DISTRICT COURT OF THE VIRGIN ISLANDS
DIVISION OF ST. CROIX ║
LARRY L. HATTER, ║ ║ Plaintiff, ║ 1:18-cv-00041 ║ v. ║ ║ GUARDIAN INSURANCE COMPANY, ║ ║ Defendant. ║ ________________________________________________ ║
TO: Kye Walker, Esq. Maria Tankenson Hodge, Esq.
ORDER DENYING DEFENDANT’S MOTION TO COMPEL
THIS MATTER is before the Court upon Defendant’s Motion to Compel Plaintiff to Appoint a Competent and Disinterested Appraiser to Participate in the Court-Ordered 1 Appraisal of His Claims (ECF No. 27). Plaintiff filed a response in opposition to the said motion, and Defendant filed a reply thereto. Defendant seeks to disqualify Plaintiff’s selected insurance appraiser claiming this appraiser is the same person who acted as Plaintiff’s public adjuster on Plaintiff’s original claim and that Plaintiff’s agreement with the appraiser’s employer—which requires Plaintiff to pay the employer five percent of the amount recovered—makes the appraiser conflicted and affects his ability to perform a valid appraisal. Def’s Mot. at 1-3; Rep. at 3 (ECF No. 33). 1 The Court notes that Defendant filed no supporting brief with its motion. Local Rule of Civil Procedure Hatter v. Guardian Insurance Company 1:18-cv-00041 Order Granting Defendant’s Motion to Compel Page 2
Plaintiff opposes the said motion ucpoomnp tehtee ngtrounds that the insurance contract states only that “each party will choose a appraiser,” that Defendant could have included an impartiality requirement if it wanted to do so, and that this appraiser is neither biased nor incompetent. Opp’n at 1-8 (ECF No. 31) (emphasis in original). DISCUSSION The Court determines that Christopher Scarlett—Plaintiff’s selected appraiser—can serve as an appraiser under the parties’ contract and other applicable law. The Court sees no requirement that an appraiser in this process must be both competent and disinterested and will not impose such a requirement. Plaintiff retained Phoenix Claims ConsultinSge eon February 17, 2018, for purposes of adjusting his insurance claim against Defendant. Def’s Mot., Ex. 4. The agreement allows for Christopher Scarlett—the managing member of the company—to appraise Plaintiff’s claim and requires that Plaintiff pay the company five percent of the amount recovered by settlement from mediation, arbitration, appraisal and other avenues of conflict. Scarlett served as the public adjuster on Plaintiff’s claim, and, on January 24, 2019, Plaintiff notified Defendant that it would also be using Scarlett as his appraiser. Def’s Mot., Ex. 2. The language of the appraisal provision in the parties’ insurance contract states as follows:
[i]f you and we fail to agree on the amount of loss, either may demand an Hatter v. Guardian Insurance Company 1:18-cv-00041 Order Granting Defendant’s Motion to Compel Page 3
The two appraisers will choose an umpire. If they cannot agree on an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the Described Location is located. The appraisers will separately set the amount of loss. If the appraisers will separately set the amount of loss. If the appraisers submit a written report of agreement to us, the amount agreed upon will be the amount of the loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.
Each party will: a. Pay its own appraiser; and b. bear the other expenses of the appraisal and umpire equally.
Insurance Policy at 7, Conditions at para. 8 (a copy of which is attached to the Complaint as Attachment #4 (Exhibit 2) (ECF No. 1-4)). The term “disinterested” or anything like it is simply not part of the contract, and the Court is reluctant to find any ambiguity in the insurance appraisal clause. A plain reading of the contract makes clear that it provides for the selection only of a competent appraiser, nothing more. To the extent any ambiguity might exist, the Court must acknowledge that Defendant drafted the agreemeCnota, kalnedy Bcoanyt Craocntduoa.l Alassn'ngu va. gCeo nmt'ul sItn sb. eC oco. nstrued in favor of the party who did noBt udnrtaifnt ivt.. C ont’l Ins. Co. , 770 F. Supp. 1046, 1051 (1991) (citing , 583 F.2d 1201, 1207 (3d Cir. 1978) (applying Virgin Islanadnsd l adwis)in).t eIrf eDsteefdendant wanted a requirement that the appraisers had to be both competent , it was required to so state in the written contract it prepared Though the contract language itself provides Defendant no relief, Defendant makes two central arguments in support of its motion: 1) that Virgin Islands law requires that Hatter v. Guardian Insurance Company 1:18-cv-00041 Order Granting Defendant’s Motion to Compel Page 4
contingency fee arrangement with Plaintiff violates that requirement or otherwise makes Scarlett incompetent to handle the claim. Defendant argues that the Virgin Islands Code requires appraisers to be both competent and disinterested, even in the absence of policy language requiring appraisers to have both attributes. Rep. at 2. Specifically, Defendant relies on the Code’s mandate that “[t]he business of insurance is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters.” V.I. Code Ann. tit. 22, § 2. Defendant believes that the good faith requirement found in this directive means that an insurance appraiser cannot have a personal financial stake in a claim. Rep. at 2. The Court declines to read the Code so broadly. Defendant has cited no authority—and the Court could find none—to indicate that this section of the Code could be read in such a way as to impose that kind of requirement, or how—even if it did so—Scarlett’s contingency fee agreement would be in violation of that obligation. Moreover, the Virgin Islands Code specifically defines public adjusters as persons who might receive commissions for their work: commission (3) “Public adjuster” means a person, who for money, , or any other thing of value, prepares, completes, or files an insurance claim form for an insured in negotiating for or effecting the settlement of a claim or claims for loss or damage covered by an insurance contract or who advertises for employment as an adjuster of such claims.
V.I. Code Ann. tit. 31, § 751(a)(3) (emphasis added). Though there is no Virgin Islands case law on this exact issue, courts in other Hatter v. Guardian Insurance Company 1:18-cv-00041 Order Granting Defendant’s Motion to Compel Page 5 Hozlock v.
pDoolniceigeasl dCoo sn. ot explicitly call for a “disinterested” appraiser. For example, in , 745 A.2d 1261, 1265 (Pa. Super. Ct. 2000), a Pennsylvania court held that “the mere existence of a contingency fee agreement does not, in and of itself, render an otherwise ‘competent’ appraiser unfit.” While the court there declined to state whether the addition of “disinterested” into the policy would have changed the result, it was instructive in explaining that “in most cases, an appraiser will have at least some bias toward his appointing party,” and, as a result, the nature of the fee-structurSee seh aolsuoldH neollte rb ve. oHuetlcleorme-determinative when considering whether the appraiser is biased. , 636 A.2d 599, 605 (N.J. Super. Ct. 1993) (noting that “an appraiser chosen by a party ‘is supposed and expected, in a restricted sense, to represent the party appointing him and within reasonable limits to see to it that no legitimate consideration favAomra.b Cleen tto. Itnhse.
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DISTRICT COURT OF THE VIRGIN ISLANDS
DIVISION OF ST. CROIX ║
LARRY L. HATTER, ║ ║ Plaintiff, ║ 1:18-cv-00041 ║ v. ║ ║ GUARDIAN INSURANCE COMPANY, ║ ║ Defendant. ║ ________________________________________________ ║
TO: Kye Walker, Esq. Maria Tankenson Hodge, Esq.
ORDER DENYING DEFENDANT’S MOTION TO COMPEL
THIS MATTER is before the Court upon Defendant’s Motion to Compel Plaintiff to Appoint a Competent and Disinterested Appraiser to Participate in the Court-Ordered 1 Appraisal of His Claims (ECF No. 27). Plaintiff filed a response in opposition to the said motion, and Defendant filed a reply thereto. Defendant seeks to disqualify Plaintiff’s selected insurance appraiser claiming this appraiser is the same person who acted as Plaintiff’s public adjuster on Plaintiff’s original claim and that Plaintiff’s agreement with the appraiser’s employer—which requires Plaintiff to pay the employer five percent of the amount recovered—makes the appraiser conflicted and affects his ability to perform a valid appraisal. Def’s Mot. at 1-3; Rep. at 3 (ECF No. 33). 1 The Court notes that Defendant filed no supporting brief with its motion. Local Rule of Civil Procedure Hatter v. Guardian Insurance Company 1:18-cv-00041 Order Granting Defendant’s Motion to Compel Page 2
Plaintiff opposes the said motion ucpoomnp tehtee ngtrounds that the insurance contract states only that “each party will choose a appraiser,” that Defendant could have included an impartiality requirement if it wanted to do so, and that this appraiser is neither biased nor incompetent. Opp’n at 1-8 (ECF No. 31) (emphasis in original). DISCUSSION The Court determines that Christopher Scarlett—Plaintiff’s selected appraiser—can serve as an appraiser under the parties’ contract and other applicable law. The Court sees no requirement that an appraiser in this process must be both competent and disinterested and will not impose such a requirement. Plaintiff retained Phoenix Claims ConsultinSge eon February 17, 2018, for purposes of adjusting his insurance claim against Defendant. Def’s Mot., Ex. 4. The agreement allows for Christopher Scarlett—the managing member of the company—to appraise Plaintiff’s claim and requires that Plaintiff pay the company five percent of the amount recovered by settlement from mediation, arbitration, appraisal and other avenues of conflict. Scarlett served as the public adjuster on Plaintiff’s claim, and, on January 24, 2019, Plaintiff notified Defendant that it would also be using Scarlett as his appraiser. Def’s Mot., Ex. 2. The language of the appraisal provision in the parties’ insurance contract states as follows:
[i]f you and we fail to agree on the amount of loss, either may demand an Hatter v. Guardian Insurance Company 1:18-cv-00041 Order Granting Defendant’s Motion to Compel Page 3
The two appraisers will choose an umpire. If they cannot agree on an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the Described Location is located. The appraisers will separately set the amount of loss. If the appraisers will separately set the amount of loss. If the appraisers submit a written report of agreement to us, the amount agreed upon will be the amount of the loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.
Each party will: a. Pay its own appraiser; and b. bear the other expenses of the appraisal and umpire equally.
Insurance Policy at 7, Conditions at para. 8 (a copy of which is attached to the Complaint as Attachment #4 (Exhibit 2) (ECF No. 1-4)). The term “disinterested” or anything like it is simply not part of the contract, and the Court is reluctant to find any ambiguity in the insurance appraisal clause. A plain reading of the contract makes clear that it provides for the selection only of a competent appraiser, nothing more. To the extent any ambiguity might exist, the Court must acknowledge that Defendant drafted the agreemeCnota, kalnedy Bcoanyt Craocntduoa.l Alassn'ngu va. gCeo nmt'ul sItn sb. eC oco. nstrued in favor of the party who did noBt udnrtaifnt ivt.. C ont’l Ins. Co. , 770 F. Supp. 1046, 1051 (1991) (citing , 583 F.2d 1201, 1207 (3d Cir. 1978) (applying Virgin Islanadnsd l adwis)in).t eIrf eDsteefdendant wanted a requirement that the appraisers had to be both competent , it was required to so state in the written contract it prepared Though the contract language itself provides Defendant no relief, Defendant makes two central arguments in support of its motion: 1) that Virgin Islands law requires that Hatter v. Guardian Insurance Company 1:18-cv-00041 Order Granting Defendant’s Motion to Compel Page 4
contingency fee arrangement with Plaintiff violates that requirement or otherwise makes Scarlett incompetent to handle the claim. Defendant argues that the Virgin Islands Code requires appraisers to be both competent and disinterested, even in the absence of policy language requiring appraisers to have both attributes. Rep. at 2. Specifically, Defendant relies on the Code’s mandate that “[t]he business of insurance is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters.” V.I. Code Ann. tit. 22, § 2. Defendant believes that the good faith requirement found in this directive means that an insurance appraiser cannot have a personal financial stake in a claim. Rep. at 2. The Court declines to read the Code so broadly. Defendant has cited no authority—and the Court could find none—to indicate that this section of the Code could be read in such a way as to impose that kind of requirement, or how—even if it did so—Scarlett’s contingency fee agreement would be in violation of that obligation. Moreover, the Virgin Islands Code specifically defines public adjusters as persons who might receive commissions for their work: commission (3) “Public adjuster” means a person, who for money, , or any other thing of value, prepares, completes, or files an insurance claim form for an insured in negotiating for or effecting the settlement of a claim or claims for loss or damage covered by an insurance contract or who advertises for employment as an adjuster of such claims.
V.I. Code Ann. tit. 31, § 751(a)(3) (emphasis added). Though there is no Virgin Islands case law on this exact issue, courts in other Hatter v. Guardian Insurance Company 1:18-cv-00041 Order Granting Defendant’s Motion to Compel Page 5 Hozlock v.
pDoolniceigeasl dCoo sn. ot explicitly call for a “disinterested” appraiser. For example, in , 745 A.2d 1261, 1265 (Pa. Super. Ct. 2000), a Pennsylvania court held that “the mere existence of a contingency fee agreement does not, in and of itself, render an otherwise ‘competent’ appraiser unfit.” While the court there declined to state whether the addition of “disinterested” into the policy would have changed the result, it was instructive in explaining that “in most cases, an appraiser will have at least some bias toward his appointing party,” and, as a result, the nature of the fee-structurSee seh aolsuoldH neollte rb ve. oHuetlcleorme-determinative when considering whether the appraiser is biased. , 636 A.2d 599, 605 (N.J. Super. Ct. 1993) (noting that “an appraiser chosen by a party ‘is supposed and expected, in a restricted sense, to represent the party appointing him and within reasonable limits to see to it that no legitimate consideration favAomra.b Cleen tto. Itnhse. Cpoa.r vt.y L saon daapupointing him is overlooked bWyh tihtee vo.t Shteart aep Fparramis Feirr’”e (&q uCoatsi.n Cgo i.n part Cf,. 4C9e nAt..7 L3i8fe ( INn.sJ.. CCoh.. v1.9 A0e1tn))a; Cas. & Sur. Co. , 809 N.W.2d 637, 639 (2011); , 466 N.W.2d 257, 261 (Iowa 1991) (recognizing that party-appointed appraisers act “as advocates for their respective selecting parties.”) Defendant slightly shifts gears in its Reply Brief, and thought it stops short of calling Scarlett “incompetent,” it suggests that his previous involvement in the claim as adjuster 2 should render him unfit to serve as appraiser. Rep. at 2. Again, Defendant offers no legal 2 Compare The Court cannot tell if Defendant is simply conflating the competency and disintereasntedd requirements or if it might be suggesting that someone who is not disinterested must also necessarily be not competent. Def’s Mot. At 2-3 (“Accordingly, an order to appoint an appraiser who is competent who does not have a Hatter v. Guardian Insurance Company 1:18-cv-00041 Order Granting Defendant’s Motion to Compel Page 6
authority to support this position. To the extent that Defendant argues that Scarlett’s previous service as the adjuster undermines his competence to serve as appraiser, the Court rejects that notion. Competence and disinterestedneSsese ,a er.eg .,d Hifofezrloecnkt concepts, and an appraiser who might be partial can still be competent. , 745 A.2d at 1265. This Court has also adopted a very narrow view of the “competence” requirement, finding that it means only “[a] basic or minimal Gabuailritdyi atno Gdeon . sIonms. eLtthdi.,n vg.” C aanridb btehaant Fsopoedc iSaelirzvesd., eInxcp.erience or knowledge is not necessary. , Case No. ST-15-CV-253, 2016 V.I. LEXIS 215, *26-27 (D.V.I. 2016) (quoting Black’s Law Dictionary 322 (9th ed. 2009)). Here, Scarlett is a certified professional insurance appraiser with more than 10 years of experience in public adjusting and authorization to perform public adjusting in the Virgin Islands. Pl’s Opp. at 4. Accordingly, the Court finds him to be competent. Further, most courts that have addressed this precise issue have found that an appraiseSre ec,a en.g b.,eP urinebni aPsreodp se.,v LeLnC ivf. tAhlles taaptpe rInaiss. eCro .was also the party’s adjuster in the same matter. , Case No. 07-CV-845, 2008 U.S. Dist. LEXIS 30157 (W.D. La.) (“an appraiser may be disinterested even if the appraiser was also that party's adjuster in theA suatmo-eO wmnaetrtes rI,n sso. Cloon. gv .a As ltliheedr eA disj unsote ervsi d&e Anpcep rinai tsheres r, eIncoc.rd to indicate improper motives”); , 605 N.W.2d 685, 689 (1999) (“appraisers are not disqualified from their appointments on the basis of does undermine the appraiser’s competence Hatter v. Guardian Insurance Company 1:18-cv-00041 Order Granting Defendant’s Motion to Compel Page 7
3 having previously served as adjusters”). The record before the Court does not evidence an nefarious relationship between Scarlett and Plaintiff, and it would be improper to simply assume that the appraisal process will not be carriOedR oDuEtR wEiDth integrity. Based upon the foregoing, it is now hereby that Defendant’s Motion to Compel Plaintiff to Appoint a Competent and DisintereDstEeNd IAEpDpraiser to Participate in the Court-Ordered Appraisal of His Claims (ECF No. 27) is .
ENTER:
Dated: April 5, 2019 /s/ George W. Cannon, Jr. GEORGE W. CANNON, JR. MAGISTRATE JUDGE