Vermont Mutual Insurance Company v. New England Property Services Group, LLC
2023-0335-Appeal.
R.I.Mar 20, 2025Background
- Vermont Mutual Insurance Company issued a homeowner's insurance policy to Joanne St. Vil for property in Rumford, Rhode Island; St. Vil later assigned her claim to New England Property Services Group, LLC (NEPSG) in exchange for repair work.
- After disagreement over the amount of windstorm damage, both sides invoked the policy's appraisal process, which required each party to select a "competent appraiser" and allowed disagreement resolution by an appointed umpire.
- NEPSG appointed its owner, Steven Ceceri—who had a direct financial stake as the claim assignee—as appraiser; Vermont Mutual objected to his lack of disinterest, but proceeded with the appraisal, reserving rights to challenge the result.
- The final appraisal award was signed by NEPSG's appraiser and the umpire, but not Vermont Mutual's appraiser; the award was substantially higher than Vermont Mutual’s own estimate.
- Vermont Mutual petitioned to vacate the award, alleging "evident partiality" of NEPSG's appraiser; the Superior Court denied the petition and granted NEPSG’s cross-petition to confirm.
- Vermont Mutual appealed, challenging the legal standard applied and arguing that the award should be vacated under Rhode Island’s Arbitration Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the appraisal process governed by Arbitration? | Yes; policy appraisal = arbitration, so Act applies | No; less formal than arbitration, so Act does not control | Yes, process is arbitration; Act applies |
| Should the appraisal award be vacated for partiality? | Yes; Ceceri's financial interest was "evident partiality" | No; policy only demands competency, and Ceceri’s interest did not affect outcome | Yes; Ceceri’s direct interest was improper and influenced award |
| Was there a required "causal nexus" between improper interest and the award? | Yes; large disparity in appraisals and non-unanimous result shows influence | No; award did not match Ceceri’s number and neutral umpire signed | Yes; evidence shows causal nexus, not a unanimous decision |
| Can parties contract out of statutory protections against partiality for arbitrators? | No; statute and public policy bar waiver of arbitration integrity safeguards | Yes; parties bound by language they accepted in policy | No; statute's protections are non-waivable, upholding public faith in ADR |
Key Cases Cited
- Waradzin v. Aetna Cas. & Sur. Co., 570 A.2d 649 (R.I. 1990) (held that an appraisal provision in an insurance policy can be equated with arbitration under Rhode Island law)
- Grady v. Home Fire & Marine Ins. Co., 27 R.I. 435 (R.I. 1906) (used terms "appraisal" and "arbitration" interchangeably, supporting policy language interpretation)
- Aetna Cas. & Sur. Co. v. Grabbert, 590 A.2d 88 (R.I. 1991) (articulated two-step test for "evident partiality" in appraisals: improper interest plus causal nexus)
- McGinity v. Pawtucket Mut. Ins. Co., 899 A.2d 504 (R.I. 2006) (found evident partiality where undisclosed relationship influenced a non-unanimous arbitration award)