Devonwood Condominium Owners Assn. v. Farmers Ins. Exchange

Devonwood Condominium Owners Assn. v. Farmers Ins. Exchange (2008) 162 Cal.App.4th 1498 addressed the form of judgment used to confirm an appraisal award when there is a dispute about which losses are covered under the applicable policy. There, a condominium owners association submitted a claim for fire damage to a unit. (Devonwood, supra, 162 Cal.App.4th at p. 1501.) The insurer took the position it had no obligation under the policy to pay for interior painting. (Id. at p. 1502.) The appraisal panel issued an award that segregated out of the replacement cost for interior painting from the replacement cost for all other items. The award specified that the segregation of costs was made "'without consideration of . . . any coverage or other provision of the above policy which might affect the amount of the insurer's liability thereunder. . . ." (Id. at p. 1501.) In confirming the appraisal award, the trial court issued a money judgment for the entire amount of the appraisal. (Id. at p. 1503.) The appellate court concluded the judgment had to be vacated because it did not conform to the appraisal award, which merely established replacement cost values for the claimed items of damage but did not address liability. (Devonwood, supra, 162 Cal.App.4th at pp. 1503, 1506.) Under those circumstances, the court "was limited to the issuance of a judgment which brought finality to the dollar amount of the replacement cost values, and nothing more." (Id. at p. 1506.) The Devonwood court confirmed that "a judgment after confirmation of an appraisal award fixing the cash value of loss does not preclude further litigation on other issues between parties to an insurance policy." (Id. at p. 1507, fn. 4.) A Devonwood itemization permits an appraisal panel to fulfill its obligation to assign values to damaged items without exceeding its authority by deciding issues that bear upon causation, coverage, or misrepresentation of the claim by the insured. Although the appraisal process establishes the replacement cost values, the parties are free to dispute the insurer's liability to pay for disputed categories of loss in subsequent litigation.