responsibility underneath the coverage. The appraisal clause required every celebration’s appraiser to state the worth on the time of loss and the quantity of loss. As a substitute of doing that, the appraiser offered the umpire with a sweeping $233 million “assertion of loss” that functioned as a place to begin or menu of restore prices, quite than a definitive quantity of loss. Even his personal pricing knowledgeable admitted it was primarily a value checklist quite than a calculation of what it will really price to revive the property.
By failing to supply an entire and impartial quantity of loss, the insurers argued that all the course of collapsed into one the place the umpire was pressured to construct an award from scratch, a process that the contract by no means allowed. The insurers additionally contended that, even when the Florida Arbitration Code have been utilized, the conduct amounted to misconduct that prejudiced their rights and due to this fact justified vacating the award.
Portofino countered by insisting that courts should not alleged to second-guess value determinations and that their appraiser had, in truth, developed scope and pricing adequate to adjust to the coverage. They maintained that disputes over the standard of the appraiser’s work weren’t grounds for judicial interference.
Portofino additionally pressed procedural defenses, arguing that the insurers’ movement to vacate was premature as a result of the award was issued in levels quite than as a single doc. They additional recommended that any problem needed to proceed solely underneath the restricted statutory grounds for vacating arbitration awards in Florida, which they mentioned didn’t embody the insurers’ complaints. Of their telling, the insurers have been trying to reframe dissatisfaction with the result as a course of defect.
The federal courtroom, nevertheless, noticed the matter very in another way. The choose held that the appraisal clause was not honored as a result of the appraiser for Portofino didn’t do one factor the contract required: state the quantity of loss. His personal testimony confirmed that he deliberately left scope determinations to the umpire, who then used the worth checklist to generate a determine.
The courtroom discovered that this essentially bypassed the construction of the clause, which envisions appraisers presenting their competing quantities of loss to one another, with the umpire performing solely as a tiebreaker. The courtroom reasoned that when an appraiser doesn’t present an precise loss quantity, the umpire can not examine two acknowledged positions however as an alternative should assemble an award himself. That course of will not be what the events agreed to of their insurance coverage contract.
The choose additionally rejected Portofino’s try to confine the evaluation to the Arbitration Code. Whereas some courts have borrowed arbitration ideas for value determinations, the Florida Supreme Courtroom has emphasised that value determinations are distinct and primarily creatures of contract.
The courtroom due to this fact regarded first as to whether the method violated the plain language of the coverage. The courtroom held that even when the statute utilized, the conduct certified as misconduct underneath Florida regulation as a result of it amounted to a dereliction of responsibility that prejudiced the insurers. In both analytical path, the award couldn’t stand.
Concerning the procedural defenses, the courtroom discovered that Portofino had already admitted that there was a single award issued in seven elements. That admission foreclosed the argument that the movement to vacate was premature. Making an attempt to reframe the award as a number of discrete awards after the actual fact couldn’t bar judicial overview.
The courtroom recommended that it was not second-guessing the quantity of loss or the standard of the proof, however merely making certain that the contractual course of was adopted. The courtroom contrasted this case with others the place courts declined to intrude, noting that the defect on this case was structural, not substantive.
Ultimately, the ruling invalidated the appraisal award and ordered a brand new appraisal to be performed earlier than a brand new panel. The courtroom declared that the award was void underneath the contract for failure to adjust to its phrases and, within the different, vacated the award for misconduct underneath Florida’s Arbitration Code. It stopped wanting reaching the insurers’ different challenges, together with claims of fraud, discover failures, or disinterestedness, as a result of the method defect was adequate by itself to unravel the award.
This choice serves as a lesson that appraisal clause language is essential and should be adopted. Even in essentially the most high-stakes disputes, the method should honor the contractual framework. Except events agree in any other case, when an appraiser fails to hold out the essential responsibility of stating an quantity of loss, all the award is susceptible to problem. For Portofino, what as soon as regarded like a two nine-figure triumph has now been diminished to a hole victory because the courtroom ordered everybody again to sq. one.
I’m not sure what the subsequent step will probably be. I anticipate that Portofino will problem the ruling by way of enchantment. I’ll hold readers updated.
Thought For The Day
“You need to study the principles of the sport. After which it’s important to play higher than anybody else.”
—Albert Einstein
1 Westchester Surplus Traces Ins. Co. v. Portofino Grasp Owners Assoc., No. 3:23-CV-00453 (N.D. Fla. Sept. 22, 2025). (See additionally, Westchester’s Movement for Abstract Judgment, and Portofino’s Response to Movement for Abstract Judgment).
