Appraisal Award Must be Rejected if Appraiser Has a Financial Interest in a Potential Award
Post 5019
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New England Property Services Group, LLC appealed from a January 23, 2024 order denying the plaintiff’s motion to reconsider a denial of the plaintiff’s petition to confirm an appraisal award. The Superior Court granted the defendant, Vermont Mutual Insurance Company’s (defendant),cross-petition to vacate the award based on partiality on the part of the plaintiff’s appraiser.
In New England Property Services Group, LLC v. Vermont Mutual Insurance Company, No. 2024-67-Appeal, Supreme Court of Rhode Island (March 10, 2025) the Supreme Court Applied state law.
FACTS
Brandy Hamel and Scott Parker (the insureds) made claim to Vermont Mutual for loss caused by wind damage to the insured’s property located in Greenville, Rhode Island. The insureds engaged plaintiff to complete the repairs at their home in exchange for the assignment of their insurance claim to plaintiff. The defendant processed the claimed loss and provided an estimate to plaintiff. The plaintiff disagreed with the estimate and invoked the appraisal process established in the insurance agreement.
THE APPRAISAL CLAUSE
The appraisal clause in the contract allows the determination of loss by submitting the dispute over the amount to a panel of three appraisers.
Steven Ceceri (Ceceri), the principal of plaintiff, was appointed by plaintiff as its appraiser for the dispute. The defendant appointed Vincent Cicci (Cicci) as its own appraiser. According to the terms of the appraisal clause, Ceceri and Cicci were to agree on a person to serve as appraisal umpire. The two men could not agree, and Felix Carlone (Carlone) was appointed as umpire by the Superior Court.
The appraisal concluded with an award signed by Ceceri and Carlone, with Cicci refusing to sign, according to defendant, because he believed that the award was not supported by the facts presented. Plaintiff filed a petition to confirm the appraisal award under Rhode Island’s Arbitration Act in the Superior Court. The defendant filed a cross-petition to vacate the award arguing that Ceceri was ineligible to serve as appraiser for plaintiff because of his financial interest in a potential award.
The Superior Court entered an order granting defendant’s cross-petition to vacate the appraisal award and denying plaintiff’s petition to confirm the appraisal award.
After defendant objected, the Superior Court denied plaintiff’s motion. The hearing justice determined that the omission of the term “disinterested” from the insurance contract did not negate the categorization of the appraisal process as an arbitration. Specifically, he declared that plaintiff “continuously promoted” the appraisal proceedings as arbitration throughout the process.
DISCUSSION
The plaintiff asserts that the public policy is efficient resolution of insurance disputes that have been served by the appraisal proceeding. The plaintiff further avers that Rhode Island has not universally equated appraisal with arbitration and that the Arbitration Act does not apply to this appraisal proceeding.
The Supreme Court concluded that it is well settled in New Hampshire that when the language of a statute is clear and unambiguous, the Supreme Court must interpret the statute literally and must give the words of the statute their plain and ordinary meanings.
The Arbitration Act has no requirement that the arbitrators be disinterested; rather, they are only prohibited from engaging in partiality or corruption. Since the Plaintiff, sitting as an appraiser, had a financial interest in the outcome he was engaging in partiality or corruption.
The Supreme Court concluded that plaintiff’s actions revealed his willingness to use every judicial avenue available to derive an unfair advantage if it were permitted to now claim that the appraisal proceeding is not arbitration after previously attempting to confirm the appraisal award in the Superior Court under that same theory. The Supreme Court affirmed the order of the Superior Court.
ZALMA OPINION
The New York Standard Fire Insurance Policy has been the foundation for insurance policies insuring against the risk of lost to real or personal property and, followed and adopted across the country. It, and almost all property policies, contain an appraisal clause as a prompt means of conflict resolution. In this case, one of the appraisers had an assignment of the insured’s claims against the insurer and was interested in the result of the appraisal. The Supreme Court found that the appraisal is subject to New Hampshire’s Arbitration Act as an arbitration and affirmed the Superior Court because of the plaintiff’s appraiser’s interest in the proceeds.
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Notice of Claim Later than 60 Days After Expiration is Too Late
Post 5089
Injury at Massage Causes Suit Against Therapist
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Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.
In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.
FACTUAL BACKGROUND
Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma
Post 5087
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Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf
Zalma’s Insurance Fraud Letter – June 1, 2025
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ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at ...
No Coverage if Home Vacant for More Than 60 Days
Failure to Respond To Counterclaim is an Admission of All Allegations
Post 5085
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In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.
BACKGROUND
On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.
Plaintiff filed suit ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...
