Milligan v. CCC Info. Servs. Inc.
920 F.3d 146
2d Cir.2019Background
- Milligan leased a 2015 Lexus, then suffered a total-loss rollover shortly after; GEICO (insurer) paid the lienholder $45,924 based on a Market Valuation Report produced by CCC (GEICO contractor).
- Milligan sued GEICO and CCC in federal court as a putative class action alleging breach of contract, unjust enrichment, negligence, violations of NY Regulation 64 (valuation for current model-year total losses), and GBL § 349, claiming GEICO’s valuation method violated Regulation 64.
- GEICO (and CCC) moved to compel appraisal pursuant to an appraisal clause in Milligan’s policy that allows either party to demand appraisal of “the amount of loss,” with two appraisers and an umpire and an award of any two to determine loss.
- The district court (adopting a magistrate judge’s R&R) denied the motions to compel appraisal, finding the demand untimely and that the dispute raised legal questions about the meaning of Regulation 64 and the policy’s coverage (not a pure factual valuation issue).
- GEICO and CCC appealed; the Second Circuit considered (1) whether the appraisal clause constitutes “arbitration” for FAA interlocutory jurisdiction, and (2) whether appraisal should be compelled.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the appraisal clause is "arbitration" under the FAA (jurisdiction) | Milligan: FAA inapplicable; state-law definitions not controlling | GEICO/CCC: Appraisal is arbitration; interlocutory FAA appeal available | Held: Yes; clause is arbitration under federal common law, so FAA §16(a)(1)(B) gives jurisdiction |
| Whether appraisal is mandatory and timely here | Milligan: GEICO’s appraisal demand was untimely; dispute is legal (coverage/Regulation 64) and not for appraisers | GEICO: Demand sufficient; appraisal appropriate to resolve amount-of-loss | Held: Denied appraisal on merits — dispute raises legal questions about Regulation 64 and contract interpretation, so appraisal inappropriate |
| Whether appraisers can resolve coverage/interpretation issues | Milligan: Appraisers cannot resolve legal questions about policy/regulatory meaning | GEICO: Appraisal can determine reasonable purchase price (amount) | Held: Appraisers may decide factual amount issues but cannot decide legal questions of policy/regulatory interpretation; this is a legal issue |
| Whether non‑signatory CCC can compel appraisal via equitable estoppel | Milligan: CCC is not a party to the policy and cannot enforce appraisal | CCC: Derivative right via equitable estoppel permits enforcement | Held: Denied — CCC’s right is derivative of GEICO’s; because GEICO cannot compel appraisal, CCC cannot either |
Key Cases Cited
- McDonnell Douglas Fin. Corp. v. Pennsylvania Power & Light Co., 858 F.2d 825 (2d Cir. 1988) (parties may submit specified disputes to a third party for binding resolution—functionally arbitration even without that label)
- Bakoss v. Certain Underwriters at Lloyds of London Issuing Certificate No. 0510135, 707 F.3d 140 (2d Cir. 2013) (procedure naming a third physician to make a final decision constituted arbitration under the FAA)
- Amerex Group, Inc. v. Lexington Ins. Co., 678 F.3d 193 (2d Cir. 2012) (appraisal cannot resolve legal questions of coverage; it is for factual determination of amount of loss)
- Denney v. BDO Seidman, LLP, 412 F.3d 58 (2d Cir. 2005) (non‑signatory may be compelled to arbitrate where issues are intertwined and estoppel applies)
- Duane Reade, Inc. v. St. Paul Fire & Marine Ins. Co., 411 F.3d 384 (2d Cir. 2005) (courts may reserve legal questions of policy interpretation for judicial resolution rather than appraisal)