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Tuesday, June 18, 2024 | Back issues
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Iconic Hotel Must Have Storm Damage Appraisal

(CN) - Insurers of West Virginia's iconic Greenbrier Hotel have won their bid to perform in-depth appraisals of more than $17 million in claimed damages from a fast-moving line of severe thunderstorms with hurricane force winds ripped through the Allegheny Mountains in 2012.

The Greenbrier, a luxury, upscale resort located in White Sulphur Springs, WV, has been the favorite haunt of many famous movie stars, including Leonardo DiCaprio, Jennifer Garner, Ben Affleck, Jessica Simpson, Brooke Shields, Lionel Richie, the Kennedy family, and many presidents, including Woodrow Wilson.

The golf course, designed golf course architect Charles Blair McDonald has been home to three PGA Senior tournaments.

During the 1950's an underground bomb shelter was built on grounds to house Congress in the event of a nuclear war, and the facility, code-named Project Greek Island, remained operational until 1992.

In June 2012, a mid-Atlantic and Midwest derecho -- a line of severe thunderstorms that produce tremendous straight-line winds -- become one of the most destructive and deadly weather events in U.S. history.

According to AccuWeather, the storm was essentially an "inland hurricane" spawning torrential rains, sustained winds of 58 mph or higher, and wind gusts of up to 100 mph. Large hail, widespread flooding, and isolated tornadoes commonly occur alongside derechos. Before it was through, the 2012 derecho travelled more than 700 miles, impacted 10 states and the District of Columbia, and killed dozens while causing widespread power outages that lasted up to a week.

Afterwards, Jim Justice, owner of the Greenbrier, told golfnewsnet.com that 70 to 80 trees were damaged at the Old White TPC golf course during the storm, including at least fifty 200-year-old sycamores.

Skyboxes, spectator areas, and camera towers were also damaged, and the 700 room hotel was without power during the week of the scheduled Greenbrier Classic, which was scheduled to start three days later, Justice said.

Greenbrier contended that its total losses, including lost business in the aftermath of the storm, amount to more than $17 million. But its insurers, Lexington Insurance Company, XL Insurance America, Inc., Ace American Insurance Company, and Underwriters at Lloyd's London, said the resort's actual, verifiable losses amounted to no more than $800,000.

The insurers contend that submissions of claim were late, incomplete, subject to frequent revision, and simply not proofs of loss. They also argue that they were stymied in their efforts to carry out appraisals in the time and manner required under contract.

U.S. District Judge Irene Berger, determined that the policy language was unambiguous and that the appraisal provision, "while not clearly defining 'proof of loss,' had set forth parameters for a proof of loss."

"The Greenbrier's claims submissions permitted the Insurers to investigate the claim and estimate their liabilities, evidenced by the Meaden & Moore analysis prepared on December 17, 2013. Requesting additional information or documentation is part of investigating a claim that would naturally occur after submission of a proof of loss, as that term is used in West Virginia," Berger continued. "The Insurers accepted the submissions and investigated the claims contained therein. Under applicable West Virginia case law, that serves to prevent any denial of coverage based on the failure to file a proof of loss in compliance with the policy terms."

But Berger went on to note that the case law regarding proof of loss is of limited applicability in this case.

"Here, the issue is whether appraisal was demanded in accordance with the policies; proof of loss is implicated only because the appraisal provision of the Lloyd's, XL, and Lexington policies reference it," she wrote.

"The Court does not find the policy language ambiguous. Although the appraisal provision does not itself define proof of loss, the policies contain a paragraph setting forth the parameters for a proof of loss. The only documents in this case that meet the plainly-worded policy requirements are the 'Sworn Statement in Proof of Loss' forms generated by the Insurers."

As a result, Berger held, "[T]he Greenbrier's position that any one of several events could have triggered the appraisal clause is wholly impractical, both for the parties attempting to follow the policy provisions and for a court endeavoring to apply them.

She continued: "The Greenbrier argues that it makes little sense to trigger the sixty day time to demand appraisal with forms generated only after the Insurers decide how much to pay. However, a dispute as to the amount of loss would arise only after the Insurers investigated the claim and came to a preliminary coverage position. The Greenbrier, of course, was free to file a document meeting the policy requirements for a proof of loss at an earlier date in order to trigger the start of the appraisal timeline. It did not do so. The Court must apply the unambiguous language of the contract. The motion to compel appraisal by Lexington, XL, and Lloyd's is, therefore, granted."

"Absent some argument from the Greenbrier challenging the application of the conflicting language, however, the Court must apply the language as contained in the policy. ACE demanded appraisal slightly over two months after the Insurers completed their investigation and the parties' respective positions were established. The demand came before the Greenbrier filed suit. Accordingly, the Court finds that ACE demanded appraisal in compliance with the ACE policy terms. Therefore, its motion to compel appraisal is granted.:

Berger then stayed the matter pending the appraisals.

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