It is never over until it is over. The $56 million appraisal award I first noted in Appraisals Can Lead to Nasty Legal Battles—Should Appraisers and Umpires Get Insurance Protecting Them? had an interim Order that vacated the $56 million appraisal award.1

The federal court ruled:

The Court rules that FBCO did not comply with the Policy and its request to the state court was premature, meaning the state court was without authority to appoint Mr. Weeks…Thus, Mr. Weeks was without derivative authority to issue an appraisal award. Because the Court grants BMIC’s Motion on this ground, the Court need not address BMIC’s other arguments in support of its Motion.

The ruling relied only on the policy language. The situation involved replacing an umpire that was retiring from the appraisal process and selecting a new umpire. The court first noted the policy language regarding appraisal:

Appraisal: If you and we do not agree on the amount of the loss or the actual cash value of covered property, either party may demand that these amounts be determined by appraisal.

If either makes a written demand for appraisal, each selects a competent, independent appraiser and notifies the other of the appraiser’s identity within 20 days of receipt of the written demand. The two appraisers then select a competent, impartial umpire. If the two appraisers are unable to agree upon an umpire within 15 days, you or we can ask a judge of a court of record in the state where the property is located to select an umpire.

The court then noted the applicable facts surrounding the resignation of the first umpire and appointment of the replacement umpire:

[T]he parties agreed to appoint Eddie Kizer (Mr. Kizer) as the appraisal umpire….However, on June 1, 2020, Mr. Kizer e-mailed V’Rhett F. Williams (Mr. Williams), FBCO’s appraiser, and Raymond Choate (Mr. Choate), BMIC’s appraiser, notifying them that ‘due to an increase claims volume from COVID19,’ he had to withdraw as the umpire… Mr. Kizer’s affidavit, which FBCO references, states that he ‘talked with both Choate and Williams to let them know that [he] was going to withdraw from serving as the appraisal umpire . . .’ on May 28, 2020. …On June 15, 2020, FBCO requested that the 29th Judicial District Court for Palo Pinto County, Texas, select a replacement umpire… The state court did so on June 16, 2020….

FBCO argues that it waited 15 days before filing an ex parte application for the appointment of an umpire in state court, citing May 28, 2020, as the triggering date… BMIC argues that FBCO did not wait 15 days before applying, citing the earliest triggering date as June 1, 2020…

Mr. Kizer’s affidavit suggests that Mr. Kizer spoke to Mr. Choate and Mr. Williams about his intent to withdraw from serving as the appraiser on May 28, 2020… However, Mr. Kizer officially withdrew as the umpire for the appraisal on June 1, 2020. Mr. Choate and Mr. Williams did not begin discussing a replacement for Mr. Kizer until June 1, 2020…On June 1, James McClenny, attorney of record for FBCO, contacted Mr. Choate, BMIC’s appraiser, and suggested that the parties ‘discuss potential replacements for the umpire.’ Moreover, on June 2, Mr. Choate reached out to Mr. Williams, inquiring about Mr. Williams’ availability to discuss replacing Mr. Kizer… Mr. Choate sent another e-mail on June 5, asking Mr. Williams when he would ‘like to discuss new umpires[.]’ …On June 12, Mr. Choate sent another email to Mr. Williams concerning availability….On June 12, Mr. Williams provided Mr. Choate with a list of umpires he could agree to….On June 16, Mr. Choate notified Mr. Williams that he could not agree to one of the potential umpires listed by Mr. Williams but that he was considering whether he could work with the two alternatives listed.

The situation of an umpire resigning is infrequent. The policy is silent about how to appoint a replacement umpire. The only written guidance is the appraisal clause. Accordingly, the court noted that the parties must wait until the expiration of time from the date of the formal resignation of the first umpire:

FBCO’s request for an umpire was filed on June 15, 2020, only 14 days after Mr. Kizer withdrew as the appraisal umpire….FBCO was not “authorized” to file its Application until June 16, 2020—after the expiration of 15 days from the date Mr. Kizer withdrew as umpire. To hold otherwise would render the time specifications in the Policy meaningless.

Missed a $56 million appraisal award by filing a day early!

Still, the court did not rule on the other reasons for overturning the appraisal award, and we are left to conjecture how those would have been ruled upon. The lesson from this is to obtain a written formal resignation from the umpire or agree in writing on a date that the umpire formally resigned. Then, follow the procedures and time frames set out in the policy regarding selecting the replacement umpire.

Thought For The Day

Missed it by THAT much.
—Maxwell Smart
1 First Baptist Church of Odessa v. Brotherhood Mutual Ins. Co., No. 7:18-cv-00208 (W.D. Tex. Feb. 9, 2022).