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James Dickey, Inc. v. Alterra America Insurance Co.

United States District Court, C.D. California

July 14, 2017

JAMES DICKEY, INC., Plaintiff,
v.
ALTERRA AMERICA INSURANCE COMPANY; and DOES 1 through 20, inclusive, Defendants.

          ORDER DENYING PLAINTIFF'S MOTION TO VACATE APPRAISAL [58]

          OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the Court is Plaintiff James Dickey, Inc.'s motion to vacate a November 18, 2016 appraisal award in the amount of $27, 237.28. (ECF No. 58.) For the following reasons, the Court DENIES Plaintiff's motion.[1]

         II. FACTUAL BACKGROUND

         Two years into this case, the parties are well aware of the facts. Plaintiff purchased an inland marine insurance policy from Defendant Alterra Insurance Company with an effective date of October 1, 2013. (First Am. Compl. (“FAC”) ¶ 8, ECF No. 30.) On April 4, 2014, certain Snap-On brand tools covered under the policy were stolen. (FAC ¶¶ 9, 11.) The parties were subsequently unable to agree on the value of the stolen tools, and thus Defendant moved to compel an appraisal under the policy. (See Mot., ECF No. 32; Policy 12, ECF No. 16-5.) The Court granted Defendant's motion after Plaintiff failed to timely oppose it. (Order 2, ECF No. 35.)

         The appraisal provision in the relevant policy calls for each party to nominate an appraiser and then for the appraisers to agree on an “impartial umpire.” (Policy 12.) At that point, the two appraisers each render their appraisal. (Id.) If the appraisers' proposed awards do not match, the umpire steps in. (Id.) When the umpire and one of the parties' appraisers agree on an award in writing, the award becomes final. (Id.)

         Plaintiff nominated Eugene Twarowski as its appraiser and Defendant nominated David Smith. (Smith Decl. ¶¶ 2-3, ECF No. 62-12; McCarthy Decl. ¶ 2, ECF No. 62-13.) Sometime in mid-July, the parties' appraisers agreed that Bo McCarthy would serve as umpire. (Smith Decl. ¶ 5.) On September 12, 2016, McCarthy provided the parties with a disclosure statement indicating that he had worked with Twarowski on an appraisal approximately five years prior; Twarowski had served as the public adjuster[2] and he (McCarthy) had served as “[a]ppraiser for the [i]nsurance company.” (McCarthy Decl. ¶¶ 3-5; Twarowski Decl., Ex. B, ECF No. 58-1.)

         On October 20, 2016, the appraisers formally recognized that McCarthy's services would be necessary after they conferred and could not reach an agreement on the value of the tools. (Smith Decl. ¶ 9.) On November 7, 2016, the appraisers held a conference call with McCarthy during which McCarthy proposed that they set up an in-person meeting to review the record and further discuss the contested issues. (Smith Decl. ¶ 10.) Later that night, Twarowski sent an email to Smith and McCarthy suggesting dates for the meeting and making them aware that he might bring a witness. (Twarowoski Decl., Ex. D.) In response, McCarthy sent an email to both parties' appraisers indicating that he would expect them to “put on witnesses or bring any documents that strengthen [their] position” to the meeting. (Id.)

         On November 14, 2016, Defendant's attorney wrote a letter to Twarowski, Smith, McCarthy, and Plaintiff's attorney requesting that Plaintiff identify any witness it intended to bring to the meeting and provide a “detailed explanation” of what topics the witness intended to discuss. (Twarowski Decl., Ex. F.) On November 15, 2016, Twarowski wrote an email to Smith, McCarthy, and Defendant's attorney indicating that he would not be bringing any witness to the meeting. (Twarowski Email, ECF No. 62-5 (“I am not calling any witness to testify at the panel meeting.”).)

         On November 17, 2016, the appraisers and McCarthy met to discuss the competing appraisals. (McCarthy Decl. ¶ 7.) Both sides presented their positions: Defendant's appraiser argued that depreciation should be applied to the tools and Plaintiff's appraiser argued that depreciation should not be applied to the tools. (Id.) McCarthy agreed with Defendant's appraiser that some measure of depreciation should be applied to the tools. (Id. ¶ 8.) At that point, Plaintiff's appraiser requested the meeting be “adjourned so that he could have more time to gather additional evidence” about “how Snap On prices had risen year over year.” (Twarowski Decl. ¶ 11.) McCarthy denied Twarowski's request for what amounted to a continuance, informing Twarowski that the meeting would not be adjourned and that the appraisal would be completed “that day.” (McCarthy Decl. ¶ 9.) Taking into account the tools' allegedly excellent condition, McCarthy determined that they should be depreciated at a rate of two percent per year, for a total of 14 percent depreciation. (Id. ¶ 8.) Accordingly, he reduced the total value of the tools by 14 percent for a final award of $27, 237.28. (Award, ECF No. 62-8.)

         On November 18, 2016, McCarthy and Smith signed an “Appraisal of Insurance Claim Award Form” finalizing the $27, 237.28 award. (Id.) Plaintiff provided Defendant with a copy of the finalized award on November 28, 2016, via email. (Id.) Defendant satisfied the award in full on December 7, 2016. (Hellenkamp Decl. ¶ 16, ECF No. 62-14.)

         On June 2, 2017, Plaintiff filed a motion to vacate the appraisal award. (Mot., ECF No. 58.) Plaintiff asserts that McCarthy failed to disclose his previous relationship with the law firm Morris, Polich, and Purdy LLP (“MPP”) that represents Defendant in this matter. (Id. at 4.) Plaintiff asserts that this relationship biased McCarthy, causing him to disallow the presentation of its witness and to deny its request for a continuance. (Mot. 5-6; Reply 3, ECF No. 63.) To support this claim, Plaintiff submits a declaration from Twarowski indicating that, “During discussions of the panel on November 17, 2016, umpire Bo McCarthy acknowledged in my presence that he had in the past done work for the Morris Polich firm . . . . Bo McCarthy had not previously disclosed his relationship with the Morris Polich firm.” (See Twarowski Decl. ¶ 10.)

         The “work” Twarowski references is a 2010 appraisal between “Dr. and Mrs. Kramer” and Allstate Insurance Company (“the Kramer appraisal”). (Henry Decl. ¶ 2, ECF No. 58-2.) In that appraisal, McCarthy served as Allstate's appraiser, Stephen Huchting-who at that time worked for MPP-served as counsel for Allstate, and Twarowski served as the public adjuster.[3] (Id. ¶ 3; McCarthy Decl. ¶ 5.) As noted above, McCarthy disclosed the fact that he worked on this case with Twarowski; however, he did not disclose MPP's involvement in the case.

         III. ...


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