Cory v. USAA General Indemnity Company

[5] UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE [7] BRYAN CORY, et al., CASE NO. C25-5452-KKE [8] Plaintiff(s), ORDER GRANTING MOTION TO [9] v. COMPEL APPRAISAL [10] USAA GENERAL INDEMNITY COMPANY, [11] Defendant(s). [12] 13 Plaintiffs Bryan Cory and Shanlynn Cory unsuccessfully attempted to invoke their 14 insurance policy’s appraisal provision before filing this lawsuit against their insurer, Defendant 15 USAA General Indemnity Company (“USAA”). Since filing this action, the Corys now request 16 that the Court order USAA to comply with that provision. Dkt. No. 12. 17 Because the appraisal provision is enforceable and USAA has not shown that it is not 18 obligated to comply with it, the Court will grant the Corys’ motion to compel appraisal. 19 I. BACKGROUND 20 The Corys purchased a USAA homeowner’s insurance policy (“the Policy”) that protected 21 the Corys’ home against, among other things, damage from either water or fire. 1 Dkt. No. 1-3 ¶ [23] 1 The record is equivocal about the cause of the damage to the Corys’ property. The complaint alleges that the Corys’ property was damaged by water from burst plumbing on August 11, 2023. Dkt. No. 1-3 ¶ 7. USAA’s answer admits that the Corys’ property was damaged on August 11, 2023, but states that the loss reported was a fire loss and not a [24] 1 4; Dkt. No. 3 at 40–41. The Policy was in effect on August 11, 2023, when the Corys’ home was 2 damaged. Dkt. No. 1-3 ¶¶ 6–7; Dkt. No. 11 ¶¶ 7–8. The Corys notified USAA of the damage to 3 their property and made a claim for coverage under the Policy. Dkt. No. 1-3 ¶ 8. 4 Although USAA opened coverage on the Corys’ claim, the Corys were not satisfied with 5 how USAA handled the claim and eventually hired their own loss consultant to assist them in 6 estimating the value of the claim. Dkt. No. 1-3 ¶¶ 10–11. The Corys’ consultant estimated the 7 loss total to be $787,446.09, and the Corys submitted that estimate to USAA as a supplemental 8 claim. Dkt. No. 13-1. USAA confirmed its previous determination, which was hundreds of 9 thousands of dollars less than the Corys’ valuation. Id., Dkt. No. 13 ¶ 3, Dkt. No. 13-2 at 2. 10 The Corys then invoked the Appraisal provision of the Policy (Dkt. No. 13-3 at 2), which 11 USAA rejected. Dkt. No. 1-3 ¶ 12. The Corys reiterated their appraisal demand, which USAA 12 again rejected. Id. 13 After providing the notice required by the Insurance Fair Conduct Act (“IFCA”), the Corys 14 filed this lawsuit in Cowlitz County Superior Court. Dkt. No. 1-3. USAA removed the action to 15 this Court in May 2025, and the Corys subsequently filed a motion to compel appraisal. Dkt. No. 16 12. That motion is now ripe for resolution, and the Court will grant it for the following reasons. 17 II. ANALYSIS 18 A. Legal Standards 19 Washington law finds appraisal provisions of an insurance policy to be “universally” valid 20 and enforceable, and courts uphold them “upon the grounds of sound public policy” as they “tend [21] 22 water loss. Dkt. No. 11 ¶¶ 7–8. The Corys’ motion to compel appraisal does not identify the cause of the property damage, although a document attached to the accompanying Declaration of Charles P. Pearson references fire damage. 23 Dkt. No. 13-1 at 6. USAA’s opposition brief states, without citation, that “[t]his lawsuit arises from a partial fire loss occurring at plaintiff’s home on August 11, 2023.” Dkt. No. 14 at 1. The cause of the property damage does not appear to be material to the resolution of the motion before the Court, and thus the Court need not resolve this factual 24 discrepancy at this time. 1 to fair dealing and to the prevention of litigation.” Keesling v. W. Fire Ins. Co. of Fort Scott, Kan., [2] 520 P.2d 622, 626 (Wash. Ct. App. 1974) (quoting Goldstein v. Nat. Fire Ins. Co., 180 P. 409 , 411 3 (Wash. 1919)). 4 However, an appraisal provision is ‘not self-executing; and, if the company does not pay the damages fixed by the appraisers, an insured must commence legal 5 action, the appraisal must be confirmed by the court and judgment entered for the insured. The authority and control over the ultimate disposition of the subject 6 matter remains with the courts.’ 7 Montler v. Belfor USA Grp., Inc., No. 39497-2-III, 2023 WL 5622963 , at *12 (Wash. Ct. App. 8 Aug. 31, 2023) (quoting Keesling, 520 P.2d at 625 ). 9 B. The Court Will Enforce the Policy’s Appraisal Provision. 10 The Corys’ motion invokes the Appraisal provision of the Policy, which reads, in relevant 11 part: 12 If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent and impartial appraiser 13 within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or 14 we may request that the choice be made by a judge of a court of records in the state where the “residence premises” is located. The appraisers will separately set the 15 amount of the loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will 16 submit their differences to the umpire. A decision agreed to by any two will set the amount of loss. [17] … [18] This is not a provision providing for or requiring arbitration. The appraisers and 19 umpire are only authorized to determine the “actual cash value”, “replacement cost” or cost to repair the property that is the subject of the claim. They are not authorized 20 to determine coverage, exclusions, conditions, forfeiture provisions, conditions precedent, or any other contractual issues that may exist between you and us. The 21 appraisal award cannot be used by either you or us in any proceeding concerning coverage, exclusions, forfeiture provisions, conditions precedent, or other 22 contractual issues. However, once contractual liability is admitted or determined, the appraisal award is binding upon you and us. This appraisal process and 23 authority granted to the appraisers and the umpire can only be expanded or modified by written mutual consent signed by you and us. [24] 1 Dkt. No. 1-3 at 46. The Corys argue that because the Appraisal provision of the Policy is a binding 2 contract term that authorizes them to demand an appraisal, the Court should grant their motion and 3 stay the litigation while the appraisal process is ongoing. Dkt. No. 12 at 4. 4 In opposition to the Corys’ motion, USAA acknowledges that “appraisal can be a useful 5 tool for resolving what are primarily valuation disputes,” but contends that the dispute in this action 6 is not primarily about the value of the loss but about whether and how coverage terms apply to 7 certain categories of the Corys’ costs. Dkt. No. 14 at 1. USAA cites no authority requiring that 8 an appraisal provision is properly invoked only where it would resolve all of the disputes between 9 an insured and insurer. USAA contends that in addition to disputes over the valuation of personal 10 property and the building, there are additional disputes as to causation and coverage, but has not 11 shown that appraisal would serve no useful purpose. Id. at 5–6. 12 Because the Policy contains an Appraisal provision that permits the Corys to demand an 13 appraisal, and because USAA has not shown that it should not be obligated to honor that provision, 14 the Court will grant the Corys’ motion. See, e.g., Graham v. Country Mut. Ins. Co., No. 2:20-CV15 00189-SAB, 2021 WL 5239795 , at *2 (E.D. Wash. Feb. 9, 2021) (“It is true that determining the 16 amount of loss is a separate issue from determining whether the loss is covered under the policy 17 and that the latter cannot be resolved by appraisal. However, this does not relieve Defendant of 18 the obligation to engage in the appraisal process in the first place.”). 19 III. CONCLUSION 20 For these reasons, Plaintiffs’ motion to compel appraisal is GRANTED. Dkt. No. 12. The 21 parties shall engage in the appraisal process consistent with the Policy’s terms, and this matter is 22 STAYED while that process is ongoing. 23 The parties shall file a joint status report within two weeks of the conclusion of the appraisal 24 process. If the appraisal process is not completed by October 31, 2025, the parties shall file a joint 1 status report no later than that date, addressing the progress made and whether the stay should 2 remain in place. 3 The Court also acknowledges that the parties have submitted a joint status report (Dkt. No. 4 15) as required by Federal Rule of Civil Procedure 26(f), but the Court defers entry of a case 5 schedule until after the stay is lifted. 6 Dated this 12th day of August, 2025. [7] A [8] Kymberly K. Evanson 9 United States District Judge