Fleischner Potash Prevail in Appeal Confirming Appraisal Award in Superstorm Sandy Art Damage Claim

FP successfully argued that the New Jersey Appellate Division did not have jurisdiction to consider an appeal from an order confirming an appraisal award for a fine arts claim resulting from Superstorm Sandy. The claim was for damages in excess of $300 million, which went through a nearly six-year appraisal. FP represented the London market insurers, who provided excess coverage above the $75 million primary policy limit. In 2018, after review of tens of thousands of pages of documents, numerous meetings and consideration of submissions from counsel on issues such as the meaning of the policy term “retail value,” the Umpire issued a 52-page opinion and award in the amount of $48,876,014.

The Appellants challenged the appraisal award and sought modification thereof pursuant to the Alternative Procedure for Dispute Resolution Act, N.J.S.A. 2A:23A-1 to -30 (“APDRA”). FP argued that modification of the award was not warranted, as the arbitrator had not “erroneously applied law to the issues and facts,” N.J.S.A. 2A:23A-13(a) and the award was based on “substantial evidence.” N.J.S.A. 2A:23A-13(b). The Law Division judge agreed and denied Appellants’ application to modify the award. Appellants’ motion for reconsideration was also denied, and judgment was entered.

On appeal, FP argued that the Appellate Division did not have jurisdiction over the matter, as the Appellants waived their right to appeal when they agreed to appraisal pursuant to the APDRA. FP further argued that there are limited exceptions allowing for further review or appeal – where public policy requires it or if the wrong standard of review is applied – neither of which applied to this matter. The Appellate Division agreed, holding that it had no jurisdiction where the judge adhered to the APDRA’s statutory grounds in addressing a challenge to an appraisal award and finding that there were no “rare circumstances” supporting an exception. The Appellate Division held that the arguments Appellants made were merely disagreements regarding the interpretation of the insurance contract and the sufficiency of the factual findings made by the Umpire, which did not warrant modification of the Award. Accordingly, the appeal was barred under N.J.S.A. 2A:23A-18(b).

The case was handled by Benjamin Fleischner, Adam Stark and Kirsten Orr.

A copy of the Appellate Division Decision and Order can be found below.