In Park Meadows Homes Association, Inc. v. American Family Mutual Insurance Co. (2018AP1484), the Court of Appeals District I held that American Family could invoke a policy’s appraisal clause after litigation began and did not breach its contract or act in bad faith.
Park Meadows submitted a claim to its insurer American Family for property damages after a storm. American Family paid the claim. Park Meadows later presented a claim for a full roof replacement but provided no cost estimate. American Family denied the claim for the roof replacement, and Park Meadows filed the instant lawsuit.
During the litigation, American Family moved to compel appraisal, pursuant to its policy with Park Meadows. The policy allowed either party to compel appraisal if there was a disagreement on the amount of a loss. The policy also required Park Meadows to provide the amount of the loss to American Family in the event of a loss.
The circuit court ordered appraisal. An appraisal panel issued an award to Park Meadows, and American Family paid the award. The circuit court then granted summary judgment in favor of American Family. Park Meadows appealed, arguing that American Family could not invoke the appraisal clause of the policy once the dispute had moved to litigation.
Citing the 1991 case Lynch v. American Family Insurance Co., the court of appeals held that American Family could invoke the appraisal clause after the commencement of litigation. Lynch said that an insurer cannot invoke an appraisal clause subsequent to the filing of a lawsuit when it had the opportunity to invoke appraisal prior to the lawsuit. In this case, American Family did not have a prior opportunity to invoke appraisal because Park Meadows had not provided the insurer the amount of the loss. Without an amount of loss, there was no disagreement on the amount on which American Family could compel appraisal prior to the lawsuit. Without an opportunity to invoke the appraisal clause before Park Meadows began the litigation, American Family could move to compel appraisal during the litigation.
The court of appeals further found that Park Meadows pointed to no genuine issues of material fact regarding its breach of contract and bad faith claims against American Family. Therefore, the court upheld summary judgment in favor of American Family.