Memorandums of Appraisal, Appraisal Parameters or similarly named documents which outline the scope of the appraisal are becoming more and more common. The case of Church Mutual Insurance Company v. Circle of Light,1 is a good reminder that all appraisers should know the terms and limitations set forth in any such document before proceeding to appraisal.

Following a hail and wind claim, the insured filed a claim with Church Mutual for loss and damage to its property. Disagreeing with the amount of the loss, the parties proceeded with the appraisal process. Following the submission of separate estimates, the parties agreed to submit only certain aspects to appraisal. They entered into certain Appraisal Parameters which provided, in part, as follows:

2. …the only issue appropriate for appraisal is the value of the property or the amount of the loss, not whether or not covered damage exists.

3. In the present case, the respective appraisers and umpire shall appraise the amount of the loss to the roofing system, including any attached guttering, vents decorate additions, and/or exterior lighting related to the May 31, 2013 hail/wind event.

4. Church Mutual Insurance and Circle of Light Church previously provided their estimates for the amount of damage. The current dispute is not with regarding [sic] to scope of the damage, only the amount of loss to the roofing system, including any attached guttering, vents, decorate additions, and/or exterior lighting related to the May 31, 2013 hail/wind event.

5. The respective appraisers and umpire are not to appraise any damage to the interior, as there is a pending coverage dispute on damage to the interior.

6. Additionally, any exterior damage above and beyond the damage outlined in the parties’ respective estimates is beyond the scope of the current appraisal process.

7. However, should the appraisers locate and/or observe further damage to the exterior, which they believe have been caused by or related to the May 31, 2013 hail/wind event, the appraisers are to notify the parties’ respective attorneys, so the alleged additional exterior damage may be evaluated and inspected by Church Mutual Insurance.

An appraisal award was made and signed by the appraiser for Circle of Light and the Umpire. Church Mutual sought to set aside the appraisal award arguing that it did not comply with the Appraisal Parameters. Specifically, Church Mutual asserted that the estimate submitted on behalf of Circle of Light, upon which the award was based, included damage to the convent roof, garage roof, school roof, and storage roof – items which were not included in the original, pre-appraisal estimate.

The court granted Church Mutual’s motion and set aside the appraisal award. Specifically, the court upheld the Appraisal Parameters as a clear and unambiguous contract entered into by the Parties and signed by each appraiser. In its ruling, the court noted that the pre-appraisal agreement clearly set forth the parameters of the appraisal, which stated that the appraisal should not extend beyond the scope of the estimates previously submitted. The court further highlighted the Appraisal Parameters’ provision that provided a mechanism for either appraiser to address “additional damages” or ambiguity related to the phrase “roofing system” by notifying the parties’ respective attorneys. In essence, the court held that to the extent the appraiser on behalf of the Circle of Light thought there was an ambiguity or had a question about the scope, he should have invoked this provision and contacted counsel. Having not done so, the court found it determinative and set aside the award.

Unfortunately for the insured, this case serves as a good reminder to attorneys and appraisers alike that the terms of pre-appraisal agreement are important, should be purposefully drafted, and followed. In that regard, it is unclear whether the appraisal award would have been set aside if the insured’s appraiser had contacted counsel pursuant to the terms of the Appraisal Parameters.
1 Church Mutual Ins. Co. v. Circle of Light, 2019 WL 4277334 (E.D. Mo. Sept. 10, 2019).