• Based on their insurance expertise, Larry Arnold and Annabelle Harris of Cummins & White secured a favorable appraisal award of $4.7 million — significantly less than the $16 million sought by the insured.
  • Mr. Arnold and Ms. Harris then successfully navigated the case through the appeals process, emerging victorious when the California Court of Appeals denied the building owners’ petition to vacate the appraisal award.
  • Importantly, the appellate court’s opinion, using language directly out of briefs prepared by Cummins & White, addressed the broader scope of insurance appraisals under California law.

Case Study

Larry Arnold and Annabelle Harris of Cummins & White, LLP, successfully represented several insurance companies in an appraisal and subsequent appeal of an award made in conjunction with repair costs for a historic building damaged in a fire. The court considered the owners’ appeal of a judgment entered after a trial court denied their petition to vacate an award resulting from an appraisal conducted according to the California Insurance Code. The appraisal followed a claim in which the owners and their insurers could not agree on the value of repairs required to restore the building.

Mr. Arnold and Ms. Harris skillfully argued the case on behalf of the insurance carriers and secured an appellate victory when the court denied the owners’ petition to vacate the appraisal award.


In 2005, a four-story mixed-use building in Watsonville, CA, was seriously damaged in a fire. The owners of the building made a claim under their insurance policy. The claim was investigated and some payments were made, but the parties were unable to agree on the value of the loss.

The owners demanded an appraisal of the building, as well as business income losses according to the terms of its fire insurance policy (Section 2071 of the California Insurance Code), and claimed that repairs exceeded $16 million. The several excess insurers retained Cummins & White to handle the appraisal.

Legal Strategy

The firm consulted with local building and construction experts to address the dollar value of the claims. During the formal appraisal, Mr. Arnold and Ms. Harris presented compelling evidence about the repair estimates and emphasized the real-life implications of the claim. In addition, based on their expertise in insurance coverage, Mr. Arnold and Ms. Harris submitted briefs that distilled a large amount of construction detail so the appraisal panel could easily understand the repair estimates and positions taken by the insurance companies.

An award was issued three months later with the actual cash value of the loss set at $4.7 million. The award was subsequently turned into a judgment. Unhappy with the amount, the owners filed a motion in superior court to set aside the judgment. The court denied the petition, and the owners appealed.

As part of the appeals process, Mr. Arnold and Ms. Harris submitted an in-depth brief supporting the lower court’s decision in favor of the judgment. In February 2009, the Court of Appeal for the Sixth District issued an opinion that specifically rejected all of the owners’ arguments to vacate the appraisal award, and in a broader sense, addressed the scope of insurance appraisals under California law. (The opinion—Pajaro Wall Street Inn, LLC. vs. CIBA Insurance Services, et. al.)

Appellate Court Opinion

The court rejected the owners’ claim that the panel erred in its decision. The owners contended that the panel had:

  • Made improper coverage determinations when it concluded that some of the building’s components had not been damaged in the fire. The court, however, said Insurance Code Section 2071 empowered the appraisal panel to determine the actual cash value of the damaged items, as well as the amount of loss or damage, which could include a conclusion that the property was not damaged.
  • Incorrectly concluded that certain replacement materials were of “like kind and quality” as original materials. (Repair estimates using original materials were $2.2 million more than estimates using the insurers’ suggested materials.) Conversely, the court held that materials suggested by the insurers comprised “like kind and quality” with the original materials, rejecting the argument that if original materials were available, they must be used.
  • Failed to determine the value of all items the owners submitted to the appraisal. Nevertheless, the court stated that only the building was submitted for appraisal, and that nothing in the code required the panel to follow the format of one estimate over the other or to assign a dollar value to every line item.
  • Exceeded its authority by making a coverage determination about the appropriate period of restoration under the business income claim. The court, however, noted that the code does not expressly address business income claims but stated that the record supports the conclusion that the parties submitted the owners’ contractual business income loss claim to appraisal, and therefore the panel could render conclusions.


According to Mr. Arnold, lead counsel from Cummins & White, they were pleased with the victory after shepherding the case from the insurance appraisal through the appeals process. He noted that the appellate victory was significant for their clients because some case law in California is not favorable for insurers in the context of appraisal awards.

“Not only did the appellate court agree with our arguments,” Mr. Arnold said, “it issued an opinion using language directly from our briefs, which sets favorable precedent for insurers in appraisals. While the decision currently is not published, we have requested publication on behalf of the insurers because of the importance of the findings to the scope and parameters of insurance appraisals in California.”