Low, Ball & Lynch’s
WEEKLY
LAW RESUME
Property
Insurance - Appraisals - Coverage
Jeff
Kacha v. Allstate Insurance
Company
(
Court of Appeal,
Division One
Appraisals are normally
limited to determination of the value of the item insured. This case discusses
the issue of whether an appraiser’s jurisdiction is exceeded where
determinations of coverage are made by the appraiser along with his
valuation.
Jeff Kacha and his wife suffered damage to their home and
personal property in a fire. Allstate Insurance Company insured the Kacha residence. Allstate evaluated the claim and made
payment. Kacha then hired a public adjuster and
demanded an appraisal. He contended he was owed an additional $600,000. This
included cleaning and repair or replacement of property. Kacha petitioned the Superior Court to compel an appraisal
and appoint an umpire. The motion was granted by the court and a retired Judge
was appointed as umpire. Each side appointed their own appraiser to work with
the umpire.
Thereafter, an
inspection of the property occurred with the appraisers and umpire. The matter
was briefed by the parties and Allstate contended that certain claimed damages
were unrelated to the fire. Kacha objected to this,
stating that this was outside the scope of the appraisal. The panel made an
award of $163,792 in replacement cost value and $155,993 in actual cash value.
Some items were marked zero. Allstate paid the amount of the award. Kacha applied to the appraisal panel to correct the award,
arguing that the determination of zero dollars for certain items was a coverage
determination. When the panel refused to change the award, he petitioned the
Superior Court to vacate it. The court denied Kacha’s
petition and confirmed the award. A judgment was entered in conformance with the
award. Kacha appealed.
The Court of Appeal
reversed. It ordered the appraisal award vacated. An appraisal is to determine
only the amount of loss. It is to determine the amount of the actual cash value
and loss. It
is not to resolve questions of coverage or interpret policy
provisions. When an appraisal panel exceeds its powers by deciding coverage
issues, the decision must be vacated. Thus, the trial court erred by denying
Kacha’s petition to vacate the appraisal
award.
It was clear from the
evidence that some items for which a zero sum was awarded had suffered damage.
The question was the source of that damage. By awarding zero, the appraisal panel
made coverage determinations, thus exceeding its
authority.
Finally, the court held
that there was no waiver of the right to challenge the award because Kacha accepted and retained Allstate’s payment of the award.
Here, Kacha immediately applied to the appraisal panel
for reconsideration and then petitioned the Superior Court for an order vacating
the award. Allstate sent the drafts unsolicited and they had not yet been
cashed. Thus, Kacha was apparently holding the drafts
pending resolution of the appeal. There was no voluntary acceptance of benefits
which would justify a dismissal of the appeal.
Based on the foregoing,
the court directed the trial court to reverse the judgment and enter an order
granting Kacha’s petition, vacating the appraisal
award.
COMMENT
Appraisals must strictly
comply with the provisions of Insurance Code §2071 or the parties must stipulate
to expand the powers of an appraiser. This case shows that failure to do so will
result in a vacation of an award where the appraisers make coverage
determination.
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