ALFIERO v. METLIFE AUTO & HOME INSURANCE AGENCY INC et al

Filing 24

DECISION AND ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT re 20 Motion for Summary Judgment By JUDGE D. BROCK HORNBY. (jib)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
LORETTA ALFIERO,
PLAINTIFF
V.

METLIFE AUTO & HOME
INSURANCE AGENCY, INC.,
A BRAND OF,
AND
METROPOLITAN PROPERTY AND
CASUALTY INSURANCE COMPANY,
DEFENDANTS

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CIVIL NO. 2:16-CV-513-DBH

DECISION AND ORDER ON DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT
This dispute is over the effect of an insurance policy’s requirements that
the parties engage appraisers to determine the amount of loss in the event the
insurer and the insured disagree, and prohibiting suit under the policy unless
the insured has fully complied with its terms. I conclude that the provisions are
enforceable and therefore GRANT the insurer’s motion for summary judgment on
the insured’s claim because the insured failed to engage in the appraisal process.
For over 125 years, standard fire insurance policies have provided that
when the amount of a loss is disputed, either the insurer or the insured can
demand arbitration or appraisal to determine the amount of loss, and that no
lawsuit can be brought on a claim unless that policy requirement has been met.

See, e.g., Hamilton v. Liverpool & London & Globe Ins. Co., 136 U.S. 242 (1890).1
In Hamilton, the Supreme Court declared:
Such a stipulation, not ousting the jurisdiction of the courts,
but leaving the general question of liability to be judicially
determined, and simply providing a reasonable method of
estimating and ascertaining the amount of the loss, is
unquestionably valid, according to the uniform current of
authority in England and in this country.

Id. at 255.
In Maine, a statute requires fire insurance policies to provide that in the
event of a dispute over the value of an insured loss, one party can demand that
each party “select a competent and disinterested appraiser,” and the two
appraisers are to “select a competent and disinterested umpire.” “An award in
writing . . . of any two . . . shall determine the amount of actual cash value and
loss” and, according to the statute, each party must pay the expense of its own
appraiser and half the expenses of the umpire.

24-A M.R.S.A. § 3002.

No

lawsuit for the recovery of any claim is “sustainable in any court . . . unless all
the requirements of this policy shall have been complied with . . . .” Id. The
Maine Law Court has reviewed such terms in the past, although not focused on
the issue presented here. See, e.g., Oakes v. Franklin Fire Ins. Co., 120 A. 53
(Me. 1923); Mowry & Payson, Inc. v. Hanover Fire Ins. Co., 76 A. 875 (Me. 1909).2
In this case, the plaintiff insured had a homeowner’s policy3 with the
defendant insurer that contained provisions substantially mirroring the

In 1990, Maryland’s Court of Special Appeals stated that the practice then was over 100 years
old. Meyer v. State Farm Fire & Cas. Co., 582 A.2d 275, 275 (Md. Ct. Spec. App. 1990).
2 In 1909 the provision was somewhat different in that each party had to name three appraisers;
then each party would choose one of the other party’s three, and those two would select a third.
3 24-A M.R.S.A. § 3003 recognizes combination coverages.
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statutory language.4 She incurred a loss on her insured premises (by vandalism,
not fire), but she and the insurer ended up far apart on the recoverable loss.
Def.’s Statement of Material Facts (SMF) (ECF No. 21) ¶ 18-29; Pl.’s Reply to
Def.’s SMF (ECF No. 23-1) ¶ 18-29.

The insurer proceeded to request an

appraisal proceeding under the policy and nominated a particular appraiser, but
the insured never responded by selecting her own appraiser. Def.’s SMF ¶ 41;
Pl.’s Reply ¶ 41. Accordingly the insurer proceeded to deny her claim based in
part upon her failure to comply with the appraisal clause. Def.’s SMF ¶ 42; Pl.’s
Reply ¶ 42. She has now sued the insurer for recovery of her loss, and the
insurer has moved for summary judgment, arguing that her failure to comply

Def.’s Statement of Material Facts (SMF) (ECF No. 21) ¶ 1; Pl.’s Reply to Def.’s SMF (ECF No.
23-1) ¶ 1. The Policy itself is Exhibit B to the defendant’s memorandum of law in support of its
motion. Specifically, in a section titled “Property Conditions,” the policy provides:

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Appraisal. If you and we fail to agree on the amount of loss, either you or we can
make a written demand for an appraisal of the loss. Each party will select a
competent appraiser and notify the other within 20 days of the appraiser’s
identity. The two appraisers will select a competent and impartial umpire. If the
two appraisers are unable to select an umpire within 15 days, you or we can
request that the choice of an umpire be made by a judge of a court of record in
the state where the residence premises is located.
The appraisers will separately set the amount of loss determining the full
replacement cost and actual cash value for each item as needed. If the appraisers
submit a written report of an agreement to us, the amount agreed upon will be
the amount of the loss. If they fail to agree, they will submit their differences to
the umpire. The written award by two of these three people for any item will set
the amount of loss and is binding on you and us when filed with us.
You will pay the appraiser selected by you. We will pay the appraiser selected by
us. You and we will split the other expenses of appraisal and the fee of the
umpire.
Def.’s Ex. B (ECF No. 22-2) at H-2. In a separate section titled “General Conditions,” the policy
reads: “Lawsuits Against Us. No suit or action may be brought against us by you unless there
has been full compliance with all of the policy terms.” Id. at M-1.
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with the appraisal clause dooms her claim.

The material facts are not in

dispute.5
The insured’s only basis for opposing summary judgment is this:
Ms. Alfiero [the insured] lives off of social security. Ms.
Alfiero’s monthly income is approximately $945.00 per
month. The appraiser[ ]s that were contacted all gave
estimates stating the appraisal would take approximately six
to eight hours depending on travel time, and the hourly fee
was $200.00 to $300.00 per hour. The total cost for just an
appraiser selected by Ms. Alfiero would be a minimum of
$1,200.00 and a maximum of $2,400.00. The amount that
an appraiser costs vastly exceeds what Ms. Alfiero’s income
is. According to Metropolitan [the insurer] they can deny her
claim because of her inability to pay for an appraiser after
they denied her proof of loss statement.

Pl.’s Opp’n (ECF No. 23) at 8.
In Enger v. Allstate Ins. Co., 682 F. Supp. 2d 1094 (E.D. Cal. 2009), aff’d,
407 F. App’x 191 (9th Cir. 2010), the court dismissed an insured’s lawsuit under
a fire insurance policy with similar provisions where the insurer invoked the
appraisal policy and the insured did not pursue it.

Enger ruled that under

California law “[completion of the appraisal process is] a precondition to
Plaintiff’s filing a lawsuit.” Id. at 1099 (quoting Garner v. State Farm Mut. Auto.
Ins. Co., No. C 08-1365 CW, 2008 WL 2620900, at *7 (N.D. Cal. June 30, 2008)).
Likewise in United Community Ins. Co. v. Lewis, 642 So. 2d 59 (Fla. Dist. Ct.
App. 1994), a Florida court ruled that the appraisal clause was “mandatory once
invoked by one of the contracting parties.” Id. at 60.6 There is also the approving

The plaintiff’s legal memorandum does say that she opposes summary judgment “due to the
conflicting information and numerous material facts in dispute.” Pl.’s Opp’n (ECF No. 23) at 8.
But she has admitted most of the defendant’s stated material facts, and the few disputes are not
material to this controversy.
6 The remedy in Lewis is unclear. The trial court had denied a motion to dismiss and the court
of appeals reversed. But it remanded “for the trial court to enter an order finding that arbitration
[that is how the court characterized the appraisal process] was mandatory . . . and retaining
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language in Hamilton quoted at the outset of this opinion. And in Fisher v.
Merchant’s Ins. Co., 50 A. 282, 284 (Me. 1901), Maine’s Law Court stated: “A
determination by arbitration of the amount of loss having been especially made
by the parties a condition precedent to any right of action for recovery of damages
for the loss, it was incumbent upon the plaintiff to prove performance or a valid
excuse for nonperformance.”
The parties have cited and I have found no contrary authority. Nor is this
feature of the appraisal clause hidden from the lay public: the Maine Bureau of
Insurance website maintains a “Frequently Asked Questions” page on
homeowners insurance, and it too states that the parties “each choose an
appraiser at [their] own expense.” Maine Bureau of Insurance, Homeowners
Insurance―Frequently Asked Questions, State of Maine Professional and
Financial Regulation, https://www1.maine.gov/pfr/insurance/faq/homeowners.html#s
(last visited June 28, 2017).
I conclude that the appraisal process is mandatory under Maine law, that
the insured failed to participate in the process, and that she therefore cannot
proceed in this lawsuit to recover her claim under the policy. Nothing in the
statute, the policy or the caselaw suggests that inability to pay is an excuse.
This seems like a harsh outcome if indeed the insured homeowner could
not cobble together resources to pay for an appraiser.7 But the statute and the

jurisdiction for the purpose of enforcement.” United Cmty. Ins. Co. v. Lewis, 642 So. 2d 59, 60
(Fla. Dist. Ct. App. 1994). The court made no reference to the effect of time limits in the policy.
But the underlying complaint was for declaratory relief and therefore perhaps there was still time
to engage the policy process.
7 The record does not reveal whether the plaintiff might have pursued other avenues to pay for
the appraiser such as a home equity loan. Because this is a summary judgment motion by the
insurer, I proceed on the premise that the insured truly was unable to pay for an appraiser.
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cases suggest no alternative. I note that the same result of no coverage and no
insurance benefits would follow if the insured were unable to pay her policy
premium.8
The defendants’ motion for summary judgment is GRANTED.9
SO ORDERED.
DATED THIS 28TH DAY OF JUNE, 2017
/S/D. BROCK HORNBY
D. BROCK HORNBY
UNITED STATES DISTRICT JUDGE

The Supreme Court has said that due process and equal protection provide no relief against
governmental fees “in the area of economics and social welfare” (in that particular case fees that
were a condition to discharge in bankruptcy), United States v. Kras, 409 U.S. 434, 443-46 (1973)
(distinguishing Boddie v. Connecticut, 401 U.S. 371 (1971), in which the fee for access to a
judicial forum that was the only means of divorce was struck down); Harris v. McRae, 448 U.S.
297, 323 (1980) (“this Court has held repeatedly that poverty, standing alone is not a suspect
classification”). This case of course is about fees that were the subject of private contract, but
the Supreme Court cases suggest how difficult the argument of inability to pay really is.
9 The insurer requested summary judgment on the entire complaint. The insured has made no
argument that her counts for breach of covenant of good faith and fair dealing and for unfair
claims settlement practices survive independently of the contractual issue and I therefore do not
address them.
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