The Golden Rule is usually an excellent gauge of propriety and ethics. If good ole insurance coverage protection lawyer Steve Badger known as me and stated, “Chip, guess what? I saved you a bunch of time, effort and value. I despatched an e-mail to a choose, and he appointed the umpire to our shopper’s insurance coverage appraisal,” most of you would guess what my verbal response can be to him. So, why would policyholders or their attorneys suppose the identical follow performed by them to insurance coverage firms is reliable?
The Golden Rule thought got here to my thoughts whereas studying an Alabama federal case1 the place it seems the policyholder despatched a unilateral demand for the appointment of an umpire by way of e-mail to a state court docket choose. The federal choose famous the next:
In February 2023, Geovera obtained a letter dated November 5, 2022, from DNB demanding appraisal. In response, Geovera requested DNB undergo an examination underneath oath, which it indicated was a situation precedent to the appraisal course of. (Id.) After months of making an attempt to schedule an examination and as soon as a November date was ‘held’ as a risk, DNB indicated to Geovera that it might undergo an examination solely after Geovera named their appraiser.
In December 2023, DNB despatched Geovera a letter stating that it might ‘transfer ahead with requesting a court-appointed umpire’. DNB then despatched a letter to a Baldwin County Circuit Court docket Choose, with out copying Geovera, which resulted within the choose offering DNB with a letter ‘order’ appointing an umpire for appraisal. In accordance with Geovera, the state court docket choose was not absolutely knowledgeable of the underlying info previous to his issuance of his “order” at DNB’s request.
In gentle of the ‘order’ compelling Geovera to have interaction within the appraisal course of, Geovera filed the moment declaratory motion searching for a declaration that ‘enter judgment declaring Geovera has no obligation to take part within the appraisal as ordered by Choose Stankoski of the Circuit Court docket of Baldwin County, Alabama as Choose Stankoski was not apprised of the particular nature of the dispute, or the events concerned therein on the time of the request for the order and the issuance of the order itself.’
The federal court docket choose dismissed the motion indicating that the quantity in controversy didn’t rise to the extent required to offer a federal court docket jurisdiction to listen to the matter. However the query stays—is the unilateral race to nominate an umpire correct or moral?
The letter despatched to Choose Stankoski states partially:
DNB demanded appraisal in writing a couple of yr in the past, however GeoVera has refused to decide on its personal competent and neutral appraiser pursuant to the Coverage. This failure entitles DNB to request that ‘the selection be made by a choose of a court docket of report within the state the place the ‘residence premises’ is positioned.’ Accordingly, since all situations precedent, together with the requisite 15-day discover requirement, have been met, occurred or been waived, on behalf of DNB, we ask that you simply appoint an umpire in order that the appraisal course of can transfer ahead.
Appraisal clauses, generally present in householders, car, and property insurance policies in Alabama, present a method to resolve disputes in regards to the quantity of loss for a lined declare.
When appointment of an umpire is important, both get together could request a choose of a court docket of report to carry out this function. ‘If in an settlement provision be made for a way of naming or appointing an arbitrator or arbitrators or an umpire, such methodology shall be adopted. . . .’ Lexington Ins. Co. and Chartis,101 So. 3d 1190, 1196 (Ala. 2012) (quoting 9 U.S.C. § 5). Thus, appointment of an umpire is an extrajudicial motion that could be accomplished by a choose outdoors of the judicial system, with out pleadings, discovery, and hearings.
Subsequently, as offered underneath the Coverage, DNB and its appraiser ask that you simply appoint a reliable and disinterested umpire to supervise the appraisal course of. DNB is conscious that the people recognized within the connected checklist of potential umpire candidates can be prepared and in a position to serve within the capability of umpire for this dispute, if appointed by this Court docket, all of that are competent and disinterested.
Please present the identify and speak to info of the umpire chosen within the area offered beneath. I’ll instantly present this info to the insurance coverage provider and its appointed appraiser in addition to my shopper’s appointed appraiser.
The letter apparently didn’t copy counsel for the insurance coverage firm. The e-mail despatched to the choose didn’t, and the choose’s Order was not copied to the insurance coverage firm lawyer.
I raised how unfair a unilateral appointment could be in How Are Insurers Altering the Course of to Appoint an Umpire in an Insurance coverage Appraisal, $56 Million Greenback Appraisal Award Results in Fraud Counterclaim and Lawyer Hostility, and Order Vacates $56 Million Greenback Appraisal Award—Unilateral Appointment of Substitute Umpire Breached Coverage Time Necessities By One Day. On the Insurance coverage Appraisal and Umpire Affiliation (IAUA) and Property Loss Appraisal Community (PLAN) programs, I train that unilaterally sought umpire appointments will not be correct and might be unethical in lots of states that prohibit legal professionals from having unilateral contact with judges asking for materials orders or on something of substance. Certainly, it was at a Georgia Affiliation of Public Insurance coverage Adjusters (GAPIA) assembly the place an insurance coverage regulation professor stated it was an unethical act for legal professionals to hunt this kind of treatment with out alerting the opposing facet.
The Alabama Canons of Judicial Ethics state {that a} choose mustn’t provoke, allow, or contemplate ex parte communications regarding a pending continuing, besides in sure circumstances like scheduling, administrative functions, acquiring recommendation from a disinterested professional, or conferring individually with the events in an effort to mediate or settle, so long as no get together positive aspects a bonus:
A choose ought to accord to each one that is legally excited by a continuing, or his lawyer, full proper to be heard based on regulation, and, besides as licensed by regulation, neither provoke nor contemplate ex parte communications regarding a pending or impending continuing. A choose, nonetheless, could receive the recommendation of a disinterested and neutral professional on the regulation relevant to a continuing earlier than him; offered nonetheless, a choose ought to use discretion in such instances and, if the choose considers that justice would require it, ought to give discover to the events of the particular person consulted and the substance of the recommendation, and afford the events affordable alternative to reply.
For me, I’m educating that it’s unethical within the overwhelming majority of jurisdictions for an lawyer to ship such a unilateral request to a choose.
What do you suppose?
Thought For The Day
No matter disagreement there could also be as to the scope of the phrase “due means of regulation” there could be little question that it embraces the basic conception of a good trial, with alternative to be heard.
—Oliver Wendell Holmes, Jr.
1 Geovera Specialty Ins. Co. v. DNB Investments, No. 24-003, 2024 WL 3836074 (S.D. Ala. Aug. 15, 2024).