Dufrene v. Certain Interested Underwriters at Lloyd's of London Subscribing to Certificate Number 3051393
Docket: No. 11-CA-1002
Court: Louisiana Court of Appeal; March 27, 2012; Louisiana; State Appellate Court
Plaintiff Dufrene Developers, Inc. appeals the July 15, 2011 judgments that confirmed the Umpire's Award in favor of Certain Underwriters at Lloyd’s, London, and denied Dufrene's motion to vacate the appraisal award. The underlying dispute arose from an insurance claim for windstorm damage to Dufrene's apartment building during Hurricane Katrina. Following a disagreement on the damage amount, Dufrene invoked the appraisal provision of the insurance policy, appointing Lewis O’Leary as its appraiser, while Underwriters selected Mark Sturgess. The trial court appointed Robert Foley as umpire to resolve the discrepancies between the appraisers' assessments.
The court established procedural rules for the appraisal process and conducted in-camera reviews of specific documents related to Dufrene's appraisal report. Ultimately, O’Leary’s report indicated a claim of $258,808.07, while Sturgess found no additional amounts owed. Dufrene later sought to disqualify Sturgess, claiming bias. The court affirmed the findings and the Umpire's decision, validating the appraisal process and the legitimacy of the awarded amounts.
A hearing on Dufrene's Motion to Disqualify Mark Sturgess occurred on May 9, 2011, leading to the trial court's judgment on May 11, 2011, which denied the motion. An umpire, Robert Foley, issued a report on May 14, 2011, stating that the plaintiff was fully compensated by the insurers and that no additional amounts were owed. Sturgess concurred with Foley's findings. Following this, Underwriters filed a Motion to Confirm the Umpire’s Award on June 7, 2011, while Dufrene filed a Motion to Vacate the Appraisal Award on June 28, 2011. The trial court held a hearing on both motions on July 13, 2011, ultimately confirming the umpire's award, denying Dufrene’s motion, and dismissing Dufrene’s claims for property damage. Written judgments were signed on July 15, 2011, and Dufrene subsequently appealed.
In the appeal, Dufrene alleges three errors, primarily arguing that the trial court improperly interfered with the appraisal process and that the umpire and appraisers were not allowed to operate independently. Dufrene contests the removal of certain attachments from Mr. O’Leary’s report, asserting this hindered the appraisal process. In contrast, Underwriters defend the trial court’s actions, claiming they ensured the appraisal was conducted fairly and in line with legal standards, and that the excluded documents did not pertain directly to the relevant appraisal issues. The appeal references the enforceability of appraisal clauses under Louisiana law, which do not strip the court of jurisdiction, and emphasizes that insurance contracts should be interpreted according to civil law principles, aiming to ascertain the parties' common intent based on the policy language. The insurance policy in question includes an appraisal provision but lacks specific procedural guidelines for conducting the appraisal.
The appraisal process, while not strictly bound by court rules, allows for court involvement, specifically for appointing an umpire when appraisers cannot agree. The insurance policy's language does not limit this court involvement. During a hearing on October 13, 2010, the trial court emphasized the need for umpire independence and instructed appraisers to rely solely on their own data, avoiding overwhelming the umpire with extraneous materials.
The court established guidelines for the appraisal process, including:
1. Appraisers may submit relevant documents to the umpire within a set timeframe.
2. All submissions must be copied to opposing counsel and the other appraiser simultaneously.
3. Submissions can include reports, estimates, and photographs related to damages at a specific location.
4. Ex parte communications with the umpire by appraisers are prohibited; any contact must be initiated by the umpire.
5. If the umpire contacts an appraiser, the other appraiser must be copied on all correspondence.
6. Submissions must not include legal opinions, advice, or documents prepared by legal counsel.
7. The umpire, Robert Foley, is instructed to disregard certain emails from the plaintiff's appraiser due to concerns of being overwhelmed with communications.
The trial court's guidelines aim to ensure a fair, impartial, and efficient appraisal process, which is supported by the contractual language of the insurance policy and is not prohibited by law. The guidelines are deemed reasonable to maintain fairness in the appraisal.
The trial court did not err in excluding certain attachments from Mr. O’Leary’s report, as the focus for the umpire was solely on the amount of damages at 1354 Lake Avenue, not causation. Dufrene's attachments, which included various reports and documents about damage indicators and repair needs, were deemed unnecessary by the trial court after an in camera inspection. The court instructed that the umpire could request these documents if needed. The ruling by the trial court was upheld, with no grounds found to challenge its guidelines in the appraisal process.
Dufrene also contended that the trial court should have disqualified Underwriters’ appraiser, Mark Sturgess, alleging bias due to his previous role as an adjuster. Dufrene highlighted that Sturgess did not account for damage shown in 2005 photographs in his appraisal. Underwriters countered by citing Sturgess’ extensive experience and argued that mere accusations of errors do not justify disqualification. The court noted that evidence must show a lack of honesty or integrity to disqualify an appraiser, and found no such evidence against Sturgess, affirming the trial court's decision not to disqualify him.
Finally, Dufrene claimed the trial court erred by confirming an award that allegedly failed to accurately reflect the loss amount. Dufrene argued that Mr. Foley merely totaled repair receipts without assessing their adequacy. Underwriters maintained that the appraiser and umpire’s determination of loss adhered to the policy terms, which state that a decision agreed upon by any two parties is binding. The court found no merit in Dufrene's assignments of error.
The umpire reviewed all evidence regarding the claim and concurred with Mr. Sturgess’ report, concluding that no additional funds were owed to Dufrene by Underwriters. Underwriters contended that the policy did not necessitate an independent estimate from Mr. Foley and that relying on one appraiser's figures was not improper. The umpire's reliance on various documents, including receipts and invoices from the plaintiff, was deemed acceptable in forming the award. An appraisal award is binding only if appraisers fulfill their duties as specified in the policy. In cases with two appraisers and an umpire, the burden of proof lies with the party contesting the award. Contrary to Dufrene’s claims, the umpire's report indicated that Mr. Foley did not merely aggregate receipts; he reviewed multiple appraisal reports, inspected the property, and consulted a roofer who found no wind damage. Moisture readings also showed no significant leakage. The property had been previously repaired, and Mr. Foley's reliance on receipts was not deemed inappropriate. Ultimately, both Mr. Foley and Mr. Sturgess agreed on the lack of additional funds owed, fulfilling their responsibilities under the policy. Therefore, the umpire’s decision is binding, and the trial court's confirmation of the appraisal award is upheld. The judgments from July 15, 2011, granting Underwriters' Motion to Confirm and denying Dufrene's Motion to Vacate are affirmed.
