St. Croix Trading Co. v. Regent Insurance
2016 WI App 49
| Wis. Ct. App. | 2016Background
- St. Croix Trading Co./Direct Logistics, LLC (insured) claimed wind damage to a historic building; it submitted a Proof of Loss for ~$104,533, while Regent Insurance estimated $3,224 and denied the claim.
- Regent invoked the policy's appraisal clause; each side appointed an appraiser and the two selected an umpire.
- The appraisal panel awarded replacement and actual cash values for three items (shingle roof, slate roof, fence) and assigned zero value to four others (interior water damage, rubber roof, windows, lawn).
- The award included an addendum stating the fence award was "ADVISORY ONLY" because the panel "has not confirmed coverage on the fence."
- St. Croix moved to vacate the appraisal award, arguing the panel exceeded its authority by deciding coverage; the circuit court vacated the award for that reason and Regent appealed.
Issues
| Issue | St. Croix's Argument | Regent's Argument | Held |
|---|---|---|---|
| Whether the appraisal panel exceeded its authority by considering coverage | Panel impermissibly decided coverage; appraisal limited to valuing losses | Panel validly considered causal facts and did not decide coverage; appraisal should stand | Panel exceeded authority by determining coverage; award vacated |
| Whether appraisal may decide causation vs coverage | Causation factual and may be decided only to the extent it informs amount of loss; coverage is a legal question for court | Appraisers may consider cause of damage when valuing loss | Appraisers may assess causation as a factual input to amount of loss, but may not construe policy or decide coverage |
| Standard for vacating appraisal award | Award should be set aside if panel committed fraud, bad faith, material mistake, or failed to understand its task | No credible evidence on the face of the award showing those defects; award presumptively valid | Vacatur appropriate where face of award shows panel misunderstood contractually assigned task |
Key Cases Cited
- The Farmers Automobile Ins. Ass'n v. Union Pac. Ry. Co., 319 Wis. 2d 52 (2009) (appraisal-award review focuses on whether panel understood and performed its contractually assigned task)
- Quade v. Secura Insurance, 814 N.W.2d 703 (Minn. 2012) (appraisers may determine causation as a factual part of amount of loss but may not decide coverage or construe policy)
- St. Paul Fire & Marine Ins. Co. v. Hausman, 231 Wis. 2d 25 (Ct. App. 1999) (policy interpretation and coverage are questions of law for the courts)
- Jefferson Insurance Co. of New York v. Superior Court of Alameda County, 475 P.2d 880 (Cal. 1970) (appraisers may determine amount of damage but not coverage or policy interpretation)