The Insurance Appraisal and Umpire Association (IAUA) will hold a one-day certification course in Marina Del Ray next Thursday, March 14. The IAUA generally teaches national issues, techniques and ethics involving appraisal. However, there will be a special presentation on California issues involving appraisal presented by attorney insurance defense attorney Larry Arnold and policyholder attorney Joel Gumbiner. I will be making a special presentation, “Be The Appraiser and Umpire You Would Hire.”

Shane Smith and I had a paper published nine years ago, Overturning Appraisal Awards for Bias and Seeking Discovery from Appraisers.1 We noted the following as the general rule in appraisal:

An insurance appraisal award will typically not be vacated unless it clearly appears that it was made without authority or was the result of fraud, mistake, or misfeasance of the appraisers. An appraiser is expected to provide an independent and unbiased opinion on the value of a loss. The persons appointed as appraisers must be impartial or disinterested. The term ‘disinterested’ is defined as ‘having no desire to know about a particular thing.’ Generally, the appraiser must be free from bias, prejudice, and partiality, and not have a pecuniary interest.

‘Bias or prejudice on the part of an arbitrator … may be sufficient to warrant removal of an arbitrator prior to an award.’ Many jurisdictions view appraisal awards the same or similar to arbitration awards, so the case law on this subject often involves arbitrators. Courts across the country have analyzed the different circumstances where a party may raise that the other party’s appraiser was not impartial or disinterested in the appraisal process.

The emphasis that each state law must be researched on the topic is truer today than before. It seems as if there has been an explosion of appraisal cases that end up in court regarding appraiser and umpire bias.

California courts generally hold that a party-selected appraiser may be disqualified when a substantial business relationship exists between an appraiser and a party.2

I will write more about California appraisal after the IAUA conference next week. Here is the link for registration.

Thought For The Day  

In every case, I have to be conscious that the litigants before me deserve a fair hearing, and I cannot let my emotions get in the way of their right to receive an impartial judgment.

—Sonia Sotomayor

1 William F. “Chip” Merlin Jr. and Shane S. Smith, Overturning Appraisal Awards for Bias and Seeking Discovery from Appraisers, The Brief, Vol 44, Iss. 4, pp. 48-55 (Summer 2015).

2 Mahnke v. Superior Court, 180 Cal.App.4th 565 (2009).