The combat 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 court docket 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 below the coverage. The appraisal clause required every get together’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 worth listing quite than a calculation of what it might truly value to revive the property.
By failing to supply a whole and unbiased quantity of loss, the insurers argued that the complete 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 will not be imagined to second-guess value determinations and that their appraiser had, actually, developed scope and pricing ample 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 below the restricted statutory grounds for vacating arbitration awards in Florida, which they stated didn’t embody the insurers’ complaints. Of their telling, the insurers have been making an attempt to reframe dissatisfaction with the result as a course of defect.
The federal court docket, 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 did not 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 listing to generate a determine.
The court docket discovered that this basically 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 court docket reasoned that when an appraiser doesn’t present an precise loss quantity, the umpire can’t evaluate two said positions however as a substitute should assemble an award himself. That course of just isn’t what the events agreed to of their insurance coverage contract.
The choose additionally rejected Portofino’s try and confine the evaluation to the Arbitration Code. Whereas some courts have borrowed arbitration rules for value determinations, the Florida Supreme Courtroom has emphasised that value determinations are distinct and primarily creatures of contract.
The court docket due to this fact regarded first as to whether the method violated the plain language of the coverage. The court docket held that even when the statute utilized, the conduct certified as misconduct below Florida legislation as a result of it amounted to a dereliction of responsibility that prejudiced the insurers. In both analytical path, the award couldn’t stand.
Relating to the procedural defenses, the court docket discovered that Portofino had already admitted that there was a single award issued in seven components. That admission foreclosed the argument that the movement to vacate was premature. Trying to reframe the award as a number of discrete awards after the actual fact couldn’t bar judicial overview.
The court docket recommended that it was not second-guessing the quantity of loss or the standard of the proof, however merely guaranteeing that the contractual course of was adopted. The court docket contrasted this case with others the place courts declined to intervene, noting that the defect on this case was structural, not substantive.
In the long run, the ruling invalidated the appraisal award and ordered a brand new appraisal to be carried out earlier than a brand new panel. The court docket declared that the award was void below the contract for failure to adjust to its phrases and, within the various, vacated the award for misconduct below Florida’s Arbitration Code. It stopped in need of reaching the insurers’ different challenges, together with claims of fraud, discover failures, or disinterestedness, as a result of the method defect was ample by itself to unravel the award.
This choice serves as a lesson that appraisal clause language is essential and should be adopted. Even in probably 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 fundamental responsibility of stating an quantity of loss, the complete award is susceptible to problem. For Portofino, what as soon as regarded like a two nine-figure triumph has now been decreased to a hole victory because the court docket ordered everybody again to sq. one.
I’m not sure what the following step might be. I anticipate that Portofino will problem the ruling via enchantment. I’ll preserve readers updated.
Thought For The Day
“It’s important to be taught the principles of the sport. After which it’s a must to play higher than anybody else.”
—Albert Einstein
1 Westchester Surplus Strains 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).