Amerex Group, Inc. v. Lexington Insurance
678 F.3d 193
2d Cir.2012Background
- Amerex and Amerex USA inc. dispute with Lexington and Westchester excess insurers over coverage and lost business income after a warehouse sprinkler/flood incident.
- Primary insurer Fireman's Fund paid up to its $2.5 million policy; excess policies provided $10 million total beyond primary.
- Excess Insurers demanded appraisal under policy terms; the district court compelled appraisal and formed a Panel.
- Panel valued Amerex's losses at about $1.3 million, below Fireman's Fund coverage, making excess policies inapplicable.
- Amerex challenged (i) waiver/timeliness of appraisal, (ii) whether Panel addressed coverage or damages, (iii) due process due to discovery differences; district court denied merits and Amerex appealed.
- Appraisal process spanned about 30 months with mediation and extensive document review prior to the appraisal decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Excess Insurers waived appraisal rights by delay | Amerex argues post-litigation delay rendered appraisal untimely | Excess Insurers contend delay was reasonable given case specifics | No waiver; appraisal timely under New York framework |
| Whether the Panel decided coverage issues or damages | Amerex contends the Panel addressed policy interpretation | Panel limited to damages, not coverage | Panel did not adjudicate coverage; it determined damages within policy terms |
| Whether the appraisal process violated due process by limiting Amerex discovery | Amerex says it lacked discovery from insurers' investigation | Appraisal is a limited, non-arbitration process with informal procedures | No due process violation; discovery scope appropriately limited in appraisal context |
Key Cases Cited
- Chainless Cycle Mfg. Co. v. Sec. Ins. Co., 169 N.Y. 304 (N.Y. 1901) (reasonable period for appraisal depends on facts)
- Duane Reade, Inc. v. St. Paul Fire & Marine Ins. Co., 411 F.3d 384 (2d Cir. 2005) (appraiser may not resolve coverage; damages may be appraised)
- In re Penn Cent. Corp., 56 N.Y.2d 120 (N.Y. 1982) (distinguishes appraisal from full arbitration; restores scope to damages)
- Littrell v. Allemania Fire Insurance Co. of Pittsburgh, Pa., 250 N.Y. 628 (N.Y. 1929) (timeliness of appraisal post-litigation depends on circumstances)
- Hayes v. Allstate Ins. Co., 722 F.2d 1332 (7th Cir. 1983) (post-suit appraisal rule questioned; context matters)
- Terra Indus., Inc. v. Commonwealth Ins. Co. of Am., 981 F. Supp. 581 (N.D. Iowa 1997) (flexible, case-specific approach to waiver)