J. Ryan Fowler | Property Insurance Coverage Law Blog | April 2, 2019
With appraisal becoming more popular in first-party insurance cases, I often get asked: When is the appraisal completed? As most answers for a first party insurance case – it depends on the policy. Recently a Federal District Court in Florida was asked to determine which of two appraisal awards was final and enforceable.1
The insureds filed a claim for hurricane damage with their insurance company. The claim eventually let to a lawsuit in federal court where the parties didn’t contest coverage and agreed to an appraisal under the insurance policy.
Each side appointed an appraiser: Kunzman (for the insurer) and Thomas (for the insureds), and the trial court appointed Leiby to serve as an umpire. The Appraisers and Umpire performed a property inspection in August of 2018. The trial court then outlined the following e-mail exchanges:
September 5, 2018:
1:54 p.m. – Umpire Leiby circulated an appraisal award (the “Disputed Award”) in the amount of $121,800.30 that included his electronic signature. The email stated, “See attached for review and comment. If one or both of you find this agreeable, please sign, scan, and return to me. I will then get out the originals.”
2:27 p.m. – Appraiser Kunzman expressed his objection to the Disputed Award, asked for a breakdown and itemization of the award amount and a copy of Appraiser Thomas’ estimate.
2:35 p.m. – Appraiser Thomas emailed Umpire Leiby and Appraiser Kunzman a signed copy of the Disputed Award that Umpire Leiby had circulated at 1:54 p.m., stating, “Please see the attached award signed by me.”
3:59 p.m. – Umpire Leiby responded to Appraiser Kunzman’s 2:27 p.m. email, requesting Appraiser Thomas forward him the missing documents and indicating that he would “hold off on the final until [Appraiser Kunzman] gets that.”
September 6, 2018:
9:37 a.m. – Umpire Leiby advised Appraiser Kunzman to provide any input based upon Appraiser Thomas’ estimate within five days. Umpire Leiby then indicated that the “the award [was] not yet final.”
September 17, 2018:
12:10 p.m. – Umpire Leiby sent the parties’ appraisers a revised appraisal award (the “Revised Award”) in the amount of $90,704.27.
12:59 p.m. – Appraiser Kunzman executed the Revised Award and returned it to Umpire Leiby.
The insurance company paid the insureds $90,704.27, the amount of the Revised Award.
The insureds then asked the court to confirm the First Award in the amount of $121,800.30, executed by the Umpire and the insured’s appraiser as the binding appraisal award. The insurance company argued that the insureds’ motion should be denied because the First Award was preliminary or, if the award was final, it was timely modified by the Umpire.
The court looked at the underlying insurance policy which stated:
The appraisers will state separately the value of the residential property and the amount of loss. If they fail to agree, they will submit their difference to the umpire. A decision agreed to by any two will be binding.
(Emphasis in original.)
The court granted the insureds’ motion, finding that the Umpire did not have the authority to unilaterally change the award after it was signed by two parties. In its order, the court explained that the express terms of the policy stated that a “decision agreed by any two [appraisers] will be binding.” Here, the court continued, the evidence supported the conclusion that the Disputed Award was final and there was a decision agreed to by any two. The court ruled that once the First Award was forwarded and signed by Appraiser Thomas it “became binding by the express and unambiguous terms of the insurance policy.”
The court pointed out that no party had moved to correct or clarify the award and there was no basis for modifying it. The court said that although subsequent emails reflected the Umpire’s statement that the Disputed Award was not intended to be final, those later emails “had no effect” on the Disputed Award’s “earlier binding effect under the express terms of the policy.”
In this case, the disputed (first in time) award was final and enforceable based on the insurance policy language.
______________________________
1 Guzman v. American Security Ins. Co., No 18-cv-61195 (S.D. Fla. March 27, 2019).