Property insurance policies rarely have language describing the process of an appraisal to resolve controversies. I have often said this invites “kangaroo court” justice.

Wikipedia discusses what a Kangaroo Court is:

A kangaroo court is a court that ignores recognized standards of law or justice, carries little or no official standing in the territory within which it resides, and is typically convened ad hoc. A kangaroo court may ignore due process and come to a predetermined conclusion. The term may also apply to a court held by a legitimate judicial authority which intentionally disregards the court’s legal or ethical obligations…

A kangaroo court could also develop when the structure and operation of the forum result in an inferior brand of adjudication. A common example of this is when institutional disputants (‘repeat players’) have excessive and unfair structural advantages over individual disputants (‘one-shot players’).

The term kangaroo court is often erroneously believed to have its origin from the courts of Australia’s penal colonies. The Oxford English Dictionary cites the first published instance of the term as from an American source, A Stray Yankee in Texas by Philip Paxton, published in 1853. There are, however, earlier instances of the term, including an 1841 article in The Daily Picayune, New Orleans, that quotes another publication, the Concordia Intelligencer, reporting several lynchings instituted ‘on charges of the Kangaroo court’. The Picayune article also asks ‘What is a kangaroo court?’

Some sources suggest that it may have been popularized during the California Gold Rush of 1849 to which many thousands of Australians flocked. In consequence of the Australian miners’ presence, it may have come about as a description of the hastily carried-out proceedings used to deal with the issue of claim-jumping miners.

Ostensibly, the term comes from the notion of justice proceeding ‘by leaps’, like a kangaroo – in other words, ‘jumping over’ (intentionally ignoring) evidence that would be in favor of the defendant. An alternative theory is that as these courts are often convened quickly to deal with an immediate issue, they are called kangaroo courts since they have ‘jumped up’ out of nowhere, like a kangaroo. Another possibility is that the phrase could refer to the pouch of a kangaroo, meaning the court is in someone’s pocket.

Etymologist Philologos argues that the term arose ‘because a place named Kangaroo sounded comical to its hearers, just as place names like Kalamazoo, and Booger Hole, and Okefenokee Swamp, strike us as comical.

A Connecticut case currently in appraisal and litigation enforcing the appraisal process brought the concept of kangaroo Justice to mind when I read this Order:

The court is troubled by the allegations contained in the plaintiff’s motion to reargue or reconsider. The court’s orders… the court ordered that the parties are to participate in the appraisal process through their designated appraisers, and that ‘Liberty Mutual shall refrain from engaging in direct communications with the appraisal panel and allow its appraiser to prepare his statement of the loss and let the appraisers identify differences for resolution by the umpire.’ The court has in no way indicated that if a difference in valuation exists that the parties may then turn the process on its head and turn it into a full trial. The parties are to follow the appraisal process and abide by its rules, including that the parties are to work through their designated appraisers in the process.

A motion filed by the policyholder complained that Liberty Mutual’s counsel was interfering with the appraisal process. A letter from Liberty Mutual’s counsel stated in part:

Liberty Mutual respectfully requests that the panel provide dates of availability for Liberty Mutual through counsel to provide additional information and arguments to the panel. As always, Liberty Mutual invites the Insured, through counsel, to present their information to the panel as well.

Should the Insured, or his counsel, present information to the panel, including information specifically provided to Mr. Tancreti, we respectfully request that this be provided to our office so that Liberty Mutual may have a reasonable opportunity to review this information and respond appropriately.

Regarding the hearing, please also notify the parties should the panel wish to do an in person hearing or hold the hearing via Zoom. Please note, it is Liberty Mutual’s continued position that the Connecticut Supreme Court’s decision in Kellogg v. Middlesex Mut. Ass. Co., 326 Conn. 638 (2017) affords the parties the opportunity to present evidence to the entire panel through a joint site inspection and/or appraisal hearing.

The Connecticut Supreme Court in Kellogg held that an appraisal award – issued after invocation of a standard provision – functionally equivalent to the appraisal provision found in the policy at issue – is subject to review under Conn. Gen. Stat. Ann. § 52-418, which establishes the grounds for which an arbitration award may be vacated under Connecticut law….

…

We further note that, as the panel has new viewed the Property, it is clear that a majority of the alleged necessary repairs have occurred at the Property. Pursuant to the Policy’s Loss Settlement Provision, the Insured is entitled to no more than the actual and necessarily spent to repair or replace the damage. Therefore, the panel should have an opportunity to view evidence of the amount actually and necessarily spent in repairing the Property including, but not limited to, evidence of the cost of labor and materials to complete the work at the Property. At this time, Liberty Mutual has not been provided this information.

It does not take a rocket scientist to figure out from the above example that if an insurance company wants to stop or merely slow down an appraisal resolution of a claim, all it has to do is ask its insurance defense counsel to get involved.

To be fair and balanced, what are the due process rights, if any, of the parties involved in an “appraisal?” While researching this, I noted that Connecticut courts call the proceeding an “arbitration” and an “appraisal” as if the two are the same. They are not.

Some Connecticut courts also cite Connecticut’s arbitration code as guidance for what process to follow. If so, why can’t the parties have the opportunity to present evidence and make argument?

Which leads me back to the point of this post: What are the rules when deciding the process of an appraisal? Do they vary the way rules of kickball vary from neighborhood to neighborhood when we were kids, despite millions of dollars sometimes being at stake?

Thought For The Day

If a man’s reputation can be destroyed in an afternoon by a secret kangaroo court, then we, too, can one day be propelled into a pit of everlasting shame by the same process.
—Peter Hitchens