United States District Court, N.D. California
ORDER DENYING MOTION TO COMPEL APPRAISAL RE: DKT. NO.
HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE
before the Court is GEICO General Insurance Company's
(“GEICO”) motion to compel appraisal and dismiss
or stay the case, for which briefing is complete.
See Dkt. Nos. 30 (“Mot.”), 36
(“Opp.”), and 40 (“Reply”). Because
the Court agrees with Plaintiffs that the dispute presented
is not subject to the cited appraisal provision, the Court
DENIES the motion.
27, 2019, Plaintiffs, on behalf of themselves and all others
similarly situated, filed a complaint alleging breach of
contract claims against GEICO. Dkt. No. 1
(“Compl.”). Plaintiffs obtained GEICO private
passenger automobile physical damage insurance policies,
which included comprehensive and collision coverage (the
“Policy”). Compl. ¶ 1. Plaintiff Munoz
leased a vehicle and was in an accident on February 24, 2017,
which rendered her vehicle a total loss. Id.
¶¶ 45-46. Plaintiff Ventrice-Pearson owned a
vehicle and was in an accident on November 14, 2018, which
rendered her vehicle a total loss. Id. ¶¶
58-59. GEICO provided letters to both Plaintiffs determining
the base values of the vehicles. Id. ¶¶
allege that GEICO failed to pay the actual cash value for the
total loss claims of Plaintiffs and others in the putative
class. The Policy states that GEICO “will pay for
collision loss to the owned auto or non-owned auto for the
amount of each loss less the applicable deductible.”
Id. ¶ 16. Plaintiffs argue that GEICO breached
this provision by failing to pay sales tax owed where the
total-loss vehicle was leased, and by only paying a prorated
amount of the regulatory fees to all total-loss insureds
instead of the full amount. Id. ¶¶ 28-40.
Federal Arbitration Act (“FAA”), 9 U.S.C. §
1 et seq., establishes that a written arbitration
agreement is “valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the
revocation of any contract.” 9 U.S.C. § 2; see
also Moses H. Cone Mem'l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24 (1983) (noting federal policy
favoring arbitration). “The [FAA] does not, however,
define ‘arbitration.'” Wasyl, Inc. v.
First Bos. Corp., 813 F.2d 1579, 1582 (9th Cir. 1987).
Instead, state law, to the extent it is not inconsistent with
the FAA, provides that answer. Id. Under California
law, an appraisal agreement in an insurance policy is
considered enforceable as an arbitration clause. See
Louise Gardens of Encino Homeowners' Ass'n Inc. v.
Truck Ins. Exch., Inc., 98 Cal.Rptr.2d 378 (2000)
(finding that an agreement in an insurance policy to conduct
an appraisal is considered to be an arbitration agreement);
see also Wasyl, Inc., 813 F.2d at 1582 (noting that
California law defining agreement does not conflict with the
federal policy favoring arbitration).
party moves to compel arbitration, the court must determine
(1) “whether a valid arbitration agreement
exists” and (2) “whether the agreement
encompasses the dispute at issue.” Lifescan, Inc.
v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012
(9th Cir. 2004). The agreement may also delegate gateway
issues to an arbitrator, in which case the court's role
is limited to determining whether there is clear and
unmistakable evidence that the parties agreed to arbitrate
arbitrability. See Brennan v. Opus Bank, 796 F.3d
1125, 1130 (9th Cir. 2015). In either instance, “before
referring a dispute to an arbitrator, the court determines
whether a valid arbitration agreement exists.”
Henry Schein, Inc. v. Archer & White Sales,
Inc., 139 S.Ct. 524, 530 (2019) (citing 9 U.S.C. §
the parties contest whether an agreement was formed, the
court applies “general state-law principles of contract
interpretation, ” without a presumption in favor of
arbitrability. Goldman, Sachs & Co. v. City of
Reno, 747 F.3d 733, 742 (9th Cir. 2014) (internal
quotation omitted). The party seeking to compel arbitration
bears the burden of proving by a preponderance of the
evidence that there was an agreement to arbitrate. Norcia
v. Samsung Telecomms. Am., LLC, 845 F.3d 1279, 1283 (9th
Cir. 2017). Conversely, the party opposing arbitration is
entitled to the benefit of all reasonable doubts and
inferences. Three Valleys Mun. Water Dist. v. E.F. Hutton
& Co., 925 F.2d 1136, 1141 (9th Cir. 1991).
Therefore, a court may find that an agreement to arbitrate
exists as a matter of law “[o]nly when there is no
genuine issue of fact concerning the formation of the
agreement.” Id. (internal quotation omitted);
see also Alarcon v. Vital Recovery Servs., Inc., 706
Fed.Appx. 394, 394 (9th Cir. 2017) (same).
relevant here, the Policy provides:
If [GEICO] and the insured do not agree on the amount of
loss, either may, within 60 days after proof of loss is
filed, demand an appraisal of the loss. In that event, we and
the insured will each select a competent appraiser. The
appraisers will select a competent and disinterested umpire.
The appraisers will state separately the actual cash value
and the amount of the loss. If they fail to agree, they will
submit the dispute to the umpire. An award in writing of any
two will determine the amount of loss. We and the insured
will each pay his chosen appraiser and will bear equally the
other expenses of the appraisal and umpire.
[GEICO] will not waive our rights by any of our acts relating
Dkt. No. 1, Ex. A at 10. The policy defines
“loss” as “direct and accidental loss of or
damage to” the insured auto and defines “actual
cash value” as “the replacement cost of the auto