Steiner v. Middlesex Mut. Assur. Co.

• Decision Date: 11 March 1997
• Docket Number: No. 15766,15766
• Citation: 689 A.2d 1154,44 Conn.App. 415
• Court: Connecticut Court of Appeals
• Parties: Helmut STEINER et al., v. MIDDLESEX MUTUAL ASSURANCE COMPANY

Page 1154

689 A.2d 1154

44 Conn.App. 415

Helmut STEINER et al., v. MIDDLESEX MUTUAL ASSURANCE COMPANY

No. 15766.

Appellate Court of Connecticut.

Argued Oct. 31, 1996.

Decided March 11, 1997.

Joel J. Rottner, West Hartford, with whom was Robyn L. Sondak, for appellant (defendant).

Frank J. Kolb, Jr., East Haven, with whom, on the brief, was David Crow, for appellees (plaintiffs).

Before DUPONT, C.J., and LAVERY and HEALEY, JJ.

HEALEY, Judge.

This case arises out of a dispute over a fire loss between residential property owners and their fire insurer. The defendant, Middlesex Mutual Assurance Company, had issued a homeowner's insurance policy to the plaintiffs, Helmut Steiner and Michelle Steiner, insuring their Westport residence against loss or damage by fire. On August 18, 1992, their residence was extensively damaged by fire. The parties were unable to agree on the value of the damages, and they, therefore, agreed to have the matter of the loss determined through an appraisal ¹ process provided under the policy. The parties thereafter, on January 26, 1993, executed, inter alia, on a printed form the following memorandum of appraisal:

"This memorandum by and between Helmut Steiner & Michelle Brown Steiner of the first part and the Middlesex Mutual Insurance Company of the second part:

Witnesseth: that whereas the party of the first part claims to have sustained a loss by Fire occurring on the 18th day of August 1992 to and upon the following described property to wit: Building & Code up Grades & establish length of repair period. 249 Greens Farms Road Westport CT and

Whereas policy # 1277049 issued by the party of the second part to the party of the first part provides as follows:

'2. Appraisal

If the insured and the company fail to agree as to the amount of loss, each shall, on the written demand of either, made within sixty days after receipt of proof of loss by the company, select a competent and disinterested appraiser, and the appraisal shall be made at a reasonable time and place. The appraisers shall first select a competent and disinterested umpire, and failing for fifteen days to agree upon such umpire, then, on the request of the insured or the company, such umpire shall be selected by a judge of a court of record in the county and state in which such appraisal is pending. The appraisers shall then appraise the loss, stating separately the actual cash value at the time of loss 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. The insured and the company shall pay his or its chosen appraiser and shall bear equally the other's expenses of the appraisal and the umpire.' and,

Whereas, a disagreement has arisen between the parties hereto as to the amount of such loss.

Therefore ² This Memorandum Witnesseth: that in conformity to the terms and conditions of the policy of the party of the second part, Dallas Dodge Sr. ... and Alan Tancreti ... have been selected and are hereby appointed appraisers, to appraise, in accordance with the terms and conditions of said policy, the replacement value of said property and the amount of loss directly caused by said fire to and upon the same...."

The two appraisers and the umpire, chosen in accordance with the insurance contract, met and, on May 3, 1993, rendered an "initial appraisal award." That appraisal was itemized as follows: building--replacement cost value-$1,440,000; building--actual cash value-$864,000; loss--replacement cost value-$858,559.62; loss--actual cash value-$600,000. ³ As the trial court correctly noted, this May 3, 1993 appraisal was "limited" in that it did not take into account any necessary code upgrades in the undamaged areas of the insureds' premises. It expressly stated ⁴ that "code upgrades not considered in undamaged areas." ⁵ After the completion of the May 3, 1993 appraisal, authorities from the town of Westport determined that the undamaged portion would have to be upgraded to meet the Westport code requirements.

Thereafter, the parties apparently tried to negotiate a settlement of the values for the code upgrades in the undamaged areas. They were unable to agree. As a result of that impasse, the plaintiff commenced this declaratory judgment action on August 13, 1993. After the Westport authorities determined that upgrades would be required in the undamaged portion, the parties continued with the appraisal.

On September 14, 1995, the appraisers and the umpire issued a memorandum of appraisal, which stated, inter alia, that the award of May 3, 1993, "left code upgrades in undamaged areas open." ⁶ That memorandum also said that a meeting that took place sometime after May 30, 1995, "during which meeting it was determined that as a result of the fire, the building had to be brought up to current code before a Certificate of Occupancy could be issued for reoccupancy." It was further determined that it was physically and economically impractical to repair the structure to comply with all applicable building codes. It was then determined that the most logical way to comply with all appropriate codes would be the complete demolition of the building and the construction of a new structure in its place. The September 14, 1995 appraisal developed a total replacement value, inclusive of demolition, of $1,652,017.78. This award noted that "the prior award for the fire loss ... did include necessary code upgrades in the damaged areas equaling a replacement cost value loss of $858,559.62." This appraisal then deducted "the previous award from the values developed" and went on to say that "the award [now] equals $793,458.10 which represents the replacement cost value for this portion of the appraisal." (Emphasis added.) This appraisal also pointed out that "it was further agreed that establishment of the actual cash value of the building as previously developed [had been] $864,000.00" (Emphasis added.) It then reset the actual cash value, stating that "the actual cash value of the building inclusive of code upgrades is [now] $991,210.62."

The plaintiffs then filed a motion to confirm the appraisal award. The defendant filed a "limited" objection to the confirmation of the appraisal award, alleging that "the submission to the appraisers for the second portion of the appraisal award, which is the subject of the plaintiff's Motion to Confirm, was to determine the increased costs and for the total cost to repair and replace the damaged property taking into account the necessary code upgrades.... In making said determination it was not necessary to determine the actual cash value of the building subsequent to its replacement and restoration and in accordance with code upgrades...." In addition, the defendant filed an application to vacate the arbitration award, which sought "an order vacating a portion of [the] arbitration award [of September 14, 1995] ... to the extent that the award ... exceeded the submission...."

In its decision, the trial court pointed out that, after the issuance of the initial appraisal award, dated May 3, 1993, and the plaintiffs' institution of their declaratory judgment action, the parties "agreed to submit the issue of the total value of code upgrades, including that in undamaged areas, for appraisal." It further noted that, as a result, on September 14, 1995, a second appraisal was rendered, which listed the actual cash value of the building, inclusive of all code upgrades, at $991,210.62.

The trial court stated that the defendant filed an objection to the plaintiffs' motion to confirm and that, thereafter, it filed its motion to vacate that award "on the ground that it exceeded the scope of submission in that it determined what the actual cash value of the building would be subsequent to its replacement in accordance with code upgrades. Thus, the defendant requests that an order be issued vacating that portion of the September 14, 1995 award." The court then determined that although the defendant had filed a motion to vacate ⁷ the award "in light of the language in [its] request, the court believes that the defendant intended to file a motion to modify the award." ⁸

After stating that "[b]oth parties have essentially acknowledged that the purpose of the appraisal was only to establish figures regarding the amount of loss" (emphasis added), it concluded that "[h]aving reviewed the record, this court is not of the opinion that the appraisers acted upon a matter outside the charge submitted to them. Accordingly, the September 14, 1995 Memorandum of Appraisal is confirmed to the extent that it provides a determination of respective [actual] cash and replacement cost values." (Emphasis added.) It is clear on the record before this court that the trial court granted the plaintiffs' motion to confirm the September 14, 1995 award and denied the defendant's motion to vacate that award.

I

The defendant maintains that the trial court acted improperly in granting the plaintiffs' motion to confirm the appraisal award of September 14, 1995, and in denying the defendant's motion to vacate that award. It argues that the second appraisal award should have been vacated because it exceeded the scope of the submission by redetermining the actual cash value of the property at the time of the second appraisal. The defendant claims that the matter of actual cash value of the loss, both under the policy and the submission, had been fully determined at the time of the first appraisal of May 3, 1993. It is the defendant's position that, in determining the actual cash value, the only relevant time and the only time contemplated by the policy, is the time of the loss, i.e., the fire of August 18, 1992. That element should not have been revisited or reevaluated, argues the defendant, at the time of the second appraisal. The defendant claims that the only matter left open by the first appraisal was "the amount to...