Appraisers and umpires must ensure they have the necessary time to efficiently fulfill their responsibilities before committing to an appraisal panel. Both policyholders and insurers concur that policyholders deserve swift and complete compensation for their losses. The fundamental principle of insurance is compromised if policyholders do not receive timely and full payments. Therefore, it is imperative for appraisers and umpires to be prepared to quickly assess the extent of losses and make timely determinations on awards.
So, what happens when one appraiser does not promptly participate and complete the appraiser’s duty? Can the other two move the matter along and reach an agreed award?
This was recently addressed in a Louisiana case1 where the insurer’s appraiser did not promptly participate. The court made the following observations:
Cole retained Luke Irwin (‘Irwin’) as an appraiser, and Garrison retained Gregory Landes (‘Landes’) as an appraiser. Scott Dowdy (‘Dowdy’) was assigned as the umpire in the event of dispute. Irwin and Landes planned to jointly inspect the property on September 2, 2021. Due to Hurricane Ida, this inspection was delayed. On September 24th and November 9th, Landes attempted to reschedule the joint inspection with Irwin. On December 8th, Irwin responded to Landes, suggesting each solo inspect the property given his tight schedule. Landes confirmed with Irwin that while, solo inspection was ‘not customarily done,’ he would inspect the roof surface of the property.
Thereafter, Irwin and Landes could not agree over whether they were expected to limit their inspection of the property to the roof. Irwin informed Landes that he would reach out to the parties’ counsel to confirm the scope of the inspection. On February 15, 2022, Irwin contacted Landes requesting his position on the appraisal and indicated that the matter was outstanding. The next day, the two appraisers spoke on the phone. Landes advised that in the coming week he was traveling to North Carolina to handle a family matter, but if Irwin sent him his ‘ESX file’, he would review Irwin’s position and provide an opposition at the end of the work week. Three days later, Irwin followed up with Landes and informed him that he wanted to settle the matter by the ‘end of the month.’ Irwin provided his position and asked if Landes needed assistance inspecting the property.
On March 9th, having not heard from Landes, Irwin requested that the umpire, Dowdy, assist in wrapping up the appraisal process and copied Landes on the email exchange. Irwin provided Dowdy with his position and the sky measure of the property. The following day, Landes responded to Dowdy and Irwin. He told them he was back in Baton Rouge and ‘[t]here was no reason to involve the Umpire at this time’ because the appraisers could ‘get this ironed out’ amongst themselves. In response, Irwin informed Dowdy and Landes that Cole’s claim was filed 498 days ago and the appraisal had been pending for 353 days. He again notified Landes that if they could not come to an agreement that day, he would be invoking Dowdy’s assistance. Irwin provided Landes with his suggested award letter, stating the award was ‘fair and just.’
On March 11th, Landes responded saying, ‘I am no longer authorized to handle this file as my association with Envista Forensics has ended.’ Garrison hired through Envista Forensics. The next day, Irwin contacted to Dowdy to finalize the appraisal. Irwin informed Dowdy that, ‘[t]here [was] no verbal, written, nor implied disagreement’ on his position or any evidence to refute his position and valuation on the amount of loss. Irwin provided Dowdy with his signed appraisal. Dowdy then requested that each appraiser provide their position and scheduled a panel conference for the following week. Dowdy informed Landes that his disaffiliation with Envista Forensics did not excuse him from the process as he was ‘named as the appraiser, not Envista Forensics.’ Both appraisers provided their view of the events that transpired leading up to this panel conference. On March 15th, the appraisal award was signed by Dowdy. The appraisal award was executed and the process closed without Landes agreeing to the award or providing his position on the loss.
Garrison failed to pay Cole the appraisal award and Cole brought suit. Now, Garrison seeks to vacate the appraisal award contending that the award is not in compliance with terms of the Policy.
The court did not tolerate the delays and non-participation of the insurance company’s appraiser:
[T]he Court rejects Defendant’s argument that Landes did not have an opportunity to provide a separate estimate. The record reflects that the parties provided ample opportunity for Landes to do so. Like the insurer’s appraiser in Farber, Landes chose not to participate in the appraisal process. Although the matter had been pending for 353 days, Landes never inspected the property. Moreover, between February and March 2022, Irwin consistently followed up with Landes, but Landes did not provide a date for when he intended to inspect the property and expressed no opposition to Irwin’s appraisal. The Court can appreciate delays that may have occurred while Landes tended to his family matter but Landes informed Irwin of his family matter long after this appraisal process began. There were opportunities to inspect the property prior to his trip to North Carolina. Additionally, once Landes returned to Baton Rouge from North Carolina, Landes appeared ready to complete the appraisal process. He informed Irwin and Dowdy that the appraisers could ‘get this ironed out,’ and ‘[t]here [was] no reason to involve the Umpire at this time.’ Yet, only two days later, Landes reverted, notifying them that he was ‘no longer authorized’ to handle the appraisal. So while Defendant contends that Irwin and Dowdy failed to provide Landes with an opportunity to participate, this is not supported by the record.
Finally, whether Landes had ample opportunity to perform an inspection and appraisal is not dispositive because an appraisal award was agreed upon by Irwin and Dowdy. ‘[W]hen the words of a contract are clear and explicit …, no further interpretation may be made in search of the parties’ intent.’ The Policy provides that ‘[a] decision agreed to by any two [appraisers] will set the amount of loss.’ And as explained by the Eastern District, once both appraisers have an opportunity to participate in the process, ‘the eventual absence of one appraiser is not grounds to invalidate the award.’ The Court is persuaded by this reasoning. Landes not only had an opportunity to provide a position but attempted to terminate his responsibility in this process.
This case reinforces the importance of diligence and efficiency for umpires and appraisers committed to advancing the appraisal process. When one appraiser fails to work effectively, resulting in delays to the process, it poses the question: why should the entire procedure come to a halt? While an underperforming appraiser is accountable to the party that enlisted their services for prompt completion, it’s imperative to remember that appraisals are designed to be quick and cost-effective.
The key takeaway for parties and appraisers involved in appraisals is that courts are unlikely to permit any party or appraiser to derail the process, hoping to avoid an appraisal award reached without their input. However, this doesn’t authorize two-thirds of the panel to exclude an appraiser unilaterally or to neglect acting in good faith regarding scheduling and valid reasons for non-participation.
It is advisable for those encountering an appraiser who consistently delays the appraisal process to share this post with them. Accepting more work than one can manage contradicts the principle of good faith, and promptness is crucial in the realm of insurance claims resolution.
Thought For The Day
Defer no time, delays have dangerous ends.