23 order filed January 26, 2018
from the Circuit Court of Madison County, No. 16-MR-116; the
Hon. John B. Barberis Jr., Judge, presiding.
Michael J. Bedesky, of Reed, Armstrong, Mudge &
Morrissey, P.C., of Edwardsville, for appellant.
William S. Daniel, of Collinsville, for appellees.
JUSTICE CATES delivered the judgment of the court, with
opinion. Justices Welch and Moore concurred in the judgment
1 The defendant, State Farm Fire and Casualty Company (State
Farm), appeals from an order denying its motion to vacate the
judicial appointment of an appraisal umpire and an order
confirming the appraisal award. For the reasons that follow,
we reverse and remand.
2 On February 1, 2015, a fire ravaged the home of the
plaintiffs, Ronald and Jodi Witcher, leaving little more than
rubble, debris, and ash. At that time, the plaintiffs'
home and property were covered under a policy of
homeowner's insurance issued by State Farm. The
plaintiffs and State Farm agreed that the fire resulted in a
total loss, but they could not agree on the loss valuation.
The homeowner's policy provided for an appraisal process
in the event of a disagreement regarding the amount of a
loss. The policy is not included in the record on appeal, but
the parties agree that the appraisal clause provides as
"If we and you disagree on the amount of loss, either
one can demand that the amount of loss be set by appraisal.
If either makes a written demand for appraisal, each shall
select a competent, disinterested appraiser. Each shall
notify the other of the appraiser's identity within 20
days of receipt of the written demand. The two appraisers
shall then select a competent, impartial umpire. If the two
appraisers cannot agree upon an umpire within 15 days, you or
we can ask a judge of a court of record in the state where
the residence premises is located to select an umpire. The
appraisers shall then set the amount of loss. If the
appraisers submit a written report of an agreement to us, the
amount agreed upon shall be the amount of the loss. If 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. Each appraiser shall be paid by [the] party selecting
that appraiser. Other expenses of the appraisal and the
compensation of the umpire shall be paid equally by you and
3 Unable to reach an agreement on the amount of the loss, the
plaintiffs sent a letter, dated Friday, March 18, 2016, to
State Farm, demanding that the loss be settled by appraisal.
The plaintiffs also designated Joel Adkerson as their
appraiser. According to a UPS tracking document, State Farm
received the plaintiffs' letter on Monday, March 21,
2016. In keeping with the terms of the appraisal clause,
State Farm was required to notify the plaintiffs of the
identity of its appraiser within 20 days of receipt of the
appraisal demand, meaning on or before April 10, 2016. The
20-day period passed without State Farm notifying the
plaintiffs of its appraiser. The subsequent 15-day deadline
for the plaintiffs' and State Farm's appraisers to
agree on an appraisal umpire also passed without the
selection of a neutral appraisal umpire and without State
Farm's designation of an appraiser.
4 On April 27, 2016, the plaintiffs, through their attorney,
filed a petition for the judicial appointment of an appraisal
umpire in the circuit court of Madison County. Therein, the
plaintiffs alleged that State Farm failed to participate in
the appraisal process as outlined in the homeowner's
policy. The plaintiffs asserted that they had valued their
total loss at $247, 121.03, while State Farm had valued the
loss at $159, 601.48, a difference of $87, 519.55. The
plaintiffs further asserted that they submitted a written
demand for an appraisal to State Farm, and that State Farm
refused to designate an appraiser. The plaintiffs claimed
that State Farm refused to participate in the appraisal
process in an attempt to delay or thwart the appraisal
process, to deprive the insured of indemnity benefits, and to
vexatiously and unreasonably delay payment under the
homeowner's policy. The plaintiffs attached
correspondence between their adjuster and State Farm, as well
as a list of eight candidates to act as the appraisal umpire.
The record indicates that at the time the plaintiffs'
petition was filed, there was no request that the petition
and summons be served on State Farm. There is no certificate
of service or other document that shows that State Farm was
served with a copy of the plaintiffs' petition.
5 According to the record, the circuit court was presented
with and granted the plaintiffs' petition on the same
date that the petition was filed. In the order entered April
27, 2016, the court appointed Dale F. Peek to serve as the
appraisal umpire. Peek was one of the candidates listed by
the plaintiffs. The order further provided that the court
would retain jurisdiction for "filing and enforcement of
a binding Appraisal Award under the insurance policy contract
6 On May 4, 2016, State Farm filed an entry of appearance and
a reply to the plaintiffs' petition for the judicial
appointment of an appraisal umpire. In its reply, State Farm
asserted that its adjuster, Mike Hartkop, had been in contact
with the plaintiffs' agent, Dan Long, in an attempt to
resolve the claim outside of the appraisal process; that
Hartkop had attempted to contact Long by phone for two weeks;
and that Long refused to respond to multiple phone calls.
State Farm further represented that it had selected an
appraiser, Steve Ricker, and that if the parties'
designated appraisers were unable or unwilling to agree on an
appraisal umpire, State Farm would submit a list of proposed
names to the court for a selection of an umpire. State Farm
requested that the court "allow State Farm's input,
specifically a list of potential umpires, " before
making the appointment.
7 On May 9, 2016, Dale F. Peek filed a formal
"Acceptance of Appraisal Umpire Appointment" in the
circuit court of Madison County. On that same date, State
Farm filed a motion to vacate the April 27, 2016, order
appointing Dale F. Peek as the appraisal umpire. State Farm
asserted that its counsel did not receive a copy of the
appointment order until May 9, 2016. State Farm further
asserted that it had no prior notice of the circuit
court's actions, pointing out that the plaintiffs'
petition for appointment of an appraisal umpire was filed on
April 27, 2016, and that the order appointing Peek as the
appraisal umpire was entered on that same date. State Farm
noted that it had not been served with the petition and
summons and that it did not enter an appearance until May 4,
2016, seven days after the order was issued. State Farm
argued that it was denied due process where the ...