Opinion
CV146025010S
03-22-2016
A Better Way Wholesale Autos, Inc. v. Republic-Franklin Insurance Company
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO CONFIRM APPRAISAL AWARD #122
Andrew W. Roraback, J.
I
Background
The plaintiff is a seller of used vehicles whose lot was flooded resulting in the total loss of twenty-five vehicles. The defendant, an insurer, issued a property insurance policy to the plaintiff. The interpretation of that insurance policy lies at the heart of this dispute.
The parties could not agree on the amount the defendant was obligated to pay the plaintiff under the policy for the loss suffered. Consequently, the matter was submitted to an appraisal process provided for in the policy. Pursuant to this process, each party selected an appraiser and their inability to agree on " the actual cash value" of the destroyed vehicles and the amount of " loss" to the plaintiff resulted in the submission of these questions to an umpire for determination.
The policy provides, in pertinent part, that " the most" the defendant will pay for any one covered vehicle is " the actual cash value of the damaged [vehicle] . . . as of the time of 'loss' . . ." The umpire concluded that " the appropriate definition of actual cash value to be employed in this case is the fair market value, as urged by the insured." Umpire's Decision at 2.
The umpire rejected the insurer's position that the " actual cash value" should be the amount actually paid by the insured for the vehicles in question. The umpire's decision acknowledged that the policy provides that the insurer is not obligated to pay the insured for the insured's expected profit, including loss of market value or resale value. He also recognized that " the limitations imposed by the policy forbidding the recovery of expected lost profit is independent of the question of the actual cash value of the vehicle in question." Umpire's Decision at 3.
The policy contains a provision which states that " even if we [the insurer] submit to an appraisal, we still retain our right to deny the claim." The umpire's decision indicates that neither party was represented by counsel in the appraisal process. His decision also recounts that " [t]he parties at the hearing agreed that I should decide this matter taking all the evidence and arguments into consideration and determine what amount should be paid by the Insurer to the Insured under the policy, and that my decision would be binding even though it did not agree with either one of the appraisers." Umpire's Decision at 3. Conspicuous by its absence is any written agreement signed by the parties in which they agreed to be bound by the amount the umpire concluded would be due under the policy. Also absent in this case is any evidence as to whether the policy language permitted a change to its terms by oral agreement of the parties.
The plaintiff has filed an Application for Order Confirming Arbitration award pursuant to General Statutes § 52-417. The defendant has objected to this motion claiming, among other things, that the appraisal process is not an " arbitration" which is subject to confirmation under the statute.
General Statutes § 52-417 provides in relevant part: " [A]ny party to the arbitration may make application to the superior court for the judicial district in which one of the parties resides . . . for an order confirming the award. The court . . . shall grant such an order confirming the award unless the award is vacated, modified or corrected as prescribed in sections 52-418 and 52-419."
II
Discussion
In support of its application, the plaintiff cites two higher court cases for the proposition that the appraisal process provided for in the policy is tantamount to an " arbitration" for the purposes of applying the terms of § 52-417. Neither of these cases is analogous to the present case nor are they dispositive of the specific issues which constitute the gravamen of this application.
The first case relied upon by the plaintiff, Travelers Home & Marine Ins. Co. v. Kravitz, 129 Conn.App. 166, 19 A.3d 249 (2011), addressed the conditions that may justify a judicially created exception to the thirty-day period within which a party must move to vacate, modify, or correct an arbitration award pursuant to General Statutes § 52-420(b). In Kravitz, the court did not decide when an " appraisal" is considered to be the functional equivalent of an " arbitration" for the purposes of § 52-417.
General Statutes § 52-420(b) states that: " No motion to vacate, modify or correct an award may be made after thirty days from the notice of the award to the party to the arbitration who makes the motion."
The plaintiff also relies upon Covenant Ins. Co. v. Banks, 177 Conn. 273, 279, 413 A.2d 862 (1979). In that case, the Supreme Court held that the appraisal clause required in fire insurance policies under General Statutes § 38a-307 constituted " a written agreement to arbitrate within the meaning of [General Statutes] § 52-411." (Internal quotation marks omitted.) Covenant Ins. Co. v. Banks, supra, 177 Conn. 279. Section 52-411 sets forth a process by which an agreement to arbitrate may be enforced. In Banks, the court concluded that a party to a contract covered by and including the language mandated by § 38-98 was not precluded from using § 52-411 to compel participation in an appraisal process by a recalcitrant insurer. Id., 280. The Supreme Court's holding that the statutorily required appraisal language did constitute an agreement to arbitrate was supported by its decision to define " arbitration as the voluntary submission . . . of an existing or future dispute to a disinterested person or persons for final determination." Id. (citing Kantrowitz v. Perlman, 156 Conn. 224, 226, 240 A.2d 891 (1968)).
At the time Banks was decided General Statutes § 38a-307 was codified as § 38-98.
General Statutes § 52-411 provides in relevant part:
There is no evidence that the insurance policy in the present case is a standard form fire insurance policy that must include the appraisal language of § 38a-307. Even if it is such a policy, the language, by its terms, reserves for the insurer the right to deny the claim even if the insurer engages in the appraisal process. Additionally, the umpire's decision expressly acknowledged that the exclusion " expected lost profit" from coverage was independent from the question of " actual cash value." Thus, in this case, the umpire's conclusion was not a final determination of what must be paid under the policy. As such, the umpire did not have the authority to render an award subject to confirmation under § 52-417.
The umpire's decision noted that the parties, who were self-represented at the time, agreed that the umpire would " determine what amount should be paid by the Insurer to the Insured under the policy" and that his " decision would be binding even though it did not agree with either one of the appraisers." Umpire's Decision at 3. Absent additional evidence, this is not a sufficient basis to conclude that the umpire's determination is subject to confirmation under § 52-417. Furthermore, the umpire conceded that his findings did not follow the policy's dictate that the insurer was not obligated to pay the plaintiff's " expected profit, including loss of market value or resale value."
III
CONCLUSION
The plaintiff's application for order confirming the arbitration award dated October 9, 2015 is, therefore, denied.
(a) If, in a written agreement to arbitrate, a method of appointing an arbitrator . . . has been provided, the method shall be followed. (b) If no method is provided therein, or if a method is provided and any party thereto fails to use the method, or if for any other reason there is a failure in the naming of an arbitrator or arbitrators or an umpire . . . upon application by a party to the arbitration agreement, the superior court for the judicial district in which one of the parties resides . . . shall appoint an arbitrator . . . as the case may require. A person so appointed an arbitrator or umpire shall act under any arbitration agreement with the same force and effect as if he had been specifically named or referred to therein . . ."