Note: The court on its own motion vacated the opinion described below and replaced it with the opinion found here: Positano Place at Naples I Condo Ass’n, Inc. v. Empire Indem. Ins. Co., 2023 WL 6937601 (11th Cir. Oct. 20, 2023).
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A divided Eleventh Circuit panel held that an order compelling an appraisal under an insurance policy provision and staying the litigation pending the appraisal’s outcome is not appealable of right. Positano Place at Naples I Condo Ass’n, Inc. v. Empire Indemnity Insurance Co., 2023 WL 3730876 (11th Cir. May 31, 2023).
The case arose from 2017’s Hurricane Irma. The insurer, Empire, issued a policy covering five buildings owned by Positano. Empire disputed whether all five buildings were covered and the amount of the loss as to the three buildings that were covered. Positano sought to invoke the policy’s appraisal provision, which set out a process for the selection of appraisers to determine the amount of any covered loss. When Empire did not respond, Positano filed an action seeking specific performance of the appraisal provision, damages for breach of contract, and a declaratory judgment. After some procedural maneuvering, Positano moved to compel an appraisal and to stay the proceedings pending its completion. The district court accepted a magistrate judge’s recommendation that the appraisal motion be granted. Empire filed an interlocutory appeal. The Eleventh Circuit greeted the appeal with two jurisdictional questions: why the court had appellate jurisdiction to review the order compelling the appraisal and whether that order should be treated the same as an order compelling arbitration, for purposes of appellate jurisdiction.
The court carried the jurisdictional issue with the case but ultimately held that it had no appellate jurisdiction, in a 2-1 decision authored by Judge Barbara Lagoa. First, the court concluded that the order compelling the appraisal was not a final order appealable under 28 U.S.C § 1291. The court then turned to whether an interlocutory appeal was permitted under 28 U.S.C § 1292(a). That subsection has been held by the Supreme Court to provide appellate jurisdiction over “orders that grant or deny injunctions and orders that have the practical effect of granting or denying injunctions and have “serious, perhaps irreparable, consequence.” Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271 (1988). The Eleventh Circuit concluded that the order compelling appraisal did not have a “serious, perhaps irreparable, consequence” because the order did not entitle Positano to judgment on its claims against Empire. While the appraisal would be binding as to the amount of the loss, Empire could still pursue its defenses of coverage denials as a whole and to specific buildings once the process concluded. If unsuccessful, Empire would be entitled to appeal any final judgment against it.
The court then turned to whether an appeal was permissible under the Federal Arbitration Act. The court reasoned that even if the order compelling appraisal fell within the definition of arbitration under the FAA, section 16(a)(3) of the FAA still required a “final decision with respect to an arbitration,” which the court deemed absent here.
Senior Judge Tjoflat dissented with characteristic length, arguing that the appraisal order granted an injunction, which authorized an appeal under 28 U.S.C § 1292(a). Judge Tjoflat pointed out that the order commanded Empire to do something and was enforceable under the district court’s civil contempt power. His dissent drew a distinction between orders granting an injunction and those denying an injunction, contending that the “serious, perhaps irreparable, consequence” requirement from Gulfstream and its progeny applies only to injunction denials. The appraisal order granted an injunction and thus, in his view, should have been held to be appealable.