A federal district court in Louisiana granted summary judgment to an insurer upholding an appraisal panel and dismissing extra-contractual claims. Island Concepts, LLC v. Certain Underwriters at Lloyd’s, London, 2014 WL 5524379 (E.D. La. Oct. 31, 2014).

A restaurant sustained wind and flood losses. Consultants were retained, including forensic accountants, and the insurer tendered all sums due for business interruption within 30 days of receipt of each consultant report that required additional sums be tendered. The insured demanded appraisal, after the conclusion of which the insurer tendered additional sums awarded. The insured nevertheless sued the insurer.

The court granted summary judgment in favor of the insurer concluding that appraisal awards are enforceable and binding absent clear mistake or misapplication of the policy’s terms. It rejected the insured’s argument that the seasonality of the business was improperly considered, commenting that where reasonable minds could differ, the panel award should not be overturned and that the extent of the period of restoration was within the scope of the appraisal panel’s authority. The court rejected the insured’s argument that anticipated net losses do not impact the claim for continuing expenses. The policy involved defined business income as “Net Income (Net Profit or Loss before income taxes) … and … [c]ontinuing normal operating expenses incurred….” The court concluded the “and” means “plus” such that a net loss during the period of restoration reduced by the same amount the claim for continuing expenses, noting the purpose of business interruption insurance is to “protect the earnings which the insured would have enjoyed had no interruption or suspension occurred,” but “it is also designed to prevent the insured from being placed in a better position than if no loss or interruption of business had occurred.” [Citations omitted.] The court dismissed the extra-contractual claims for failure of proof.