Hurricane Sally damage not properly appraised
Downtown Pensacola flooding at the height of Hurricane Sally, September 16, 2020
A Florida federal court judge recently vacated a $187 million appraisal award issued to a group of condominium associations in Pensacola for Hurricane Sally damage. George Keys served as the appraiser for the associations, who own the property known as the Portofino Towers.
Following Hurricane Sally, the associations preliminarily claimed around $6.7 million in damage, then demanded appraisal when they and their insurers were unable to agree on the initial proof of loss. During the appraisal, Keys submitted a statement of loss in the amount of $233 million, while the insurers’ appraiser appraised the damages at approximately $18.9 million.
At their depositions, Keys and his estimator, Larry McCallister, testified that the $233 million statement of loss in fact was not the amount of money required to repair the damages associated with Hurricane Sally. Rather, they claimed it was just a price list that the umpire could use when fashioning the ultimate appraisal award. In other words, based on their own admission, Keys’ appraisal team claimed that they never took a position on the scope of damage or amount of loss from Hurricane Sally and instead deferred to the umpire for that determination. Ultimately, the umpire, Jon Doan, issued a $187 million appraisal award.
The federal court ruled in favor of the insurers, finding that, based on Keys’ and McCallister’s own testimony, they did not comply with the fundamental requirement of the appraisal provision, namely, that each appraiser must state the amount of loss. By conducting the appraisal as Keys and McCallister described, Keys made it impossible for the two appraisers to reach an agreement without the involvement of the umpire, frustrating the requirements of the provision. The court additionally found that by failing to do the job the appraisal provision required of him, Keys conduct constituted a “dereliction of duty” and was “misconduct” that prejudiced the insurers’ rights in the appraisal.
The court indicated that it has “other, grave concerns with Keys’ actions throughout the appraisal” but that it “needn’t dwell on them.”
The insurers were represented by John David Dickenson and Alexandra Schultz of Cozen O’Connor; Jack Reiter and Jordan Kosches of GrayRobinson; Aaron Konstam and Bryan Walsh of Kennedys; Wayne Taylor of Mozley, Finlayson & Loggins; Heidi Raschke and Amanda Proctor of Carlton Fields; and David Bibb of Rolfes Henry.
The associations were represented by Edward Fleming, Matthew Bush, and Aaron McCurdy of McDonald Fleming; Kurtis Keefer of Goede, Deboest & Cross; and Charles Beall of Moore, Hill & Westmoreland.
LMA Newsletter of 10-6-25
