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Auto-Owners Insurance Co. v. Summit Park Townhome Ass'n

United States District Court, D. Colorado

April 14, 2015

AUTO-OWNERS INSURANCE COMPANY, a Michigan corporation, Plaintiff,
SUMMIT PARK TOWNHOME ASSOCIATION, a Colorado corporation, Defendant

For Auto-Owners Insurance Company, a Michigan corporation, Plaintiff: John David Mereness, Gregory R. Giometti, Gregory R. Giometti & Associates, P.C., Denver, CO.

For Summit Park Townhome Association, a Colorado corporation, Defendant: David John Pettinato, LEAD ATTORNEY, William Corretti Harris, Merlin Law Group, P.A., Tampa, FL.



This insurance coverage dispute is before me on Defendant Summit Park Townhome Association's (" Summit Park" ) Motion to Stay Litigation and Motion to Compel Appraisal as Mandated Under the Policy [Doc. # 7]. Plaintiff Auto-Owners Insurance Company (" Auto-Owners" ) issued an insurance policy to Summit Park. Summit Park now requests that the Court compel Auto-Owners' participation in the appraisal process outlined in the policy in order to determine the " amount of loss" it sustained as a result of a September 2013 hailstorm; stay the litigation pending completion of that process; and reserve jurisdiction to select an umpire.

I have reviewed the motion, Auto-Owners' response [Doc. # 10], and the reply [Doc. # 16]. Oral argument would not materially assist me in deciding the motion. As explained below, I GRANT the motion because the policy unambiguously commits the parties' dispute regarding the amount of loss from the storm, if any, to the appraisal process. Staying further court proceedings while this process takes place is the most efficient way to proceed for both the parties and the Court.

I. Background

The following facts are undisputed unless otherwise noted. Auto-Owners issued policy number 74416480-13 to Summit Park, a homeowner's association for a community of 57 townhomes in Aurora, Colorado. 2d Am. Compl. ¶ ¶ 2-3 [Doc. # 6]. The policy has a term of March 1, 2013, to March 1, 2014, and covers, among other things, " direct physical loss of or damage to" the Summit Park premises. Id. ¶ ¶ 3-4. In September 2013, a hailstorm moved through Aurora. Id. ¶ 5. Summit Park made a claim under the policy for damages resulting from the storm. Id. Auto-Owners investigated the claim and paid Summit Park some $245,000. Mot. ¶ ¶ 6, 11 [Doc. # 7].

Summit Park believes the covered damages are millions of dollars greater and hired counsel to press its cause with Auto-Owners. Id. ¶ 9. Summit Park also sought to exercise its rights under the policy's appraisal provision. Id. ¶ 21. That provision allows either party to " make written demand for an appraisal of the loss" if the parties " disagree on the value of the property or the amount of loss." Ex. A to 2d Am. Compl. at 78 [Doc. # 6-1]. Once a party does so, each party " will select a competent and impartial appraiser" to decide the issue. Id. The appraisers then choose an umpire to whom " they will submit their differences," if any, and a " decision agreed to by any two will be binding." Id. A " judge of a court having jurisdiction" will choose the umpire if the appraisers cannot agree on a selection. Id.

Auto-Owners eventually filed this declaratory judgment action in response to these demands. As relevant here, Auto-Owners alleges that the policy does not cover Summit Park's claimed damages, in whole or in part, because they were either caused by a storm predating the policy's effective dates--rather than by the September 2013 storm--or by some cause of loss not covered under the policy, such as defective workmanship. See 2d Am. Compl. ¶ ¶ 61-71 [Doc. # 6]. Auto-Owners further alleges that, to the extent the September 2013 storm did cause damage, the policy does not provide coverage for replacement of undamaged property, including vinyl siding, to achieve " matching" or " visual consistency" with damaged property that is replaced. Id. ¶ ¶ 72-78.

The instant motion requires me to decide whether these are " disagree[ments] on the value of the property or the amount of loss" such that Summit Park may invoke the appraisal provision. Ex. A to 2d Am. Compl. at 78 [Doc. # 6-1]. If I conclude that they are, I must then decide whether it is appropriate to stay the litigation while the appraisal process is completed.

II. Analysis

The Court's jurisdiction in this matter is founded on diversity of citizenship. 28 U.S.C. § 1332(a). Therefore, I apply the substantive law of Colorado. Essex Ins. Co. v. Vincent, 52 F.3d 894, 896 (10th Cir. 1995). Under Colorado law, questions of coverage under an insurance policy are generally matters of law reserved for the court. See Fire Ins. Exch. v. Bentley, 953 P.2d 1297, 1300 (Colo.App. 1998). The policy must be enforced as written unless the policy contains an ambiguity. Cary v. United of Omaha Life Ins. Co., 108 P.3d 288, 290 (Colo. 2005). The policy should be construed to give effect to the intent of the parties. Id. " Whenever possible this intent should be ascertained from the plain language of the policy alone." Farmers Ins. Exch. v. Anderson, 260 P.3d 68, 72 (Colo.App. 2010). " [W]ords should be given their plain meaning according to common usage, and strained constructions should be avoided." Compton v. State Farm Mut. Auto. Ins. Co., 870 P.2d 545, 547 (Colo.App. 1993).

Auto-Owners contends that the appraisal process has no role to play in this case, at least at this juncture. In committing disputes about the " amount of loss" to the appraisal process, Auto-Owners contends, the policy does not allow appraisers to determine the cause of any loss. Rather, this is a question of coverage that only the Court can resolve. Therefore, it contends, appraisers cannot decide how much, if any, of the damage to Summit Park's property was caused by the September 2013 storm, as opposed to events predating the policy or excluded causes like defective workmanship. And they ...

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