Court Of Appeal Affirms Order Denying Policy Holder’s Petition To Compel Arbitration Of Appraisal Dispute.
Despite countervailing considerations that favor arbitration, California courts continue to deny petitions to compel arbitration for the simplest of reasons: the dispute is beyond the scope of the arbitration agreement. Such was the case in Moghtader v. Travelers Commercial Insurance Company, B254173 (2/8 Dec. 4, 2014) (Rubin, Flier, Grimes) (unpublished).
After Dr. Moghtader’s two-level exterior deck on his Hollywood Hills home was damaged by fire, he and his attorney entered into a to-and-fro with his insurance company, Travelers, to get the repair costs paid. Evidently, the insurance company refused to cover costs related to expensive steel support beams allegedly required by a change in city building codes.
Fire insurance policies in California include a provision requiring the parties to participate in an appraisal when they cannot agree on the amount of loss of covered items. Ins. Code, sections 2070, 2071. The appraisal provision is an agreement for contractual arbitration. At loggerheads, Dr. Moghtader petitioned to arbitrate. (Note on usage: The first known use of “loggerheads” in print is in Francis Kirkman's, The English Rogue, 1680: "They frequently quarrell'd about their Sicilian wenches, and indeed... they seem... to be worth the going to Logger-heads for.")
The trial court denied his petition, and the Court of Appeal affirmed, explaining: “In essence Moghtader wants to convert an agreement to appraise valuation disputes into an agreement to also resolve policy interpretation disputes by having the trial court resolve the latter when ruling on a petition to compel arbitration.” Put another way, the coverage dispute was beyond the scope of the arbitration agreement.
The ultimate outcome remains to be seen, as Dr. Moghtader has sued his insurance company.