Property insurance policies rarely have language that describes the process of an appraisal to resolve disputes. I have often said that this invites “kangaroo court” justice.
Wikipedia discusses what a Kangaroo Court is:
A kangaroo court is a court that ignores recognized standards of law or justice, has little or no official status in the territory in which it resides, and is usually convened ad hoc. A kangaroo court can ignore due process and reach a predetermined conclusion. The term can also apply to a court held by a legitimate legal authority that intentionally disregards the court’s legal or ethical obligations…
A kangaroo court can also develop when the structure and function of the forum results in a poor judgment. A common example of this is when institutional disputants (“recurring players”😉 have excessive and unfair structural advantages over individual disputants (“one-shot players”).
The term kangaroo court is often mistakenly believed to have originated from the courts of Australia’s penal colonies. The Oxford English Dictionary cites the first published instance of the term from an American source, A Stray Yankee in Texas by Philip Paxton, published in 1853. However, there are earlier instances of the term, including an 1841 article in The Daily PicayuneNew Orleans, citing another publication, the Concordia Intelligencer, reporting several lynchings initiated “on kangaroo court charges”. The Picayune the article also asks “What is a kangaroo court?”
Some sources suggest it may have become popular during the California Gold Rush of 1849 to which many thousands of Australians flocked. As a result of the presence of the Australian miners, it may have come about as a description of the hastily implemented procedures used to deal with the issue of claimant miners.
Apparently, the term comes from the notion of justice advancing “in leaps and bounds,” like a kangaroo—in other words, “skipping over” (deliberately ignoring) evidence that would favor the defendant. An alternative theory is that because these courts are often convened quickly to deal with an immediate matter, they are called kangaroo courts because they have “jumped up” from nowhere, like a kangaroo. Another possibility is that the phrase may refer to the pouch of a kangaroo, meaning that the court is in someone’s pocket.
Etymologist Philologos claims that the term arose ‘because a place called Kangaroo sounded comical to its hearers, just as place names like Kalamazoo, Booger Hole, and Okefenokee Swamp strike us as comical.
A Connecticut case currently in adjudication and litigation upholding the adjudication process brought to mind the concept of kangaroo justice when I read this order:
The Court is concerned with the allegations in Plaintiff’s motion to reconsider or reconsider. The court’s order… the court ordered that the parties participate in the appraisal process through their appointed appraisers, and that “Liberty Mutual shall refrain from engaging in direct communication with the appraisal panel and allow its appraiser to prepare its statement of loss and allow the appraisers to identify differences for the adjudicator’s resolution .’ The court has not in any way suggested that if a difference in valuation exists that the parties can turn the process on its head and make it a full trial.The parties must follow the valuation process and follow its rules, including that the parties must work through their appointed appraisers in the process.
A motion filed by the policyholder complained that Liberty Mutual’s counsel interfered with the appraisal process. A letter from Liberty Mutual’s counsel stated in part:
Liberty Mutual respectfully requests that the Panel provide availability dates for Liberty Mutual by counsel to provide the Panel with additional information and arguments. As always, Liberty Mutual invites the insured, by proxy, to also present their information to the panel.
If the insured, or his representative, presents information to the panel, including information specifically provided to Mr. Tancreti, we respectfully request that this be provided to our office so that Liberty Mutual may have a reasonable opportunity to review this information and respond appropriately.
Regarding the hearing, please also notify the parties if the panel wishes to conduct an in-person hearing or hold the hearing via Zoom. Note that it is Liberty Mutual’s continued position that the Connecticut Supreme Court’s decision in Kellogg v. Middlesex Mut. Ass. Co.326 Conn. 638 (2017) provides the parties with the opportunity to present evidence to the full panel through a joint site inspection and/or assessment hearing.
Connecticut Supreme Court i Kellogg held that an appraisal award—issued upon invocation of a standard provision—functionally equivalent to the appraisal provision found in the policy at issue—is subject to review under Conn. Gene. State. Ann. § 52-418, which sets forth the grounds upon which an award may be entered under Connecticut law…
We further note that since the panel has re-viewed the property, it is clear that a majority of the alleged necessary repairs have occurred on the property. In accordance with the policy’s claims settlement provisions, the insured is not entitled to more than what is actually and necessarily expended to repair or replace the damage. Therefore, the panel should be able to see evidence of the amount actually and necessarily spent on repairing the property including, but not limited to, evidence of the cost of labor and materials to complete the work on the property. At this time, Liberty Mutual has not received this information.
It doesn’t take a rocket scientist to figure out from the above example that if an insurance company wants to stop or just slow down an assessment settlement of a claim, they just need to ask their insurance defense attorney to get involved.
To be fair and balanced, what rights do the parties involved in an “adjudication” have if any due process rights? In researching this, I noted that the Connecticut courts refer to the proceeding as an “arbitration” and an “adjudication” as if the two are the same. They are not.
Some Connecticut courts also cite the Connecticut Arbitration Code as guidance on what process to follow. If so, why can’t the parties have an opportunity to present evidence and argue?
Which brings me back to the point of this post: What are the rules when determining the process for an assessment? Do they vary the way kickball rules vary from neighborhood to neighborhood when we were kids, even though millions of dollars were sometimes at stake?
If a man’s reputation can be destroyed in an afternoon by a secret kangaroo court, then we too can one day be driven into a pit of eternal shame by the same process.
– Peter Hitchens