Wayne J. McMILLAN, Plaintiff,
v.
STATE FARM FIRE AND CASUALTY COMPANY and State Farm General Insurance Company, Defendants.
No. 8816SC919.
Court of Appeals of North Carolina.
May 16, 1989.*89 Murray, Regan and Regan by Cabell J. Regan, Lumberton, for appellant.
Anderson, Broadfoot, Johnson & Pittman by John H. Anderson, II, Fayetteville, for appellees.
WELLS, Judge.
Plaintiff contends that the appraisal provisions of the standard fire insurance policy do not operate to establish a final and binding determination of the amount of loss. Rather, he argues that the appraisal provisions are not binding upon the parties but are revocable at will, and that because any award calculated pursuant to them is not final and binding, there remains a genuine issue of fact as to the amount of loss. He contends that the trial court erred in granting summary judgment for defendants based upon the appraisal award.
In evaluating this argument we emphasize, however, that plaintiff's contract with defendants clearly provided that in the event they failed to agree upon the amount of loss, either party could "demand that the amount of the loss be set by appraisal." The agreement further provided that "[i]f the appraisers fail to agree within a reasonable time, they shall submit their differences to the umpire. Written agreement signed by any two of these three shall set the amount of the loss." (Emphasis added.) Defendants' forecast of evidence showed that the contractual provisions for appraisal were followed.
*90 In Young v. New York Underwriters Insurance Co., 207 N.C. 188, 176 S.E. 271 (1934), the North Carolina Supreme Court addressed a similar issue arising out of a fire insurance contract that also provided for appraisal to establish the amount of loss. The Court stated that "[t]he parties entered into a valid and definite written agreement for submission of the controversy to appraisers.... The appraisers and the umpire [complied with the contractual procedure and] signed and delivered an award.... Such award so made is presumed to be valid.... Consequently, such award must stand, unless there is evidence of fraud, mistake, duress, or other impeaching circumstance."
We hold that plaintiff was bound by the terms of his contract with defendants, which clearly established the procedure for determining the amount of loss when in dispute. The forecast of evidence indicates that this procedure was properly followed as detailed in the contract; the awards, therefore, were final and binding.
There being no evidence of fraud, mistake, duress or other impeaching circumstances in the appraisal process and award, the trial court properly granted summary judgment for defendants.
Plaintiff also argues that the trial court erred in dismissing his claim for recovery of punitive damages based upon defendants' alleged bad faith. Relying on Dailey v. Integon General Insurance Corp., 75 N.C.App. 387, 331 S.E.2d 148, disc. rev. denied, 314 N.C. 664, 336 S.E.2d 399 (1985), plaintiff contends that defendants' tortious bad faith refusal to settle the claim entitled him to punitive damages. This Court made clear in Dailey that tortious conduct in connection with a breach of contract must "`partake of some element of aggravation before punitive damages will be allowed.'" Id. (quoting Newton v. Standard Fire Insurance Co., 291 N.C. 105, 229 S.E.2d 297 (1976)).
In support of this argument plaintiff asserts that defendants failed to conduct a reasonable investigation before demanding appraisal, and that their settlement offer was unreasonably low. Plaintiff also characterizes defendants' action in initiating the appraisal process when he had been without the use of his home for approximately two months as unreasonable, given their duty to relieve the financial distress of their insured. See Dailey, supra. These examples of purportedly unreasonable actions do not rise to the level of aggravated conduct, such as were found in Dailey, supra.
In his brief, plaintiff attempts to challenge the constitutionality of the statutory provision which requires the inclusion of the appraisal clause in all fire insurance contracts in North Carolina. See N.C.Gen. Stat. § 58-176 (1982). As plaintiff points out, the required appraisal clause makes no provision for hearing or the taking of evidence, and provides no rules for the role of the appraisers. While we agree that the required appraisal clause carried with it serious due process implications, plaintiff did not raise the constitutional issue or argument at trial, but instead attempted to rely on the provisions of the North Carolina Uniform Arbitration Act which require notice and hearing. See N.C.Gen. Stat. §§ 1-567.6 and 1-567.7 (1983). Under these circumstances, plaintiff's constitutional arguments are not properly before us. See Commissioner of Insurance v. North Carolina Rate Bureau, 300 N.C. 381, 269 S.E.2d 547 (1980) and cases cited therein; Ratcliff v. County of Buncombe, 81 N.C.App. 153, 343 S.E.2d 601, appeal dismissed, 318 N.C. 417, 349 S.E.2d 599 (1986).
We have considered plaintiff's remaining assignments of error, find them to be without merit, and overrule them.
Affirmed.
HEDRICK C.J., and EAGLES, J., concur.