Last week, we looked at Magistrate Judge York’s October 2021 opinion in Smith v. State Farm, in which State Farm was ordered to proceed with an appraisal of the loss as properly invoked by Ms. Smith. As a refresher, Ms. Smith’s home was damaged by a March 3, 2020 storm, and State Farm agreed she suffered a covered loss and issued a payment to her. Ms. Smith disagreed with State Farm’s estimate of the loss and invoked the policy’s appraisal clause. State Farm refused to proceed with an appraisal of the loss, and Ms. Smith filed suit. In responding to Ms. Smith’s motion to compel appraisal, State Farm argued that there was only a dispute regarding the “scope” of covered loss, not the amount. Magistrate Judge York found no meaningful distinction between “scope” and “amount,” and thus ordered State Farm to proceed with an appraisal.  State Farm then sought review by the District Judge.

On review, Judge Breen affirmed Magistrate Judge York’s ruling in all respects and found State Farm’s objections to Judge York’s order to be “entirely unsupported.” Judge Breen’s opinion also highlighted the facts of the case, noting:

State Farm sought denial of the appraisal demand on the grounds that the parties’ disagreement went beyond the “amount of loss” to include a difference of opinion as to the scope of the work to be performed. Specifically, [State Farm] maintained that Smith was attempting to obtain payment for remediation of areas of her property not damaged by the storm, including the replacement of plumbing fixtures in the bathroom and kitchen and new water heater, furnace, and heat pump. Resolution of a dispute relating to the scope of work or covered provided by the insurance contract could not, State Farm insisted, form a proper basis for an appraisal under the policy provision. In the alternative, if the Court found appraisal appropriate, [State Farm] requested that the appraisal be limited to the scope of work prepared by the insurer which outlined the coverage available in the claim.

All of these arguments by State Farm were rejected by the Court, which also noted that State Farm offered no caselaw in support of its position that the application of the appraisal clause to a scope of loss controversy is somehow subject to a different standard if the “additional loss” is a large one. To sum it up, Judge York’s Order was affirmed, appraisal was ordered to proceed, and the appraisal is now underway.

A copy of Judge Breen’s opinion can be accessed here.