(Article from Insurance Law Alert, March 2025)
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Holding
The Ninth Circuit ruled that a California federal district court properly dismissed a suit against a property insurer, finding that the insured lacked standing to bring the suit and that the dispute as to the value of loss was not ripe. 50 Exch. Terrace LLC v. Mount Vernon Specialty Ins. Co., 129 F.4th 1186 (9th Cir. 2025).
Background
The insured property sustained water damage after frozen pipes burst. The insurer, Mount Vernon Specialty Insurance, and the policyholder disagreed on the cost of the repairs. Mount Vernon paid its estimated value (less depreciation and a deductible) to the policyholder and also demanded appraisal pursuant to the terms of its policy. The policyholder then filed suit, alleging that Mount Vernon wrongfully withheld compensation pending the outcome of the appraisal.
A California federal district court dismissed the coverage suit, finding that the insured lacked standing under Article III and that the dispute was not ripe. The Ninth Circuit affirmed.
Decision
The Ninth Circuit ruled that, when parties to an insurance policy disagree as to the value of a loss and the policy requires appraisal to resolve such disputes, an insured’s claim for failure to pay a disputed amount is not ripe until the appraisal is completed. The court explained that, for a coverage action to be ripe, “it must present issues that are ‘definite and concrete, not hypothetical or abstract.’” Thus, absent an appraisal, any alleged injury is too speculative to create an actionable claim, the court held. With respect to Article III standing, the court explained that the claimant must suffer an “injury in fact,” which “coincides squarely” with the ripeness determination.
Comments
Many property policies include appraisal requirements, and such provisions are instrumental in assessing the value of a covered loss. The Ninth Circuit’s ruling makes clear that, under California law, coverage suits are not ripe unless and until the appraisal process is complete.