Alioto's Restaurant, Inc. v. Insurance Co. of North America
| Decision Date | 22 April 1988 |
| Citation | 144 Wis.2d 950,425 N.W.2d 39 |
| Parties | NOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES. ALIOTO'S RESTAURANT, INC., JOHN ALIOTO INVESTMENT CORP., and ANGELO ALIOTO, Plaintiffs-Appellants, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Respondent. 87-1292. |
| Court | Wisconsin Court of Appeals |
Appeal from a judgment and an order of the circuit court for Milwaukee county: ROBERT W. LANDRY, Judge.
BEFORE NETTESHEIM, WEDEMEYER AND SULLIVAN, JJ.
Alioto's Restaurant, Inc., John Alioto Investment Corp., and Angelo Alioto (collectively, Alioto) appeal from a judgment and an order denying reconsideration of a summary judgment in favor of the Insurance Company of North America (INA). Alioto raises the following issues: (1) whether the appraisal provision of the insurance contract is the equivalent of a requirement for arbitration; (2) whether the appraisal provision precludes litigation of the question of total loss; (3) whether there are any material issues of fact precluding summary judgment; (4) whether INA is liable for bad faith; (5) whether the waiver clause is unconscionable; and (6) whether there was a sufficient factual record. Because the appraisal process was conclusive on the amount of damages, there are no material issues of fact, the INA claim is fairly debatable, the waiver clause is not at issue and the trial court did not err in granting summary judgment based on the record before it, we affirm.
On December 15, 1984, Alioto's automobile, a 1985 Mercedes 300 SD, was damaged in an accident. The automobile had been purchased new on October 30 for $38,561 and had been driven only 1,419 miles. There is no dispute that the Mercedes was covered by an INA insurance policy.
INA hired Ed Orgas, an appraiser with Property Damage Appraisers, Inc., to examine the vehicle and determine the cost of repairs. Based on his estimate, INA offered $6,896.39, minus the deductible. Ken Harechmak, INA's in-house appraisal supervisor, became involved and rendered his opinion. Based on his opinion, INA increased its offer to approximately $10,000. Meanwhile, Alioto maintained that the vehicle was a total loss. This was based on letters from Berndt Buick which stated that it could not repair the vehicle to the same condition that it was in before the accident. Alioto demanded payment accordingly.
Since there was no agreement as to the amount of loss, INA invoked the insurance policy's appraisal provision. Each side chose an appraiser, and the two appraisers agreed upon an umpire, William Burow. INA agreed to be bound by the umpire's decision. Alioto, although it named an appraiser, did not likewise agree to be bound.
Burow issued his report which set forth the basis for his finding that the total cost for repairs was $10,706.69, less the deductible. INA informed Alioto that it would pay the amount determined by the umpire. Alioto refused to agree to this figure and commenced an action, demanding the following: $65,000 for property damages and related expenses, $300,000 for damages for bad faith, $100,000 for punitive damages, and additionally, costs, disbursements, and attorney's fees.
INA moved for summary judgment, which the court granted. The court heard a motion for reconsideration, but denied it because there was no indication that the umpire failed to properly evaluate the matter. Judgment was entered on July 13, 1987. Alioto now appeals.
When reviewing the grant of a summary judgment motion, we are required to apply the standards set forth in sec. 802.08(2), Stats., just as the trial court applied them. Green Spring Farms v. Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816, 820 (1987). Summary judgment shall be rendered if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Sec. 802.08(2), Stats.
INA's motion for summary judgment asserted that the appraisal provision in the insurance policy was enforceable and binding on the parties. The motion also defended against the other claims. Alioto opposed the motion, arguing in effect that there were questions of material fact precluding summary judgment. As set forth in the body of this opinion, summary judgment was proper because Alioto has not shown that a genuine issue exists as to any material fact, and INA was entitled to a judgment as a matter of law. See sec. 802.08(2), Stats.
Alioto first argues that the appraisal provision in the insurance contract is not the equivalent of an arbitration requirement and therefore the trial court erred in construing the appraisal provision as equivalent to arbitration. We do not decide whether the appraisal provision of the contract was the equivalent of an arbitration clause, invoking the statutory review procedures of chapter 788. Rather, based on the policy's terms and Wisconsin law, the award is conclusive on the amount due Alioto.
The appraisal provision provides:
APPRAISAL FOR PHYSICAL DAMAGE LOSSES:
1. If you [Alioto] and we [INA] fail to agree as to the amount of loss either may demand an appraisal of the loss. In such event, you and we shall each select a competent appraiser, and the appraisers shall select a competent and disinterested umpire. The appraisers shall state separately the actual cash value and the amount of loss, and, failing to agree, shall submit their differences to the umpire. An award in writing of any two shall determine the amount of loss. You and we shall each pay the chosen appraiser and shall bear equally the other expenses of the appraiser and umpire.
2. We shall not be held to have waived any of our rights by any act relating to appraisal. [Boldface omitted.]
Construction of an insurance policy is generally a question of law to be determined independently on appeal. Cunningham v. Metropolitan Life Ins. Co., 121 Wis. 2d 437, 450, 360 N.W.2d 33, 39 (1985). The principles of law which apply to contracts apply to insurance contracts. Garriquenc v. Love, 67 Wis. 2d 130, 134, 226 N.W.2d 414, 417 (1975). When the policy terms are plain on their face, the court should recognize the contract's plain meaning without resorting to construction or case law. Id. at 135, 226 N.W.2d at 417.
The appraisal provision is clear and unambiguous: in the event of a disagreement regarding the amount of loss, the parties shall each choose an appraiser; the appraisers will in turn select an umpire. An award in writing by any two shall determine the amount of the loss.
When two parties submit a disagreement to the arbitrament of a third person, the decision of the person selected is conclusive when honestly made. Burnham v. City of Milwaukee, 100 Wis. 55, 67, 75 N.W. 1014, 1018 (1898). " '[T]he general rule is to hold the parties to the stipulations of their contract, unless they show some good reason for disregarding the decision made by the umpire mutually chosen for that purpose."' Baasen v. Baehr, 7 Wis. 440 [516], 445 [521] (1859). When the parties see fit to make an individual an umpire between them, if he exercises "his best judgment, in good faith and with an honest intention of determining the real value . . . his estimates are binding upon them."' Id. at 444-45. Other authorities support these general principles. See 14 G. Couch, Cyclopedia of Insurance Law sec. 50:238 (2d ed. 1982) (hereinafter Couch) (if insurance policy provides that in case of disagreement as to the amount of loss the matter shall be submitted to appraisers whose "award shall determine amount of such loss"' and an appraisal is had in conformity with the policy's provisions, the parties are bound by the result); 44 Am. Jur. 2d Insurance sec. 1692 (1982) ().
Dechant v. Globe & Rutgers Fire Ins. Co., 194 Wis. 579, 217 N.W. 322 (1928), is a Wisconsin case which specifically addresses the effect of an insurance policy's appraisal provisions. Dechant involved an automobile insurance policy which called for appraisal if the parties differed in their estimate of the cost to repair or replace the vehicle. The trial court found that the appraisal was a valid and binding award and that the award fixed the amount of damages. The trial court directed judgment dismissing the complaint. Id. at 581, 271 N.W. at 322. The supreme court reviewed the trial court's decision and stated that even a substantial difference between an award and the actual loss as determined by the jury was not sufficient to set aside an award "in the absence of the slightest evidence of fraud or want of good faith on the part of the appraisers."' Id.; Accord Quinn v. New York Fire Ins. Co., 22 Wis. 2d 495, 501, 126 N.W.2d 211, 214 (1964). Furthermore, the court stated that appraisals under insurance contracts were not to be set aside lightly without a showing of a substantial failure by the appraisers to appreciate the matter and questions before them or a showing of anything like the misuse of an arbitration agreement. Dechant, 194 Wis. at 582, 217 N.W. at 323.
Having reviewed the contract and the record, it is clear that the award was proper. Based on the above stated principles, and because the appellants have not shown any basis to overturn this award, as discussed below, the award is conclusive on the amount due Alioto.
Alioto claims that because the appraisal process is not dispositive of whether the damage to the car constitutes a total loss, it is free to litigate this issue. We disagree.
In support of its position, Alioto, citing to Couch at sec. 50:54, asserts that "[a]n appraisal clause does not permit appraisers to determine whether a loss was in fact total, as an appraisal is to determine the amount of damage only."'...
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