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Filed 5/20/08; reposted to correct caption and counsel listing
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
DEVONWOOD CONDOMINIUM
OWNERS ASSOCIATION,
Plaintiff and Respondent,
v.
FARMERS INSURANCE EXCHANGE,
Defendant and Appellant.
A116302
(Contra Costa County Super. Ct.
No. N06-1118)
Appellant Farmers Insurance Exchange (Farmers), asks that we reverse or vacate
the lower court’s judgment for $129,939.87 in favor of respondent Devonwood
Condominium Owners Association (Devonwood). We find the judgment violates Code
of Civil Procedure section 1287.4 because it does not conform to the appraisal award
upon which it is based. Accordingly, we vacate the judgment, and remand with
instructions to the lower court to enter a new judgment that conforms to the appraisal
award.
BACKGROUND
This dispute centers around Farmers’s obligations under a written property
insurance policy it issued to Devonwood, a California homeowners association. When a
fire occurred in one of Devonwood’s units, a Hercules, California, condominium in 2004,
Devonwood submitted a claim for fire damage to Farmers. When the parties could not
agree on the value of the loss, Devonwood demanded that an appraisal be conducted by a
panel pursuant to the policy’s appraisal provision. The provision called for each party to
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select a competent and impartial appraiser, who together would select an umpire, and
stated that “[a] decision agreed to by any two will be binding.” Devonwood selected
Keith Charleston as its appraiser, Farmers selected Peter Evans, and the two selected
Gene Roberts as the umpire.
This appraisal panel, after holding hearings and considered evidence submitted by
the parties, issued a unanimous written “appraisal of insurance claim award” in June
2006. The panel stated that it had considered all material facts and available information
pertaining to Devonwood’s claim, and decided on “an appraisal Award as described
below which in the appraisal panel’s opinion restores the building to its pre-loss
condition,” based on the condition of the property in April 2005. The panel then stated
two categories of replacement cost values. The first, the “replacement cost value of firerelated structure damage, exclusive of floor coverings, ceiling coverings (including
paint), and wall coverings (including paint) in the residential unit,” totaled $122,460.65.
The second category, the “replacement cost value of interior painting of walls and
ceilings due to fire-related structure damage,” totaled $7,479.22. The panel also stated in
relevant part:
“Attached to this award is a breakdown which sets forth those items included
herein. This breakdown sets forth the above award in detail and is made without
consideration of any deductible amount or any coverage or other provision of the above
policy which might affect the amount of the insurer’s liability thereunder. . . .”
Devonwood subsequently filed a petition to confirm the appraisal award in Contra
Costa County Superior Court. Farmers opposed the petition, arguing the requested order
“would necessarily create liability to pay the assigned valuation irrespective of coverage
issues and the applicable deductible, all contrary to the clear dictates” of the appraisal
award, and “would necessarily require the determination of coverage issues such that in
addition to determining the amount of loss . . . said order would create Farmers’s liability
for the loss, an issue of coverage,” although the appraisal panel had no authority to
resolve any coverage issues. Farmers requested the appraisal award either be corrected
pursuant to Code of Civil Procedure section 1286.6, subdivision (b) (providing for the
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correcting of an award without affecting the merits of the decision because the arbitrators
exceeded their powers), or vacated based on Code of Civil Procedure section 1286.2,
subdivision (a)(4) (also based on the arbitrators exceeding their powers).1
At the heart of Farmers’s opposition was its contention that it was not obligated
under the policy to pay for painting interior areas. According to a declaration by
Farmers’s attorney, Linda J. Lynch, “during the course of the appraisal hearing, the
policy provision which stipulates there is no coverage for interior finishes was discussed.
[Farmers] indicated to all attendees and the panel that provision would affect how much
[Farmers] paid on the claim. . . . [T]here was a lack of consensus between Devonwood
and [Farmers] as to exactly how that provision applied in this context of this claim. At no
time was that coverage issue submitted for resolution by the appraisal panel . . . . In fact,
the appraisal panel members advised they could not resolve that or any other coverage
issue and informed us that they would segregate and separately value the different
elements of damage and segregate the award so the parties could determine their rights
and obligations under the policy.”
Farmers also submitted declarations from the appraiser it selected for the panel,
Peter Evans, the panel’s umpire, Gene Roberts, and Noelle Stitt, a Farmers claims
representative. As a part of its reply, Devonwood submitted extensive written objections
to the declarations of Lynch, Evans, Roberts, and Stitt.
The superior court heard argument and issued a written statement of decision. It
found that an agreement to conduct an appraisal contained within an insurance policy
constituted an arbitration agreement subject to the statutory law regarding contractual
arbitrations, that Farmers had conceded that the appraisal panel had not addressed any
coverage issues, that Farmers’s opposition did not cite any statutory bases for the court to
dismiss, correct, or vacate the award, that none were present, and that it was required by
statute to confirm the award. The court sustained Devonwood’s objections to the
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Farmers also argued the petition should be dismissed because it was filed in the
wrong venue, an issue it does not raise on appeal.
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declarations of Evans and Roberts and most of Stitt’s, and overruled most of the
objections to Lynch’s declaration. It confirmed the appraisal award in the amount of
$129,939.87.
Devonwood then submitted a proposed judgment. Farmers filed objections to the
statement of decision and proposed judgment, arguing many of the positions it raises in
this appeal. It requested that, if the court issued judgment, it do so based on what
Farmers considered to be the entire award, including the appraisal panel’s statement that
it was not determining any coverage issues, or that the court issue a conditional award
that required the parties to resolve themselves or through a more formal venue the issue
of coverage.
The court issued an order granting Devonwood’s petition, confirming the appraisal
award, and awarded Devonwood judgment in the sum of $129,939.87, as well as the
costs of its petition. It then entered judgment for Devonwood in the amount of
$129,939.87, and awarded it costs. Farmers subsequently filed a timely notice of appeal.
DISCUSSION
Farmers asks that we reverse or vacate the judgment on several grounds. It argues
that the judgment does not conform to the appraisal award, contrary to the dictates of
Code of Civil Procedure section 1287.4; that even if the judgment so conforms, the
appraisal panel necessarily exceeded its powers by determining coverage issues; and that
an appraisal award issued pursuant to Insurance Code section 2071 (section 2071) may
not be entered as a money judgment following its confirmation pursuant to Code of Civil
Procedure sections 1286 and 1287.4. Farmers also argues the lower court erred when it
excluded the declarations of Evans, Roberts, and Stitt.
Devonwood opposes Farmers’s arguments. It also moves for sanctions against
Farmers for filing a frivolous appeal.
We conclude the lower court’s judgment did not conform to the appraisal award in
violation of Code of Civil Procedure section 1287.4 and, therefore, must be vacated.
We are faced with a pure question of law, that being whether or not the court’s
judgment complies with the requirements of Code of Civil Procedure section 1287.4
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based upon the undisputed facts in the record. Therefore, our standard of review is de
novo. (Louise Gardens of Encino Homeowners’ Assn., Inc. v. Truck Ins. Exchange, Inc.
(2000) 82 Cal.App.4th 648, 657 (Louise Gardens) [applying de novo review of issues
regarding an appraisal award that “primarily involve the interpretation of relevant
statutes”]; Groth Bros. Oldsmobile, Inc. v. Gallagher (2002) 97 Cal.App.4th 60, 65 [de
novo review appropriate for analysis and interpretation of statutes and their application to
undisputed facts.)
The parties do not dispute that the appraisal award was issued by an appraisal
panel duly appointed pursuant to their contractual agreement, or that this award was a
binding determination of the “amount of loss.”2
They also do not dispute that their
contractual agreement regarding this appraisal award is consistent with the language
contained in the standard form fire insurance policy of section 2071.3
The statutory
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The record does not contain a complete insurance policy executed by the parties.
Nonetheless, according to the parties, the appraisal provision states in relevant part:
“If we and you disagree on the amount of the loss, either may make written
demand for an appraisal of the loss. In this event, each party will select a competent and
impartial appraiser. The two appraisers will select an umpire. . . . The appraisers will
state separately the amount of the loss. If they fail to agree, they will submit their
differences to the umpire. A decision agreed to by any two will be binding.”
The provision also states that “[i]f there is an appraisal, we will still retain our
right to deny the claim.”
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The appraisal provision in the standard form policy contained in section 2071
states in relevant part:
“In case the insured and this company shall fail to agree as to the actual cash value
or the amount of loss, then, on the written request of either, each shall select a competent
and disinterested appraiser and notify the other of the appraiser selected within 20 days of
the request. Where the request is accepted, the appraisers shall first select a competent
and disinterested umpire . . . . Appraisal proceedings are informal unless the insured and
this company mutually agree otherwise. For purposes of this section, “informal” means
that no formal discovery shall be conducted . . . no formal rules of evidence shall be
applied, and no court reporter shall be used for the proceedings. The appraisers shall then
appraise the loss, stating separately actual cash value and loss to each item; and, failing to
agree, shall submit their differences, only, to the umpire. An award in writing, so
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framework contained in the Insurance Code is key to understanding what the court was
required to do here.
“California courts have enforced appraisal clauses in fire insurance policies for
almost 100 years.” (Appalachian Insurance Co. v. Rivcom Corp. (1982) 130 Cal.App.3d
818, 824.) “Since its substance was first enacted in 1909, . . . section 2071 has directed
that the standard form for fire insurance policies include an appraisal provision to settle
disagreements concerning the amount of loss.” (Gebers v. State Farm General Ins. Co.
(1995) 38 Cal.App.4th 1648, 1651, quoted in Kacha v. Allstate Ins. Co. (2006) 140
Cal.App.4th 1023, 1032.) “ ‘ “The function of appraisers is to determine the amount of
damage resulting to various items submitted for their consideration. It is certainly not
their function to resolve questions of coverage and interpret provisions of the policy.” ’ ”
(Kacha v. Allstate Ins. Co., at p. 1032, italics omitted; see also Figi v. New Hampshire
Ins. Co. (1980) 108 Cal.App.3d 772, 777 [acknowledging that a policy appraiser “only
evaluates the loss and does not consider questions of policy, interpretation or scope of
coverage”]; Safeco Ins. Co. v. Sharma (1984) 160 Cal.App.3d 1060, 1065 [approvingly
quoting from a case that the appraiser “ ‘only evaluates the loss’ ”]; Lewis Food Co. v.
Fireman’s Fund Ins. Co. (1962) 207 Cal.App.2d 515, 520-521 [the function of appraisers
is “to determine the amount of damage,” not “resolve questions of coverage and interpret
provisions of the policy”].)
Generally, appraisal award proceedings are subject to the arbitration provisions
outlined in the California Arbitration Act, Code of Civil Procedure section 1280 et seq.
“An agreement to conduct an appraisal contained in a policy of insurance constitutes an
‘agreement’ without the meaning of section 1280, subdivision (a), and therefore is
considered to be an arbitration agreement subject to the statutory contractual arbitration
law.” (Louise Gardens, supra, 82 Cal.App.4th at p. 658, accord, Michael v. Aetna Life &
Casualty Ins. Co. (2001) 88 Cal.App.4th 925, 934.) However, while “arbitrators are

itemized, of any two when filed with this company shall determine the amount of actual
cash value and loss.”
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frequently, by the terms of the agreement providing for arbitration . . . given broad
powers . . . appraisers generally have more limited powers.” (Jefferson Ins. Co. v.
Superior Court (1970) 3 Cal.3d 398, 403.) Thus, as discussed earlier this year by our
colleagues in Division Four, “parties are . . . free to confirm the [appraisal] award issued
by the [appraisal] panel in the same manner in which an arbitration award is enforced.
[Citations.] A confirmed award of appraisers and umpire is treated as a confirmed
arbitration award, which has the ‘ “same force and effect as . . . a judgment in a civil
action.” ’ [Citation.] Although it is true that a party to a fire insurance contract retains
jury trial rights as to other issues, the party ‘simply has no jury trial right as regards the
setting of the dollar amount of the loss under the policy.’ ” (Lambert v. Carneghi (2008)
158 Cal.App.4th 1120, 1132.)
A party may petition the court to confirm, vacate or correct an appraisal award
(Code Civ. Proc., § 1285), and a responding party may seek dismissal of the petition, or
ask the court to confirm, vacate, or correct the award as well (Code Civ. Proc., § 1285.2).
(See Louise Gardens, supra, 82 Cal.App.4th at p. 658.) The court “shall confirm the
award as made . . . unless . . . it corrects the award and confirms it as corrected, vacates
the award or dismisses the proceeding.” (Code Civ. Proc., § 1286.) “If an award is
confirmed, judgment shall be entered in conformity therewith. The judgment so entered
has the same force and effect as, and is subject to all the provisions of law relating to, a
judgment in a civil action of the same jurisdictional classification; and it may be enforced
like any other judgment of the court in which it is entered, in an action of the same
jurisdictional classification.” (Code Civ. Proc., § 1287.4.)
In the petition proceedings below, the court’s order confirming the appraisal award
attached a copy of the appraisal award and stated that it was confirmed. On appeal,
Farmers does not contend in its Code of Civil Procedure section 1287.4 argument that the
court’s order of confirmation was out of compliance with the appraisal award; to the
contrary, it states that “the order of confirmation complied with the dictates of Code of
Civil Procedure section 1286; it confirmed the appraisal award as it had been made.”
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However, Farmers argues that the court’s subsequent judgment violated Code of
Civil Procedure section 1287.4 because the judgment did not conform to the appraisal
award. We agree. In its judgment, the court awarded Devonwood the sum of
$129,939.87, thereby finding Farmers liable for that amount. This was not in conformity
with the appraisal award. As we have already discussed, the award determined two
categories of replacement cost values, they being $122,460.65 for fire-related structure
damage exclusive of floor, ceiling, and wall coverings, including paint, in the residential
unit, and $7,479.22 for interior painting of walls and ceilings due to fire-related structure
damage, which together would “restore the building to its pre-loss condition.” The panel
also stated that its breakdown of the award was made “without consideration of any
deductible amount or any coverage or other provision of the . . . policy which might
affect the amount of the insurer’s liability thereunder.” Thus, it is clear from the face of
the award that the appraisal panel, in keeping with the limitations in the subject policy
between them and the standard form policy in section 2071, did not decide any liability
issues. Instead, they merely determined the “loss,” i.e., the replacement cost values,
resulting from the fire. Under these circumstances, the court’s statutory authority was
limited to the issuance of a judgment which brought finality to the dollar amount of the
replacement cost values, and nothing more. It went beyond this authority in its judgment.
A judgment that is limited to replacement cost values would be in keeping with the
approach taken in the only published case in California discussing an appraisal award and
a money judgment. In Louise Gardens, supra, 82 Cal.App.4th 648, the appellate court
reviewed a lower court’s judgment after confirmation of an appraisal award that had
determined an insured’s cash value loss due to earthquake damage. The lower court’s
judgment stated, “ ‘This is not a money judgment and only confirms the matters
determined by the appraisal.’ ” (Id. at p. 656, italics omitted.) The appellate court, after
reviewing the issues raised by the parties, affirmed the judgment, stating that “[t]he
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appraisal award will thus become final and binding on both parties as a measure of the
cash value of the loss sustained . . . .”4
(Id. at p. 661.)
Devonwood argues that “entry of judgment on a confirmed arbitration award is
mandatory pursuant to section 1287.4,” that “[t]he appraisal panel unanimously
determined that the amount of Devonwood’s loss to the insured property due to the
covered peril of fire was $129,939.87,” and that “Devonwood was entitled to judgment
on the confirmed appraisal award for the full amount of the award, pursuant to Code of
Civil Procedure section 1287.4.” Devonwood is correct up to a point. It is entitled to
entry of judgment on the confirmed appraisal award. However, Devonwood relies
largely on the argument that Farmers’s mere raising of a coverage issue should not allow
it to avoid the requirements of the California Arbitration Act. In doing so, Devonwood
fails to address with the crux of Farmers’s argument about the court’s judgment, which is
that Devonwood is not entitled to a judgment under the California Arbitration Act that
holds Farmers liable for the amount stated in the award because the award itself does not
determine this liability. This is correct.
Devonwood’s arguments regarding the other issues raised by Farmers follow a
similarly unpersuasive line of analysis. For example, it argues at some length that
Farmers provided no grounds for the trial court to correct or vacate the appraisal award
and that the California Arbitration Act applies to appraisal awards, neither of which are
put at issue by Farmers’s Code of Civil Procedure section 1287.4 argument. It also
argues that Farmers’s coverage issue is meritless, which is not relevant to whether the
court exceeded its authority to confirm the appraisal award as the award was issued.
Devonwood also does not present any case law which addresses Farmers’s Code
of Civil Procedure section 1287.4 argument. Devonwood contends, for example, that in
Klubnikin v. California Fair Plan Assn. (1978) 84 Cal.App.3d 393, it was determined that
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As is suggested by this discussion, and that in Lambert v. Carneghi, supra, 158
Cal.App.4th at page 1132, which we quote at page 7, ante, 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.
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a “confirmed appraisal award establishes [an] insurer’s contractual obligation and [an]
insured’s contractual damages and is not subject to collateral attack.” This is incorrect.
That case did not involve an appeal from a judgment on a confirmed appraisal award;
instead, it was an insured’s appeal from a summary judgment in a civil action for breach
of contract and declaratory relief challenging the trial court’s reliance on the actual cash
value found in a confirmed appraisal award. (Id. at pp. 395-396.) The subject fire
insurance policy insured certain property “ ‘to the extent of [its] actual cash value . . . at
the time of loss’ ” (id. at p. 395), making the appraisal award’s determination of actual
cash value and loss particularly meaningful. The legal issue involved had nothing to do
with the propriety of a trial court’s judgment upon confirmation of an award; instead,
“the critical point . . . [was] whether the provisions of Code of Civil Procedure section
1280 et seq. should be read as permitting an attack upon the award of the appraiser and
umpire by an independent action for breach of contract where the award has not been
directly attacked by a petition to vacate or modify it served and filed within the statutory
period.” (Id. at p. 397.)
In the course of stating its decision, the appellate court reiterated that a confirmed
appraisal award is treated as a confirmed award in arbitration, and that the judgment
confirming the award has the same force and effect as a judgment in a civil action.
(Klubnikin v. California Fair Plan Assn., supra, 84 Cal.App.3d. at p. 398.) None of this
is in dispute here. Thus the case provides no support for Devonwood’s opposition to
Farmers’s attack on the judgment as inconsistent with the appraisal award itself. Other
cases cited by Devonwood are similarly inapposite to the Code of Civil Procedure section
1287.4 issue.
In short, Devonwood does not sufficiently address the limited nature of the panel’s
determinations, which are plain from an examination of the appraisal award. Therefore,
its opposition is unpersuasive.5

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In light of our ruling, we need not address the remaining issues that Farmers
raises in its appeal. Technically, Farmers’s appellate arguments about the lower court’s
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DISPOSITION
We vacate the judgment and remand this matter with instructions to the lower
court to enter a new judgment that conforms to the arbitration award, consistent with this
opinion. Devonwood’s motion for sanctions against Farmers for filing a frivolous appeal
is denied. Farmers is awarded costs of appeal.
_________________________
Lambden, J.
We concur:
_________________________
Kline, P.J.
_________________________
Haerle, J.

evidentiary rulings relate to the court’s confirmation of the award. Nonetheless, the
excluded evidence relates to the same issues we have addressed herein, namely the
limited scope of the appraisal award and the court’s obligation to confirm that award as it
was issued. To the extent Farmers might contend its arguments go beyond these issues,
and assuming, without finding, error by the trial court in its evidentiary rulings, we
conclude Farmers was not prejudiced beyond what we address herein. Even if the court
had admitted and considered the evidence submitted by Farmers, it undoubtedly would
have been required to confirm the appraisal award as it was issued.
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Trial Court: County Costa County Superior Court
Trial Judge: Honorable Diana Becton Smith
Attorneys for Defendant and Appellant Sarrail, Lynch & Hall
Farmers Insurance Exchange Linda J. Lynch,

Attorneys for Plaintiff and Respondent Michel & Fackler
Devonwood Condominium Owners Michael D. Michel
Association Jeff M. Fackler