A Californian appellate court held that an appraisal constitutes arbitration under California law; and further held that the party-selected appraiser was immune from suit for actions taken pursuant to his role in the appraisal under the doctrine of arbitral immunity.

In Lambert v. Carneghi, No. A113388, 2008 WL 110510 (Cal. Ct. App. 1 Dist. Jan. 11, 2008), Winston and Elaine Lambert owned a home that was accidentally destroyed by fire. During the four years it took to obtain necessary permits to rebuild their home, many costs were incurred, the valuation of which was in dispute. A fire insurance appraisal proceeding ensued, whereby the Lamberts and the insurance company each selected an appraiser.

The Lamberts brought suit against Chris Carneghi, the appraiser they selected, claiming that his failure to define the standard for the umpire caused an improper award for the replacement costs. The trial court sustained Carneghi's demurrer. The Lamberts appealed.

The Court first disregarded the Lamberts' argument that the appraisal was not arbitration. The Lamberts waived their right to raise this argument by not raising the argument until appeal, the Court held.

Even if they had not waived this opportunity, the Court found that it is well-settled that an appraisal constitutes arbitration under California law. See Louise Gardens of Encino Homeowners' Assn., Inc. v. Truck Ins. Exchange, Inc., 98 Cal.Rptr.2d 378 (2000); see also Appalachian Insurance Co. v. Rivcom Corp., 182 Cal.Rptr.11 (1982); Ca. Civ. Pro. §§ 1280 & 2071.

The Court further disregarded the Lamberts' arguments that the doctrine of arbitral immunity was not applicable in this case. The Lamberts did not raise this argument until appeal and it was thereby waived.

But again, even if they had not waived this argument, the Court found that the privilege of arbitral immunity would apply in this case. See Moore v. Conliffe, 871 P.2d 204 (1994); Stasz v. Schwab, 17 Cal.Rptr.3d 116 (2004).

Although the Court agreed with the Lamberts that there was no specific extension of immunity to appraisers, it rejected the notion that such an analysis would be "wide of the mark."

First, the Lamberts' reliance on Coopers & Lybrand v. Superior Court, 260 Cal.Rptr. 713 (1989), was misguided. It was a mere extension of the Lamberts' earlier argument that an appraisal does not constitute arbitration.

Second, the duties of an appraiser have been analogized to the duties of an arbitrator. See Gebers v. State Farm General Ins. Co., 45 Cal.Rptr.2d 725 (1995).

Third, the ethical implications and duties of a party-arbitrator and a neutral arbitrator are not so vastly different that it would reject application of arbitral immunity. Party-arbitrators are required to make the same disclosures as neutral arbitrators.

Accordingly, Carneghi was immune from prosecution for actions taken in relation to his role as the appraiser under the doctrine of arbitral immunity.