The opinion of the court was delivered by: The Honorable David O. Carter, Judge
Julie Barrera Not Present Courtroom Clerk Court Reporter
ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS: NONE PRESENT NONE PRESENT PROCEEDING (IN CHAMBERS): ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S THE STANDARD FIRE INSURANCE COMPANY'S MOTION TO COMPEL APPRAISAL AND TO STAY ACTION PENDING APPRAISAL AND DENYING WITHOUT PREJUDICE BASIN MARINE'S MOTION FOR SUMMARY JUDGMENT
Before the Court is Plaintiff the Standard Fire Insurance Company's Motion to Compel Appraisal and to Stay Action Pending Appraisal ("Motion to Compel") (Docket 19) and Defendant Basin Marine's Motion for Summary Judgment ("MSJ") (Docket 18). The Court finds the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local R. 7-15. The Court has considered the moving, opposing, and replying papers and GRANTS IN PART AND DENIES IN PART the Motion to Compel. The early-filed MSJ is DENIED WITHOUT PREJUDICE.
On October 12, 2009, Plaintiff The Standard Fire Insurance Company ("Standard") issued an insurance policy (the "Policy") to Defendant Relentless LLC ("Relentless") for a sailing yacht known as the Dauntless. The Policy covers the "reasonable" costs of repair up to $650,000 and further provides that if the vessel "needs repair after a covered loss, we will have the option of paying the reasonable costs of repairs in accordance with a)the manufacturer's specifications; or b) generally accepted repair practices." See Complaint, Ex. A.
On January 19, 2010, the Dauntless was damaged in Defendant Basin Marine ("Basin")'s shipyard while undergoing routine maintenance and repairs. The parties do not dispute that the Policy covers the incident, but disagree as to the cost to repair the ship following the casualty. Standard contends that it has paid more than the reasonable cost to repair the Dauntless by retaining surveyors and experts and tendering $424, 263.59. Relentless, however, paid for repairs without Standard's consent, and contends that Standard should cover the $667,724 it paid. For this reason, Standard requested an appraisal from Relentless to determine the amount owed under the Policy, but Relentless allegedly refused to participate in the appraisal. Standard maintains that an appraisal is required under
The two actions--one as to liability and one as to the insurance issue--were consolidated by the Court on January 31, 2011 (Docket 17). Two motions are addressed in this Order: the first, a Motion to Compel Appraisal and to Stay Action Pending Appraisal filed by Standard, and the other, a Motion for Summary Judgment filed by Basin.
II. Motion to Compel Appraisal and Stay
An agreement to conduct an appraisal contained in an insurance policy is binding, and considered in the same way as an arbitration clause. Louise Gardens of Encino Homeowners' Ass'n Inc. v. Truck Ins. Exch., Inc., 82 Cal. App. 4th 648, 658 (2000); see also Unetco Indus. Exch. v. Homestead Ins. Co., 57 Cal. App. 4th 1459, 1465-66 (1997) ("Arbitration--and similarly appraisal . . . is a favored means of dispute resolution.") (internal citations omitted). In this case, the Policy's language is clear, as it provides for an appraisal should the parties disagree about the amount of loss. See id. Accordingly, the appropriateness of an appraisal, pursuant to the Policy, is clear, and Relentless fails to suggest otherwise. Furthermore, the purpose of an appraisal is to resolve exactly what is at issue in this case: a dispute over the amount of the loss. Indeed, the Policy requires Standard to pay for "the reasonable cost of repair or replacement of damages or stolen property" but that if a loss is covered, Standard "will pay the lesser of: 1) the Amount of insurance for [the] yacht or dinghy [in this case $650,000] or 2) the amount for which [the] yacht or dinghy can reasonably be repaired to its condition just prior to the loss." See Complaint, Ex. A. Because the parties dispute what a reasonable repair should cost, appraisal is appropriate.
Both parties nonetheless discuss the seemingly endless arguments they have had over the appraisal process. According to Standard, it advised Relentless of its concerns throughout the process, but Relentless decided on its own to have the boat sent to Maine and repaired without regard topotential cost. Motion to Compel, 3-4. Standard further contends that it twice demanded appraisal of Relentless, pursuant to the Policy, but that Relentless continued to ...