County Superior Court
Plaintiff: Fred L. Mason, Jr., Esq.
Defendant: Charles M. Nystedt, Jr., Esq.; David P. Whitman,
matter came on for hearing before Mr. Justice Lanphear on
July 14, 2016 on Defendants' Motion for Confirmation of
Appraisal Award, Plaintiff's Motion to Vacate and or to
Modify the Appraisal Award, and Defendants' Motion for
Entry of Final Judgment.
August 16, 2003, a hot water storage tank in the basement of
Mr. and Mrs. Pates' home ruptured. Valuable baseball
cards were stored in cardboard boxes directly on the floor
and on wooden slabs in the basement. Mr. Pate waited a day to
contact the insurance agent, and on the next day (August 18,
2003), left a voice message and indicated he was about to
embark on a road trip.
Mutual Fire Insurance Company (Union Mutual) contends they
received notice for the first time on September 3, 2003.
Union Mutual hired Pelletier & Rourke Inc. on September
4, 2003, who inspected the property on September 16, 2003. At
the inspection, Mr. Gorman of Pelletier & Rourke Inc.
observed visible water damage to the boxes containing the
baseball cards. He also noted that a number of the cardboard
boxes were still damp or wet. In December 2003, Mr. and Mrs.
Pate claimed a loss and submitted an estimate for $1, 281,
February 15, 2005, Union Mutual sent Mr. and Mrs. Pate a
letter advising that it would arrange an appraisal of the
items that sustained water damage and were the subject of the
claim. The appraisal was conducted and on December 29, 2005,
Union Mutual forwarded a copy of its expert's report to
Mr. and Mrs. Pate and asked for a response.
Mutual filed a complaint with the Rhode Island Superior Court
on April 5, 2013seeking a Declaratory Judgment outlining
the respective rights and duties of each party with regard to
the insurance policy at issue; a declaration that the
appraisal requirement was barred by the statute of
limitations; and a declaration that any recovery under the
policy was barred by the statute of limitations as outlined
in G.L. 1956 § 27-5-3. Mr. and Mrs. Pate counterclaimed
with several counts, including a request for declaratory
judgment that the insurer's defenses were waived.
slowly at the prelitigation stages, the case kept a low
throttle thereafter. Although each party requested a
declaratory judgment, the case continued unresolved. In June
of 2014, a motion to accelerate was granted, but discovery
motions ensued. It was listed as ready trial in January 2015,
but was delayed to allow further discovery. In an attempt to
move the case along, the Court listed the case as ready trial
after April 1, 2015 in an attempt to move it along and
assigned it to a trial justice. In spite of the trial
justice's valiant efforts, the case made no significant
progress. The case was set for a trial date of June 1 and 2,
2015. After several conferences and hearings, the trial
justice saw few, if any, remaining genuine issues of material
fact in dispute and suggested new motions for summary
judgment. Cross-motions for summary judgment were filed by
the parties in October of 2015. In a bench decision, the
trial justice ruled in favor of Mr. and Mrs. Pate finding
that Union Mutual's remaining defenses concerned the
amount of loss rather than bars to recovery. The Court
ordered the parties into the appraisal process pursuant to
the terms and provisions of the applicable policy stating:
"The question of damages shall be submitted to the
appraisal process. During the appraisal process, any evidence
concerning Pates' alleged failure to comply with the
subsection 2(d)(1) will be limited to the efforts they
reasonably could have and should have taken up to the time
when UM reasonably could have commenced its investigation had
its agent and adjuster acted diligently, that is no more than
three or four days after the Pates discovered the initial
flooding." Hr'g Tr. 31:24-32:7, Oct. 26, 2015.
hearing, counsel for Mr. and Mrs. Pate asked the Court to
specify that the appraiser separately calculates pre-award
interest, and the Court did so. Tr. 35:14-20. The trial
justice also agreed that although she had ordered final
judgment to enter, she would delay entry until the appraisal
was completed. Tr. 36:1-23.
policy required that the insurer and insured each select an
appraiser and that they mutually select a neutral umpire.
Defs.' Mot. For Entry of Final J., Ex. E at 11. Mr. and
Mrs. Pate designated Robert Connolly of Binghamton, New York
and Union Mutual designated Fred Winer of Baltimore,
Maryland. Mr. Connolly and Mr. Winer agreed upon Roger Durkin
of Durkin Valuation Consultants of Boston, Massachusetts to
be the neutral Umpire. Mr. Durkin sent a proposed engagement
letter to the parties dated October 8, 2015 concerning the
exact nature of his services and a proposed appraisal
process. In this letter, Mr. Durkin explained that there
would be no personal inspection of the property, unless
required. Union Mutual requested that Mr. Durkin meet their
appraiser, Fred Winer, and expert, Mr. Kathenes, onsite to do
an inspection. Mr. Durkin declined to meet with the appraiser
or allow for an inspection and suggested the parties go back
to Court to seek an order on the appraisal
Mrs. Pate requested the court's intervention in a letter
dated January 16, 2016 (Pl.'s Mem. Ex. M, May 13, 2016).
Union Mutual formally requested instruction on the appraisal
process in its motion of February 6, 2016, and suggested that
Mr. Durkin be replaced.
trial justice, by an Order dated March 22, 2016, denied the
request to disqualify Mr. Durkin as the Umpire. With the case
still drifting, and counsel feuding over each procedural
step, the Court provided specific instructions on the
appraisal process: 1) Union Mutual will submit the complete
reports of Mr. Winer and Mr. Kathenes to the appraisers and
the Umpire; 2) the appraisers will separately set the amount
of the loss; 3) if the appraisers agree, then that will be
the loss awarded to the Pates; 4) if the appraisers disagree
on the amount, they must submit their differences to the
Umpire who will decide the amount of the loss; 5) the
appraisal process will be conducted according to the Uniform
Standards of Professional Appraisal Practice (USPAP); 6) the
parties are prohibited from providing submissions or argument
to the Umpire and appraisers unless specifically requested
and agreed upon by a majority vote; and 7) the parties are
prohibited from further inspection of the Pates' property
unless requested and agreed upon by a majority vote. (Order
1-2, Mar. 22, 2016.)
accordance with the Order, Mr. and Mrs. Pate sent an
appraisal to Mr. Durkin. Union Mutual sent the appraisal
report of Mr. Kathenes to Mr. Durkin in early March 2016. Mr.
Durkin and Union Mutual engaged in various communications
seeking Mr. Kathenes' work product and Mr. Winer's
appraisal report; however, Mr. Winer never submitted a
report. On April 1, 2016, Mr. Durkin emailed the parties with
an "Umpire Status Report."
April 5, 2015, Mr. Durkin emailed his "Neutral Umpire
Report." He determined that the loss was $400, 000 and
pre-award interest amounted to $588, 000 (147%). Mr. and Mrs.
Pate moved to confirm this award. Union Mutual seeks to
vacate the award.