Complaint Review: Merlin Law Group - Tampa Florida

Appraisers in a first party property dispute are supposed to be impartial. Although appointed by a party the appraiser, acting as an arbitrator, must do what is fair not what the party appointing him or her want the award to be. In Auto-Owners Insurance Company v. Summit Park Townhome Association, United States District Court, Colorado, 14-cv-03417-LTB, 2016 WL 1321507 (04/05/2016) the USDC, Colorado, was faced with new information that the insured’s appointed appraiser was not unbiased or disinterested.

This insurance coverage dispute by Auto-Owners Insurance Company’s (“Auto-Owners”) raised an objection to George Keys acting as appraiser based on recently discovered, undisclosed relationships with defendant and its representatives. FACTS Auto-Owners sought declaratory relief to determine the extent of coverage under a property insurance policy it issued to Summit Park for damage to buildings on Summit Park’s premises from a 2013 hailstorm. The parties had difficulty starting the appraisal so the court imposed several guidelines to govern the process and appointed an umpire, Robert J. Norton. One of the guidelines the court imposed stated: “An individual who has a known, direct, and material interest in the outcome of the appraisal proceeding or a known, existing, and substantial relationship with a party may not serve as an appraiser.”

The court also required the appraisers to disclose all of their relationships that might indicate a bias. To put some teeth in his order the court warned that he would sanction any party who failed to comply. The Parties’ Disclosures On June 15, 2015, counsel for Summit Park, William Harris of the Merlin Law Group (“Merlin”), disclosed in a letter to counsel for Auto-Owners that Keys “does not have any significant prior business relationship with the Merlin Law Group.” Mr. Harris added that Keys “has acted as a public adjuster and/or appraiser on behalf of policyholders that the Merlin Law Group has represented in the past, however, this obviously does not affect his ability to act as an appraiser in this matter.” Keys disclosed in an email to Auto-Owners’ counsel as follows: “I do not have any substantial business relationship or financial interest in Merlin Law Group. There have been cases where both Merlin Law Group and Keys Claims Consultants [Keys’ business] acted for the same insured but under separate contracts.”

Lawyers are under an ethical duty to make honest and fair representations to the court. When this court issued an order requiring counsel and appraisers appointed by counsel, to disclose any potential lack of impartiality. The lawyers in this case drafted the appraiser’s statement of impartiality that they knew was false. One of the Merlin attorneys who appeared provided more detail about Merlin’s relationship with Keys in a brochure for Keys’ business than was disclosed to the court. Sanctions will be imposed and the bad conduct now requires the client to pay for a second appraisal with impartial appraisers and return the money paid by Auto Owners