Insured Cannot Sue to Challenge Binding Appraisal Decision

    The court dismiss the insured condominium association's challenge to an appraisal award. The Courtyards at Prairie Fields Condominium Association v. West Band Mut. Ins. Co., 2023 U.S. Dist. LEXIS ___ (N. D. Ill. Sept. 22, 2023).

    In July 2020, the insured filed a claim with West Bend for damage to the property's roof and other building components as a result of wind and hail. West Bend inspected and estimated the replacement cost for the damage was $60,989.54. This amount was paid to the insured minus the $10,000 deductible. The insured believed the damage was so severe that the roofs need to be replaced, which the insured estimated would cost $1,389,600. The insured demanded an appraisal. 

    The policy's appraisal provision said a decision by any two of the two appraisers and umpire would be binding. The two appointed appraisers could not agree on the amount of the loss. The umpire proposed an appraisal in the amount of $123,252.09, which both he and West Bend's appraiser signed.

    The insured filed a complaint for breach of contract alleging that West Bend failed to adequately compensate the insured for the damage. West Bend moved for judgment on the pleadings.

    The insured argued that the appraisal award was not binding because the language in the appraisal provision was not sufficiently clear and unambiguous to constitute a waiver of the insured's right to sue. The court disagreed. The appraisal provision clearly and unambiguously bound the parties to the appraisal conducted pursuant to the terms of the policy. The Illinois courts had held that the word "binding" was sufficiently clear and unambiguous to constitute a waiver of a party's right to sue. The appraisal did not answer questions of contract interpretation or address any number of legal or factual disputes that could give rise to a claim based on the insurer's denial of liability. The binding appraisal provision simply meant that the insurer could still object to liability, but could not object to the amount assessed by the appraisal process. 

    Therefore, West Bend's motion for judgment on the pleadings was granted.