SECOND DI VI SI ON
A NDREWS, P. J.

, M I LLER and BRA NCH, JJ.

N O T IC E : M otions for r e c ons i de r a tion m us t be ph y sic a l ly r e ce iv ed i n our c le r k ’s offic e w ithin te n da y s of the da te of de c is ion to be de e m ed tim e ly file d.

http://w w w .ga a ppe a ls .us /r ule s /

Jul y 2, 2015



# I n th e Co u r t o f

A p p eals o f

G eo r g ia

A1 5 A0 1 7 0

. Z URICH AM ERICAN INS. CO. v. OM NI HEALTH SOLUTIONS, LLC.

M I LLE R , J u d ge.

Om n i Heal th So lu t i o n s , LLC (“ Om n i ”) fi l ed an i n s u ran ce co verag e cl ai m wi th

its insur e r Z ur ic h Am eri can In s uran ce Co m p an y (“ Zu ri ch ”) fo r h ai l dam ag e t o O m ni’ s

co m m erci al p ro p ert y

. W hen a d i s p u t e aro s e o v er t h e am o un t o f t h e co v ered l o s s u n d er

Om n i ’ s p o l i cy (h erei n aft er t h e “ Po l i cy ”), O m n i i n v o ked th e Po l i cy ’ s ap p rai s al

p ro v is i o n wh i ch p ro vi ded fo r t h e ap p o i n t m en t o f t wo ap p rai sers an d an u m p i re. Th e

o ri g i nal u m

p i re res i gn ed

, h o wev er, aft er t h e d i s cu ss i o n s o n t h e l o ss had b eg u n , s o t h e

p art i es fi l ed a jo in t p et it i o n i n Su p eri o r Co u rt fo r ap p o i n tm en t o f a n ew u m pi re. Th e

Su p eri o r C o u r t g ran t ed t h e p art i es ’ jo i nt p et i t i o n , an d s ub s eq uen t l y ru l ed t h at t h e

ap p rai s al award s m ad e by t h e o ri g i n al u m p i re were n o t b i n d i n g becau s e th ere was aq u es ti o n reg ard i n g t h e o ri g i n al u m p i re’ s i m p art i al i t y. Zu ri ch ap peal s , co n t en d i n g,

i n t er al i a, t h at t h e Su p eri o r Co u rt erred i n ru li n g th at t h e ori g i n al u m p ire’ s ap p rai s al

award s were n o n -b i n d in g

. Fo r t h e reas o n s t h at fo ll ow, we affi rm i n p art an d rev ers e

i n p art

.

“ Co n s t ru ct i o n an d i n t erp ret at io n o f a co nt ract are m at t ers o f l aw fo r t h e co u rt .”

(Ci t at i o n o m i t t ed

. ) S

ewel l v. Hu l l

/ S t o r ey Dev.

, 2 4 1 Ga. Ap p

. 3 6 5, 36 6 (1 ) (5 2 6 SE2 d

8 7 8 ) (1 9 9 9 ).

Th e reco rd s h o ws t h at t he Po l i cy pro v i ded $ 2.7 m i l l i o n i n co m m erci al p ro p ert y

co v erag e fo r O m

n i’ s b u i l d i n g i n M aco n , Geo rg i a (t h e “ In s u red Pro p ert y ”). Th e

In s u red P ro p ert y co n s i s t ed o f a 1 7,2 0 0 sq

. ft

. b u il d i n g co n t ai n i n g s ev eral d o ct o rs ’

o ffi ces

. O n Feb ru ary 1 4

, 2 0 1 1, wh i l e t h e Po l i cy was i n effect

, th e ro o f o f t h e In s u red

Pro p ert y was ex t en s i v el y d am ag ed b y hai l

, r e su l t i n g i n d am ag e to t h e b u i l d i n g ’ s

co n ten t s an d e q u i p m e n t

, as wel l as s u b s eq u en t wat er an d m o l d d am ag e t o t h e

b u i l d i n g ’s cei l i n g s , wal l s an d fl o o rs

. Th e d am ag e t o t h e b u il d i n g al s o res u l t ed in

b u s i n es s i n t erru pt i o n l o s s es fo r t h e d o ct ors an d t h ei r o ffi ces

. As a res u l t o f t h o s e

l o s s es , Om

n i fi l ed an i n s u ran ce cl ai m wi th Zu ri ch

.

Zu ri ch an d O m

n i di s pu t ed t h e am o un t o f t h e c o v e r e d l o s s to t h e In s u red

Pro p ert y

. In o rd er t o res o l v e th e d i s p u t e, an ap p rai s a l o f t h e dam ag e t o t he In s u red

2Pro p ert y was u n d ert ak en p u rs u an t t o t h e t erm s o f t h e P o l i cy , wh i ch pert i n en t l y

p ro v id es :

If w e an d y o u d is ag ree on t h e v al u e o f th e p ro p ert y o r t h e a m o un t o f

l o s s , ei t her m ay m ak e w ri t t en d em an d fo r an ap p rai s al o f t h e l o s s

. In t h i s

ev en t

, each pa r t y wi l l s el ect a co m p et en t an d i m

p art i al ap p rai s er. T he

t wo ap p rai s ers wi l l s el ect an u m p i re. If th ey can no t a g r e e , ei t h er m ay

req u es t t h at s el ect i o n b e m ad e b y a ju dg e o f a co u rt hav i n g ju ri s d ict i o n

. Th e ap p rai s ers wi ll s t at e sep arat el y t h e v al u e of th e p ro p ert y an d am o u n t

o f l o s s. If t h ey fai l to ag ree, t h ey wi l l s u bm i t t h ei r d i fferen ce t o t he

u m p i re. A d eci s io n ag reed t o b y an y t wo wi l l b e b i nd i n g

.

Th e part i es each n am ed an ap p rai s er an d t h e t wo n am ed ap p rai s ers s el ect ed t h e

o ri g i nal u m

p i re t o o v ers ee t h e ap p rai s al pro ces s

. Th ereaft er, o n Oct o ber 8

, 20 1 2

, t h e

t wo ap p rai s ers an d th e o ri g i n al u m p i re ag reed t o an award o f m o re t h an $ 8 0 0 ,0 0 0 fo r

t h e st ru ct u ral d am ag e to t he In s u red Pro p ert y (t h e “ St ru ct u ral D am ag e Award ”). On

Decem b er 1 4

, 2 0 1 2

, Zu ri ch ’ s ap p rai s er a n d t h e o ri g i n al u m p i re al s o ag reed t o an

award of $3 2 2 ,4 45 .6 1 fo r O m n i ’ s bu s in e s s i n t erru p t i on cl ai m (h erei n aft er t h e

“ Bu s i n es s In t erru p ti o n Award ”).

Wh e n t h e o ri g i n al u m

p i re w as i n i t i al l y ap po i n t ed

, h e was an i n dep en d e n t

ad ju s t er. A t s o m e po i n t d u ri n g t h e ap p rai sal pro ces s , t h e o ri g i nal u m p i re j o i n ed a fi rm

3t h at p erfo rm ed w o r k fo r Zu ri ch

. On Decem b er 2 0

, 2 0 12

, at Om

n i ’ s req ues t

, t h e

o ri g i nal u m

p ire s tep p ed d o wn fro m

t h e ap p rai s al p ro ces s

.

Si n ce t h e ap p rai s ers were u n ab l e to ag ree o n t h e s el ect i o n o f a n ew u m p i re, t h e

p art i es fi led a jo i n t p et i t i o n fo r ap p o i n t m en t o f a n ew u m p ire b y t h e Su p eri o r Co u rt

.

Fo l l o wi ng a h e a r i n g , th e Su p eri o r Co urt ap p o i nt ed a n ew u m p i re t o o v ers ee t h e

ap p rai s al p ro ces s. Th e Su p eri o r Co u rt al s o ru l ed t h at t h ere was a q u es t i on reg ard i n g

t h e im part i al i t y o f t h e ori g i n al u m pi re, an d co n s eq u en t ly ru l ed th at th e St ru ct u ral

Dam ag e Award an d th e Bu s i nes s In t erru p t i o n Award were n o t b i n di n g

. Th i s ap p eal

en s u ed

.

In fo u r rel at ed en u m erat i o n s o f erro r, Zu ri ch co n t en d s t h at t h e Su p eri o r Co u rt

erred i n ru l i n g t h at t h e award s were n o t b i n d in g. W e ag ree i n p art

.

An ap p rai s em en t award i s t h e res u lt o f a c o n t ract ual m et ho d o f

as cert ai ni n g t h e a m o un t o f lo s s, [ 1 ] an d i t is b i n d i ng o n t h e p art i es as t o

t h e am o u n t of l o ss u n l es s t h e aw a r d i s set as i d e. Th ere ex is t s a

p res um p t i o n i n fav o r of t h e reg u l ari t y an d fai rn es s o f ap p rai s em en t

award s , an d i t i s d i ffi cu l t t o s et t h em as i d e. W hi l e an awar d m a y be

at t ack ed fo r an y reas o n t h at wo u l d v o i d a co n t ract

, . . . wh ere t here is n o

ev i d en ce of frau d

, o p p res s i o n , i rreg u l ari t y , o r u nfai rn es s , o t her t h an o n

1 An ap p rai s al p ro ces s can o n ly res ol v e t h e d i s p u t ed am o u n t o f a co v ered l o s s ,

n o t b ro ad er i s s u es o f l i ab i l it y

. M cGo wa n v. P r o g r es s i ve Pr ef er r ed In s

. Co

. , 2 8 1 Ga.
1 6 9 , 1 7 1 -1 7 2 (6 3 7 SE2 d 2 7 ) (2 0 0 6 ).

4t h e d i s p u t ed is s u e o f val u e, an d n o o t h er ci rcu m s t an ces t en d i ng t o rai s e

t h e i s s u e, a v erd i ct i n t he am o u n t o f t h e award i s d em an d ed

.

(Fo o tn o te o m i t t e d

. ) B e l l v. Li b er t y Mu t

. Fi r e In s

. Co

. , 3 1 9 G a. Ap p

. 3 0 2

, 3 0 3 (7 3 4

SE2 d 8 9 4) (2 0 1 2).

1 . Th e St ru ct u ral Dam ag e Award

“ [E] v ery i n s u ran ce co n t ract s h al l b e co n s t ru ed acco rd i n g t o th e en t i ret y o f i t s

t erm s an d co n d i t i o n s as s et fo rt h i n t h e p o l i cy [.] ” (Pu n ct u at i o n an d fo o t n o t e o m i t t ed .)

Co x v. S o u t h er n Gu a ra n t

y In s

. Co

. , 2 5 4 G a. Ap p

. 7 7 6, 7 7 7 (1 ) (5 6 3 S E 2 d 8 8 2 )

(2 0 0 2).

[U] n am b i gu o u s t erm s o f an i n s u ran ce p o li cy req u i re n o co n s t ru ct i o n ,

an d th e p l ai n m ean i n g of s u ch t erm s m u s t b e gi v en fu l l effect

, reg ard l es s

o f wh et h er th ey m i gh t b e b en efi ci al t o t h e i n s u rer o r d et ri m en t al t o t he

i n s u red

.

Co n t in en t a l Ca s

. Co

. v. H

. S. I. Fi n a n ci a l S

vcs
., In c. , 26 6 G a. 2 6 0

, 2 62 (4 6 6 SE2 d 4 )

(1 9 9 6). As s et fo rt h ab o v e, t h e p l ai n l an g u ag e of th e Po l i cy ’ s ap p rai s al p ro v i s i o n

s t at es :

[t ] h e ap p rai s ers w i l l s t at e s ep arat el y t h e v al u e o f t he p ro pert y an d

am o u nt o f l o s s

. If t hey fai l t o ag ree, t h ey wi l l s u b m i t t h ei r di fferen ce t o

t h e u m p i re. A d eci s i o n ag reed t o b y an y t wo wi l l b e b in d i ng

.

5Th e reco rd cl earl y s ho ws th at

, i n ad d i t i o n t o t h e o ri g i n al u m pi re, b ot h p art i es ’ ch o s en

ap p rai s ers ex p res s l y ag reed t o th e St ru ct u ral Dam ag e Award i n wri t i ng

. Bas ed o n t h e

p l ai n l an g u ag e o f t h e Po l i cy , t h e St ru ct u ral Dam ag e Award i s b i nd i n g o n t h e p art i es ,

n o t wi t h s t an d i n g an y al l eg ed bi as o f t h e ori g i n al u m p i r e

. A c c o r d i n g l y , t h e Su p eri o r

Co u rt erred i n fi n di n g t h at t h e St ru ct ural Dam ag e Award was n ot b i n d i n g

.

2 . Th e Bu si n es s In t erru p t i o n Award

Un l es s i t i s s et as i d e, t h e Bu s i n es s In t erru p t i o n A ward i s al s o b i n d i n g, b ecau s e

i t was ag reed t o b y b o t h t h e o ri g i n al u m p i re an d Zu ri ch ’ s ap p rai s er. See Bel l

, s u p ra,

3 1 9 Ga. Ap p

. at 30 3

. Th e o ri g i n al u m p ire’ s p art i al i ty

, h owev er, i s a g ro u nd fo r s et t i n g

as i d e th e award

. See Bl u m v. Bl u m , 2 4 2 Ga. 71 8

, 7 1 9 (2 5 1 SE2 d 2 4 6) (1 9 7 8 )

(arb it rat or’ s p art i al i t y as t o t h e o n e p art y i s g ro un d fo r s et ti n g as id e award ).

M o reo v er, t h e Su p eri o r Co u rt had d is cret i o n t o d et erm i n e wh et h er o r n o t t o s et as i d e

t h e B u s i n es s In terru p t io n Award b as ed o n t h e o ri gi n al u m p ire’ s p art ial i t y , an d t h i s

Co u rt w i l l u p h ol d t h e Su p eri o r Co u rt ’ s ru l i n g ab s en t an ab u se o f t h at di scret i o n

. See

e. g

. To r res v. Pi e d

m o n t Bu i l d

er s
, In c. , 3 0 0 Ga. Ap p

. 8 7 2

, 8 7 3 (3 ) (6 8 6 SE2 d 4 6 4 )

(2 0 0 9) (ab s en t ab us e o f di s cret i o n , t h i s Co u rt wi l l up h o l d ru l in g o n di s q ual i fi cat i o n

o f arb i t rat o r b as ed o n p art i al it y ).

6Here, t he reco rd s h o w s t hat t h e Bu s i n es s In t erru p ti on Award was b as ed o n an

es t i m at e p rep ared b y Zu ri ch ’ s ap p rai s er, an d

, u n l i k e t h e St ru ct u ral Aw a r d

, o n l y

Zu ri ch ’ s ap p rai s er an d t h e o ri g i n a l um p i re ag reed t o t h e Bu s i nes s In t erru p t i on Award

.

Th e reco rd al s o sh o ws t hat Om n i co u ld o n ly reco v er b u s i n es s i n t erru p t i o n d am ag es

fo r a m ax i m

u m o f t w el v e co n s ecu t i v e m o n th s , an d Zu ri ch d et erm i ned t h e 1 2 -m o n th

t i m e-p eri o d fo r cal cu l at io n o f Om n i ’ s b u s in es s i nt erru p t i o n d am ag es

. 2 M o reo v er, t h e

Bu s i nes s In t erru p ti o n Award was i s s u ed aft er t h e o ri gi n al u m pi re b eg an wo rk i n g fo r

a co m p an y t h at p erfo rm ed wo rk

fo r Zu ri ch

.

Th e Su p eri o r Co u rt fo u n d t h at t h e o ri g in al u m p i re’ s p o ss i b l e i m

part i al i t y was

s u ffi ci en t t o s et as i d e t h e Bu s i nes s In t erru p t i o n Award

. Si n ce th e Bu s i n es s

In t erru pt i o n Award was bas ed o n Zu ri ch ’ s es t i m at e, was i s s u e d a f t er t h e u m

p i re

jo i n ed a co m

p an y t h at perfo rm ed w o rk fo r Zu ri ch an d was no t ag reed t o b y Om n i ’ s

ap p rai s er, we can n o t say t h at t h e Su p eri o r Co u rt ab u sed i t s d i s cret i on i n s et ti n g as i d e

t h e Bu s i n es s In t erru p t i o n A ward

. See Bl u m , s u p ra, 2 4 2 Ga. at 71 9 (arb i t rat o r’ s

p art i a l i t y i s gro u nd s fo r s et t i n g as i d e award ); Bel l

, s u p ra, 3 1 9 Ga. Ap p

. at 3 0 3

(ap p rai s al award m ay b e set as i d e fo r i rreg u lari t y o r u n fai rn e s s )

. Acco rd i n g l y , we

2 O m n i ’ s es t im at ed m on th l y d am ag es fo r t h e ch o s en 1 2 -m o n t h p eri o d v ari ed

g reat l y fro m a h i g h o f n earl y

$ 4 2 ,0 0 0 t o a l o w o f ju s t o v er $ 7 ,0 0 0

.

7affi rm t he Su p eri or Co u rt ’ s ru l i n g t h a t t h e Bu s i n es s In t erru pt i on Award was n ot

b i n d i n g

.

Ju d g men t a f f i r med i n p a r t

a n d r ever

sed i n p a r t . An d

r ews , P. J., a nd Br a n ch

,

J., co n cu r

.

8