Kirkwood v. California State Automobile Ass'n Inter-Insurance Bureau
193 Cal. App. 4th 49
| Cal. Ct. App. | 2011Background
- California Insurance Code §2071 provides an appraisal process to resolve disputes over actual cash value under standard fire policies, with appraisers limited to valuing the loss and not interpreting coverage or statute.
- In 2007, Kirkwood, insured under an open homeowners policy with CSAA, claimed CSAA depreciated items based on age rather than actual condition and sought declaratory relief regarding §2051(b) interpretation and depreciation methods.
- Kirkwood filed suit for declaratory relief, breach of contract, bad faith, and UCL, arguing CSAA’s depreciation practice violated §2051(b) and related regulations; CSAA demanded appraisal per §2071.
- The trial court denied CSAA’s motion to compel appraisal without prejudice, reasoning that statutory/contract interpretation issues were outside the appraisal scope and should be resolved first.
- CSAA appealed, contending appraisal was mandatory and that declaratory relief on §2051(b) was improper; Kirkwood maintained declaratory relief was appropriate and would inform any later appraisal.
- The court held the appraisal was properly deferred, because the contract/statutory interpretation questions fall outside the appraisal process and declaratory relief could clarify rights and obligations before any appraisal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether declaratory relief on §2051(b) interpretation is proper before appraisal. | Kirkwood seeks judicial clarification of statutory meaning prior to valuation. | CSAA argues appraisal must proceed to determine value, delaying declaratory relief. | Declaratory relief appropriate; appraisal not mandated now. |
| Whether the appraisal clause requires immediate appraisal despite interpretation questions. | Declaratory relief governs interpretation; appraisal would follow if necessary. | Appraisal should determine value regardless of statutory interpretation. | Appraisal properly deferred; interpretation issues are outside appraisal scope. |
| Whether appraisers have authority to interpret contracts or statutes. | Appraisers only value loss, not interpret statutes or contracts. | Appraisers may resolve all necessary questions within the appraisal framework. | Appraisers limited to determining actual cash value; cannot interpret policy or statutes. |
| Whether an insurer’s depreciation methodology on open policies can be challenged via declaratory relief before appraisal. | Challenge to depreciation method is a statutory/contractual issue suitable for declaratory relief. | Depreciation methodology is an appraisal matter to be resolved through valuation. | Issue not within appraisal; declaratory relief proper to resolve depreciation interpretation. |
| Whether the trial court correctly applied the regulatory framework allowing separate legal proceedings on issues unrelated to appraisal. | Regulations permit non-appraisal proceedings for related issues, avoiding preclusion by §2071. | Appraisal could be used to resolve value issues; other proceedings are independent but should not block appraisal. | Regulations support separate proceedings for unrelated issues; declaratory relief can proceed. |
Key Cases Cited
- Jefferson Ins. Co. v. Superior Court, 3 Cal.3d 398 (Cal. 1970) (appraisal cannot determine contract interpretation or coverage)
- Kacha v. Allstate Ins. Co., 140 Cal.App.4th 1023 (Cal. App. 2006) (avoid appraisal when it improperly decides coverage/causation)
- Louise Gardens of Encino Homeowners’ Assn., Inc. v. Truck Ins. Exchange, Inc., 82 Cal.App.4th 648 (Cal. App. 2000) (appraisal is an arbitration-like process under CCP 1280(a))
- Mahnke v. Superior Court, 180 Cal.App.4th 565 (Cal. App. 2009) (appraisal is informal and cannot preclude separate legal actions)
- Community Assisting Recovery, Inc. v. Aegis Security Ins. Co., 92 Cal.App.4th 886 (Cal. App. 2001) (valuation methods under §2071 still subject to appraisal before remedy)