Hartford Fire Insurance v. Adcor Industries, Inc.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-1146
HARTFORD FIRE INSURANCE COMPANY,
Plaintiff - Appellant,
versus
ADCOR INDUSTRIES, INCORPORATED,
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Catherine C. Blake, District Judge. (CA-
04-3669-CCB)
Argued: September 20, 2005 Decided: December 14, 2005
Before LUTTIG and GREGORY, Circuit Judges, and Robert J. CONRAD,
Jr., United States District Judge for the Western District of North
Carolina, sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: George Edwin Reede, Jr., NILES, BARTON & WILMER, L.L.P.,
Baltimore, Maryland, for Appellant. Michael John Collins, THOMAS
& LIBOWITZ, P.A., Baltimore, Maryland, for Appellee. ON BRIEF:
Jeanie S. Ismay, NILES, BARTON & WILMER, L.L.P., Baltimore,
Maryland; E. Duncan Getchell, Jr., H. Carter Redd, MCGUIREWOODS,
L.L.P., Richmond, Virginia, for Appellant.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Appellee Adcor Industries was insured under a policy issued by
appellant Hartford Fire Insurance Company. J.A. 16-49. On
February 18, 2003, a storage facility owned by Adcor collapsed
under the weight of an accumulation of ice and snow. Id. at 10,
57. Adcor claimed against its insurance policy for the damage.
Id. Hartford and Adcor could not agree on the value of Adcor’s
claim for business personal property, and, pursuant to the terms of
the policy, id. at 32, Adcor demanded an appraisal to resolve the
disputed value of its loss, id. at 10, 58.
As required by the policy, each party selected an appraiser,
and the appraisers jointly selected an umpire. Id. The appraisers
could not agree on a mutually acceptable value and submitted the
disagreement to the umpire. Id. at 10-11, 58. The umpire largely
sided with Adcor’s appraiser, and together they voted to award
Adcor $11,217,667. Id. at 50-52. Unhappy with this outcome,
Hartford filed a declaratory judgment action in the district court
requesting that the court adjust the appraisal award because of
alleged “errors of law, erroneous calculations,” and improper
methodology. Id. at 12. Finding no error in the appraisal award
cognizable by a reviewing court, the district court granted Adcor’s
motion for summary judgment. Id. at 204.
The Maryland Court of Appeals has delineated a narrow set of
cases in which courts may set aside appraisal awards:
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When it is sought to set aside an award upon the ground
of a mistake committed by arbitrators, it is not
sufficient to show that they came to a conclusion of fact
erroneously, however clearly it may be demonstrated that
the inference drawn by them was wrong. It must be shown
that, by some error, they were so misled or deceived that
they did not apply the rules which they intended to apply
to the decision of the case, so that upon their own
theory, a mistake was made which has caused the result to
be somewhat different from that which they had reached by
their reason and judgment. . . . A mistake which will be
sufficient to avoid the award must be one that is plain
and palpable, such as an erroneous computation or
calculation of the amount, and the like.
Schreiber v. Pacific Coast Fire Ins. Co., 75 A.2d 108, 112 (Md.
1950) (emphasis added); see also Aetna Cas. & Sur. Co. v. Insurance
Comm’r, 445 A.2d 14, 20 (Md. 1982) (explaining that Maryland courts
“appl[y] arbitration law to appraisal clauses in insurance
policies”). Courts may also correct mistaken “concrete
propositions of law” announced by appraisers. Schreiber, 75 A.2d
at 112; see also High Country Arts & Craft Guild v. Hartford Fire
Ins. Co., 126 F.3d 629, 634 (4th Cir. 1997) (holding that an
appraiser commits correctable error when he goes beyond valuation
and purports to resolve coverage issues under the policy).
In this case, Hartford alleges that the umpire’s final
appraisal award erroneously included sales taxes, used the wrong
quote to value certain raw materials, used a replacement-value
measure rather than the actual-cash-value measure required by the
policy, and erroneously applied Adcor’s appraiser’s own methodology
to value finished goods. J.A. 10. Hartford claims that these
errors caused the appraisers to reach legal, coverage conclusions,
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Appellant’s Brief at 16, which this court can correct if erroneous,
see Schreiber, 75 A.2d at 112.
To support its allegations of appraisal error, Hartford relied
on an affidavit from James J. Kern, an accountant who assisted
Hartford’s appraiser in the preparation of his appraisal. Because
the appraisal awards were unreasoned, i.e., they listed only
numbers without providing a basis for those figures, see id. at 93-
96, and Kern was not a party to the deliberations of the umpire or
Adcor’s appraiser, Kern can claim no special insight into how the
umpire or Adcor’s appraiser calculated his award, what quotes
either of them used to arrive at their awards, or even what
methodology they applied. The most Kern can do (and all he does)
is draw inferences from the numbers appearing on the award sheets.
Because of his lack of direct knowledge, Kern’s affidavit amounts
to little more than a recitation of Hartford’s allegations. Id. at
141-43.
Kern’s speculative inferences and conclusory assertions are
not enough to create a genuine issue of material fact with regard
to one of the sorts of appraisal errors Schreiber held to be
judicially cognizable. See Thompson v. Potomac Elec. Power Co.,
312 F.3d 645, 649 (4th Cir. 2002) (stating that “[c]onclusory or
speculative allegations do not suffice” to avoid summary judgment).
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The district court’s grant of summary judgment to Adcor is
affirmed.
AFFIRMED
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