        In the Missouri Court of Appeals
                             Eastern District
                                         DIVISION III

AMERICAN FAMILY MUTUAL,                      )              No. ED101609
INSURANCE COMPANY,                           )
                                             )
       Respondent,                           )              Appeal from the Circuit Court
                                             )              of St. Louis County
vs.                                          )
                                             )              Honorable Barbara W. Wallace
EDWARD DIXON and                             )
KATHY DIXON,                                 )
                                             )
       Appellant.                            )              Filed: December 16, 2014

                                          Introduction

       Appellants Edward Dixon and Kathy Dixon (“Homeowners”) appeal from the trial

court’s entry of summary judgment in favor of Respondent American Family Mutual Insurance

Company (“American Family”). Because the record shows that the issue at dispute in this

litigation is whether Homeowners’ claims are covered losses under the policy as opposed to the

amount of damages resulting from a covered loss, the appraisal provision contained in the

insurance policy is not applicable. The issue of whether the Homeowners’ claims are covered

losses under the policy may not be delegated lawfully to an internal resolution procedure

provided in the insurance policy, but may be fully litigated by Homeowners in a court of law.
Accordingly, we reverse the judgment of the trial court and remand for further proceedings

consistent with this opinion.

                                      Factual and Procedural History

        Homeowners own a residential property in Maryland Heights, Missouri (“the Property”)

that is insured by an American Family homeowners’ insurance policy (“the Policy”). The Policy

contains an appraisal provision, which states, in full:

        Appraisal. If you and we fail to agree on the amount of damages as the result of
        a covered loss, either may demand that the actual cash value and the amount of
        the loss be set by appraisal. In this event, each party will choose a competent and
        disinterested appraiser within 20 days after receiving a written request from the
        other. The two appraisers will choose a competent and disinterested umpire. If
        they cannot agree upon an umpire within 15 days, you or we may request that the
        choice be made by a judge of a court of record in the state where the insured
        premises is located. The appraisers will appraise the loss, stating separately the
        actual cash value and loss to each item. If the appraisers submit a written report
        of an agreement to us, the amount agreed upon will be the amount of loss. If they
        fail to agree within a reasonable time, they will submit their differences to the
        umpire. Written agreement signed by any two of these three will set the actual
        cash value and the amount of the loss. We will pay our appraiser. You will pay
        your appraiser. Other expenses and the compensation of the umpire will be paid
        equally by you and us.

On April 28, 2012, the Property was damaged in a wind and hail storm. As a result,

Homeowners made a claim for coverage with American Family for damage to their concrete

driveway, concrete porch, and wood deck.1

        In a letter dated August 2, 2012, American Family informed Homeowners that they did

not find sufficient storm-related damage to warrant repair or replacement of the concrete

driveway or porch. Specifically, American Family stated: “We have inspected your property

twice and have failed to discover sufficient damage to warrant the additional repairs shown on

your contractor’s estimate, or any storm related damage that would warrant the replacement of


1
 It is not clear from the record whether additional areas of the property were damaged and/or whether American
Family provided coverage for such areas.

                                                        2
the concrete on your front porch or driveway.” American Family then referred Homeowners to

the appraisal provision in the Policy and asked Homeowners to respond in writing if they wished

to proceed with the appraisal process.

        Although it is not clear from the record which party demanded appraisal, on October 23,

2012, American Family engaged Dimitrios Zavradinos (“Zavradinos”) from Donan Engineering,

Co., Inc. to inspect the Property and make an appraisal award. Zavradinos found surface scaling,

pitting, and pop-outs on the concrete driveway but determined that such damage was not caused

by hail. Zavradinos also found hail impact dents and chips on the wood deck, but concluded that

the structural integrity of the deck was not compromised and the deck need only be repainted.

Ultimately, Zavradinos made an appraisal award of $750.00 which represented the cost to paint

the wood deck.

        On August 8, 2013, American Family filed a petition for appointment of an umpire

against Homeowners. The petition alleged that Homeowners appointed Greg Fisher from

Missouri Concrete Technology, Inc. as their appraiser, and American Family appointed

Zavradinos as its appraiser.2 The petition further alleged that the appraisers were unable to reach

an agreement between them as to the selection of an umpire and thus requested that the trial

court appoint one for them.

        On September 10, 2013, Homeowners moved to dismiss American Family’s petition for

appointment of an umpire and filed counterclaims for breach of contract and vexatious refusal to

pay. Homeowners alleged that because the dispute between the parties was one of coverage, not

valuation, the appraisal process could not be used to settle the dispute. Homeowners argued that




2
 It is not clear from the record whether Homeowners ever appointed an appraiser. The record contains only a job-
cost estimate from Greg Fisher but no appraisal award.

                                                        3
Missouri law prohibits arbitration provisions in insurance contracts and here American Family

was attempting to use appraisal as a disguise to arbitrate coverage issues.

       American Family responded with a motion to dismiss Homeowners’ counterclaims,

insisting that the dispute was merely over valuation of the loss and not coverage. Therefore,

American Family argued, the appraisal process was the “proper remedy” for the resolution of the

parties’ dispute. After a hearing on the matter, the trial court denied Homeowners’ motion to

dismiss the petition for appointment of an umpire and granted American Family’s motion to

dismiss Homeowners’ counterclaims.

       Homeowners filed a motion to reconsider the trial court’s order on May 9, 2014. The

motion alleged that a dismissal was improper because the trial court did not have enough

evidence before it to determine whether the parties’ dispute was a coverage issue or a valuation

issue. Homeowners attached three exhibits to the motion to support their argument that the

parties’ disagreement concerned the cause of damage and not valuation: (1) an estimate to repair

damage to Homeowner’s concrete from Greg Fisher of Missouri Concrete Technology, Inc.; (2)

the August 2, 2012 letter from American Family denying the existence of storm-related damage

to Homeowners’ concrete; and (3) Zavradinos’s appraisal report and reward. After considering

the exhibits and with the consent of both parties, the trial court converted American Family’s

motion to dismiss to a motion for summary judgment. The trial court subsequently granted

American Family’s motion for summary judgment without explanation and denied Homeowners’

motion to reconsider. This appeal follows.

                                         Point on Appeal

       In their sole point on appeal, Homeowners assert that the trial court erred in granting

American Family’s motion for summary judgment because American Family is attempting to use

the appraisal process to resolve a coverage dispute. Homeowners argue that an appraisal process

                                                 4
that resolves coverage issues would constitute arbitration, which is unlawful and unenforceable

in insurance matters in Missouri under Section 435.350.3

                                                   Standard of Review

           We review the grant of summary judgment de novo, giving no deference to the trial

court’s findings or determinations. ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply

Corp., 854 S .W.2d 371, 376 (Mo. banc 1993). We review the record in the light most favorable

to the party against whom judgment was entered and give the non-movant the benefit of all

reasonable inferences from the record. Id.; Calvert v. Plenge, 351 S.W.3d 851, 854–55 (Mo.

App. E.D. 2011).

                                                       Discussion

           Summary judgment is proper where the pleadings and the discovery, exhibits, and

affidavits on which the motion relies show that there is no genuine issue of material fact and the

moving party is entitled to judgment as a matter of law. Rule 74.04(c); Lacy v. Wright, 199

S.W.3d 780, 782 (Mo. App. E.D. 2006). At its core, this case is about the interpretation and

application of a contract. Construction of a contract is generally a matter of law. KCRE, Inc. v.

Robb, 897 S.W.2d 232, 233 (Mo. App. W.D. 1995). Therefore, summary judgment is

appropriate when no factual issues remain and the meaning of the contract is so clear that it may

be determined from the four corners of the document. Id. If, however, the court determines that

the contract is ambiguous, a trier of fact must resolve the ambiguity and summary judgment is

inappropriate. Id.

           Neither party alleges that the appraisal provision in the Policy is ambiguous, and we find

no ambiguity. The intention of the parties may be clearly ascertained from the contract itself.

Despite the clarity of the appraisal language found in the policy, the application of that provision

3
    All statutory references are to RSMo (2000).

                                                           5
is dependent upon the factual underpinnings of the dispute between Homeowners and American

Family. Unfortunately, the trial court offered no reason for granting summary judgment in favor

of American Family and dismissing Homeowners’ counterclaims. However, the record before us

clearly demonstrates that application of the appraisal provision was the core issue in the

pleadings filed by both parties which ultimately resulted in the trial court’s grant of summary

judgment. Because the appraisal provision applies only to disputes relating to the amount of

covered losses, and not to disputes as to whether a claim is a covered loss, the appraisal

provision does not apply to the situation presented, and granting summary judgment was

improper.

         The Policy’s appraisal provision clearly and unambiguously provides both Homeowners

and American Family the right to demand an appraisal. However, this right is limited to those

instances where the parties cannot agree on the amount of damages as the result of a covered

loss. The Policy states, in relevant part:

         “If you and we fail to agree on the amount of damages as the result of a covered
         loss, either may demand that the actual cash value and the amount of the loss be
         set by appraisal. In this event, each party will choose a competent and
         disinterested appraiser . . . . The appraisers will appraise the loss, stating
         separately actual cash value and loss to each item.”

(emphasis added). The Policy does not give the appraisers the authority to determine, in the first

instance, whether a covered loss exists.4 Rather, an appraisal may only be performed once it is

first established that a covered loss exists. Once a covered loss is established, the Policy clearly

limits the function of the appraisers to determining the “actual cash value and the amount of

loss.”



4
 Such a policy would be unenforceable as the interpretation of an insurance contract, particularly in reference to the
question of coverage, is a question of law that must be decided by the court. D.R. Sherry Const., Ltd. v. Am. Family
Mut. Ins. Co., 316 S.W.3d 899, 902 (Mo. banc 2010).

                                                          6
       In this case, the limited record before us suggests that the underlying dispute between

Homeowners and American Family is not the “amount of the loss” claimed by Homeowners, but

whether the condition of the concrete driveway and wood deck are covered losses under the

policy. Missouri law is clear that whether the appraisal provision of an insurance policy applies

depends upon whether the dispute between the insurer and insured is properly characterized as a

coverage dispute or a disagreement over the amount of the loss. Hawkinson Tread Tire Service

Co. v. Indiana Lumbermens Mutual Insurance Co., 245 S.W. 2d 24 (Mo. 1951). The record

before us does not suggest that American Family has acknowledged that the condition of

Homeowners’ concrete porch, concrete driveway, and wood deck are covered losses under the

policy of insurance. Instead, the record shows that American Family denied the existence of hail

damage to Homeowners’ concrete, and therefore denied the existence of any covered loss. In its

August 2, 2012 letter, American Family informed Homeowners that it did not find sufficient

storm-related damage to warrant repair or replacement of the concrete driveway or porch.

Additionally, American Family’s appraiser concluded in his report that the surface scaling,

pitting, and pop-outs on the concrete were caused by wear and tear and not by hail. As to the

wood deck, there is no evidence in the record from which we could conclude that the alleged

damage is an undisputed covered loss. The sole evidence in the record pertaining to the deck is

Zavradinos’s appraisal award which granted $750.00 to repaint the wood deck. The appraisal

award does not establish whether all of the alleged damage to the wood deck is a covered loss.

       In its brief and during oral argument, American Family repeatedly emphasized that the

dispute at issue was one of the amount of loss, not coverage. American Family reasons that

because the policy unambiguously provides coverage for damage caused by hail, there is no

dispute as to coverage, but only the amount of loss. We are lost in this circuitous argument

presented because the summary judgment evidence before us clearly shows that American

                                                7
Family’s objections to Homeowner’s claims is premised upon its position that the condition of

Homeowners’ concrete resulted from causes other than hail impact. Yet American Family insists

that because it admits that hail damage, in the abstract, is a covered loss under the Policy, the

issue to be resolved in addressing the merits of Homeowners’ particular claims is not a question

of coverage, but instead, a question as to the amount of damages sustained by Homeowners. We

are not persuaded.

       As noted above, appraisal provisions in an insurance policy apply only if the dispute

between the parties relates to the amount of the loss and not coverage. Hawkinson, 245 S.W. 2d

at 24; see also Certain Underwriters at Lloyd’s London Subscribing to Certificate No. IPSI

12559 v. SSDD, LLC, No. 4:13–CV–193 CAS, 2013 WL 2403843 at *8, (E.D. Mo. May 31,

2013). American Family argues that the lack of ambiguity in the hail damage provision

contained in the policy is dispositive of the fact that the only issue before the court relates to the

amount of the loss, not coverage. Although case law addressing this issue is limited, and we

have found no Missouri case squarely on point with the facts before us, we reject American

Family’s bald contention that “[c]learly coverage is not in dispute in this case.” The summary

judgment evidence before us does not suggest that American Family utilized its appraisers to

determine the extent of a covered loss, but instead has used the appraisal process to determine

whether or not there exists a covered loss. This distinction is critical to our analysis and holding

because, in that event, the appraisal provision is being used as a means of arbitration to resolve

issues of coverage, which is prohibited under Section 435.350.

        Because the summary judgment evidence in the record suggests that the issue at dispute

in this litigation is whether Homeowners’ claims are covered losses under the policy as opposed

to the amount of damages resulting from a covered loss, the appraisal provision in the Policy is



                                                   8
