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Appraisers cannot establish causation | Zalma on insurance



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IN Agrisompo North America, Inc. v. Coldwater Planting Company, M&W Farms, LLC, Brazil Planting Company, Pushen & Pullen Farms and Webb FarmsNo. 3:22cv51-MPM-RP, United States District Court, ND Mississippi (November 4, 2022) Coldwater Planting Company, et al moved to dismiss this action.

QUESTIONS

Plaintiff Agrisompo asked the USDC to enter an order appointing an “adjudicator” to determine the underlying crop insurance dispute. The dispute was to determine whether the crop damage sustained by the insureds in June 2021 was caused by a covered wind damage event or a non-covered flood event.

The parties were unable to resolve their differences on this issue, and the plaintiff responded to the impasse by suing to appoint a judge. The plaintiff argued that the court has the power to make such an order based on an assessment policy provision which states that the assessment procedure will be used “[i]if you and we do not agree on the percentage of loss caused by one of the perils insured ….”

ANALYSIS

There is extensive Mississippi authority holding that under the law of that state an appraiser may not determine questions of causation under an insurance contract. IN Jefferson Davis Cnty. Sch. Dist. v. RSUI Indem. Co.2009 WL 367688, at *2 (SDMiss. Feb. 11, 2009), Judge Parker wrote that: “Defendant argues that assessment is inappropriate because this case involves “coverage and causation issues, not a dispute over the value of an admittedly covered” loss. ‘”

Judge Parker also wrote that “it is clear that under Mississippi law, the purpose of an appraisal is not to determine the cause of loss or coverage under an insurance policy; rather, it is ‘limited to the function of determining the monetary value of the property in question.” (my italics)

This authority convinced the USDC to be directly on the spot, and in response the plaintiff can only offer the precedent of other states, which follow a different interpretation of the law. Although plaintiffs may cite extensive authority from other jurisdictions in this regard, this only serves to highlight the fact that it is defendants who can offer Mississippi precedent on point.

Plaintiff did not dispute that the diversity action is governed by Mississippi law, and it therefore appeared clear to the court that the relief it sought from the court is not available to it. The court noted that a civil action is currently pending in the Greenville Division that seeks to litigate the insurance coverage issues. Therefore, the court concluded that that case is the proper forum for the parties to resolve their disputes.

The defendants’ motion to dismiss the action was therefore granted.

The standard language of “appraisal” limits appraisers’ ability to determine only the amount of loss. Determination of coverage disputes can only be resolved by appropriate breach of contract actions. Some jurisdictions have attempted to give appraisers more authority than the policy provides. The USDC adhered to the authority of the policy and was followed by the state of Mississippi.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and zalma@zalma.com. Subscribe and receive videos limited to Excellence in Claims Handling subscribers at locals.com https://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

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About Barry Zalma

An insurance coverage and claims management author, consultant and expert witness with more than 48 years of practical and courtroom experience.




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