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Legal Updates for Florida Coverage and Property Litigation

Appeals Court Reverses Verdict, Finds Trial Court Erred in Shifting Burden of Proof in Insurance Dispute

Vasta v. Universal Prop. & Cas. Ins. Co., Fla. 2d DCA, No. 2D2023-1915, April 9, 2025

June 1, 2025

by Ashley J. Johns

An appellate court ruled in favor of the policyholders, holding that the trial court improperly approved a special verdict form that placed an undue burden on them in their breach of contract claim against the insurance carrier. 

The Vastas appealed a final judgment in favor of Universal Property & Casualty Insurance Company, attempting to “find merit in their argument that the verdict form approved by the trial court effectively imposed an erroneous burden of proof…” The basis of the underlying insurance dispute was the submission of a water leak claim under an all-risks policy issued by Universal to the Vastas. 

In their breach of contract suit, the Vastas alleged Universal failed to provide full coverage and issue a payment under the policy. The approved jury instructions for the trial included elements that the Vastas needed to prove in order to prevail. The Vastas requested a standard verdict form asking, “whether the Vastas had proven that a loss occurred during the policy period,” and the rest of the form addressed Universal’s defenses. However, Universal argued a special verdict form was needed for the Vastas’ claim as it was more of a breach of contract claim as opposed to an insurance coverage claim. The trial court agreed with Universal, concluding that the Vastas’ claim was “not a traditional denial of coverage case,” and approved a special verdict form which assigned the Vastas the burden of proving several points.

Here, the court agreed with the Vastas’ argument on appeal that the special interrogatory verdict form from the trial court imposed a burden on them that was not consistent with the law. The court details its position on this issue, specifically, that the general rule of evidence is that the plaintiff seeking recovery under an all-risks policy has the burden of proving a loss occurred while the policy was in effect. Further, once this burden is satisfied, the burden then shifts to the insurer to prove an exclusion of coverage. 

The court found that the Vastas only had the initial burden of proving a loss occurred and Universal bore the burden of proving any exclusions. Therefore, since the verdict form imposed burdens on the Vastas that were inconsistent with settled Florida law, the court concluded the trial court abused its discretion by approving the special verdict form. 

 

Legal Update for Florida Coverage & Property Litigation – June 2025 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2025 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.

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The two appraisers inspected the building, and both appraisers agreed that the damages were $313,271.98. The insurer paid the agreed appraised amount.  Thereafter, the insured submitted a claim for an additional $206,663.09 in damages. The insured argued that these additional damages were not discovered until after the repairs began, and that they should be permitted to submit an additional claim, even though there had already been a binding appraisal of damages. The insurer refused to pay the additional damages, and the insured sued for breach of contract and bad faith.  In the trial court, the insurer moved to dismiss for failure to state a claim, arguing that the binding appraisal award barred any further claims. The insured took the position that additional hidden damages could not be discovered until after the repairs began, and therefore there was a mutual mistake. The trial court dismissed the case on the insurer’s motion, because there was no “evidence of fraud, misfeasance, or mistake”. The Court of Appeals agreed that appraisal awards are generally binding, but noted that an appraisal award can be set aside for fraud or manifest mistake. The Court of Appeals reversed and remanded the case to the trial court, finding that the insured had pled mistake with sufficient particularity. The insurer appealed to the Ohio Supreme Court. On appeal, the Ohio Supreme Court reversed the Court of Appeals, and reinstated the trial court decision dismissing the case for failure to state a claim upon which relief can be granted. The Supreme Court found that since the insured had already demanded appraisal, and the appraisal award was binding, “something more than error of judgement, such as corruption in the arbitrator, or gross mistake” must be pled with particularity, and proven for the insured to override the appraisal award. Since the complaint did not allege fraud or manifest mistake with sufficient particularity, something more than a mere error of judgment, the complaint was insufficient to state a claim.  The complaint in this case did not challenge the appraisal award. It pled that additional damages were discovered that were not apparent when the appraisal was done. It did not specify “who discovered the damages, how they were discovered, where they were found, why they were previously hidden, or why they rise to the level of a manifest mistake that the “appraiser would have corrected...had it been called to his attention”. Id at ¶22 citing Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970). Cases deciding the effect of appraisal awards are unusual. The Ohio Supreme Court’s decision in One Church relies primarily on 19th century case law for its conclusion. This emphasizes the fact that there is minimal case law deciding the effect of binding appraisal clauses in property insurance policies, and makes this case all the more significant. A lengthy dissent was written by Justice Fisher, who would have affirmed the Court of Appeals decision reversing and remanding the case for a decision on the merits. Of course, the decision works both ways, and an insurer dissatisfied with a binding appraisal award will likewise be without further recourse absent evidence of corruption, fraud, misfeasance, or manifest mistake, which must be pled with particularity. To constitute manifest mistake, “the mistake must be of such character that the arbitrator or appraiser would have corrected it had it been called to his attention.”  Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970).  The majority opinion does not specifically identify what would have been sufficient to plead mistake with particularity, or if the insured could have amended the complaint to overcome the deficiencies. The dissent argues that this was not really a case alleging mistake, but rather a question of contract interpretation. The insured did not challenge the appraisal, but argued that the hidden damage was not part of the appraisal, and the appraisal only covered the known damages.  However, this argument did not carry the day with the majority.  *Thomas F. Glassman, a shareholder in Marshall Dennehey’s Cincinnati office, filed a brief in the Ohio Supreme Court on behalf of the Ohio Association of Civil Trial Attorneys, in support of the insurer’s position.