Trying to skip straight to court past the mandatory appraisal clause in an insurance policy runs into the brick wall of a dismissal for lack of ripeness. 

In 50 Exchange Terrace LLC v. Mount Vernon Specialty Insurance Company, 129 F.4th 1186 (9th Cir. 2025), the Ninth Circuit recently considered a policyholder’s creative attempt to skirt a policy’s mandatory appraisal clause. After frozen pipes burst and caused water damage, the insurer demanded an appraisal of the insurance claim under the policy. During the appraisal process, however, the policyholder sued in court, alleging that the insurer was wrongfully withholding payment pending the appraisal’s outcome. 

The Result

The Ninth Circuit affirmed the dismissal of the policyholder’s action as unripe and for lack of standing. It reasoned that, until the binding appraisal concluded, any purported injury was too speculative. If the umpire agreed with the policyholder’s valuation, then the policyholder could secure full relief. And implicitly, if the umpire disagreed with it, then the insurer would not owe anything in the first place. 

Notably, the insurer had not moved to dismiss based on lack of ripeness or standing—the district court had to raise them sua sponte amidst other motion practices by the parties. The Ninth Circuit’s opinion underscores that this scenario arises often, and insurers would do well to nip it in the bud: “We do not break new ground here. We have chosen to issue this decision as a precedential opinion in the hope of short-circuiting other similarly premature cases where the agreed insurance appraisal process has not yet been completed.”

Looking Ahead

As insurance policies increasingly turn to alternative dispute resolution (ADR) to manage costs and streamline the claim process, ripeness, and standing will aid insurers in keeping any dispute on the right track. Courts remain reluctant to intervene before the ADR process has run its course.

Takeaways for Insurers

When a policyholder sues in court, consider whether the lawsuit precedes any ADR process required by the policy. If so, raising that defect early on will cut costs for everyone involved.