In the last 60 days, COVID-19 has affected us all. Federal and state governments have issued quarantine orders. Schools have been closed. And many businesses have been adversely affected. Although North Carolina’s Federal Courts have not (yet) issued any COVID-19 related rulings, they have, in the last 60 days, issued several new coverage decisions. One of those has significantly curtailed the ability of any appraisal to proceed.
In New Bern Golf and Country Club v. Underwriters at Lloyd’s, London, the U.S. District Court for the Eastern District of North Carolina was called upon to determine the scope of appraisal, under North Carolina law.
There, the parties agreed that wind was a covered cause of loss under their policy. Id., 2020 WL 1958631. However, while the Country Club contended that wind—a covered cause—caused all of the damages claimed, the Market Insurers disagreed, contending that wind caused only a small portion of the damages, with the rest being caused by non-covered perils. Unable to resolve this dispute, litigation ensued. While the litigation was pending, the Market Insurers invoked appraisal. Then, that same day, they moved to dismiss the suit based upon their invocation. The North Carolina Federal Court held that because “the parties dispute ‘how much of the damage resulted from a covered cause and how much came from an uncovered cause,’” appraisal could not proceed. Accordingly, the court denied the appraisal invocation and motion to dismiss, allowing the litigation to proceed.
This decision appears to spawn a roadblock to appraisal. While jurisdictions such as Florida allow appraisal to proceed even when “causation” of the appraised damages is disputed, North Carolina’s stance is akin to Georgia, which precludes appraisal when “causation” issues exist. Thus, in North Carolina, like Georgia, when an insurer and insured dispute whether any claimed damage is covered under a first-party property policy, appraisal is inappropriate.
We, at Butler Weihmuller Katz Craig, LLP, shall continue to monitor these and other first-party coverage rulings. Should you have any questions about this recent case, COVID-19 claims, or any other coverage matter, please do not hesitate to contact us. In the meantime, stay safe and healthy.