2023 IL App (5th) 230249
Ill. App. Ct.2023Background
- Shelter insured the Morrows' home (policy Apr 7, 2021–Apr 7, 2022); policy contains an appraisal clause allowing either party to demand appraisal if they "fail to agree on ... market value, total restoration cost, actual cash value, or amount of loss."
- December 10, 2021 hail/windstorm damaged the property; Morrows' public adjuster estimated $38,198.15 (less $1,000 deductible) for roof/fence replacement.
- Shelter’s engineer/inspector concluded most claimed damage was noncovered or due to installation defects and estimated covered damage at $851.97 (below or near the deductible); Shelter initially denied coverage based on its inspection.
- Morrows demanded appraisal on May 5, 2022; Shelter filed a declaratory-judgment action on June 21, 2022 denying coverage. Morrows counterclaimed for breach and bad faith and alleged Shelter refused to submit to appraisal.
- The circuit court denied Shelter’s motion for judgment on the pleadings and compelled appraisal, holding the dispute was over the extent/amount of loss (not coverage). Shelter appealed; the appellate court affirmed, finding appraisal appropriate for the disputed "amount of loss" and that the interlocutory appeal was proper under Rule 307 by analogy to orders compelling arbitration.
Issues
| Issue | Plaintiff's Argument (Shelter) | Defendant's Argument (Morrows) | Held |
|---|---|---|---|
| Jurisdiction under Ill. S. Ct. R. 307(a)(1) | Appeal not permitted because order is noninjunctive and appraisal order is not an injunction | Order compelling appraisal is injunctive/analogous to arbitration and thus appealable under Rule 307 | Appellate court: appeal is permissible; appraisal order analogous to arbitration and has injunctive effect |
| Whether appraisal clause was triggered | Appraisal is limited to pricing covered damage; court must first decide whether a covered loss occurred before appraisal | Parties dispute the amount/extent of covered loss, which the appraisal clause expressly covers | Appellate court: appraisal clause covers "amount of loss"; Shelter’s own adjuster found some covered loss, so appraisal was triggered |
| Scope of appraisal (coverage vs. causation/extent) | Appraisal cannot resolve whether damage is covered or the nature of loss (policy interpretation); that is for the court | Appraisal may resolve cause/extent/amount of loss where clause permits appraisal of "loss" or "amount of loss" | Court: appraisal appropriate for determining amount/extent of accidental direct physical loss here; FTI (policy-interpretation limits) not controlling because no coverage-interpretation issue presented |
| Motion for judgment on the pleadings | Shelter argued appraisal not triggered and Morrows failed to plead covered loss | Morrows argued dispute is over amount of covered windstorm loss and appraisal demand was proper; appellate brief did not press separate argument on denial of judgment on pleadings | Appellate court deemed any challenge to denial of judgment on the pleadings forfeited for lack of argument; affirmed denial |
Key Cases Cited
- Beard v. Mount Carroll Mut. Fire Ins. Co., 203 Ill. App. 3d 724 (1990) (appraisal clause held analogous to arbitration clause)
- Runaway Bay Condominium Ass’n v. Philadelphia Indemnity Ins. Cos., 262 F. Supp. 3d 599 (N.D. Ill. 2017) (under Illinois law appraisal can address cause/amount of loss despite insurer’s contention those are legal issues for the court)
- FTI Int’l, Inc. v. Cincinnati Ins. Co., 339 Ill. App. 3d 258 (2003) (appraisal inappropriate for disputes that turn on policy interpretation)
- Pekin Ins. Co. v. Miller, 367 Ill. App. 3d 263 (2006) (clear and unambiguous policy language must be given its plain meaning)
- United States Fid. & Guar. Co. v. Wilkin Insulation Co., 144 Ill. 2d 64 (1991) (construing insurance-policy language according to plain, ordinary meaning)
- Gillen v. State Farm Mut. Auto. Ins. Co., 215 Ill. 2d 381 (2005) (standard for motion for judgment on the pleadings; construe pleadings in favor of nonmovant)