IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

December 10, 2015 Session

JOSEPH C. THOMAS, ET AL. V. THE STANDARD FIRE INSURANCE

COMPANY, ET AL.

Appeal from the Chancery Court for Hamilton County

No. 12-0328 Jeffrey M. Atherton, Chancellor

No. E2015-01224-COA-R3-CV-FILED-FEBRUARY 17, 2016

This appeal arises from an insurance claim for storm-related damage to the property of 

the plaintiffs. The case was resolved on a motion for summary judgment. According to 

the plaintiffs, the trial court erred by giving effect to the decision of the appraisal panel 

because the policy‟s appraisal provision is unenforceable. The plaintiffs contend the 

policy‟s appraisal provision constitutes an agreement to arbitrate subject to Tennessee‟s

version of the Uniform Arbitration Act (Tenn. Code Ann.§ 29-5-301, et seq.). The 

plaintiffs further argue the appraisal provision does not comply with Tennessee Code 

Annotated section 29-5-302(a) of the Uniform Arbitration Act, which requires 

agreements to arbitrate over issues relating to property used as residences must be signed 

or initialed by the contracting parties. We affirm the trial court‟s findings.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court

Affirmed; Case Remanded

JOHN W. MCCLARTY, J., delivered the opinion of the court, in which THOMAS R.

FRIERSON, II., J., joined, and D. MICHAEL SWINEY, C.J., concurred with separate 

concurring opinion.

Grace E. Daniell, Chattanooga, Tennessee, for the appellants, Joseph C. Thomas and 

Grace E. Daniell.

Clint J. Woodfin, Knoxville, Tennessee, for the appellees, The Standard Fire Insurance 

Company and The Travelers Property Casualty Companies.
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OPINION

I. BACKGROUND

On March 14, 2006, The Standard Fire Insurance Company (“Standard”), a 

subsidiary of The Travelers Property Casualty Companies (“Travelers”) (collectively, 

“Insurer”), issued a homeowners insurance policy to the plaintiffs, Joseph C. Thomas and 

Grace C. Daniell (“Homeowners”) for their residence located at 2967 Folts Circle, 

Chattanooga, Tennessee. The policy went into effect on March 14, 2006, and a high 

value home endorsement was added through an agency based in North Carolina effective 

from March 14, 2011, to March 14, 2012.

Windstorms and tornadoes swept through the Red Bank and North Chattanooga

area on April 27, 2011. Homeowners contend their dwelling, other structures, and 

surrounding premises were damaged, with several large trees falling on their house and 

other structures. According to the complaint, over 130 trees on the property were 

damaged. Homeowners quickly submitted a claim to Insurer for the storm-related 

damage to their property. In May, adjusters for Insurer inspected the damage and issued 

payment for the claimed damage to personal property and trees, as well as for tree 

removal expenses. There is no dispute regarding the amounts Homeowners were paid for 

those aspects of their insurance claim.

The matter before us pertains to the amount Homeowners are due on the dwelling 

and other structures portions of their claim. Insurer retained construction consultants to 

determine the amount of loss. Homeowners likewise hired a contractor to prepare an 

estimate. When the estimates differed, Homeowners claimed Insurer had greatly 

underestimated the damage to their dwelling and other structures. According to 

Homeowners, substantially reduced policy benefits were offered to them compared to the 

actual damages they sustained.

On September 14, 2011, Insurer invoked the appraisal process set forth in the 

policy, found in subsection 6 of “SECTION I, CONDITIONS”:

6. Appraisal. If you and we fail to agree on the amount of 

loss, either one can demand that the amount of loss be set by 

appraisal. If either makes a written demand for appraisal, 

each shall select a competent, independent appraiser and 

notify the other of the appraiser‟s identity within 20 days of 

receipt of the written demand. The two appraisers shall then 

select a competent, impartial umpire. If the two appraisers 

are unable to agree upon an umpire within 15 days, you or we 

can ask a judge of a court of record in the state where the 

residence premises is located to select an umpire. The 

appraisers shall then set the amount of loss. If the appraisers 

submit a written report of an agreement to us, the amount 
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agreed upon shall be the amount of the loss. If the appraisers 

fail to agree within a reasonable time they shall submit their 

differences to the umpire. Written agreement signed by any 

two of these three shall set the amount of the loss. Each 

appraiser shall be paid by the party selecting that appraiser. 

Other expenses of the appraisal and compensation of the 

umpire shall be paid equally by you and us.

(Emphasis added.). Per the terms of the policy provision, the parties each selected an 

appraiser. After the two appraisers were unable to agree on the amount of loss, the matter 

was submitted to an umpire. On December 3, 2012, the umpire determined the amount of 

the loss to be $132,793.95. The appraiser for Insurer concurred with that determination. 

Insurer agreed to issue payment in that amount. Homeowners, however, would not 

accept payment.

Homeowners filed this lawsuit, arguing Insurer breached the contract with them by 

refusing to timely pay the benefits they are entitled to receive under the policy. They 

contend Insurer engaged in unethical insurance practices involving delay and “lowballing,” failed to conduct a timely and reasonable investigation of the damage, and 

delayed the investigation and resolution of Homeowners‟ claims. An award of a bad 

faith penalty pursuant to Tennessee Code Annotated section 56-7-105 was sought against 

Insurer. Additionally, Homeowners alleged Insurer‟s actions violated the Tennessee 

Consumer Protection Act, Tennessee Code Annotated section 47-18-109(a)(1), entitling 

them to recover treble damages.

After an unsuccessful motion to dismiss, Insurer filed a motion for summary 

judgment based upon the appraisal provision. Insurer sought to bind Homeowners to the 

amount of $132,793.95 for their loss. The motion was granted on June 12, 2015. The 

trial court noted:

[Insurer has] moved for summary judgment, arguing that the 

appraisal clause settles this issue and creates contractually 

binding obligations on both parties to – at least given the 

factual events in this case – accept the umpire‟s figure as 

correct and accurate. In response, [Homeowners] have 

argued that the appraisal clause is not binding on them in this 

matter and that they retain the right to challenge the total 

amount of damage in court. The issue in dispute is purely 

legal, not factual; thus, this matter is appropriate for summary 

judgment as no disputed material facts necessitate denying 

summary judgment.

[Insurer‟s] burden under T.C.A. § 20-16-101 is not 

particularly lofty. Nonetheless, [Insurer] provide[s] more 
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than sufficient evidence to carry [its] own burden and shift 

the summary judgment burden to [Homeowners]. . . .

Under the now-shifted burden, [Homeowners] posit[] two 

arguments to avoid summary judgment, each of which has the 

same conclusion: the appraisal provision is not binding. The 

first of [Homeowners‟] two arguments is, essentially, that the 

appraisal provision is not the same as an arbitration clause 

and therefore is not binding. The second, alternative, 

argument is that the appraisal is essentially an arbitration 

clause, but because it was not initialed separately in 

accordance with T.C.A. § 29-5-302(a), it is an invalid 

arbitration clause.

To address these in reverse order, [Homeowners‟] second 

argument clearly fails because appraisal clauses are clearly 

not arbitration clauses. The court of appeals in Merrimack 

Mut. Fire Ins. Co. v. Batts, 59 S.W.3d 142 (Tenn. Ct. App. 

2001), addressed this exact question. . . . [T]his Court 

likewise concludes that appraisal clauses are not arbitration 

clauses, and therefore the absence of initials here does not 

impact whether that provision is binding on [Homeowners].

Before addressing [Homeowners] other argument – that 

because the appraisal clause is not an arbitration clause, it is 

not binding on [Homeowners] – the Court wishes to narrow 

the issue and identify what is, and, perhaps more importantly, 

what is not being challenged by [Homeowners] in this 

lawsuit. [Homeowners] are not challenging the existence of 

the appraisal clause in the contract. [Homeowners] are not 

challenging the procedure dictated by the appraisal clause. 

[Homeowners] are not challenging the application of the 

procedure with regards to any type of bias or favoritism. 

[Homeowners] are not challenging the credentials, credibility, 

or any other specific qualification of the umpire that was used 

in this case. [Homeowners] are not challenging the general 

validity of the appraisal clause. Instead, [Homeowners] are 

narrowly challenging the dollar-value conclusion reached by 

the umpire and agreed-to by [Insurer‟s] appraiser. In other 

words, [Homeowners] are not challenging the general process 

or the application of the process, but merely challenging the 

conclusion of the process.

Turning now to [Homeowners‟] other argument aimed at 

avoiding summary judgment, [Homeowners] ask this Court to 
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hold the appraisal clause is not binding and that they retain 

the right to challenge the determined value of damages in a 

court proceeding. . . . [Homeowners] provide one argument: 

that appraisal clauses related to residential property are not 

binding. The Court finds this argument is not supported by 

the holding in Merrimack and the fact the property in that 

case happened to be residential did not actually factor into the 

analysis. . . .

* * *

In essence, the question in Merrimack dealt with the degree of 

finality (or extent to which the parties were bound) from the 

value of damages as determined by the umpire. The 

homeowner argued that whatever number was determined by 

the umpire was final, binding, and without exception. The 

insurance company argued that the dollar amounts were final, 

but which amounts were actually owed remained 

undetermined. Here, in this present matter, it is particularly 

noteworthy that [Homeowners] are only challenging the 

dollar value of damages as determined by the umpire – in 

other words, [Homeowners] ask this Court to increase those 

numbers, not to decide any questions about coverage or 

liability.

* * *

To this Court, Merrimack stands for the following legal 

principles. First, appraisal clauses are not the same as 

arbitration clauses. Second, appraisers‟ (and eventually 

umpires‟) scope of authority is strictly defined by the contract 

or other agreement of the parties, and typically that scope is 

limited to finalizing the valuation of damage. Third, the 

umpire‟s determinations with regards to matters within the 

scope of authority granted to the umpire are binding on the 

parties and may not be challenged in court where the 

challenge is only based upon the umpire‟s determined 

amount.

This third principle, though not explicitly stated in 

Merrimack, is the only possible inference based upon the 

reasoning and holding of the case. The court discussed at 

length why the insurance company was permitted to alter the 

umpire‟s findings only when the alteration was based upon 

issues of liability, causation, or other valid reasons of denied 
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coverage – because the insurance company was altering 

matters outside the umpire‟s scope of authority. The one 

facet not allowed to be altered, then, would be matters inside 

the scope of authority – the value of the loss. . . . The 

insurance company was only permitted to differ from the 

umpire‟s findings on issues that were not within the umpire‟s 

discretion to determine. Implicit here is that the insurance 

company, then, could not ignore or disagree with the umpire‟s 

determination on matters that fell within the authority given 

to the umpire. The Merrimack decision spends considerable 

time on the circumstances and issues where it is permissible 

for a party to dispute the findings of an umpire. Obviously 

where the umpire‟s findings cannot be disputed, that 

determination would be considered binding upon the parties. 

Put simply: an umpire’s determination on any matter 

within the scope of authority granted to the umpire under 

the appraisal clause is binding upon the parties to the 

contract; any question outside that scope remains subject to

judicial challenge.

Artist Bldg. Partners v. Auto-Owners Mut. Ins. Co., 435 

S.W.2d 202 (Tenn. Ct. App. 2013) – the other primary case 

relied upon by both parties – lends further support [to] this 

Court‟s reading of Merrimack. In Artist Bldg., the court 

upheld the trial court‟s grant of summary judgment on an 

issue related to an appraisal provision and umpire 

determination. In sum, an umpire made determinations on a 

host of matters, and those determinations were then 

challenged in court. Both the trial court and court of appeals 

found that the determinations made by the umpire that were 

being challenged in court did fall within the authority granted 

to the umpire. Because the challenges went to matters that 

were within the umpire‟s authority to determine, summary 

judgment was granted dismissing the challenges because of 

“the binding nature of [the umpire‟s] decision.”

Furthermore, the insurance company raised several factual 

issues that called into question whether or not the 

determination made by the umpire was a good or sound 

determination. The court did not even consider these facts, 

instead noting that “[t]hese facts are irrelevant at this stage of 

the proceeding,” because “the parties expressly agreed that 

the [umpire] would decide” that issue. The court stated that 

since the umpire reached a determination on that issue, “that 
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decision was binding.” In essence, the court determined that 

for matters within the discretion of the umpire, those matters 

are binding and not subject to judicial review of competing 

facts or arguments that the umpire should have (or could 

have) reached a different conclusion.

Applying these principles to the present case requires a 

determination of what this contract authorizes the umpire to 

decide and whether [Homeowners‟] challenge relates to 

something within or excluded from that scope. This is not a 

difficult application. The insurance contract is clear in its 

terms that the determination of the umpire “shall” bind the 

parties. Further, the provision is clear with regard to the 

scope of authority granted to the umpire. It states the 

appraisal clause is to be used to “set the amount of loss.” 

Thus, based upon a plain reading of the unambiguous 

language, the one aspect of the umpire’s determination that 

is clearly binding is the determination with regard to the 

monetary amount of loss.

The second step, then, considers whether [Homeowners] are 

challenging something within the binding authority of the 

umpire or outside that granted authority. . . . The only thing 

being challenged by [Homeowners] in this case is the amount 

of loss and nothing else. . . . Unfortunately for 

[Homeowners], this is one of the few things they are unable 

to challenge. They are bound by the terms of their contract 

and this provision. The umpire was given express and 

exclusive rights to set the amount of loss and [Homeowners]

are bound by, and thereby prohibited from challenging, this.

* * *

The Court is aware that the contract at issue, being the 

insurance policy, is an adhesion contract. Certainly, adhesion 

contracts may be repugnant, at least from the perspective of 

[Homeowners‟] ability to negotiate the terms of the 

contract[.] However, under the facts presented to the Court in 

this case and in light of the Court‟s understanding of the law . 

. . the Court is constrained to enforce the contract as written. 

Simply state[d], the terms relating to the appraisal clause are 

not so unconscionable, oppressive, or outside the parties‟ 

reasonable expectation so as to be unenforceable.
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To summarize the Court’s findings: the appraisal clause is 

not an arbitration clause. An umpire’s authority is 

narrowly tailored based upon the authority contractually 

delegated to the umpire. All determinations made by an 

umpire on matters within that scope of authority are binding 

on all parties. Though certain aspects surround[ing] the 

processes might be reviewable by courts, the determinations 

themselves are not subject to judicial review. Here, the 

contract’s appraisal provision clearly gives the umpire 

authority to set the value of loss. The umpire did just that. 

[Homeowners] have only challenged the value that was set 

by the umpire, which is the precise determination [that] is 

binding and thus not challengeable. Accordingly, 

[Insurer‟s] motion for summary judgment is granted.

(Emphasis added. Internal citations and footnotes omitted.). This timely filed appeal by 

Homeowners followed.

II. ISSUES

The issues raised on appeal by Homeowners are as follows:

A. Whether the appraisal provision of Homeowners‟ 

insurance policy should be enforced.

B. Whether Homeowners deserve prejudgment interest.

III. STANDARD OF REVIEW

As this court recently noted in Fuller v. Banks, No. W2015-01001-COA-R3-CV, 

2016 WL 409639 (Tenn. Ct. App. Feb. 3, 2016):

For actions initiated on or after July 1, 2011, such as the one 

at bar, the applicable standard of review for summary 

judgment is set out in Tennessee Code Annotated Section 20–

16–101. See Rye v. Women's Care Center of Memphis, 

MPLLC, ––– S.W.3d ––––, ––––, 2015 WL 6457768 at *11 

(Tenn. Oct. 26, 2015). The statute provides:

In motions for summary judgment in any civil action in 

Tennessee, the moving party who does not bear the 

burden of proof at trial shall prevail on its motion for 

summary judgment if it:
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(1) Submits affirmative evidence that negates an 

essential element of the nonmoving party's claim; or

(2) Demonstrates to the court that the nonmoving party's 

evidence is insufficient to establish an essential element 

of the nonmoving party‟s claim.

Tenn. Code Ann. § 20–16–101. The grant or denial of a 

motion for summary judgment is a matter of law; therefore, 

our standard of review is de novo with no presumption of 

correctness. Rye, ––– S.W.3d at ––––, 2015 WL 6457768 at 

*12; Dick Broad. Co., Inc. of Tenn. v. Oak Ridge FM, Inc.,

395 S.W.3d 653, 671 (Tenn.2013) (citing Kinsler v. Berkline, 

LLC, 320 S.W.3d 796, 799 (Tenn.2010)). “Summary 

judgment is appropriate when „the pleadings, depositions, 

answers to interrogatories, and admissions on file, together 

with the affidavits, if any, show that there is no genuine issue 

as to any material fact and that the moving party is entitled to 

a judgment as a matter of law.‟” Rye, ––– S.W.3d at ––––, 

2015 WL 6457768 at *12 (quoting Tenn. R. Civ. P. 56.04). 

Pursuant to Tennessee Rule of Civil Procedure 56.04, the trial 

court must “state the legal grounds upon which the court 

denies or grants the motion” for summary judgment, and our 

Supreme Court has instructed that the trial court must state 

these grounds “before it invites or requests the prevailing 

party to draft a proposed order.” Smith v. UHS of Lakeside, 

Inc., 439 S.W.3d 303, 316 (Tenn. 2014).

Concerning the requirements for a movant to prevail on a 

motion for summary judgment pursuant to Tennessee Rule of 

Civil Procedure 56, our Supreme Court has explained:

We reiterate that a moving party seeking summary 

judgment by attacking the nonmoving party‟s evidence 

must do more than make a conclusory assertion that 

summary judgment is appropriate on this basis. Rather, 

Tennessee Rule 56.03 requires the moving party to 

support its motion with “a separate concise statement of 

material facts as to which the moving party contends 

there is no genuine issue for trial.” Tenn. R. Civ. P. 

56.03. “Each fact is to be set forth in a separate, 

numbered paragraph and supported by a specific citation 

to the record.” Id. When such a motion is made, any 

party opposing summary judgment must file a response 

to each fact set forth by the movant in the manner 
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provided in Tennessee Rule 56.03. “[W]hen a motion 

for summary judgment is made [and] . . . supported as 

provided in [Tennessee Rule 56],” to survive summary 

judgment, the nonmoving party “may not rest upon the 

mere allegations or denials of [its] pleading,” but must 

respond, and by affidavits or one of the other means 

provided in Tennessee Rule 56, “set forth specific facts” 

at the summary judgment stage “showing that there is a 

genuine issue for trial.” Tenn. R. Civ. P. 56.06. The 

nonmoving party “must do more than simply show that 

there is some metaphysical doubt as to the material 

facts.” Matsushita Elec. Indus. Co. [v. Zenith Radio 

Corp.], 475 U.S. [574,] 586, 106 S.Ct. 1348 [(1986)]. 

The nonmoving party must demonstrate the existence of 

specific facts in the record which could lead a rational 

trier of fact to find in favor of the nonmoving party.

Fuller, 2016 WL 409639 at *2-3 (quoting Rye, ––– S.W.3d at ––––, 2015 WL 6457768 at 

*22).

Insurance policies are contracts. Merrimack Mutual Fire Ins. Co., 59 S.W.3d 142, 

147 (Tenn. Ct. App. 2001). Questions relating to the interpretation of written contracts 

involve legal rather than factual issues. Brandt v. Bib Enters., Ltd., 986 S.W.2d 586, 592 

(Tenn. Ct. App. 1998). “As such, courts interpret insurance policies using the same 

tenets that guide the construction of any other contract.” Am. Justice Ins. Reciprocal v. 

Hutchison, 15 S.W.3d 811, 814 (Tenn. 2000); Hurley v. Tenn. Farmers Mut. Ins. Co., 

922 S.W.2d 887, 892 (Tenn. Ct. App. 1995). The terms of an insurance policy “must be 

interpreted fairly and reasonably, giving the language its usual and ordinary meaning. 

Naifeh v. Valley Forge Life Ins. Co., 204 S.W.3d 758, 768 (Tenn. 2006). The primary 

rule of contract interpretation is to ascertain and give effect to the intent of the parties.”

Clark v. Sputniks, 368 S.W.3d 431, 441 (Tenn. 2012). The policy should be construed 

“as a whole in a reasonable and logical manner, and the language in dispute should be 

examined in the context of the entire agreement.” Id. (quotations omitted).

IV. DISCUSSION

Referring to the selection of two appraisers and an “umpire” appraiser, subsection 

6 of section I of the policy states, “Written agreement signed by any two of these three 

[appraisers and umpire] shall set the amount of the loss.” The umpire and one other 

appraiser agreed the amount of loss was $132,793.95. Homeowners do not suggest the 

appraisal was improperly conducted or there were any coverage issues with the award.

They simply desire more money. In a well-reasoned opinion, the trial court determined 

Homeowners should be bound by the appraisal provision. 
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The parties agreed the appraisal panel would “set the amount of the loss.” 

Homeowners, therefore, are not entitled to disregard the policy‟s expressed intent and 

contest the appraisers‟ finding. See Artist Building Partners v. Auto-Owners Mut. Ins. 

Co., 435 S.W.3d 202 (Tenn. Ct. App. 2014) (“[T]he parties expressly agreed that the 

appraisal panel would decide . . . .”). Id. at 217-19. We affirm the trial court‟s finding 

the parties are bound to the appraisers‟ determination of the amount of loss. The 

determinations by the appraisal panel did not exceed the scope of its authority. There is 

no genuine issue of material fact as to the binding nature of the appraisal panel‟s finding. 

Homeowners assert the appraisal provision is in effect an agreement to arbitrate, 

and as such must comply with the requirements of Tennessee Code Annotated section 29-

5-302(a). In Merrimack Mutual Fire Insurance Company v. Batts, 59 S.W.3d 142 (Tenn. 

Ct. App. 2001), we rejected the very same theory and held an appraisal provision of a 

property insurance policy was not an agreement to arbitrate subject to the Uniform 

Arbitration Act. Id. at 147-50. Referring to treatises and case law from other 

jurisdictions, the Merrimack court concluded “arbitration proceedings and appraisal 

proceedings are not the same thing.” 59 S.W.3d at 149. The decision described 

arbitration as a formal proceeding used as an alternative to going to court to decide issues 

of both law and fact. An appraisal, on the other hand, was described as a means to 

quantify the monetary value of a property loss. Id., at 149-50. Thus, we have squarely 

held an appraisal provision in a homeowners‟ policy is not an agreement to arbitrate 

subject to the Uniform Arbitration Act. Homeowners have not presented us any basis for 

abrogating our decision. None of the authorities cited by Homeowners are sufficient for 

us to overturn Merrimack. The signature requirements of section 29-5-302(a) of the 

Uniform Arbitration Act do not apply to appraisals. Id., at 150-52. The trial court 

properly enforced the appraisal provision of Homeowners‟ policy and found the parties 

are bound by the decision of the appraisers. Prejudgment interest is not warranted.

V. CONCLUSION

We affirm the decision of the trial court granting summary judgment to Insurer. 

This case is remanded for further proceedings as may be necessary. Costs of the appeal 

are assessed to Joseph C. Thomas and Grace E. Daniell.

_________________________________

JOHN W. McCLARTY, JUDGE