Frans v. Harleysville Lake States Insurance
Frans v. Harleysville Lake States Insurance
Concurring Opinion
{concurring). I agree with the majority’s disposition on reconsideration. I note that this case involves a close question. However, Jacobs v Schmidt, 231 Mich 200; 203 NW 845 (1925), which was not discussed by the parties in their original briefs or arguments but was relied on by defendant in its motion for reconsideration, tips the balance in favor of our disposition today. The appraisal clause in the Jacobs stock sale agreement was very similar to the clause at issue here. Id. at 202-203. The Jacobs Court concluded that the appraisal clause could not be unilaterally revoked by plaintiff, given the difference between an arbitration and an appraisal. Id. at 204. In light of Jacobs, I believe that our current disposition is correct.
Opinion of the Court
ON RECONSIDERATION
Defendant appealed by leave granted the trial court’s order denying its motion for an appraisal in this action involving plaintiffs claim for insurance proceeds following a fire that damaged plaintiffs business property, which was covered by a fire insurance policy issued by defendant. Defendant had made a written demand for a binding appraisal regarding the loss pursuant to a provision in the insurance policy after the parties were unable to agree on the amount of the loss, but plaintiff viewed the policy provision as a common-law arbitration clause subject to unilateral revocation and exercised the alleged right to revoke, refusing to participate in an appraisal. The trial court agreed with plaintiff and denied defendant’s motion for an appraisal. We affirmed the trial court’s ruling in Frans v Harleysville Lake States Ins Co, unpublished opinion per curiam of the Court of Appeals (SAWYER and METER, JJ.), issued January 12, 2006 (Docket No.
Questions of law are reviewed de novo on appeal. Westchester Fire Ins Co v Safeco Ins Co, 203 Mich App 663, 667; 513 NW2d 212 (1994). The Insurance Code, specifically MCL 500.2833(l)(m), provides that Michigan fire insurance policies must contain the following provision:
That if the insured and insurer fail to agree on the actual cash value or amount of the loss, either party may make a written demand that the amount of the loss or the actual cash value be set by appraisal. If either makes a written demand for appraisal, each party shall select a competent, independent appraiser and notify the other of the appraiser’s identity within 20 days after receipt of the written demand. The 2 appraisers shall then select a competent, impartial umpire. If the 2 appraisers are unable to agree upon an umpire within 15 days, the insured or insurer may ask a judge of the circuit court for the county in which the loss occurred or in which the property is located to select an umpire. The appraisers shall then set the amount of the loss and actual cash value as to each item. If the appraisers submit a written report of an agreement to the insurer, the amount agreed upon shall be*204 the amount of the loss. If the appraisers fail to agree within a reasonable time, they shall submit their differences to the umpire. Written agreement signed by any 2 of these 3 shall set the amount of the loss. Each appraiser shall be paid by the party selecting that appraiser. Other expenses of the appraisal and the compensation of the umpire shall be paid equally by the insured and the insurer.
As required by the statute, the fire insurance policy in this case contained the language regarding the appraisal process. It reads:
D. PROPERTY LOSS CONDITIONS
2. Appraisal
If we and you disagree on the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that the selection be made by a judge of a court having jurisdiction. The appraisers will state separately the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:
a. Pay its chosen appraiser; and
b. Bear the other expenses of the appraisal and umpire equally. If there is an appraisal, we still retain our right to deny the claim.[1]
Pursuant to common-law arbitration principles, either party may unilaterally revoke the agreement at any time before the announcement of the award, regardless of which party initiated the arbitration. Hetrick v David A Friedman, DPM, PC, 237 Mich App 264, 268-269; 602 NW2d 603 (1999); Tony Andreski, Inc v Ski Brule, Inc, 190 Mich App 343, 347-348; 475 NW2d
“[W]hen common-law principles and clear statutory language conflict, the statute controls.” People v Hock Shop, Inc, 261 Mich App 521, 532; 681 NW2d 669 (2004). Here, allowing one party to unilaterally revoke the appraisal clause and terminate the appraisal process would run contrary to the parties’ specific agreement as reflected in the insurance policy,
Reversed and remanded for entry of an order directing the parties to commence appraisal proceedings consistent with the parties’ agreement. We do not retain jurisdiction.
1 To the extent that this last sentence can be read as providing defendant insurer the right to unilaterally reject the appraisal process or reject the amount determined by an appraisal, such an interpretation cannot withstand scrutiny because it is contrary to MCL 500.2833(l)(m). We view this language as merely indicating that defendant insurer need not pay a claim in the amount determined in the appraisal process on grounds other than simply a disagreement with the dollar figure arrived at in the appraisal, e.g., discovery that a homeowner committed arson. Bad faith, fraud, misconduct, or manifest mistake can also provide
We agree with the Hetrick panel’s assessment, stated in dicta, that common-law arbitration agreements should be enforced on the same terms as any other contract, thereby consigning “the unilateral revocation rule to legal history’s dustbin.” Hetrick, supra at 277.
Our Supreme Court recently reiterated that “[a] fundamental tenet of our jurisprudence is that unambiguous contracts are not open to judicial construction and must be enforced as written.” Rory v Continental Ins Co, 473 Mich 457, 468; 703 NW2d 23 (2005) (emphasis in original).
We note that our Supreme Court is currently in the process of deciding a case in which one of the issues presented is “whether common-law arbitration agreements should be unilaterally revocable.” Wold Architects & Engineers, Inc v Strat, 472 Mich 908 (2005).
Reference
- Full Case Name
- Frans v. Harleysville Lake States Insurance Company (On Reconsideration)
- Cited By
- 6 cases
- Status
- Published