STEVEN M WHITE V STATE FARM FIRE & CASUALTY COMPANY (Concurring Opinion)
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STATE OF MICHIGAN
COURT OF APPEALS
STEVEN M. WHITE and GAIL A. WHITE,
FOR PUBLICATION
July 28, 2011
Plaintiffs-Appellees,
v
No. 298083
Oakland Circuit Court
LC No. 09-099766-CK
STATE FARM FIRE AND CASUALTY
COMPANY,
Defendant-Appellant.
Before: BORRELLO, P.J., and METER and SHAPIRO, JJ.
SHAPIRO, J. (concurring).
I concur with Judge Meter’s opinion in all respects. I write separately to emphasize the
practical dislocations that would arise from adoption of defendant’s argument. Defendant
essentially asks that we require the party-appointed appraisers to possess the same level of
neutrality as the umpire. Indeed, virtually all the cases cited by defendant address the
requirements for judges and magistrates, which is, of course, an absolute standard of impartiality.
I agree with the majority that this position is inconsistent with the Legislature’s decision to use
statutory language that clearly distinguishes between the role of the party-selected appraisers and
the umpire. The umpire, upon whom the decision ultimately rests, must be “impartial” while the
appraisers need not be. Instead, they must be “independent,” i.e. not under the actual control of
the parties.
Appraisal is a practical mechanism to resolve disputes without the necessity for lawsuits
and the appraiser acts as an expert for the party that hires them. While an appraiser brings
specialized knowledge to the process, all parties also expect that each appraiser will articulate
and generally support his client’s position concerning the claim. In an appraisal, the two partyselected appraisers, through argument and compromise, attempt to reach a resolution of the claim
that they both believe is reasonable. If that cannot be accomplished, then the umpire either
induces them to bridge their differences or makes the decision himself with one of the two-party
appraisers providing the second vote. Despite defendant’s assertion of a due process claim, at no
point does defendant assert that this methodology yields unfair results or that it is impracticable.
Defendant suggests that payment of an appraiser by contingent fee is corrupting, but that
payment by hourly fee is not. This is a distinction without a difference. The appraiser appointed
by defendant in this case makes his living acting on behalf of insurance companies and it is
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either naive or disingenuous to suggest that he will continue to be hired by them if they do not
feel that the results he obtains are in their interest. Defendant’s appraiser testified that over the
past three years alone, defendant has appointed him as its appraiser on approximately 40 claims
and has paid him $114,512.03 in appraiser fees. In the 14 recent claims where this appraiser and
a public adjustor, presumably working under a 10 percent contingency, served as party
appraisers, his hourly fees exceeded the policyholders’ appraisers’ fees by 42 percent. To
maintain that he does not have a pecuniary interest in seeking a favorable outcome for defendant
and the other insurance companies that retain him is absurd. This is not an attack on this
gentleman’s probity, as he is, in fact, paid to act as an advocate with specialized knowledge, as is
plaintiff’s appraiser. The role that the appraiser plays, the fact that he is paid by one side to the
dispute, and the fact that he exclusively (or nearly exclusively) works for either insurers or
insureds, is the source of the lack of impartiality, not whether he is compensated at an hourly rate
or by a contingent fee. The appraiser’s livelihood depends on maintaining a reputation among
insureds or insurers that their respective positions will be well-articulated and supported and that
the appraiser will obtain an acceptable, if not pleasing, outcome for the side that retained them.
If we were to adopt defendant’s extra-statutory requirements, virtually all party-appointed
appraisers would have to be disqualified and the entire appraisal mechanism, which has fairly
served all sides for decades, would come to a screeching halt. The result would be more
unnecessary litigation.
Lastly, the majority opinion does not address plaintiff’s argument that defendant’s policy,
by requiring “disinterested” rather than “independent” appraisers, is inconsistent with state law
as it has existed since 1990 and constitutes fraud. Given our conclusion in this case, I agree that
it was not necessary to do so and I make no judgment as to defendant’s intent in its continued use
of the outdated terminology. However, it must be noted that defendant’s response to this
argument is wholly devoid of merit. Defendant suggests that if its policy is out of compliance
with the statute, indeed, even if it is purposefully so, it is of no consequence because its policy
also states:
10. Conformity to State Law.
When a policy provision is in conflict with the applicable law of the state in
which this policy is issued, the law of the State will apply.
This statement, which is itself required to be included by state law, is a sword provided to the
insured should they discover that the policy issued to them does not comply with state law.
Contrary to defendant’s suggestion, it is not intended as a shield for insurers that issue policies
inconsistent with state law. Insurers have a duty to comply with state law. The provision justcited is intended to require that compliance; not to facilitate non-compliance.
/s/ Douglas B. Shapiro
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