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HomeProperty InsurancePolicyholder and Insurer Agree to Vacate Appraisal Award Based on Appraiser Not...

Policyholder and Insurer Agree to Vacate Appraisal Award Based on Appraiser Not Being Qualified


In an unusual motion, the policyholder and insurer filed a joint motion to vacate an appraisal award in a matter pending in Colorado. 1 Given the facts recited by the parties and Colorado law regarding appraisal, this unusual motion seems to make sense. The motion is still pending because it is opposed by the roofing contractor, who is claiming an interest in the insurance proceeds.

The facts indicated that the policyholder requested that the roofing contractor make repairs, which resulted in the roofing contractor suggesting that the policyholder submit a claim with its insurer for damage to the roof. The facts of the motion then set the stage for an argument that the policyholder’s appraiser was not qualified to act as an appraiser under Colorado law: 2

7. At Skyyguard’s recommendation, Calvary retained Steven Ziegler of Reserve Capital LLC as its appraiser and invoked the Policy’s appraisal clause.

8. Church Mutual acknowledged the appraisal demand, named Brett
Lochridge of Unified Building Sciences as its appraiser, and requested that Ziegler
exchange disclosures pursuant to Colorado DORA Bulletin B-5.26…

9. The DORA Bulletin requires ‘the selected appraiser’ ‘be fair and competent,’ and states that the appraiser ‘must disclose to all parties any known facts that a reasonable person would consider likely to affect an appraiser’s interest in the amounts determined by the appraisal process.’…

10. Neither Skyyguard nor Ziegler disclosed any information to Church Mutual or Lochridge that would indicate that Ziegler was not competent or impartial.

11. On November 5, 2019, Ziegler provided his disclosures to Lochridge. Ziegler disclosed that he had ‘no financial interest in the outcome of this appraisal.’

12. Using many of the same line items from Skyyguard’s September 23, 2019 estimate, Ziegler prepared an estimate for the amount of loss at $1,147,221.68 RCV for repair costs, excluding building code upgrades…

13. On or about May 19, 2020, the appraisers arrived at the final appraisal award (“Appraisal Award”)….The total RCV was $1,434,693.29. The ACV was $828,933.39.

16. Skyyguard contacted Ziegler via text message as early as September 13, 2018 to notify Mr. Ziegler of the forthcoming Claim and to advise that they anticipated needing his ‘assistance’. Skyyguard then requested Ziegler assist with the Claim around July 2019 and sent Ziegler a copy of New Line Roofing Estimate. At Skyyguard’s request, Ziegler inspected the Property, along with Skyyguard, on July 17, 2019.

17. Ziegler obtained information about the Claim and inspected the Property to assess the purported damage for the purpose of determining whether to assist Skyyguard with the Claim as Calvary’s public adjuster or appraiser. During the inspection, Mr. Ziegler provided Skyyguard with his opinion that he was ‘90 percent sure’ the Claim should be covered by insurance. He testified that he would not agree to be an appraiser if he did not believe that there was coverage for the loss, or if he believed that the damage was insufficient for appraisal. Skyyguard prepared its inflated September 23, 2019 estimate—which more than doubled the New Line Roofing Estimate—only after receiving Ziegler’s appraisal recommendation.

18. Mr. Ziegler testified that he decides whether to serve as an insured’s public adjuster or appraiser based on what he believes is in the insured’s best interest.

19. Ziegler testified that, in developing the Appraisal Award, he did not evaluate whether or not the alleged damage was caused by the Storm.

20. On or about May 26, 2020, Mr. Ziegler submitted his one and only invoice for the work performed for the appraisal to Calvary. Mr. Ziegler’s invoice charged $75,000 for 250 hours of work. Mr. Ziegler’s invoice provided no line itemization of his work performed, and Mr. Ziegler testified that he did not keep track of his time working on the appraisal.

21. Skyyguard’s owners, Chase Baron and Sean Smith, each testified that they understood that Mr. Ziegler’s fee was based on a percentage of the Appraisal Award. Skyyguard knew that Mr. Ziegler’s invoice was inflated yet directed Calvary to pay it with funds received from the Appraisal Award.

22. It was also discovered that, during the appraisal process, Skyyguard met with Ziegler and prepared inflated estimates for Ziegler to use in connection with the appraisal.

23. Ziegler did not disclose to Church Mutual or Lochridge that he inspected the Property on July 17, 2019 with Skyyguard, developed damage opinions, recommended that he be retained as an appraiser, rather than as a public adjuster, and recommended that Calvary invoke the appraisal clause. Nor did Ziegler disclose that his decision to work as an insured’s appraiser is guided by what he believes is most beneficial to the insured.

24. Church Mutual and Calvary also discovered that the actual cost of the work was much less than the Appraisal Award. Skyyguard retained New Line Roofing to complete the roof replacement work, including code upgrades, for hundreds of thousands of dollars less than what was indicated on the Appraisal Award and submitted to Church Mutual. New Line Roofing completed all roof replacement work, including the purported ‘code upgrades’ for a total of $764,114.78. (Citations omitted)

While these facts alleged in the motion are stipulated, it should be pointed out that I have no idea whether the facts are true or not or the circumstances giving rise to the policyholder and insurer agreeing to these facts. However, assuming the facts are true, there are some lessons raised that appraisers should consider.

First, prior involvement with a loss before an appraisal is demanded is often a fact that disqualifies many from becoming an appraiser for the loss in many jurisdictions. Not disclosing the prior involvement will certainly be an issue in Colorado.

Second, the fact that the roofing contractor believed that the appraiser was working on a contingent fee and the appraiser was not keeping contemporaneous and accurate billing time records is suspect. Appraisers and umpires should be meticulous regarding their billing and activities during the appraisal, setting forth work on a line-by-line basis which is factually accurate.

Third, there was no attempt by the appraiser to determine if the storm actually caused the damage. Colorado law allows appraisers to make this determination and if it is an issue, the appraisers should be doing something to make a determination of causation rather than simply assuming the damage seen was caused by a particular storm.

Fourth, the prior involvement of the appraiser was to suggest to the policyholder to demand appraisal. Appraisers are supposed to be appointed after a demand for appraisal is made—not suggesting options of litigation versus appraisal for a policyholder.

Finally, all appraisers and umpires being asked for disclosures should be very conservative and make certain even remote facts of an inquiry are disclosed. This is especially true in Colorado.

The case is still pending, and the roofing company has not filed its response to this motion. But it is very unusual for a policyholder and insurer to stipulate to these facts, which, at first blush, appear to set forth a number of reasons for the appraisal award to be vacated.

Thought For The Day

If you tell the truth, you don’t have to remember anything.
—Mark Twain


1 Calvary Baptist Church of Denver v. Church Mut. Ins. Co., No. 1:21-cv-01723 (D. Colo. [Motion filed June 10, 2024]).
2 Id. at *5.