United States District Court, S.D. Mississippi, Northern Division
CARLTON W. REEVES, UNITED STATES DISTRICT JUDGE
Before the Court is the plaintiff’s motion to lift stay. Docket No. 56. The matter is fully briefed and ready for adjudication.
I. Factual and Procedural History
As explained in prior Orders, Sharon Burrell alleges that Allstate has underpaid her fire insurance claim. She says her home was totally destroyed and her claim merits recovery of the policy limits. Allstate disagrees; its assessment and payout were obviously lower than the limits.
The Court had stayed the case so the parties could complete the appraisal required by the policy. Because that has now been completed, Burrell wants to proceed with her suit. Allstate responds that the completion of the appraisal clause renders the case moot, as Burrell is bound by the appraisal award. The appraisal award was for approximately 60% of the policy limits.
Burrell has advanced two different legal theories against Allstate. Each will be discussed in turn.
Burrell had earlier invoked Munn v. Nat’l Fire Ins. Co. of Hartford, 115 So.2d 54 (Miss. 1959). See Docket No. 16, at 6. That case held that “an appraisal is presumptively correct, but . . . the court may set aside the appraisal where the award is so grossly inadequate or excessive as to amount to a fraud in effect, although fraud is not charged, or where the appraisers were without authority, or where there is a mistake of fact or to prevent injustice.” Munn, 115 So.2d at 58 (citations omitted).
Allstate now argues that the appraisal award means “there is nothing left to litigate in this case.” Docket No. 60, at 4. The argument treats the appraisal award as if it were an arbitration award – already litigated and essentially final. Munn, however, holds otherwise. “The report of appraisers fixing the amount of a fire loss is not an arbitration and award, ” the Mississippi Supreme Court concluded. Munn, 115 So.2d at 56 (citation omitted). Otto Munn was entitled to challenge the appraisal in court.
Allstate also contends that the appraisal award is binding under Boler-Phillips Body Shop, Inc. v. Employers Mut. Cas. Co., 251 F. App’x 912, 915 (5th Cir. 2007) (unpublished). But Boler-Phillips did not acknowledge or cite to Munn. Other, published Fifth Circuit cases (with presumably better briefing from the parties than may have occurred in Boler-Phillips), recognize that an insured may challenge appraisal awards in court. See Mitchell v. Aetna Cas. & Sur. Co., 579 F.2d 342, 350 (5th Cir. 1978).
The undersigned concludes that this matter is now a classic Munn case. The parties must proceed to resolve whether the appraisal award is so grossly inadequate to the fire loss as to constitute a fraud, whether there was a mistake of fact in the appraisal, or whether accepting the appraisal would sanction an injustice.
B. Mississippi Code § 83-13-5
During the hearing on Allstate’s motion to compel appraisal, Burrell added her second theory of the case: “that she was not bound by the appraisal policy because its application would violate her rights under Mississippi Code § 83-13-5.” Docket No. 43, at 2; see also Home Ins. Co. v. Greene, 229 So.2d 576, 578 (Miss. 1969). Because Burrell had not raised this theory until the argument, Allstate had not had a fair opportunity to develop a response and the theory was not ...