                                  Hilda GALINDO, Plaintiff-Appellant,

                                                     v.

 ARI MUTUAL INSURANCE COMPANY, f.k.a. American Reliance Insurance Company, Defendant-
Appellee.

                                    Alicia Suarez, Plaintiff-Appellant,

                                                     v.

  ARI Mutual Insurance Company, f.k.a. American Reliance Insurance Company, Defendant-Appellee.

                            Ramon Ferrer, Mayra Ferrer, Plaintiffs-Appellants,

                                                     v.

                   United States Fidelity and Guaranty Company, Defendant-Appellee.

                                   Nos. 97-5856, 97-5857 and 98-4485.

                                     United States Court of Appeals,

                                             Eleventh Circuit.

                                               Feb. 7, 2000.

Appeals from the United States District Court for the Southern District of Florida. (Nos. 97-2302-CV-JAL,
97-2314-CV-JAL, 97-2975-CIV-SH), Joan A. Lenard and Shelby Highsmith, Judges.

Before BIRCH and CARNES, Circuit Judges, and MILLS*, Senior District Judge.

        BIRCH, Circuit Judge:

        These consolidated cases present the issue of whether a supplemental claim on a homeowner's

insurance policy permits the insurance company to investigate the additional claim before an appraisal is

required under the policy. The district judges determined that the insurance companies' investigation of the

subsequent claims was a condition precedent to appraisal; consequently, the insureds' appraisal request was

premature. We affirm.

                                            I. BACKGROUND




   *
    Honorable Richard H. Mills, Senior U.S. District Judge for the Central District of Illinois, sitting by
designation.
        In the wake of Hurricane Andrew, which struck Dade County, Florida, on August 24, 1992, numerous

residential owners made claims on their homeowners' insurance policies for property loss and damage. Three

such homeowners and their respective insurance companies are involved in this appeal: Hilda Galindo

("Galindo") and ARI Mutual Insurance Company, formerly, American Reliance Insurance Company ("ARI");

Alicia Suarez ("Suarez") and ARI; and Ramon and Mayra Ferrer ("Ferrer") and United States Fidelity and

Guaranty Company ("USF&G"). In 1992, all of these homeowners made claims on their insurance policies

following Hurricane Andrew. After investigation, the insurance companies paid the claims, and payment was

accepted by the insureds.1 Thereafter, the insurance companies considered these claims settled and closed.

        In 1997, all of these homeowners wrote their insurance companies, stated that their previous

payments had been insufficient to cover the Hurricane Andrew loss and/or damage to their residences and

personal property, and demanded payment of supplemental, sizeable claims on their policies based on

unsworn and unsigned estimates purportedly prepared by East Coast Appraisers, Inc. ("East Coast"). The

insureds also imposed on the insurance companies an ultimatum: either pay the requested amounts within

a few days or submit to appraisal or arbitration under the terms of the policy.2 In response, the insurance

companies promptly informed the insureds that invocation of appraisal was premature prior to an

investigation of the claim by the insurance companies. To investigate these supplemental claims after five

years had passed since the original Hurricane Andrew payments, the insurance companies requested that the

insureds fulfill their obligations under the insurance policies, which included providing a sworn proof of loss



  1
   ARI paid Galindo $14,864 on November 25, 1992, for structural damage to her home and loss of personal
property, and it paid Suarez's claim on October 8, 1992. Suarez, however, was dissatisfied with the first
payment and submitted a subsequent claim, which ARI paid on June 14, 1993. The cumulative amount paid
to Suarez under all coverages provided by her policy was $8,817. The record does not reveal the amount of
the 1992 payment that USF&G made to the Ferrers.
  2
    Galindo's May 5, 1997, letter to ARI demanded payment of $109,296, less the previous payment, within
five business days or submission to appraisal. Suarez's May 20, 1997, letter to ARI demanded payment of
$85,404, less former payments, within five business days or submission to appraisal. The Ferrers' June 20,
1997, letter to USF&G demanded payment of $161,404.15, less the prior payment, within ten days or
submission to appraisal.

                                                      2
with supporting documentation,3 allowing inspection of the property, and appearing for an examination under

oath.

        Rather than complying with the insurance companies' requests for information to permit investigation

of the claims, all of the insureds filed complaints in state court and sought declaratory relief by compelling

appraisal under their respective policies. The insurance companies removed the cases to federal court based

on diversity jurisdiction and filed motions to dismiss for failure to state a claim for which relief could be

granted or for summary judgment based on lack of disagreement regarding the loss amount in the 1997,

supplemental Hurricane Andrew claims. The district judges concluded that the insureds had prevented the

insurance companies' investigation of the supplemental claims, which was a condition precedent to either

party's demand for appraisal because of failure to agree regarding the loss amount.4 Accordingly, the motions


    3
    Although the East Coast estimate for Galindo and Suarez represented that the report included work
accomplished and work to be done with invoices, no invoices were attached and repairs that supposedly had
been done were not identified.
    4
   The same district judge for the Galindo and Suarez cases quoted the appraisal provision of the ARI
homeowner's policy, which is representative of appraisal provisions in homeowner's insurance policies:

                         Appraisal. If you and we fail to agree on the amount of loss, either may demand an
                appraisal of the loss. In [that] event, each party will choose a competent appraiser within 20
                days after receiving a written request from the other. The two appraisers will choose an
                umpire. If they cannot agree upon an umpire within 15 days, you and we may request that
                the choice be made by a judge of a court of record in the state where the residence premises
                is located. The appraisers will separately set the amount of loss. If the appraisers submit a
                written report of an agreement to us, the amount agreed upon will be the amount of loss. If
                they fail to agree, they will submit their differences to the umpire. A decision agreed to by
                any two will set the amount of loss.

        Galindo R1-18-1-2; Suarez R1-20-1-2 (alteration in original). The judge stated that "[n]owhere in
        [Galindo's] complaint does she suggest that A[RI] disagreed with her as to the value of her loss."
        Galindo R1-18-3 n. 1; Suarez R1-20-3 n. 1.

                Similarly, the district judge granting summary judgment in Ferrer concluded:

                [T]he Ferrers argue that USF&G's request for documentation, examination under oath and
                sworn proof of loss are sufficient to establish the existence of a disagreement between the
                parties regarding the amount of loss, thereby making their invocation of the appraisal process
                appropriate. The pertinent policy provision states, "If you and we fail to agree on the amount
                of loss, either may demand an appraisal of the loss." The Court finds nothing in USF & G's

                                                      3
to dismiss or for summary judgment were granted. On appeal, the insureds pursue their arguments that they

are entitled to compel appraisal concerning the loss amount of their supplemental claims based on loss

estimates. They also appeal the district judges' denying their motions to amend their complaints.

                                               II. DISCUSSION

         We review a district court's granting summary judgment de novo, consider all facts and reasonable

inferences in favor of the nonmoving party, and apply the same legal standards used by the district court. See

Allison v. McGhan Medical Corp., 184 F.3d 1300, 1306 (11th Cir.1999). Summary judgment properly was

granted when the evidence before the district judge showed that there was no genuine issue concerning any

material fact and that the moving party was entitled to judgment as a matter of law. See Carnival Brand

Seafood Co. v. Carnival Brands, Inc., 187 F.3d 1307, 1309 (11th Cir.1999) (citing Fed.R.Civ.P. 56(c)). The

interpretation of an insurance contract is a question of law subject to de novo review. See Technical Coating

Applicators, Inc. v. United States Fidelity & Guar. Co., 157 F.3d 843, 844 (11th Cir.1998). We review de

novo a district judge's granting a motion to dismiss for failure to state a claim. See Long v. Satz, 181 F.3d

1275, 1278 (11th Cir.1999) (per curiam). This consists of finding that there is no set of facts that could

substantiate the allegations of the complaint; we review the legal conclusions de novo. See Mesocap Ind.

Ltd. v. Torm Lines, 194 F.3d 1342, 1343 (11th Cir.1999).

         A federal court applies the substantive law of the forum state in a diversity case, unless federal

constitutional or statutory law requires a contrary result. See Salve Regina College v. Russell, 499 U.S. 225,

226, 111 S.Ct. 1217, 1218, 113 L.Ed.2d 190 (1991). Absent a decision by the highest state court or

persuasive indication that it would decide the issue differently, federal courts adhere to intermediate appellate

courts in applying state law. See Insurance Co. of N. Am. v. Lexow, 937 F.2d 569, 571 (11th Cir.1991).


                 request that connotes disagreement with the amount of loss claimed by the Ferrers in their
                 demand letter. USF&G's response is nothing more than a request for further information and
                 documentation, in accordance with the terms of the insurance policy, to permit USF&G to
                 evaluate the Ferrers' claim.

        Ferrer R1-20-5 (emphasis added).

                                                       4
Concomitantly, the Florida Supreme Court has held that " '[t]he decisions of the district courts of appeal

represent the law of Florida unless and until they are overruled by this Court.' Thus, in the absence of

interdistrict conflict, district court decisions bind all Florida trial courts."5 Pardo v. State, 596 So.2d 665, 666

(Fla.1992) (citation omitted) (alteration in original). "The law is settled that a federal appellate court sitting

in a diversity case must apply the state law as it exists at the time of the appeal and not at the time of the

district court judgment." Kramer v. Piper Aircraft Corp., 868 F.2d 1538, 1541 (11th Cir.1989).

           The Florida Third District Court of Appeal, sitting in Miami, unanimously has decided en banc the

precise issue before us in a consolidated case arising from homeowners' supplemental claims against their

insurance companies for Hurricane Andrew damage and loss. See United States Fidelity & Guar. Co. v.

Romay, 744 So.2d 467 (Fla.Dist.Ct.App.1999) (en banc). In Romay, the Third District Court of Appeal

receded from its prior law that required appraisals based solely on the insured's filing a sworn proof of loss.6


   5
   The Florida Supreme Court also has explained the purpose of this rule and the hierarchy of authority in
Florida courts:

                   "The District Courts of Appeal are required to follow Supreme Court decisions. As an
                   adjunct to this rule it is logical and necessary in order to preserve stability and predictability
                   in the law that, likewise, trial courts be required to follow the holdings of higher
                   courts—District Courts of Appeal. The proper hierarchy of decisional holdings would
                   demand that in the event the only case on point on a district level is from a district other than
                   the one in which the trial court is located, the trial court be required to follow that decision.
                   Alternatively, if the district court of the district in which the trial court is located has decided
                   the issue, the trial court is bound to follow it. Contrarily, as between District Courts of
                   Appeal, a sister district's opinion is merely persuasive."

           Pardo v. State, 596 So.2d 665, 666-67 (Fla.1992) (citation omitted). Indeed, Suarez concedes in her
           brief: "Due to the discrete genesis of these claims—Hurricane Andrew's devastation of South
           Florida—there is little likelihood that another district court of appeal will address this issue or take
           a position contrary to that of the Third District. Without an inter-district express and direct conflict,
           this issue is unlikely to reach the Florida Supreme Court from the Third District Court of Appeal."
           Appellant Suarez's Brief at 37; see Fla. R.App. P. 9.030(2)(A)(iv) (stating that the Florida Supreme
           Court has discretionary jurisdiction to review district court of appeals decisions that "expressly and
           directly conflict with a decision of another district court of appeal").
       6
     In his special concurrence, Chief Judge Schwartz, who authored the former Third District Court of
Appeal's seminal case for appellant's position, Allstate Ins. Co. v. Sierra, 705 So.2d 119
(Fla.Dist.Ct.App.1998), "and several of its ill-conceived descendants" in the Third District Court of Appeal,
see, e.g., Harrah v. Allstate Ins. Co., 721 So.2d 1266 (Fla.Dist.Ct.App.1999) (per curiam); Llaguno v. ARI

                                                           5
Instead, the en banc court held "that the insured must meet all of the policy's post-loss obligations before

appraisal may be compelled."7 Id. at 468.


Mut. Ins. Co., 719 So.2d 311 (Fla.Dist.Ct.App.1998) (per curiam); Perez v. Allstate Ins. Co., 709 So.2d 591
(Fla.Dist.Ct.App.1998) (per curiam), agreed with "Judge Jorgenson's unanswerable opinion" in Romay.
Romay, 744 So.2d at 472 (Schwartz, C.J., specially concurring).
  7
    Delineated by the Romay court, the representative USF&G post-loss obligations under its homeowner's
policy provide:

                2. Your duties after loss. In case of a loss to covered property, you must see that the
                following are done:

                a.      give prompt notice to us or our agent;

                ....

                d.      (1) protect the property from further damage;

                        (2) make reasonable and necessary repairs to protect the property; and

                        (3) keep an accurate record of repair expenses;

                e.      prepare an inventory of damaged personal property showing the quantity,
                        description, actual cash value and amount of loss. Attach all bills, receipts and
                        related documents that justify the figures in the inventory;

                f.      as often as we reasonably require:

                        (1) show the damaged property;

                        (2) provide us with records and documents we request and permit us to make copies;
                        and

                        (3) submit to questions under oath and sign and swear to them;

                g.      send to us, within 60 days after our request, your signed, sworn proof of loss which
                        sets forth, to the best of your knowledge and belief:

                        (1) the time and cause of loss;

                        (2) the interest of the insured and all others in the property involved and all liens on
                        the property;

                        (3) other insurance which may cover the loss;

                        (4) changes in title or occupancy of the property during the term of the policy;

                                                      6
         Appraisal in a homeowner's insurance policy is treated as an arbitration provision, "narrowly

restricted to the resolution of specific issues of actual cash value and amount of loss." Id. at 469.

Consequently, the en banc court reasoned that it is "axiomatic that an arbitrable issue exists between the

parties whose agreement provides for appraisal when there is a disagreement in the dollar amount of the loss

being claimed." Id. That court further recognized that "the disagreement necessary to trigger appraisal cannot

be unilateral." Id. at 469-70. Rather, the contract terms "contemplated that the parties would engage in some

meaningful exchange of information sufficient for each party to arrive at a conclusion before a disagreement

could exist." Id. at 470. Otherwise, an insured, after sustaining a loss, "could immediately invoke appraisal

and secure a binding determination as to the amount of loss" and "the post-loss obligations, would be struck

from the contract by way of judicial fiat and the bargained-for contractual terms would be rendered

surplusage."8 Id. at 471. The court concluded that "[t]here exists but one reasonable interpretation of the

terms of the policy at issue here: The insured must comply with all of the policy's post-loss obligations before




                         (5) specifications of damaged buildings and detailed repair estimates;

                         (6) the inventory of damaged personal property described in 2e above;

                         (7) receipts for additional living expenses incurred and records that support the fair
                         rental value loss....

        Romay, 744 So.2d at 470-71. The Romay court determined that "[t]hese obligations are not unduly
        burdensome or arbitrary and constitute assurance that the insurer will be provided with adequate
        information on which to base its conclusion." Id. at 471. Furthermore, the en banc state appellate
        court concluded that these post-loss obligations were required as conditions precedent for appraisal
        and that the policy terms were not ambiguous. See id.
   8
    The court further explained that

                 permitting the insured to compel appraisal without first complying with the policy's post-loss
                 obligations would place the insurer at a considerable disadvantage entering the appraisal
                 process. The nature of the post-loss obligations is merely to provide the insurer with an
                 independent means by which to determine the amount of loss, as opposed to relying solely
                 on the representations of the insured.

        Romay, 744 So.2d at 471 n. 4.

                                                       7
the appraisal clause is triggered."9 Id. In the absence of a Florida Supreme Court decision on this issue and

finding no conflict with federal constitutional or statutory law, we apply the Florida Third District Court of

Appeal's en banc opinion in Romay to the consolidated appeals before us. Therefore, we hold that these

insureds must comply with the post-loss terms of their respective homeowner's policies, which enables the

insurance companies to investigate the insureds' claims and to disagree with the loss amount before the

appraisal term becomes effective.10


   9
    Nearly ninety years ago, the Florida Supreme Court recognized that express conditions in an insurance
contract are part of the consideration for the insurer to assume the risk and that the insured, by accepting the
policy, becomes bound by these conditions. See Southern Home Ins. Co. v. Putnal, 57 Fla. 199, 49 So. 922,
932-33 (1909); see also Shuster v. South Broward Hosp. Dist. Physicians' Prof'l Liability Ins. Trust, 591
So.2d 174, 176 (Fla.1992) ("The insurer has the duty to investigate the facts and give fair consideration to
the claims pending."). Indeed, the Supreme Court has stated with respect to an insured's responsibility to
submit to an examination under oath:

                 The object of the provisions of the policies of insurance, requiring the insured to submit
                 himself to an examination under oath, to be reduced to writing, was to enable the company
                 to possess itself of all knowledge, and all information as to other sources and means of
                 knowledge, in regard to the facts, material to their rights, and to enable them to decide upon
                 their obligations, and to protect them against false claims.

        Claflin v. Commonwealth Ins. Co., 110 U.S. 81, 94-96, 3 S.Ct. 507, 515 (1884).
   10
     Galindo and Suarez also argue on appeal that the district judge abused her discretion in denying their
respective motions pursuant to Federal Rule of Civil Procedure 15(a) to amend their complaints. Among the
reasons that the Supreme Court has recognized as warranting the denial of a motion to amend is "futility of
amendment." Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). "A proposed
amendment is futile if the complaint, as amended, would be subject to dismissal." Jefferson County School
Dist. No. R-1 v. Moody's Investor's Servs., Inc., 175 F.3d 848, 859 (10th Cir.1999). There is no way that
Galindo and Suarez could amend their complaints to obtain the declaratory judgment that they sought in
district court because of the Florida Third District Court of Appeal's Romay decision, the basis of our holding
in this case. Romay requires that insureds comply with the post-loss provisions of their insurance policies
and that there be disagreement between the insured and the insurer before appraisal is appropriate. Thus, the
district judge correctly denied their respective motions to amend their complaints.

                 Suarez also contends that the district judge erred in denying her motion to remand for lack
        of subject matter jurisdiction pursuant to 28 U.S.C. § 1447(c), because the appraisal remedy that she
        seeks requires determination and application of state substantive law. In addition to diversity, under
        which ARI removed the underlying state-court action to federal court, 28 U.S.C. § 2201(a) authorizes
        a federal court "[i]n a case of actual controversy within its jurisdiction ... [to] declare the rights and
        other legal relations of any interested party seeking such declaration ... [and][a]ny such declaration
        shall have the force and effect of a final judgment or decree and shall be reviewable as such." Id.
        While the Supreme Court has recognized that "it would be uneconomical as well as vexatious for a

                                                       8
                                            III. CONCLUSION

        These three appeals, Galindo, Suarez, and Ferrer, pose the same issue of whether an insured's

supplemental claim on a homeowner's policy requires appraisal based on the insured's proof of loss. The

district judges in each of these cases removed from state court determined that the insured's unilateral loss

estimate without an opportunity for the insurance company to investigate the supplemental claim was

insufficient to constitute a disagreement between the two parties regarding the amount of loss or damage.

Because we apply Florida law to resolve these consolidated appeals and the Florida Third District Court of

Appeal has decided en banc in Romay that an insurance company must be given an opportunity to investigate

a supplemental claim before there can be a disagreement between the parties regarding the amount of property

loss or damage to effectuate appraisal, we AFFIRM.

        AFFIRMED.




        federal court to proceed in a declaratory judgment suit where another suit is pending in a state court
        presenting the same issues, not governed by federal law, between the same parties," no state court
        proceeding remains between Suarez and ARI that would give rise to "gratuitous interference" after
        removal to federal court. Brillhart v. Excess Ins. Co., 316 U.S. 491, 495, 62 S.Ct. 1173, 1175-76,
        86 L.Ed. 1620 (1942) (emphasis added). Furthermore, our decision in this appeal applies the Third
        District Court of Appeal's Romay decision, which is the same ruling that Suarez would receive in
        state court because the state trial court is bound by Romay. Thus, Suarez's argument that the district
        judge's denial of her motion to remand to preclude the federal courts from deciding a state-law issue
        is meritless.

                                                      9
