Steve Badger and yours truly substituted for appraisal educator Bob Norton at last week’s Insurance Appraisal and Umpire Association certification course. One of the funnier aspects of the course is when we ask those sitting for the certification test whether the answer to a particular hypothetical is “yes” or “no.”  The right answer is often “it depends” because some states rule one way and others rule another.

Bob Norton and Steve Badger

While we were teaching the course, a Kansas federal judge made a decision regarding an insurer’s motion to disqualify the policyholder’s appraiser based on the lack of impartiality.1 As with most issues involving insurance, the first step is to read the insurance policy. The federal judge noted that the appraisal clause stated, in part:

If we and you disagree on the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser….

The court then noted the insurer’s basis for the appraiser’s disqualification:

Defendant seeks disqualification of Plaintiff’s selected appraiser, Jeremy Cannefax, challenging his impartiality based upon his alleged alignment with Wichita Home Specialists (“WHS”), the contractor whose estimate forms the basis for Plaintiff’s damages claim. Defendant argues Mr. Cannefax has refused to be fully transparent concerning his relationship with WHS, even though his comments on the WHS Facebook page clearly show there is a close and ongoing relationship. Defendant further argues Mr. Cannefax’s posts on the WHS Facebook page emphasize the general pro-insured/anti-insurer advocacy prevalent on that page. Defendant’s motion is well-supported. Attached to the motion is the detailed Affidavit of its Field Team Supervisor, Kent Garretson, including nine exhibits (WHS’s contract for services with Plaintiff and its estimate, Plaintiff’s proof of loss, Mr. Garretson’s correspondence to Plaintiff, the Facebook posts Mr. Cannefax made on WHS’s page, and Mr. Cannefax’s email and ‘Declaration of Impartiality’).

It is important to note that the policyholder’s attorney failed to respond to or rebut the insurer’s affidavits. Accordingly, the court accepted them as true and noted the basis for the ruling:

The Court finds that the material facts set forth in Defendant’s motion—which Plaintiff has not disputed—establish on their face that Jeremy Cannefax, Plaintiff’s selected appraiser, is not impartial as required by the Insurance Policy. Mr. Garretson, who is responsible for handling Plaintiff’s claim, states in his Affidavit that he performed due diligence through online research regarding Mr. Cannefax, in accordance with the requirement of the Policy, to determine whether Mr. Cannefax is “competent and impartial.” During his research, Mr. Garretson accessed WHS’s Facebook page and discovered that Mr. Cannefax made several posts on that page that Mr. Garretson considered to be indicative of a relationship between Mr. Cannefax and WHS, as well as a lack of impartiality on the part of Mr. Cannefax. Defendant has thus shown that Mr. Cannefax has some type of relationship with WHS through these Facebook posts. No rebuttal is offered by Plaintiff.

Mr. Garretson further states in his Affidavit that he sent a letter to Plaintiff on July 14, 2023, asking for detailed information concerning the extent of any financial relationship with WHS and any financial interest Mr. Cannefax might have in the outcome of the appraisal and, in particular, any agreement for compensation he might have with WHS. Mr. Cannefax responded by email on July 19, 2023, stating that he thought the request for his ‘finances’ was ‘unreasonable’ and attaching his ‘Declaration of Impartiality’ on the stationery of a company named ‘Blue Chip Consulting, Inc.’ The Court agrees with Defendant that Mr. Cannefax’s response is unpersuasive; he did not mention WHS or elucidate on the apparently close relationship he has with that company as demonstrated by his several posts on its Facebook page. Moreover, it is telling that Plaintiff never filed a response in this case making any arguments based upon Mr. Cannefax’s July 19, 2023 email or his ‘Declaration of Impartiality.’

… the Court finds Defendant has sufficiently established that Plaintiff’s selected appraiser should be disqualified because he is not impartial as required by the Insurance Policy in this case.

During the IAUA course, I made the observation that the trend is to disqualify appraisers where the appraisal clause calls for impartiality and the proposed appraisers worked on the claim or have work with the company making estimates on the claim. Judges will tend to approve of appraisers not having a pre-conceived opinion based on prior work on the claim.

Steve Badger pointed out that appraisers and umpires should be careful about what they write on social media. Boasting about “winning” an appraisal or obtaining higher or lower awards in advertisements or social media simply shows bias or impartiality. It is significant that this federal judge found the Facebook posts to be relevant evidence, as Badger warned in the IAUA course.

For a Colorado perspective of impartiality, I suggest reading Appraisal and the Impartiality of Appraisers. For the Texas perspective, I would suggest “Pissing In The Wind” Comment Disqualifies Appraiser From Appraisal Panel, and Texas Court Finds That Appraiser Does Not Have to Be Impartial If Policy Does Not Require Impartiality. For a Tennessee perspective, please visit Impartial Appraisers and Public Insurance AdjustersAgain, states have different perspectives on the issue, and the panel to an appraisal needs to know the state law that applies to an appraisal.

I always learn a lot from the IAUA audience questions. The IAUA is closing in on having over 1000 members. My hat is off to Bob Norton, past IAUA presidents, and all the Board members who have worked so hard to build this successful organization.

Thought For The Day  

Justice cannot be for one side alone, but must be for both.

—Eleanor Roosevelt

1 L & M Auto Repair v. Federated Mut. Ins. Co., No. 6:23cv01203 (D. Kan. Jan. 17, 2024).