Pollock v. Federal Insurance Company
- Joseph Spero
- 3:21-cv-09975
- U.S. District Court · Northern District of California
- 9
In Pollock v. Federal Insurance Company, Chief Magistrate Judge Spero denied Federal’s motion to disqualify the homeowners’ appraiser and pause umpire selection.
Federal Insurance Company and the Homeowners, Thomas Pollock and Eileen Tabios; the ruling allowed the appraisal process to continue without disqualifying Robert Bresee, while leaving umpire selection for a separate order.
What happened
Pollock v. Federal Insurance Company concerns a fire-insurance coverage claim by Thomas Pollock and Eileen Tabios against Federal Insurance Company. The policy required each side to select an independent appraiser, who would help determine the amount of the loss and select a third appraiser, or umpire, if needed. After the parties’ appraisers could not agree on an umpire, Federal asked the court to disqualify the homeowners’ appraiser, Robert Bresee, and pause the umpire-selection process.
Federal argued that Bresee was biased. The homeowners argued that the court lacked authority to remove their appraiser under the federal arbitration law or the policy, and that Bresee met the policy’s and California law’s impartiality requirements. The court explained that federal courts generally should not intervene in an ongoing arbitration before an award, except in an extreme case involving potentially severe and irreparable harm.
Chief Magistrate Judge Joseph C. Spero denied the motion. He ruled that extreme circumstances were required and that Federal had not shown them. The court did not decide the parties’ dispute over selecting the umpire; it stated that issue would be addressed in a separate order.
The detailed version
- Pollock v. Federal Insurance Company · No. 3:21-cv-09975
- Joseph Spero
- Sept. 30, 2022
Background
The case involves a claim for coverage under a fire-insurance policy issued by Federal Insurance Company to Thomas Pollock and Eileen Tabios, whom the opinion calls the “Homeowners.” The policy includes an appraisal process for determining the amount of a loss when the parties cannot agree. Each side selects a competent, independent appraiser. The two appraisers then select a third appraiser, or “umpire,” and the written agreement of any two of the three sets the amount of the loss.
On July 14, 2022, the court granted the Homeowners’ request to compel an appraisal and directed each side to select a party appraiser within 20 days. The parties’ appraisers later could not agree on an umpire. Federal then moved to disqualify the Homeowners’ appraiser, Robert Bresee, based on alleged bias and asked the court to stay, or pause, the umpire-selection process until the disqualification motion was decided.
Parties’ Positions
Federal argued that the policy’s requirement that party appraisers be “competent” and “independent” gave the court authority to disqualify Bresee. Federal relied on Gahn v. Columbia Casualty Insurance Co. and argued that cases cited by the Homeowners were distinguishable because they involved different arbitration agreements or arbitration proceedings at different stages.
The Homeowners argued that the court lacked authority under the Federal Arbitration Act and the policy to remove their party appraiser. They maintained that Bresee was a competent and independent appraiser and met California’s impartiality requirements. They relied on Ninth Circuit decisions stating that courts should intervene in arbitration before a final award only in extreme circumstances.
Court’s Analysis
The court concluded that the Ninth Circuit’s demanding “extreme circumstances” standard applied to Federal’s motion. Under Aerojet-General Corp. v. American Arbitration Association and In re Sussex, judicial intervention during arbitration is generally disfavored because it can delay the arbitration and undermine its purpose of resolving disputes quickly and inexpensively. The court understood those decisions to mean that, after a court has ordered arbitration, a court should consider a motion to disqualify a party-appointed arbitrator only in extreme circumstances.
The court found the reasoning of Queen’s Medical Center v. Travelers Casualty & Surety Co. of America more persuasive than Gahn. In Queen’s Medical, the court declined to decide before an arbitration award whether a party appraiser was actually biased, concluding that the insurance company’s showing fell well short of the extreme circumstances required for intervention. The court here rejected Federal’s argument that the result should differ because this policy expressly required independent appraisers or because the proceeding involved an insurance-coverage appraisal.
The court also rejected the suggestion that the lack of detailed procedural rules in the policy gave it broad authority to fill procedural gaps by disqualifying the appraiser. It explained that the procedures governing an arbitration or appraisal generally come from the parties’ contract together with applicable federal or state default rules. The court further concluded that the timing of Federal’s motion did not justify a more permissive approach: the relevant authority indicated that bias challenges generally should be raised after the arbitration is completed and an award is rendered.
The court noted that Federal had not attempted to show that the extreme-circumstances standard was satisfied. It stated that, to the extent Federal questioned Bresee’s impartiality because of his past work with the firm representing the Homeowners, the appropriate time to raise that challenge was when the arbitration was complete.
Disposition
Chief Magistrate Judge Joseph C. Spero denied Federal’s motion to disqualify Bresee and stay selection of the umpire. The court stated that the parties’ dispute over selecting the umpire would be addressed in a separate order. The opinion therefore did not resolve the umpire-selection dispute.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.