Lam v. Allstate Indemnity Co.

DOYLE, Presiding Judge.

Bing Chi Lam filed suit against Allstate Indemnity Company to enforce an appraisal provision in his Allstate homeowners’ insurance policy following damage to his roof. Allstate filed a motion to dismiss for failure to state a claim, and the trial court granted the motion following a hearing. Alternatively, the trial court also dismissed Lam’s complaint pursuant to Uniform Superior Court Rule 14 based on his failure to attend the motion hearing and/or to prosecute his case. Lam appeals, and for the reasons that follow, we affirm.

Lam’s homeowners’ policy issued by Allstate covered his dwelling against “sudden and accidental direct physical loss,” including *152but not limited to, loss to a roof caused by hail and windstorms. The policy contained a provision providing for an appraisal procedure to determine the amount of loss if the parties were unable to agree upon such following a covered loss.

According to Lam, his roof was damaged by high winds and hail, and he timely reported the damage to Allstate. After a claims representative inspected Lam’s roof, Allstate determined that it sustained wind damage to four shingles and that there was ceiling damage in Lam’s bedroom and kitchen, and Allstate provided Lam with an estimate to repair the shingles and ceiling in the amount of $783.06. Lam did not agree on the amount of the loss, and he wrote to Allstate requesting that the amount of loss be determined pursuant to the appraisal provision contained in his policy. Allstate responded to Lam in writing, conceding that it had determined that four shingles were damaged by wind and there was damage to his interior ceiling, all covered by the policy. According to Allstate, the estimates provided by Lam did not differ from Allstate’s appraisal with respect to the cost of replacing the shingles, but instead improperly sought complete replacement of all of the shingles on his roof. Stating that “[c] overage was not granted to replace all the shingles as there was not damage to warrant such,” Allstate concluded that the appraisal provision was “not applicable” because “the difference in estimates . . . [relates to] coverage rather than pricing.” Allstate did not deny coverage or provide any additional explanation of benefits.

Lam filed suit against Allstate seeking only to enforce the appraisal provision in his policy.1 Allstate filed a motion to dismiss for failure to state a claim, arguing that the appraisal provision was not available to Lam because it could not be used to settle disputes over coverage. Following a hearing, the trial court granted the motion and, alternatively, dismissed Lam’s complaint for failure to prosecute based on his failure to attend the hearing. This appeal followed.

1. Lam argues that the trial court erred by granting Allstate’s motion to dismiss for failure to state a claim upon which relief can be granted. We disagree.

“We review de novo the trial court’s grant of a motion to dismiss.”2

A motion to dismiss for failure to state a claim upon which relief can be granted should not be sustained unless (1) the *153allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought. In deciding a motion to dismiss, all pleadings are to be construed most favorably to the party who filed them, and all doubts regarding such pleadings must be resolved in the filing party’s favor.3

Here, the appraisal provision contained in Lam’s homeowners’ policy provides that if Lam and Allstate

fail to agree on the amount of the loss, either party may make written demand for an appraisal. Upon such demand, each party must select a competent and impartial appraiser. . . . The appraisers will select a competent and impartial umpire____ The appraisers then determine the amount of loss____If they cannot agree, they shall submit their differences to the umpire. A written award agreed upon by the appraisers or an appraiser and the umpire will determine the amount of loss.4

Allstate argues that the appraisal provision is not applicable in this case because the parties’ dispute is, in essence, a dispute over coverage. The Supreme Court of Georgia has held that

an appraisal clause can only resolve a disputed issue of value. It cannot be invoked to resolve broader issues of liability. To invoke an appraisal clause to eliminate... issues of liability . . . would be impermissible, as it would expand the scope of the appraisal clause beyond the issue of value. It would be tantamount to converting the appraisal clause into an arbitration clause, which is the type of clause that would be invoked to address such broader issues. Arbitration clauses, however, are impermissible in contracts between insurers and insureds.5

*154Here, although Allstate had conceded that there was wind damage to Lam’s roof and agreed to pay for it, the parties could not agree upon the extent of the damage — how much of the roof was damaged by the wind. Their disagreement, therefore, was over coverage, which is not a proper basis for an appraisal. Accordingly, the trial court did not err by granting Allstate’s motion to dismiss for failure to state a claim.

2. In light of our holding in Division 1, we need not address Lam’s enumeration that the trial court abused its discretion by dismissing his complaint for want of prosecution based on his failure to attend the hearing.

Judgment affirmed.

Phipps, C. J., Boggs and Branch, JJ., concur. Barnes, P. J., Ellington, P. J., and McFadden, J., dissent.

In Count 1 of the complaint, Lam asserted a demand for appraisal, and in Count 2, he sought a declaratory judgment regarding the rights of Lam and Allstate under the policy as it related to appraisal of the claim.

(Punctuation omitted.) South Point Retail Partners v. North American Properties Atlanta, 304 Ga. App. 419, 420 (696 SE2d 136) (2010).

(Citation and punctuation omitted.) Stendahl v. Cobb County, 284 Ga. 525, 525-526 (1) (668 SE2d 723) (2008).

The policy did not define the phrase “amount of loss.”

(Citations omitted.) McGowan v. Progressive Preferred Ins. Co., 281 Ga. 169, 172-173 (637 SE2d 27) (2006), citing OCGA § 9-9-2 (c) (3) (barring arbitration provisions in “[a]ny contract of insurance . . .”).