Does Anybody Remember When Steve Badger Was Kicked Off an Appraisal Panel? Great American Now Claims Appraisals Are Arbitrations

The Great Debate: The Rematch – A Clash of Titans Over Hail & Appraisal is coming up this Thursday in Colorado. In my preparation, I came across an old case where Great American appointed Steve Badger as its appraiser. While Great American participates in thousands of appraisals and conducts them using the standard method of appraisal, Great American is not giving up on its argument that appraisals should be treated as arbitrations and governed by the Federal Arbitration Act.

In Appraisal Is Not Arbitration in Alabama, I noted that Great American lost its argument that appraisals are really arbitrations and subject to the Federal Arbitration Act at the Alabama Supreme Court. 1 My comment was:

Appraisal, as property insurance practitioners understand the term, is not arbitration. Alabama sees it the same way despite a property insurance carrier trying to argue otherwise.

Great American is still not giving up. It has filed a petition to the United States Supreme Court 2 arguing that the Alabama Supreme Court was wrong and that appraisals are governed by Congressional legislation under the Federal Arbitration Act:

This case concerns an important question of law under the Federal Arbitration Act-an act created to bring national uniformity across courts in validating and enforcing dispute resolution procedures. The Alabama Supreme Court reached a remarkable conclusion inconsistent with the FAA and this Court’s precedent.

The court engaged in a misguided analysis under federal law, but it also discussed its own decisions holding that an appraisal provision is not an agreement to ‘arbitrate’ and therefore not enforceable under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. If the Alabama Supreme Court’s decision stands, it will reinvigorate historic hostility to arbitration agreements that the FAA was intended to extinguish by allowing state courts to define arbitration as narrowly as they wish under state law. Accordingly, this case is a prime candidate for this Court’s review.

What Great American fails to tell the United States Supreme Court is that appraisal provisions within property insurance policies are generally not treated as arbitrations by property insurance companies and their adjusters. Indeed, I could not find one other appraisal case where Great American took this position that arbitrations are appraisals except in this one Alabama case. I wonder if Steve Badger will agree or disagree with Great American’s view on Thursday?

While researching Great American appraisal cases and getting ready for this Thursday’s debate, I came across an old Texas case, which I cited in a blog written nine years ago, Steve Badger Stricken as Biased Appraiser. I have come to have a lot of deep respect for Steve. While we have determined that we share a lot of common ground over various issues, this sentiment stated nine years ago still holds true:

Last fall, I debated Steve at a TAPIA conference as referenced…I can guarantee you that everybody in that room knew I was for policyholders and Steve Badger was for the insurance companies—all of them.

Most public adjusters blame him for starting a war on insurance customers if they happen to be so unlucky to have been stricken by hail. Those starting wars have already taken a side.

Thought For The Day

You have enemies? Good. That means you’ve stood up for something, sometime in your life.
—Winston Churchill

1 Great Am. Ins. Co. v. Crystal Shores Owners Ass’n, No. SC-2023-0092, 2023 WL 8858165 (Ala. Dec. 22, 2023).
2 Great Am. Ins. Co. v. Crystal Shores Owners Assoc., No. 23-1051 [Petition for Writ of Cert. filed Mar.21, 2024].