Is Patrick Sharkey a Bias Umpire?

In most appraisal awards, the umpire usually sides with either the insurer's appraiser or the insured's appraiser. As a result, both parties to the appraisal are looking for an umpire who will be fair and impartial (or at least only partial to their side).

A prospective umpire should reveal material suggesting a bias for both parties to be fully informed. But what exactly is this data?

The general rules requiring disclosure were recently reviewed in Dickey v. Alterra America Insurance Company, 2017 WL 3013405 (C.D. Cal.):

To prove partiality, the party seeking to vacate must present specific facts demonstrating that the umpire was genuinely prejudiced against the moving party or that the umpire neglected to disclose material that gives rise to a reasonable suspicion of bias.

Previous work for a side by an umpire may create the impression of bias necessary to vacate an award.

Only if the preceding effort was substantial and ongoing can a court overturn an award based on a perception of prejudice.

In Dickey, the umpire — McCarthy — told the parties that he had worked on a claim with the insured's named appraiser, Twarowski, five years before. Twarowski was a public adjuster in the previous claim, and McCarthy was Allstate's appraiser.

On the other hand, McCarthy failed to disclose that the law firm that represented Allstate in the preceding claim was the same firm that represented Alterra American Insurance Company in the assessment in question. Twarowski had no idea that this law firm was working for Allstate in the previous appraisal.

The court determined that this single past engagement, five years ago, was inadequate to generate an impression of prejudice sufficient to warrant the appraisal award being vacated. According to the court, the relationship was "too distant, too tenuous, and too insubstantial," to establish the required impression of prejudice.

Takeaway

Suppose one of the appraisers, one of the parties, or one of the lawyers representing the parties has an unreported relationship with one of the appraisers, one of the parties, or one of the lawyers representing the parties. In that case, the appraisal award may be in jeopardy. Attempting to go past the insurer using an umpire who is an old high school friend of the insured's appraiser, for example, may result in a request to vacate and the same litigation that an appraisal is supposed to avoid.

Each appraiser should make a comprehensive written disclosure of all relationships they have to any party or lawyer engaged in the claim and the potential umpire. Because this is not uncommon, the parties are likely to agree that their respective appraisers have some link to the party nominating them. On the other hand, Umpires are a different story because they are usually the ones who make the final decision. Prospective umpires should be scrutinized more closely, as should each side's relationship with the prospective umpire, to ensure that the final award is not the consequence of secret gamesmanship or personal "behind the scenes" interactions.