Kennedy v. GeoVera Specialty Insurance Company
2:23-cv-06395
E.D. La.Nov 22, 2024Background
- Plaintiff Kelly Kennedy held a GeoVera wind-only homeowners insurance policy for her Louisiana property when Hurricane Ida struck in August 2021.
- After Kennedy reported hurricane-related damages, GeoVera paid undisputed amounts to cover reported losses, but a substantial dispute remained over the total amount of damage.
- Kennedy invoked the policy’s appraisal provision and appointed Barry Van Shoubrouek (Irwin & Associates) as her appraiser; GeoVera appointed its own.
- Both appraisers could not agree, so an umpire, Miles Corbitt, was appointed; the final appraisal award ($146,436.65) was agreed to by Kennedy’s appraiser and the umpire.
- GeoVera moved to strike the award after learning (via initial disclosures in September 2024) that Kennedy’s appraiser had a 'flat fee' contract that increased based on loss valuation, arguing this violated the impartiality requirement of the policy.
- The Court considered whether this fee structure violated the policy and Louisiana law, thereby invalidating the appraisal award.
Issues
| Issue | Kennedy's Argument | GeoVera's Argument | Held |
|---|---|---|---|
| Whether the appraisal award should be set aside due to appraiser's fee structure | GeoVera's objections are speculative and untimely; umpire had no interest | Irwin’s contract created a financial interest, violating policy impartiality requirement | Award set aside; impartiality requirement violated |
| Whether the fee arrangement renders the appraiser partial | No proof Irwin was partial; process was fair | Fee structure functions as contingency fee, making appraiser interested party | Appraiser was not impartial; award must be rescinded |
| Whether GeoVera's motion to strike was timely | Motion untimely; award issued March 2023, motion filed October 2024 | Only learned of fee arrangement after recent disclosures; motion filed promptly thereafter | Motion timely; based on when evidence was discovered |
| Whether subsequent proceedings must restart appraisal | Not specifically addressed | Should restart with impartial appraisers as required by policy | Parties must restart appraisal process with impartial appraisers |
Key Cases Cited
- Cadwallader v. Allstate Ins. Co., 848 So. 2d 577 (La. 2003) (construing insurance contracts according to intent of parties under Louisiana law)
- Branch v. Springfield Fire & Marine Ins. Co., 4 So. 2d 806 (La. 1941) (appraisal awards binding if appraisers comply with terms of policy)
- St. Charles Par. Hosp. Serv. Dist. No. 1 v. United Fire & Cas. Co., 681 F. Supp. 2d 748 (E.D. La. 2010) (challenging appraiser impartiality requires evidence of suspect integrity)
- Cent. Life Ins. Co. v. Aetna Cas. & Sur. Co., 466 N.W.2d 257 (Iowa 1991) (appraisers acting as decision-makers must be disinterested)