McGowan v. Progressive Preferred Ins. Co.
| Decision Date | 15 July 2005 |
| Docket Number | No. A05A0726.,No. A05A1077.,No. A05A1090.,A05A0726.,A05A1077.,A05A1090. |
| Citation | 618 S.E.2d 139 |
| Parties | McGOWAN v. PROGRESSIVE PREFERRED INSURANCE COMPANY et al. Dasher v. Atlanta Casualty Company et al. Walker v. State Farm Mutual Automobile Insurance Company et al. |
| Court | Georgia Supreme Court |
Butler, Wooten, Fryhofer, Daughtery & Crawford, James E. Butler, Jr., Jason L. Crawford, Columbus, James C. Fuller, Campbell, Waller & McCallum, Jonathan H. Waller, Birmingham, AL, Gary O. Bruce, Columbus, for appellants.
Troutman Sanders, Alan W. Loeffler, Herbert D. Shellhouse, Wesley B. Tailor, Atlanta, McKenna, Long & Aldridge, John L. Watkins, David N. Stern, Atlanta, for Appellee.
Rogers & Hardin, Tony C. Powers, Kimberly L. Myers, Atlanta, for Atlanta Casualty Company.
Sutherland, Asbill & Brennan, John A. Chandler, Thomas M. Byrne, Teresa W. Roseborough, Kristin B. Wilhelm, Russell S. Bonds, Atlanta, for State Farm Mutual Automobile Insurance Company.
Harry McGowan, Dorothy Dasher, and Mary Walker filed separate suits against their respective insurance companies and CCC Information Services, Inc. (CCC).1 Although the factual circumstances in each case vary slightly, each insured's vehicle was a total loss and the insurer paid or offered to pay compensation for that loss. Their suits named CCC as a defendant based upon allegations that CCC had provided flawed and inaccurate valuations of their vehicles to their insurers and that CCC derived its valuation system in a manner that violated Georgia law.2 They alleged that CCC's methodology for valuing vehicles did not properly and accurately determine the fair market value of their vehicles with the statistical validity required by law, resulting in undervaluing their vehicles. Relying upon that fundamental premise, their claims included fraud in the inducement, breach of contract, and RICO violations, and each complaint sought class action certification. In essence, they alleged that their insurance companies had conspired with CCC to deliberately undervalue their losses.
While the three suits were pending, the trial court ordered the enforcement of an appraisal provision in the respective insurance contracts. Each court-ordered appraisal resulted in a valuation greater than that determined by the insurer. Thereafter, Walker, Dasher, and McGowan amended their complaints to raise additional claims. After further review, however, the trial court dismissed each action in its entirety, finding all issues moot, primarily because no claims remained that were independent of the valuation disputes. For the reasons that follow, we affirm.
Case Nos. A05A0726 and A05A1077
McGowan and Dasher have raised identical issues in their enumerations of error. In the interest of judicial economy we have combined their appeals. In Case No. A05A0726, McGowan appeals the dismissal of his claims, and in Case No. A05A1077, Dasher does likewise.
The record shows that McGowan owned a 1996 Mazda B4000 4X2 Le Cab Plus insured by Progressive Preferred Insurance Company. On September 13, 1999, McGowan was involved in an automobile collision that resulted in the destruction of his Mazda. McGowan's policy obligated Progressive to pay the fair retail replacement value of a vehicle comparable to that of his vehicle before the loss, subject to the applicable deductible. Progressive offered McGowan $11,318 and purportedly justified its offer using a CCC valuation.
McGowan's policy provided that if he and Progressive did not agree on the amount of a loss, either could demand an appraisal. The policy stated:
If we cannot agree with you on the amount of your loss, then you or we may demand an appraisal of the loss. Each party shall appoint a competent and disinterested appraiser. If the appraisers agree on the amount of the loss, they shall submit a written report to us and this shall be deemed to be the amount of the loss. If the appraisers cannot agree within a reasonable time, they shall then choose a competent, impartial umpire, provided that if they cannot agree on an umpire within fifteen (15) days, either you or we may petition a judge of a court having jurisdiction to choose an umpire. The disagreement of the appraisers shall then be submitted to the umpire. Subject to the provisions of the Policy, a written agreement signed by two of these three will then be the amount of the loss.
The trial court granted Progressive's motion to compel McGowan to submit to an appraisal of his totaled vehicle. The appraisal process determined the value of McGowan's loss as $13,300.
The record shows that Dasher was the owner of a 1995 GMC Safari van insured by Atlanta Casualty Company (AC). Her van was totaled in August 1999. The insurance policy required AC to pay the "actual cash value" of the van less a deductible of $500. Dasher's policy also had an appraisal provision, which AC invoked. This provision stated:
If we and you do not agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will select a competent appraiser. The two appraisers will select a third appraiser. The appraisers will state separately the actual cash value and the amount of loss. If they fail to agree, they will submit their differences to the third appraiser. A decision agreed to by any two will be binding. The policy required each party to pay its chosen appraiser and to share in the cost of any third appraiser.
An independent appraiser selected by AC inspected the van and determined it to be a total loss, but mistakenly identified the vehicle as a two-door cargo van instead of a four-door passenger van. When AC requested an evaluation report from CCC, CCC also misidentified the van as a cargo van and valued it at $9,821. Settlement negotiations ended with AC's final offer of $10,634.23, an offer that AC claimed included $10,389 for the van's actual cash value, plus $727.23 for sales taxes, and $18 for a DMV fee, minus the $500 deductible specified in the policy. According to AC, it did not use the CCC report, but considered other factors including the Southeastern Edition of used car price guide published by the National Automobile Dealers Association (NADA). AC claimed that in August 1999, the blue book pricing guide assigned a value of $9,450 to a 1995 GMC Safari cargo van. While trying to settle Dasher's claim under her policy, neither AC nor Dasher noticed the third party appraiser's error in the description of the van. Dasher filed suit in June 2000 against AC and CCC.
The trial court granted AC's motion to compel an appraisal. Apparently, the discrepancy in the specific type of van was not discovered until the court-ordered appraisal took place. Following the appraisal process, AC offered Dasher $11,900, an amount that exceeded her own appraiser's valuation of $11,784, and another appraisal of $11,725.
In dismissing the Dasher and McGowan cases, the trial court noted that the The trial court observed that after the completion of the court-ordered appraisals, it had found that the Plaintiffs' claims "had been resolved and rendered moot by the court-ordered appraisals" under the authority of Eberhardt v. Ga. Farm etc. Ins. Co.3 and Southern Gen. Ins. Co. v. Kent.4 Even so, the court "permitted the Plaintiffs to amend their complaints to allege claims, if any, that were independent of the valuation disputes and that might survive the holdings of the Eberhardt and Kent decisions." After the complaints were amended, the trial court determined that:
the Plaintiffs having made no challenge to the appraisals and having alleged no claims independent of the valuation disputes between the Plaintiffs and Defendants, all claims (including claims of fraud, conspiracy and violations of the Georgia RICO statute) alleged in the Amended and Restated Complaints are moot and must be dismissed under the authority of Eberhardt and Kent.
The trial court also specifically found "that its ruling — that the unchallenged conclusion of the appraisal process bars the Plaintiffs' valuation-based claims — does not render the appraisal process a form of arbitration barred in disputes between insureds and insurers."
1. On appeal, McGowan and Dasher contend that the trial court erred in construing the court-ordered appraisals as determinative of liability because this construction converted the underlying appraisal provision into an arbitration clause prohibited under OCGA § 9-9-2(c)(3). They also argue that, by directing court-ordered appraisals, the trial court forced them to participate in arbitration. They claim that because it is impermissible to include arbitration provisions in insurance contracts of this nature, the appraisal provisions are nothing more than thinly disguised arbitration provisions. We disagree.
For nearly a hundred years, so-called "appraisement" provisions have formed part of insurance policies and have been duly enforced by courts.5 Appraisal provisions have long appeared in automobile insurance policies in this state.6 In Corbett, a decision by this court in 1926, we held that
[a]n appraisement such as was contemplated by the terms of the policy in question would not determine liability. Not being an award, either common-law or statutory, it could amount to nothing more than a contractual method of ascertaining the loss, settling no other fact, and could not alone be the basis of a cause of action or judgment.7
In other words, an appraisal is not an award of any kind but merely "a contractual method of ascertaining [and settling a] loss." Appraisal provisions enable the parties to settle disputes as to the value of a loss without having to file suit. Absent fraud or mistake, a decision agreed to by any two appraisers will be binding on the insured and his...
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