Insurer’s Challenge to Appraisal Award Fails
The federal district court entered judgment based on the appraisal panel's award over the insurer's objections. Proto Gage, Inc. v. Federal Ins. Co., Inc., 2024 U.S. Dist. LEXIS 155699 (E.D. Mich. Aug. 29, 2024).
Proto Gage sought coverage from Federal for its business income losses resulting from the failure of two press machines. Appraisal was ordered by the court. The appraisal panel awarded Proto Gage an award of $5,457,601.00. Federal previously paid $299,276 towards Proto Gage's claim, resulting in a claim of $5,158,325.00. Based upon the appraisal award, Proto Group moved for entry of judgment.
Federal opposed the motion on various grounds. Federal first argued that the district court did not have jurisdiction to enter judgment because there was a pending appeal before the Sixth Circuit. The court noted, however, that the Sixth Circuit had dismissed the appeal.
Federal next asserted that the appraisal award should be set aside because it was the result of manifest mistake. It argued that because the appraisal award failed to expressly state that Proto Gage's business income loss was during the "period of restoration," a term defined by the policy, it should be set aside. Federal, however, failed to separately file a motion to vacate, so its request for vacate in its response to Proto Gage's motion was improper. Further, Federal identified no mistake in the appraisal award that was apparent on the face of the award. Rather, Federal protested that "there is no mention in the appraisal award as to what the applicable Period of Restoration is for the claim." Michigan law, however, only required that appraisal awards state valuation determinations for the categories of coverage under the policy. This is what the appraisal award did.
Federal also asked the court to vacate its prior order, essentially seeking reconsideration of the court's ruling granting Prto Gage's motion for summary judgment on the issue of appraisals. Federal was many months tardy in seeking reconsideration. Further, Federal admitted there was coverage by acknowledging that the business income loss was legitimate and by paying significant money. Federal did later backtrack and claim the payment was an "accommodation" but the court ruled that Federal could not disavow its earlier acknowledgement of coverage and evade the appraisal process. The dispute was propertly sent to, and resolved by, the appraisal panel.
Finally, Proto Gage's request for interest was upheld. Proto Gage was entitled to 12 percent penalty interest on the $5,158,325.00 amount owing on the appraisal award.
Therefore, Proto Gage's motion for entry of judgment was granted.
