Disinterested appraiser has arbitral immunity; expert appraiser has no immunity.(Recent Court Decisions)

The California Court of Appeal ruled that a disinterested appraiser has immunity for his role in an appraisal conducted pursuant to law but that an appraiser hired as an expert has no immunity for his actions in the same proceeding.

Winston and Elaine Lambert owned a home in Los Altos Hills that was destroyed by fire in 1995. The residence was covered by a Fire Insurance Exchange (FIE) policy providing guaranteed replacement-cost coverage, which included the full cost of replacing the home in conformity with all applicable laws and regulations. When, four years later, the Lamberts finally obtained all the necessary permits to rebuild, they were unable to agree on the replacement cost with FIE and therefore invoked their right to an appraisal.

Under California law, property owners are entitled to an appraisal to resolve valuation disputes with insurance companies. The law provides for each party to select a disinterested appraiser; any disagreement between the appraisers is resolved by an umpire.

The Lamberts selected Christ Carneghi as their appraiser and also retained Robert Dailey, another appraiser, as an expert "to define, describe and estimate the replacement cost" for purposes of the appraisal. When the Lamberts were not satisfied with the final appraisal at the completion of the process, they sued Carneghi and Dailey for negligence, seeking $1.8 million in damages. The trial court found that Carneghi was immune from suit as an arbitrator and that Dailey had immunity under the litigation privilege, which protects testimony in proceedings authorized by law; the court therefore dismissed the case. The Lamberts appealed.

On appeal, the Lamberts' primary arguments were that Carneghi had no arbitral immunity because the appraisal was not an arbitration, and that Dailey had no immunity because the litigation privilege does not apply when plaintiffs sue their own ...