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Colorado Hospitality Services Inc. v. Owners Insurance Co.

United States District Court, D. Colorado

July 14, 2015

COLORADO HOSPITALITY SERVICES INC., a Colorado company d/b/a Peoria Hospitality, LLC, Plaintiff,
v.
OWNERS INSURANCE COMPANY, an Ohio company, Defendant. OWNERS INSURANCE COMPANY and AUTO OWNERS INSURANCE COMPANY, Petitioners,
v.
COLORADO HOSPITALITY SERVICES, INC., Respondent. Consolidated with Civil Action No. 15-cv-01046-RBJ

ORDER

R. BROOKE JACKSON, District Judge.

Before the Court are Colorado Hospitality Services, Inc.'s motion for partial summary judgment [ECF No. 17] in 15CV1046 and the insurers' "cross-motion" for summary judgment filed in 14CV1859. They both raise the same issue: whether an appraisal award should be vacated. The Court concludes that the award must be vacated, and accordingly, grants the motion in 14CV1859 and denies the motion in 15CV1046.

FACTS

Colorado Hospitality Services, Inc., doing business as Peoria Hospitality, LLC ("Peoria") operates the Timbers Hotel located at 4411 Peoria Street in Denver, Colorado. Peoria claims that the hotel sustained damage in a hail storm on June 6, 2012. It submitted a claim to its property insurer, Owners Insurance Company, which in turn sent engaged Eberl Claims Service to inspect the premises. Eberl estimated the loss at $52, 231.13. On June 10, 2013 Owners made an Actual Cash Value payment to Peoria of $23, 777.53, reflecting depreciation of $23, 453.60 and a $5, 000 deductible.

Believing that the loss was much higher than Eberl's estimate, Peoria retained a public adjuster, Mike Lindhurst of C3 Group, Inc. to assist in adjusting the loss. Thereafter Lindhurst on behalf of Peoria submitted a claim in excess of $1.1 million.[1]

The insurance policy contains the following term:

Appraisal
If we and you disagree on the value of the property or the amount of the loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire.... The appraisers will state separately the value of the property and the amount of the loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:
a. Pay its chosen appraiser; and
b. Bear the other expenses of the appraisal and umpire equally.
If there is an appraisal, we will still retain our right to deny the claim.

ECF No. 1-9 at 3 (Policy ยง E.2.).

Peoria invoked the appraisal process and selected Clark Lodge of Lodge Adjusting & Consulting as its appraiser. Owners selected Michael Fultz of PT&C Forensic Consulting Services, P.A. as its appraiser. The two appraisers selected Thomas Moorhead, a former state district judge and now a member of the Judicial Arbitration Group, to be the umpire. Mr. Lodge's appraisal was for $911, 652.18 Actual Cash Value and $1, 066.357.52 Replacement Cost. ECF No. 32-3 at 13-17. I am not aware of the result of Mr. Fultz's appraisal. In any event, Mr. Lodge and Judge Moorhead agreed to Mr. Lodge's numbers, i.e., an appraisal award of $911, 652.18 Actual Cash Value ($1, 066, 357.52 Replacement Cost).

Owners then invoked its "right" to deny the claim, contending that there were no damaging hailstorms in the vicinity of the hotel during the two-year period of its policy. Peoria filed a motion for partial summary judgment, arguing that Owners had waived any contention that no hail damage occurred during the policy period when two adjusters sent to the hotel by Owners prepared estimates of hail damage, and that ...


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