Based on the association's refusal to agree that the claim had been fully adjusted and paid, Hamilton sought appraisal under the terms of the policy.

The following month, the association sued Hamilton. Among other things, it contended that Hamilton's appointment of Randy Ison as its party-designated appraiser (of the three to conduct the appraisal) was a breach of the policy requirement that each appraiser be “impartial.”

The trial court granted Hamilton's motion for summary judgment compelling appraisal, and the association appealed.

The Hamilton Policy

The Hamilton policy provided:

If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding.

The appellate court affirmed.

In its decision, the appellate court explained that Mr. Ison was an employee of J.S. Held, a building consultant hired by Hamilton. The appellate court said that there was “no indication in the record, however, that Mr. Ison himself was directly paid” by Hamilton or that any part of Mr. Ison's or J.S. Held's compensation for work on the appraisal or the association's claim would include a contingent fee (which has been identified as a “factor” in assessing partiality).

The appellate court pointed out that there was “little case law on this issue,” and that what little case law was available involved arbitrators rather than appraisers.

The appellate court then turned to the appraisal provision in the Hamilton policy, observing that the tie-breaking third appraiser – often referred to as the “umpire” (as in the Hamilton policy) or “neutral” – “provide[d] the real impartiality.”

According to the appellate court, if an appraiser acted unprofessionally, skewed what should be objective calculations regarding materials and labor costs, and put “the proverbial thumb on the scale,” the umpire was the safeguard empowered to reject such efforts by siding with the other party-appointed appraiser. Alternatively, it continued, a professionally-qualified umpire “may negotiate one or both of the party-appointed appraisers into a reasonable compromise.”

The appellate court then held that “impartiality” meant something other than the “dictionary definition” as it related to appraisers appointed and paid by the parties. An appraiser's “direct or indirect financial interest in the outcome of the arbitration,” including an arrangement for a contingent fee, required “disclosure rather than disqualification in the case of an appraiser.”

The appellate court concluded by agreeing with the trial court that Hamilton's appointment of Mr. Ison did not warrant disqualification.

The case is Brickell Harbour Condominium Ass'n, Inc. v. Hamilton Specialty Ins. Co., No. 3D17-2761 (Fla. Ct.App. Oct. 10, 2018). Attorneys involved include: Kramer, Green, Zuckerman, Greene and Buchsbaum and Robert I. Buchsbaum, for appellant. Kelley Kronenberg and Kimberly J. Fernandes (Tallahassee), for appellee.