Merlin Law Group attorney Etienne Font was an insurance claims adjuster long before he entered private law practice and eventually joined us. He has years and depth of experience on both sides of the aisle that few property insurance attorneys in the country have.
Etienne sent me an adjudication approval yesterday and said he had never seen this language in an adjudication clause where the decision to appoint the judge would be decided by a coin:
If the insured and this insurer do not agree as to the extent of, or amount of, loss or damage, each shall, upon the written request of either, select a competent and disinterested appraiser and notify the other appraiser. elected within twenty (20) days of such request. The assessors must choose a competent and disinterested judge.
If within fifteen (15) days the appraisers fail to agree on such a judge, the appraisers shall simultaneously exchange lists of five proposed judges. If the lists contain a common proposed judge, that person shall be the judge for the assessment. If the lists do not contain a common proposed arbitrator, each appraiser shall strike four names from the other appraiser’s list, thereby leaving one proposed arbitrator on each list. A coin is then tossed, with the appraiser appointed by the insured calling heads or tails. The winner of the coin toss shall select the referee from the two names remaining on the lists.
I know what many of you are thinking – is this legal?
Arbitration clauses sometimes have a similar method of drawing the third arbitrator. An insurance case in New York discusses this:1
This Court is persuaded by Justice Feinman’s approach, i.e, to combine each proposed method, and therefore uses it here, but with a slight modification. Justice Feinman recognized that by combining the ranking method and the strike and draw method, a tied ranking could occur. Justice Feinman incorporated the element of chance from the strike and draw method used to break ties, i.e, a coin toss. However, Justice Feinman indicated that the winner of the coin toss would appoint the judge.
There is a subtle difference between breaking a tie between two possible choices with a coin toss and giving the winner of the coin toss the unilateral right of appointment, although in practical terms the two methods may be functionally equivalent. Under the latter method (chosen by Justice Feinman), the element of chance is removed from the selection of judges by one degree. That is, the element of chance does not directly determine the judge; instead, the winner of the coin toss chooses the referee. To be true to the direct role of the element of chance in the stroke and the drawing method, the referee (or third referee) must be drawn by random draw in the event of a tie in the referee’s (or third referee) ranking.
I could not find any assessment decisions with this exact language. Since arbitration clauses and recent arbitrations have a similar method for selecting an arbitrator or arbitrator, this may be a valid method for selecting an arbitrator. I’m not sure.
While I was researching and thinking about this question, my better half, Donice Krueger, asked me why I was smiling and laughing quietly. I told her about the problem and then said:
I thought about judges and the different methods they use to select a judge. I’ve seen it all. Once a judge ran a finger down the yellow pages of the bar list with his eyes closed and then stopped. That’s how the judge was chosen. The coin flip or lottery is probably better than that.
Another lesson learned is that property insurance forms are quickly leaving many of the standard forms that we have studied and used for years before. People in the property insurance industry must read the entire policy for each claim. Hang in there or you’ll be left far behind.
Time changes everything except something within us that is always surprised by change.
1In re American Home Assur. Co., 39 Misc.3d 184, 958 NYS2d 870 (2013).