First-party property policies typically include appraisal provisions requiring each party to appoint a “disinterested” or “impartial” appraiser. A Florida appellate court recently addressed the question of what makes a potential appraiser “disinterested” in a case involving a Hurricane Irma claim.
Florida’s Third District Court of Appeals held that a fiduciary, like a public adjuster who is in a contractual agent-principal relationship with a policyholder, cannot serve as a “disinterested” appraiser, as a matter of law. State Farm Fla. Ins. Co. v. Sanders, No. 3D19-927, --- So. 3d ----, 2019 WL 3309217, at *4 (Fla. 3d DCA July 24, 2019).
Underlying Facts and Procedural Background
Sanders involved a Hurricane Irma claim under a State Farm homeowners policy. Id. at *1. Appraisal was invoked. Id. The policy’s appraisal provision stated, “Each party will select a qualified, disinterested appraiser.” Id.
The policyholders appointed Gian Debernardi of 911 Claims Corporation as appraiser. Id. A contract between the policyholders and 911 Claims Corporation stated that Debernardi would serve as an agent and representative of the policyholders “to adjust, appraise, advise and assist in the settlement of the loss.” Id. The contract assigned 10% of the amount recovered to 911 Claims Corporation. Id.
Pre-appraisal, Debernardi inspected the subject property, notified State Farm of the claim, and prepared a damage estimate. Id.
State Farm challenged Debernardi’s appointment, arguing he was not “disinterested” because of (1) the agent/principal relationship with the policyholders, (2) the continency fee arrangement, and (3) his earlier issued estimate. Id.
The trial court disagreed and ordered that the appointment was permitted. Id. The appellate court reversed. Id.
Appellate Court’s Legal Analysis
The appellate court held that allowing Debernardi to serve as appraiser would give rise to a harm that could not be remedied on appeal, due to the binding nature of appraisals. Id., at *2. (citing State Farm Fire & Cas. Co. v. Licea, 685 So. 2d 1285, 1287-88 (Fla. 1996)).
Next, the appellate court considered the issue of whether Debernardi could qualify as a “disinterested” appraiser. Id., at *2. Citing Fla. Ins. Guar. Ass’n v. Branco, 148 So. 3d 488, 491 (Fla. 5th DCA 2014), the appellate court explained that a “disinterested” appraiser requirement in an insurance policy conveys a “clear intention to restrict appraisers to people who are, in fact, disinterested.” Id., at *2. “Disinterested” has been defined as “[f]ree from bias, prejudice, or partiality; not having a pecuniary interest.” Id., at *2 (citations omitted). The Branco court held that attorneys cannot serve as their clients’ “disinterested” appraisers due to the fiduciary and confidential relationship between attorneys and clients. Id., at *3.
Likewise, the appellate court in Sanders determined Debernardi could not serve as the policyholders’ “disinterested appraiser” because he was their agent and public adjuster. Id.
Notably, the appellate court also held that, based upon his continency fee arrangement with the policyholders, Debernardi could not serve as a “disinterested” appraiser because he had a “financial interest in whether or not the [policyholders] recover from State Farm and how much they recover.” Id.