Morning post, Insurance attorneys are trying to become the new appraisal stars—and get more business doing it, noted that a leading Louisiana insurance defense attorney suggests that insurers should invoke appraisal as a technique to avoid Louisiana law requiring prompt and full payment after claims investigation. This may be a motive in a recent case for a Louisiana insurer to fight waiver arguments to invoke appraisal.1
In a decision last month, Louisiana Chief Federal Judge Nannette Jolivette Brown stated the issue before her:
The defendant is asking the court to issue an order compelling the parties to submit to the appraisal process in accordance with the express terms of the policy. Plaintiff opposes the motion, alleging that Defendant has waived its right to appraisal by failing to request it within 60 days of receipt of Plaintiff̵
7;s proof of loss on February 4, 2022.
Can an insurer waive the right to appraisal by waiting too long to demand it? What is too long in Louisiana?
She noted the policyholder’s arguments and facts supporting the waiver:
The plaintiff opposes the motion. Plaintiff points out that on February 4, 2022, he submitted a comprehensive proof of loss package to Defendant containing evidence supporting a claim for $479,672.47. Additionally, Plaintiff points out that on February 17, 2022, his contractor submitted documentation to Defendant regarding the roof damage recorded in the repressurization of the roof, which was done at Defendant’s direction. Plaintiff alleges that Defendant “undoubtedly was aware by February 20222 that there was a massive dispute over the amount of the loss.”
Plaintiff asserts that Defendant had 60 days from receipt of Plaintiff’s proof of loss on February 4, 2022, to appeal an assessment. Since Defendant filed to compel an assessment within that time frame, Plaintiff contends that Defendant has waived its right to compel assessment. Alternatively, Plaintiff contends that Defendant’s request for a May 31, 2022 appraisal was too late because it was made more than 120 days after the January 28, 2022 inspection. Therefore, Plaintiff contends that Defendant did not invoke the appraisal process within a reasonable time…
She even cited Louisiana precedent relied on by the policyholder:
The plaintiff pleads WP Sevier v. United States Fidelity & Guaranty Company. There, the Louisiana Supreme Court held that an insurer’s failure to demand appraisal within 60 days of receipt of satisfactory proof of loss rendered the demand ineligible under the terms of the policy at issue in that case. A provision in the policy stated:
The amount of loss for which this company may be liable shall be paid sixty days after proof of loss, as set forth herein, is received by this company and determination of the loss is made either by agreement between the insured and this company expressed in writing or by submit an award to this company as provided herein.
The insurer required appraisal after the 60-day period and before anything was paid to the insured under the contract. The Louisiana Supreme Court held that the appraisal requirement was too late.
Based on this, it appears that the Louisiana policyholder would prevail on the waiver argument. Not so fast, my geeky insurance friends.
She noted the difference in policy language:
The loss allowance provision for the policy at issue in Sevier is distinguishable from the loss provision at issue here. The policy in question here contains:
Loss will be paid 60 days after we receive your proof of loss and:
1. Reach an agreement with you;
2. There is a final judgment; or
3. There is a submission of a valuation award with us.
According to the plaintiff’s policy, the defendant must obtain proof of loss and one of the three listed options must be satisfied before the clock starts ticking on the 60-day payment period. It is undisputed that the plaintiff has not reached an agreement with the defendant, that the court has not entered a final judgment and that no judgment has been entered with the defendant. Therefore, this case is distinguishable from Sevier because the loss provision requirement has not been satisfied.
She then found that the insurer had not waived the right to invoke valuation:
The adjuster inspected the plaintiff’s property on January 28, 2022, but he was unable to inspect the roof. The adjuster noted that an engineer was needed to inspect the property. The engineer’s report was received on February 17, 2022. On March 1, 2022, the adjuster made an estimate but stated that an additional roof inspection was needed. On April 19, 2022, the roof inspector reported that the plaintiff’s attorney had not authorized a roof inspection. On April 29, 2022, the adjuster completed the report without a requested roof inspection. The defendant then sent the plaintiff a payment for the undisputed damages on May 11, 2022 and it sent a demand for assessment on May 31, 2022. The defendant therefore received the adjuster’s final report on April 29, 2022 and it demanded assessment 32 days later. Considering all these circumstances, the court concludes that the defendant demanded assessment within a reasonable time after a dispute as to the amount of the loss arose. Accordingly, defendant has not waived appraisal and the motion to compel appraisal must be granted because the express terms of the policy require appraisal.
Who was the lead attorney representing the insurance company that won this seemingly unwinnable argument? Matthew Monson. That’s why we study and analyze his cards and techniques.
A thought after reading the Louisiana law
All the evils of France have been produced less by the perversity of the wicked and the violence of fools than by the hesitation of the weak, the compromises of conscience, and the delay of patriotism. Let every deputy, every Frenchman show what he feels, what he thinks, and we are saved!
— Marquis de Lafayette
1 McMillian v. Safepoint Ins. Co.No. 2:22-cv-01744 (ED La. Jan. 10, 2023).
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