Will courts reverse an assessment judgment if a party claims the judgment was made in error? The answer to the question varies from state to state. Most states say courts will correct an award as a result of mistake or fraud. But a facially valid award will sometimes not be corrected, even if error is alleged.
Merlin Law Group attorney Corey Harris noted Limitations on Discovery: Going Behind the Face of an Appraisal Award:
Florida courts have found that litigation over an appraisal award must be based on the face of the award itself and have prohibited parties from going further to have a judgment vacated…
… The court noted that the adjudication process was intended to be an alternative to litigation and was binding on the parties. According to the court, going beyond the assessment decision and allowing the court to determine the amount of loss instead of the panel as intended policy would impermissibly allow the court to intervene in the appraisal process. Although the court can make reductions for deductibles, past payments and items not covered, this can only be done based on what is within the four corners of the award.
Similarly, a recent Florida court would not allow an award to be challenged where the written award was specific and clear.1 The relevant facts were:
“Defendant responded to plaintiff’s invocation of the policy’s appraisal provision by noting that there were three potential causes of loss: (1) a sewer line failure, (2) a shower tray leak, and (3) an air conditioner failure leak. Because there were three potential causes of loss, the parties were instructed to make a specified assessment.
On June 29, 2022, the Appraisal Panel – consisting of Plaintiff’s Appraiser, Santos Leal, and Defendant’s Appraiser, Edwin Witty – entered into an Appraisal Award (the “Award”). …The award stated that “the appraisers and the judge hereby assess the amount of loss as follows:”
• Water spillage from the sewer line: $160,151.73 [replacement cost value] / $152,144.14 [actual cash value]
• Shower drain leak: $0
• Leakage from A/C system: $0
(Evaluation Price 2 (Changes Added)).
After the award was issued, plaintiff’s counsel notified Leal that the adjudication panel would assess all three potential causes of loss…. Subsequently, on July 8, 2022, Leal emailed Witty to tell him that while the award listed three causes of loss , Leal did not know they were “assessing 3 claims” and “we are just discussing [sic] it drained [sic].’ In his explanation, Leal says “[a]s stated in the assessment by deducting the allowance of $0, damages arising from the failure of the shower pan or the failure of the air conditioner were not assessed, or to the extent that they partially overlapped with the failure of the drainage system, they were not delineated in valuation price.’ However, Witty states that he considered all three potential causes of loss in determining the award, discussed all three with Leal, and Leal agreed that all damages were caused by a sewer line overflow and not by leaking shower trays or air conditioning systems.
Interestingly, while the court found that adjudication and arbitration are different, it held that the Florida Arbitration Code should be followed to confirm or vacate an adjudication award:
The Florida Supreme Court instructs that when a party to an insurance contract has invoked the relevant policy’s adjudication provision, the adjudication proceeding shall be conducted pursuant to the policy and not the Florida Arbitration Code. Looks Allstate Ins. Co. v. Suarez, 833 So. 2d 762, 765 (Fla. 2002) (‘Once a court has determined that the appraisal provisions of an insurance contract have been properly invoked, further proceedings should be conducted pursuant to those provisions[.]’ (amendment added; call number in footnote omitted)). Nevertheless, Florida courts still apply the procedures provided by the Arbitration Code in a review process for confirmation, which includes modifying, correcting, or clarifying an award.
Looks Guzman v. Am. Sec. ins. Co.377 F. Supp. 3d 1362, 1365 (SD Fla. 2019) (citation omitted). A request for a court to vacate, amend, correct or clarify a judgment must be made within 90 days of the motion receiving notice of the judgment. Looks Fla. Statistics. §§ 682.10, 682.13-14.
The court found that the judgment clearly provided for a judgment on all causes of action and was binding because it was signed by two of the appraisers:
So even if Leal did not evaluate or discuss the shower tray and air conditioning system malfunction with Witty – that would not invalidate the award. Simply put, Leal and Witty signed an award that expressly listed and awarded amounts to the three possible causes of loss as required by the May 4, 2022 regulation.
… Notably, the policy states that if the appraisers “fail to agree, they will submit their differences to an arbitrator.” Here both Leal and Witty signed the award which read “[t]he above award [explicitly listing the drain line, shower pan leak, and A/C leak] reflects the agreed damages and costs associated with all claims for the home and other structures.’ (Evaluation Award 2 (alterations and emphasis added)); looks Suqin Zhu v. NYC LLC, 291 F.Supp. 3d 378, 387 2017) (‘By signing a written instrument, a party creates presumptive evidence of his consent to enter [*18] to a binding agreement.’ The award is binding because the policy expressly states that a ‘decision agreed to of any two [appraisers] will be binding.’
The lesson for members of an adjudication panel is not to sign off on an award unless it clearly reflects what you intend to award. Panel members must read the award form carefully. If you sign a judgment, you cannot expect a court to change it later.
If you don’t make mistakes, then you don’t do anything. I’m sure a doer makes mistakes.
1 Karsel Holdings v. Scottsdale Ins. Co., No. 21-21277, 2023 US Dist. LEXIS 8637 (S.D. Fla. Jan. 18, 2023).