Umpires Following Unfavorable Appraisal Awards May be Subject to Suit
I was forwarded a lawsuit by Art Newman, who is the current president of the Windstorm Network. The suit is regarding activities that Newman conducted as an Umpire to an appraisal. A policyholder that was not pleased with the appraisal award sued Citizens Property Insurance Corporation and Art Newman.
It states in part:
11. Pursuant to the terms of the Policy, the Insured invoked the appraisal process and demanded the Insurance Company to comply with the Policy's appraisal clause via' US Mall and facsimile.
12. The Insurance Company complied wlth the Insured's appraisal demand and selected Shawn Hall of Burton Claims Service, Inc. as their appraiser, Shortly thereafter, the Insured selected Tony Quintana of Claimserve Co. as his appraiser.
13. On or about March 24, 2008, the appraisers, in order to provide an accurate appraisal estimate, conducted an inspection of the insured's property which is the subject ofthis action.
14. Each appraiser separately detailed the actual cash value, the replacement cost, and the amount of loss of each Item. Unfortunately, they failed to come to an agreement.
15. As afforded in the Policy, in the event that the competent and impartial
appraisers are unable to reach an agreement, the decision to set the amount of loss must be assigned to a neutral umpire, selected by both the Insured and the Insurance Company.16. Mr. Art Newman (the "Umpire"), was mutually selected by Mr. Quintana and Mr. Hall, before the start of the appraisal process.
17. On or about June 13, 2008, both appraisers provided the Umpire copies of their loss estimates. In order to provide a competent and accurate estimate of the loss, The Umpire scheduled an inspection of the property. This property inspection was to be attended by himself, Mr. Quintana and Mr. Hall and was scheduled to take place on July 23, 2008.
18. On July 23, ;l008,the date mutually agreed to by all parties, the Umpire failed to appear at the Inspection and did not notify any party of same.
19. Notwithstanding, his failure to appear at the inspection and failure to examine the physical damages that were the subject of disagreement between the appraisers, on July 30, 2008, the Umpire submItted an executed Appraisal Award in the amount of $17,613.61.
20. The Umpire never visited nor inspected the property, never attempted to
reschedule said inspection, never examined the physical damages that were the
subject of disagreement between the appraisers and never properly appraised the
amount of the losses.21. The Umpire did not have prior knowledge of the claim, and therefore was
unqualified to make an assessment of the damages without personally inspecting the property first.22. The Insured has suffered and continues to suffer damages resulting from the Umpire's egregious behavior In issuing an Appraisal Award after failing to inspect
the property.23. Pursuant to Frorida Statute Section 682.13(b), the court snarl vacate an award when: "... there Is evident partiality by an arbitrator appointed as a neutral or corruption in any of the arbitrators or umpire or misconduct prejudicing the rights of
any party."24. Clearly, the issuance of an Appraisal Award by the Umpire, wrthout the inspection of the property, evidences partiality on his part and clearly constitutes misconduct prejudicing the rights of the Insured. These egregious acts of misconduct have undoubtedly damaged the Insured.
25. The Insured has been obligated to retaIn the undersigned attorneys for the prosecution of this action and is entitled to a reasonable attorneys' fee pursuant to
Florida Statute Section 627.428.26. This Court should vacate the Appraisal Award executed by the Umpire who has engaged in blatant misconduct as a result of his actions, prejudiced the rights of the Insured and has otherwise greatly damage the Insured,
WHEREFORE, the Insured respectfully requests that this Court enter judgment
against the Insurance Company and Art Newman, vacate the Umpire's Appraisal
Award or in the alternative modify or correct the award and entille the undersigned to court costs and reasonable attorneys' fees pursuant to Sections 627.428, Florida
Statutes.
I do not know what will come of this lawsuit. Generally, it is difficult to overturn an appraisal award. And, just because Newman did not go to the loss site does not prove he is prejudiced against the policyholder. Further, there is no requirement that he go to the loss site. As I previously indicated in Appraisals Better Be Won Because They are Difficult to Overturn--Even if Unfair in Result or Procedure, there are no rules at all.
Still, the cost of hiring counsel to represent himself could subject Newman to a change of heart. Possibly, this will be the new techniques for those that lose appraisals-- sue the umpire. The impact of such action would certainly make umpires a little more concerned with their activities during the appraisal process. Fortunately, I have never filed suit against an umpire.
My concern is that if my colleagues start filing such suits on a regular basis, the availability of umpires is going to diminish and the cost is going to rise. I used to question why umpires posed the hypothetical of being the target of lawsuits, and now I can appreciate their concern and the reality of the costs and implications by such actions. It will be interesting to see if this becomes a trend or isolated occurrence.
Chip,
If I do not know a particular umpire candidate, as part of my due dillegence as an appraiser when selecting an Umpire, I interview him/her to get an idea whether that person is competant to undertake the assignment.
In the case discussed in your blog, I will assume both appraisers selected Mr. Newman, as they felt he was competant. As you stated, there is no-none-nada requirement for Mr. Newman, as an Umpire to visit the loss site. I don't know why Mr. Newman chose not to meet the appraisers, however, it certainly does not make him unworthy or incompetant to serve as the umpire and render his opinion as to the value of the loss.
In my opinion, there are two points working against the dissatisfied policyholder: (1) the policyholder chose his appraiser who agreed to Mr. Newman as an umpire, and (2)it takes two of the three persons to agree on the award amount to set an award....it is not the umpire alone that sets the award.
Based on the background information contained in your blog, the lawsuit seems frivilous at best.
In addition, I agree with your statement that if umpires are sued on a regular basis because a policyholder or insurance company is unhappy with the decision, the pool of umpires will dry up or become extremely expensive to retain, and or the appraisal process may cease to exist.
I have found more and more that properly documented and valid umpire findings/investigation reports are being challenged by Citizens for a plethora of reasons raised merely to stall, hamper, thwart and hinder rights of the Insured, be it a personal or corporate Insured; Citizens' various annointed counsels thruout Florida have come to know that they can buy upwards of 6 months to a year raising such non meritorious objections and defects, with impunity, before most of the Florida Circ. Courts.
There should be a clearinghouse where practitioners can note such pleadings, defects and non meritorious filings to their fellow peers who commonly take the side of the Insured battling for dollars which should have been paid the 20 or 30 days after the Award, but were not; in my view Citizens and others pulling these antics should be stopped early on in the objection process and that can be accomplished by having their informed opponents sharing such information and data in a commom and reliable respository.
Isn't Art Newman the gentlemen who owns, or at least works for) Belfor, a General Contracting firm usually hired by insurance companies to estimate and repair damaged structures? Judging by the facts and tone of the referenced lawsuit, I believe my assumption is correct. Plz correct me if it isn't.
And, as any General Contractor knows, you must visit the loss site to inspect and calculate the damages.
Indeed, it was the Umpire - Mr. Newman - who
"...scheduled an inspection of the property. This property inspection was to be attended by himself, Mr. Quintana and Mr. Hall and was scheduled to take place on July 23, 2008...
...Notwithstanding, his failure to appear at the inspection and failure to examine the physical damages that were the subject of disagreement between the appraisers, on July 30, 2008, the Umpire submItted an executed Appraisal Award in the amount of $17,613.61...
The Umpire never visited nor inspected the property, never attempted to reschedule said inspection, never examined the physical damages that were the
subject of disagreement between the appraisers and never properly appraised the amount of the losses."
WHY DID HE [MR. NEWMAN] FAIL TO SHOW @ A MEETING/INSPECTION HE REQUESTED? WHY DIDN'T HE TRY TO RE-SCHEDULE SAME? WHY DIDN'T HE AT LEAST HAVE THE COURTESY TO CALL THE APPRAISERS AND ADVISE THAT HE WASN'T GOING TO BE THERE?
His behavior and treatment of the insured's claim is not only BIASED, it's insanely RUDE to all involved.
I hope his Award is set aside. Maybe after paying some attorney's fees of his own, he'll gain an understanding that rudeness and obvious biased behavior have consequences (financial ones anyway).
Poor insureds....in more ways than one.
SHIRLEY HEFLIN
Here is a case where one party "spurned" feels like they were wronged, so sue..
I do not agree if a party gets an unfavorable award, they trot off to court and expect relief and a reversal of the award based on the issue: " wrthout the inspection of the property, evidences partiality on his part and clearly constitutes misconduct prejudicing the rights of the Insured. These egregious acts of misconduct have undoubtedly damaged the Insured."
Suppose the award is vacated and another award is issued in favor of the insured? Would that then allow the carrier to file another suit seeking relief under the same circumstances?
Caveat Emptor, the insured selected their appraiser, if the appraiser could not argue the damages successfully to the umpire, then the insured should look to seek damages from someone other than the umpire.
Perhaps the claim had little value and that the correct amount was issued? Just because someone puts a dollar value on paper does not mean it's the right one. The umpire makes a ruling based on whats presented to him or her. While umpires are not required to inspect property they are expected to evaluate the evidence and exercise common sense when issuing an award.
How many slab cases did Merlin Law Group litigate "without seeing the damage?."
Going after a umpire is not the answer. The insured can always explore E & O coverage. Litigation is a double edged sword.
Chip, in this case I think you opened pandora's box.
Most Umpires I've ever been exposed to are NOT worried about being the "target" of a lawsuit because most of them are professionals and act accordingly.
I can see maybe he "forgot" to attend the inspection he requested and scheduled - but he didn't bother w/a follow-up inspection - true, it's not required, but he [THE UMPIRE] felt it was NECESSARY and that's probably why he set it up....and then failed to show, failed to re-schedule and subsequently entered an Award without an inspection.
In my opinion, this is truly an exception to the norm of professional Umpire behavior.
Thanks.
SHIRLEY HEFLIN
It appears that some folks take what is written in a statement of claim for the truth. These are allegations of which the veracity will be determined in court.
Maybe the umpire who was under no obligation to attend never said he would. I've read more frivolous, untrue, exaggerated statements of claim recently that stretch the limits of credulity. No where is there mention that the insured even disagreed with his own appraisers assesment or how far off the mark the umpire's award was from his own experts.
That an insured is unhappy with an award is nothing new. What is disturbing is that the contractual bond between insured and insurer now includes anyone who intervenes in the process i.e. adjuster, appraiser, umpire etc. With all these folks now subject to frivolous litigation the cost of doing business just became more expensive. Without a "hold harmless " agreement in place protecting them from litigation I can see where many experienced claims professionals will refuse to act on behalf of an insurer who will not assume all of their defense costs. The cost of proferring an opinion just became more unacceptable.
Chip,
This is one the exact reasons why I work with the underwriters of the Pro Liability policies for my clients to make sure that Adjusters functioning as appraisers and umpires have those functions specifically written into the definition of coverage or at least endorsed onto the policy.
It is my opinion that with the "finality" of the appraisal award, there is more E&O exposure than in simply adjusting claims. If a client feels like an adjuster does a poor job, he always has the option of hiring another adjuster and opening a supplemental claim.
I appreciate all the comments. There are a number of issues at play which I feel need to be addressed.
First, everybody deserves a "fair" appraisal. Most of the time, the panel tries to do just that. And, there have been times when Art Newman, a contractor that typcally gets leads from insurance companies, also awards significant sums in favor of the policyholder.
What does a party supposed to do when they lose an appraisal because of "unfairness" in the procedure? I wish I knew because many states refuse to say that there is a required procedure.
Insurance Veteran notes a very important point--pleadings in a complaint are not proof of what happened. Proof is one thing and allegations are another. We should always remember that.
Yet, I do not know if one could call a lawsuit "frivlolous" just because the losing party to an appraisal brings a lawsuit. Lawsuits may have merit or may not depending on the law and the facts. In some situations, the law is very fluid and not very developed. This is the situation with appraisals. Indeed, please note that the policyholder attorney is raising Arbitration Code rules because there is nothing else to rely upon in a procedure. A case like this could eventually raise issues of a Constituional nature where discovery proves that there is no procedure.
Finally, in the event something does go terribly awry, having Errors and Omission coverage can help pay for mistatkes or at least the cost of legal counsel in the litigation to discern these legal points.
Chip,
This is a situation that if heard in the halls of the Capitol will certainly have some legislators "pencil" working on a way to hold umpires acountable for a no-show. Who knows what they come up with but they are pretty creative. It makes for bad business and over all ill will to have two parties call on the services of an umpire to arbitrate a dead lock only to have the umpire never show, call or make an attempt to contact both parties with a course of action. To just submit a reward based on what, splitting the difference???
Granted there may be much more to this than written in your blog and the umpire may have been able to make the absolute best compromise but still, to not show and just submit seems pretty unprofessional.
Get ready Session 2010!!
Well, I would hope any Attorney filing a lawsuit would have a well-founded basis for doing so (i.e., facts supporting their "allegations").
SHIRLEY HEFLIN