Opinion
A131339
05-09-2012
KEMPER INDEPENDENCE INSURANCE COMPANY, Plaintiff and Respondent, v. ORA CITRON, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Contra Costa County Super. Ct. No. N101498)
This is an appeal from a judgment confirming an insurance appraisal award. Kemper Independent Insurance Company (Kemper) issued a homeowners insurance policy to Ora Citron. After a fire damaged Citron's home, Kemper and Citron participated in an appraisal pursuant to Insurance Code section 2071 to resolve a dispute about the actual cash value of the property and the amount of the loss. The appraisal resulted in an award assigning a replacement cost value of $704,906.50 and an actual cash value of $639,027.36. Kemper petitioned for an order confirming the appraisal award pursuant to the California Arbitration Act, Code of Civil Procedure section 1280 et seq. Citron opposed the petition, claiming the award should be vacated. The trial court granted the petition, confirmed the award, and entered judgment in conformity with the award.
Unless otherwise noted, all further statutory references are to the Code of Civil Procedure.
On appeal, Citron contends the court erred by confirming the appraisal award. Specifically, she claims the court should have vacated the award pursuant to section 1286.2 because the process was "corrupt." She also argues the trial court erroneously failed to consider her appraiser's declaration, which she argued "show[ed] corruption" at the appraisal hearing. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
After a June 2009 fire damaged her Concord home, Citron made a claim to Kemper, the insurer under her homeowners insurance policy. Kemper assigned adjuster Marsha Gelon to Citron's claim. Kemper and Citron were not able to agree on the amount of the loss, so the parties conducted an appraisal pursuant to Insurance Code section 2071 to determine the actual cash and replacement cost values. The panel included two appraisers and a neutral umpire selected by them: Kemper's appraiser Robert Mooring, Citron's appraiser, Keith Charleston, and neutral umpire Peter Evans. Evans notified the parties he had been retained by Kemper's counsel as an expert witness, primarily in the area of claims handling, in "Pomerantz [v]s. Kemper. . . ." Evans noted Gelon was the "principal claims examiner" in Pomerantz, but that he had never spoken with her.
The Appraisal Hearing
On May 5, 2010, the parties participated in an informal appraisal hearing pursuant to Insurance Code section 2071. Citron appeared with her attorney. Gelon, apparently unaware Kemper had a right to counsel at the appraisal hearing, appeared for Kemper without an attorney. At the hearing, Gelon "had copies of various subcontractor bids pertaining to the repair of . . . Citron's dwelling." She "intended to submit these bids to the appraisal panel [but] did not have an opportunity to do so."
A few days after the hearing, Kemper hired Sedgwick, Detert, Moran & Arnold LLP (Sedgwick). In a May 10, 2010 letter to the appraisal panel, counsel for Kemper asked Evans to "void[ ]" the appraisal hearing because Kemper was not represented by counsel. Citron opposed the request. In an email to both parties, Evans declined to void the appraisal hearing. He described the hearing and concluded the "panel agrees that sufficient information has been provided for it to work towards an award. It does not agree to void the process." Evans also noted Sedgwick is "counsel for Kemper in the Pomerantz matter" and that he had served as a consultant or expert witnesses in five "other cases, all resolved, where [Sedgwick] was representing defendant insurers[.]" Evans stated, "I am uncertain whether any potential conflict is mine or yours."
In a May 19, 2010 letter, counsel for Kemper asked Evans to either "disregard the . . . appraisal hearing and schedule a new one" or permit Kemper to "submit additional information relevant to the appraisal," specifically subcontractor bids forming the basis "for the general contractor proposals that Kemper discussed and presented (but did not provide to) the panel at the hearing." The letter attached "the sub bids in support of the general contractor proposals" and asked Evans to consider them. In a June 2010 letter to Sedgwick and the panel, counsel for Citron discussed his concerns about the "Form of Award" proposed by Evans and demanded Sedgwick withdraw from representing Kemper because "it has currently engaged . . . Evans in another matter" and therefore created a conflict of interest for Evans. Citron contended it was Sedgwick's duty to withdraw as "the late comer to this action. . . ." Sedgwick declined to withdraw.
The subcontractor bids are not part of the record on appeal.
In August 2010, the panel issued the award. It stated it was "made without consideration of any deductible amount, any coverage determination or other provision of the . . . policy which might affect the amount of the insurer's liability thereunder" and set the replacement cost value of the loss at $704,906.50 and the actual cash value at $639,027.36. Charleston did not sign the award.
Kemper's Petition to Confirm the Appraisal Award
Kemper filed a petition to confirm the appraisal award pursuant to section 1280. In response, Citron contended her rights were "substantially prejudiced" by Evans and Mooring's "misconduct" and "corruption" during the appraisal process. She also argued the award "should be vacated" because Evans "was subject to disqualification but failed to recuse himself" and because the appraisal panel was "not selected as required by the parties' written agreement."
In support of the opposition, Charleston submitted a declaration averring "Evans engaged in misconduct, was biased, and made several improper decisions in Kemper's favor in this appraisal because of his past relationship with Kemper's counsel, the Sedgwick firm, and the significant amount of work provided to him by Sedgwick." Charleston's declaration described conversations he had with Evans leading him to conclude "Evans made the wrongful determination that the arbitrators should consider the Vanderbuilt estimate," a subcontractor bid prepared by Vanderbuilt at Kemper's request, even though the Vanderbuilt estimate was not submitted at the appraisal hearing. Charleston also stated Evans "made the arbitrary decision that he would only allow an amount of $7,000 for the Architect Scope," which constituted an "improper coverage decision."
Kemper objected to Charleston's declaration. It contended Charleston's declaration was inadmissible because it was "replete with hearsay, speculation, and improper opinion testimony[.]" Second, Kemper argued Citron waived any objection to the appraisal panel selection process by "proceeding with the appraisal, receiving the appraisal award, and making this contention only after determining she was unsatisfied with the award." Third, Kemper contended there was no corruption or misconduct and no evidence Citron was substantially prejudiced.
The day before the hearing on the petition to confirm the appraisal award, Citron filed an opposition responding to the points raised in Kemper's reply. Citron supported the opposition with the declaration of her attorney, Bruce McIntosh, who disputed the assertions in Kemper's reply and averred the appraisal process was corrupt. The declaration attached eight exhibits.
The Hearing and Ruling on Kemper's Petition to Confirm the Appraisal Award
At the hearing on the petition to confirm the award, the court noted it had not considered Citron's untimely opposition to Kemper's reply. Counsel for Citron argued there was corruption in the award because Sedgwick refused to withdraw; in response, the court noted Citron failed to move to disqualify the firm. The court also indicated it "found Mr. Charleston's declaration very troubling" because it "trash[ed] the opinions or reputations of the other two arbitrators" and because it was "largely incomprehensible. . . . It seems to be conclusory and overreaching in its scope. I would have serious problems believing this type of testimony from Mr. Charleston. . . ."
In a written order, the court granted the petition, confirmed the award, and sustained all of Kemper's 26 objections to Charleston's declaration. In addition, the court concluded Citron failed to demonstrate a statutory ground for vacating the award and explained the "ruling would have been the same even if all of [Kemper's] evidentiary objections" to Charleston's declaration "were overruled. The declaration of Keith Charleston . . . is virtually unintelligible, and does not identify a factual basis for any of the four objections raised by [Citron]: (1) a defect in the selection of the arbitration panel; (2) misconduct; (3) corruption; or (4) disqualification. . . . [T]he record should reflect that there is not the slightest evidence of any misconduct by either Mr. Evans or Mr. Mooring." The court entered judgment in conformity with the award.
DISCUSSION
To place the issues in context, we briefly describe the statutory scheme. Pursuant to Insurance Code section 2071, a standard form fire insurance policy must include "an appraisal provision to settle disagreements" between the insurance company and the insured "concerning the amount of loss." (Gebers v. State Farm General Ins. Co. (1995) 38 Cal.App.4th 1648, 1651 (Gebers).)"It is the insured's initial responsibility to establish the 'actual cash value' of the property damaged. If the insured disagrees with a value suggested by the insurer, the appraisal process provides the means by which the dispute is to be settled." (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2011) ¶ 15:356, p. 15-53.) "The statutory standard form specifies that insurer and insured are each to select 'a competent and disinterested appraiser' and that the umpire selected by these appraisers shall likewise be 'competent and disinterested.'" (Gebers, at p. 1651, quoting Ins. Code, § 2071, fn. omitted.)
Insurance Code section 2071 provides in relevant part, "In case the insured and this company shall fail to agree as to the actual cash value or the amount of loss, then, on the written request of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within 20 days of the request. Where the request is accepted, the appraisers shall first select a competent and disinterested umpire; and failing for 15 days to agree upon the umpire, then, on request of the insured or this company, the umpire shall be selected by a judge of a court of record in the state in which the property covered is located. Appraisal proceedings are informal unless the insured and this company mutually agree otherwise. For purposes of this section, 'informal' means that no formal discovery shall be conducted, including depositions, interrogatories, requests for admission, or other forms of formal civil discovery, no formal rules of evidence shall be applied, and no court reporter shall be used for the proceedings. The appraisers shall then appraise the loss, stating separately actual cash value and loss to each item; and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two when filed with this company shall determine the amount of actual cash value and loss. Each appraiser shall be paid by the party selecting him or her and the expenses of appraisal and umpire shall be paid by the parties equally. In the event of a government-declared disaster, as defined in the Government Code, appraisal may be requested by either the insured or this company but shall not be compelled."
Insurance Code "section 2071 calls for an informal appraisal proceeding, unless the parties mutually agree otherwise, with no depositions, interrogatories, and the like, no formal rules of evidence, and no court reporter. The direction to maintain informality in appraisal proceedings . . . 'to equalize the positions of insurers and insureds and to streamline the appraisal process by reducing the opportunity for delaying tactics by insurers. . . .' [Citation.]" (Kirkwood v. California State Automobile Assn. Inter-Ins. Bureau (2011) 193 Cal.App.4th 49, 58 (Kirkwood).)"Additionally, [Insurance Code] section 2071 constrains the role of the appraiser to that of appraising 'the loss, stating separately actual cash value and loss to each item. . . .' Appraisers have no power to interpret the insurance contract or the governing statutes. '"The function of appraisers is to determine the amount of damage resulting to various items submitted for their consideration. It is certainly not their function to resolve questions of coverage and interpret provisions of the policy."' [Citations.] Under [Insurance Code] section 2071, an appraiser has authority to determine only a question of fact, namely the actual cash value or amount of loss of a given item. [Citation.]" (Id. at pp. 58-59; see also Safeco Ins. Co. v. Sharma (1984) 160 Cal.App.3d 1060, 1063.)
An agreement to conduct an appraisal in an insurance policy is an "'agreement' within the meaning of section 1280, subdivision (a), and . . . is considered to be an arbitration agreement subject to the statutory contractual arbitration law." (Louise Gardens of Encino Homeowners' Assn., Inc. v. Truck Ins. Exchange, Inc. (2000) 82 Cal.App.4th 648, 658, fn. omitted; Kirkwood, supra, 193 Cal.App.4th at p. 57.) "A party may petition the court to confirm, correct or vacate an appraisal award; the court must confirm unless it corrects and confirms as corrected, vacates the award, or dismisses the proceeding." (Kirkwood, at p. 58, citing §§ 1285, 1286.) In response to a petition to confirm the appraisal award, the responding party may request the award be vacated or corrected. (§ 1288.2; see also Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group 2011) ¶ 5:536, pp. 5-364-5-365.)
Section 1286.2 sets forth the exclusive grounds to vacate an appraisal award. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 33 (Moncharsh).)A trial court "shall vacate the award if [it] determines any of the following: (1) The award was procured by corruption, fraud or other undue means[;] (2) There was corruption in any of the arbitrators[;] (3) The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator[;] (4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted[;] (5) The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title[;] (6) An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware; or (B) was subject to disqualification upon grounds specified in Section 1281.91 but failed upon receipt of timely demand to disqualify himself or herself as required by that provision." (§ 1286.2, subds. (a)(1)-(6).) A party seeking to vacate an appraisal award "must demonstrate that his ground is supported by the provisions of . . . section 1286.2" and "show substantial prejudice[.]" (United Brotherhood of Carpenters Etc., Local 642 v. Demello (1972) 22 Cal.App.3d 838, 840 (Demello).)
"'On appeal from an order confirming an arbitration award, we review the trial court's order (not the arbitration award) under a de novo standard. [Citations.] To the extent that the trial court's ruling rests upon a determination of disputed factual issues, we apply the substantial evidence test to those issues.' [Citation.]" (Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1217.)
The Court Did Not Abuse its Discretion by Declining to Consider Charleston's Declaration
Citron claims the court erred by failing to consider Charleston's declaration. Although she contends the court "ignor[ed]" her evidence, she does not identify the standard of review. We review the court's refusal to consider Charleston's declaration for abuse of discretion. (Lockheed Litigation Cases (2004) 115 Cal.App.4th 558, 564.)
Citron does not challenge the court's rulings on Kemper's 26 objections to Charleston's declaration except to state generally — and without any supporting authority — that the court should not have sustained them. Citron has therefore waived any challenge to the court's ruling on the objections. "An appellant must provide an argument and legal authority to support his contentions. This burden requires more than a mere assertion that the judgment is wrong. 'Issues do not have a life of their own: If they are not raised or supported by argument or citation to authority, [they are] . . . waived.' [Citation.] . . . When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived." (Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 852; see also In re Phoenix H. (2009) 47 Cal.4th 835, 845.) Here, Citron's one-sentence "discussion" of each objection in her reply brief is insufficient to raise the issue. (Shimmon v. Franchise Tax Bd. (2010) 189 Cal.App.4th 688, 694, fn. 3 ["arguments raised for the first time in the reply brief will not be considered unless good cause is shown for failing to raise them earlier"]; Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 685 [appellant's "belated attempt to address [various] . . . claims in his reply brief—after the respondents' brief noted his failure to address the striking of these claims—did not salvage these abandoned issues"].)
Citron relies on a single case, Jefferson Ins. Co. v. Superior Court (1970) 3 Cal.3d 398, 403, to support her argument that the court erred by failing to consider the Charleston declaration. In Jefferson, the appraisers "determined as a matter of law that the issue before them was the 'replacement cost less depreciation' of the building, and that in arriving at the value listed in their award as 'cash value,' they refused to consider income, location, or any other relevant factor tending to show the fair market value of the property, despite the fact that such evidence was made available for their use." (Id. at pp. 401-402.) The trial court vacated the appraisal award pursuant to section 1286.2, determining "(1) that the appraisers had exceeded their powers by erroneously deciding a question of law (the meaning of 'actual cash value'), which they had not been authorized to decide, and (2) that the insured had been substantially prejudiced by the refusal of the appraisers to consider material evidence." (Jefferson, at p. 402.)
The California Supreme Court concluded the trial court properly vacated the award because the "appraisers misinterpreted the meaning of 'actual cash value' and therefore failed to decide the factual issue submitted to them. . . ." (Jefferson, supra, 3 Cal.3d at p. 403.) The court explained, "[w]here an appraisal award is based upon a misconception of the law, this fact may be proved to the court by extrinsic evidence, including a declaration of one of the appraisers. The declaration of an appraiser is properly received to show what the appraisers considered the issue to be, for the purpose of determining whether they exceeded their powers by making an error of law." (Ibid.)
Jefferson does not — as Citron contends — stand for the proposition that an appraiser's declaration "is properly received to show corruption" in the appraisal process. Jefferson holds an appraiser's declaration may be admissible to show the appraisers made an error of law. (See Lambert v. Carneghi (2008) 158 Cal.App.4th 1120, 1131.) Jefferson does not compel admission of a declaration where — as here — a party seeking to vacate an appraisal award contends "[t]he award was procured by corruption. . . ." (§ 1286.2, subd. (a)(1).)
Citron has failed to establish the court abused its discretion by declining to consider the Charleston declaration. Citron makes no attempt to explain how the court's conclusion that the declaration was "troubling," "largely incomprehensible," and "conclusory" was arbitrary, capricious, or somehow exceeded the bounds of reason.
The Court Properly Granted the Petition to Confirm the Appraisal Award
Citron contends the court erred by confirming the appraisal award. Her argument is difficult to follow, but she seems to claim Sedgwick's refusal to withdraw constituted a "conflict of interest" for Evans and somehow constituted corruption under section 1286.2, subdivisions (a)(1) and (2). She also suggests there was "misconduct" at the appraisal hearing under section 1286.2, subdivision (a)(3). We disagree.
Citron urged the trial court to vacate the award because Evans failed to recuse himself. (See, e.g., § 1281.9, 1286.2, subd. (a)(6)(B).) She does not reprise this argument on appeal.
To be sure, an appraisal award must be vacated if "[t]he award was procured by corruption . . ." or if "[t]here was corruption in any of the arbitrators." (§ 1286.2, subds. (a)(1)-(2).) In addition, the court must vacate an appraisal award if "[t]he rights of the party were substantially prejudiced by misconduct of a neutral arbitrator." (§ 1286.2, subd. (a)(3).) Here, the court concluded there was "not the slightest evidence of any misconduct by either Mr. Evans or Mr. Mooring." Substantial evidence supports that conclusion where, as here, Citron has not demonstrated the court erred by excluding Charleston's declaration and has not argued the court erred by declining to consider her "sur-opposition" and supporting documents.
Citron notes the court's refusal to consider her "sur-opposition" and the evidence submitted in connection with that opposition but does not contend the court erred by declining to consider them.
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In her opening brief, Citron describes the appraisal process in great detail but does not cite any authority to support her claim that Sedgwick's refusal to withdraw is a basis to vacate an appraisal award under section 1286.2. As noted above, our high court has held that "an award reached by an arbitrator pursuant to a contractual agreement to arbitrate is not subject to judicial review except on the grounds set forth in sections 1286.2 (to vacate) and 1286.6 (for correction)." (Moncharsh, supra, 3 Cal.4th at p. 33.) A refusal to withdraw by counsel for the insurer is not among the grounds listed in section 1286.2. Even if we assume Sedgwick's failure to withdraw constituted a statutory ground for vacating the award, Citron has not shown she was substantially prejudiced by Sedgwick's refusal to withdraw. (Demello, supra, 22 Cal.App.3d at p. 840.)
DISPOSITION
The judgment is affirmed. Kemper is entitled to costs on appeal.
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Jones, P.J.
We concur:
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Needham, J.
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Bruiniers, J.