INSURANCE-RELATED COURT CASES
Digested from case reports published online
A victory for homeowners insured
On February 5, 2010, Raymond Romeo’s property sustained “a water loss followed by ice and flood.” He filed a claim with Allstate Property and Casualty Insurance Company under his homeowners policy, and Allstate made a partial payment toward the damages. Although the parties agreed that the loss was covered by the terms of the policy, they were unable to agree as to the extent of the damages and the cost of remediation. When Romeo sought to invoke a provision in the policy that either party could seek appraisal in the event of a dispute, Allstate refused to proceed with the appraisal.
Allstate’s refusal was based on its reasoning that the disagreement involved mixed issues of valuation and coverage such that appraisal was not appropriate. As a result, Romeo filed suit against Allstate for breach of contract.
While the first action was pending, the court issued a decision in Hahn v. Allstate Insurance Company, which defeated Allstate defense by holding that “unless the insurer denies coverage for the claimed loss and if the dispute is limited to the amount or extent of the loss, the parties are required to submit to the appraisal process.” In an about-face, Allstate took the position that the appraisal process was a mandatory precondition to Romeo’s suit. Allstate filed a motion for summary judgment, arguing that the terms of the policy required that the dispute be resolved via appraisal and not litigation.
Romeo filed suit for breach of contract; Allstate counterclaimed seeking a declaration that the parties were required to submit the matter to appraisal. The trial court granted summary judgment for Allstate without prejudice. Romeo appealed.
Thereafter, Romeo demanded that Allstate move forward with the appraisal process. Allstate refused, stating that Romeo’s demand was untimely under the policy. Allstate cited a provision in the policy that stated that an action against it must be commenced within two years after the inception of loss or damage due to fire or other peril covered by the Rhode Island standard fire policy. Allstate’s motion for summary judgment was heard on December 11, 2012; the case came before the Supreme Court of Rhode Island on February 2, 2023.
Romeo then commenced the action at issue, seeking relief in the form of a judgment ordering Allstate to designate an appraiser and to complete the appraisal process. Final judgment was rendered in favor of Allstate by the superior court of Rhode Island.
The Supreme Court of Rhode Island vacated the judgment, holding that Romeo’s initial demand for appraisal was not time barred and therefore the trial court erroneously granted summary judgment in favor of Allstate.
Romeo v. Allstate Property and Casualty Insurance Company—Rhode Island Supreme Court—May 3, 2023—No. 2022-50.