United States District Court, D. Colorado
LOCHWOOD CHATEAU MASTER HOME OWNERS ASSOCIATION, INC., a Colorado corporation, Plaintiff,
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a corporation, Defendant.
ORDER TO SHOW CAUSE
S. Krieger Chief United States District Judge
MATTER comes before the Court on Plaintiff Lochwood
Chateau Master Home Owners Association, Inc.'s
(“Lochwood”) Motion for Partial Summary Judgment
- Breach of Contract for Nonpayment of Appraisal Award (the
“Partial Summary Judgment Motion”)
(#56). The Court has begun its review of the
parties' briefing on that motion. As it always does, the
Court commenced its inquiry by examining whether it properly
has jurisdiction over the lawsuit. It became apparent to the
Court that there are significant concerns in that regard.
Therefore, for the reasons set forth below, the Court
ORDERS the parties to SHOW
CAUSE as to why the lawsuit should not be dismissed
or remanded for a lack of subject-matter jurisdiction.
a hail damage case. Lochwood is the owner of residential
property located in Lakewood, Colorado. At all times relevant
to this lawsuit, it was insured by a business owner's
insurance policy (the “Policy”) issued by
Defendant American Family Mutual Insurance Company
(“American Family”). The Policy included a
provision allowing for independent appraisal of the insured
property or amount of loss in the case that such loss amount
was in dispute by the parties. That appraisal provision
states in relevant part:
If we and you disagree on the amount of 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. If they cannot
agree, either may request that selection be made by a judge
of a court having jurisdiction. The appraisers will state
separately the amount of loss. If they fail to agree, they
will submit their differences to the umpire. A decision
agreed to by any two will be binding.
(#14-2, at 1.) This appraisal was a
mandatory condition precedent if invoked by either of the
parties (though, of course, both parties were free
not to invoke it if they so elected). Id.
The Policy further specifies that “[n]o one may bring a
legal action against us under this insurance unless: (a)
[t]here has been full compliance with all of the terms of
this insurance….” Id. at 16.
September 9, 2013, Lochwood's property apparently
suffered damage from a hail storm, and Lochwood timely
submitted a claim to American Family for that damage under
the Policy. The parties apparently do not dispute that hail
damage is a covered loss; instead, the crux of the dispute
concerns the amount of that loss. Lochwood apparently
believes that the covered loss amount is significantly higher
than does American Family.
originally filed its initial complaint in Colorado state
court on September 8, 2015. American Family removed the
matter to this Court, asserting diversity jurisdiction.
Complaint asserts four claims: declaratory relief
(i.e., to declare the parties' rights and
obligations under the Policy, specifically including the
scope of the appraisal provision set forth therein); a
petition to compel American Family to participate in the
appraisal process, specifically compelling it to appoint its
appraiser; breach of contract for failure to adjust the loss
and failure to pay the benefits due under the Policy; and an
unreasonable delay in paying Lochwood' claim (in
violation of C.R.S. § 10-3-1115).
Judge Tafoya held a scheduling conference with the parties on
February 9, 2016 and ordered the parties to complete an
appraisal, as outlined pursuant to the policy. The
parties' respective appraisers were to select an umpire,
but if the appraisers could not agree as to an umpire, each
party could file a motion to appoint one. The appraisers
failed to agree, and after receiving the parties' cross
motions to appoint an umpire, Magistrate Judge Tafoya
appointed John A. Voelpel III and stayed discovery while the
appraisal was pending. The appraisal process was completed on
June 6, 2016, and on October 31, 2016, the parties requested
that the stay be lifted.
April 7, 2017, Lochwood filed a Partial Summary Judgment
Motion. It sought summary judgment on its breach of contract
claim, asserting that because the appraisal process had been
completed, under the terms of the Policy, American Family was
obligated to pay the appraised amount as a matter of law.
American Family opposed entry of partial summary judgment by
attacking the fairness and impartiality of the appraisal
process. It noted that the purportedly
“impartial” appraiser appointed by Lochwood had a
long and detailed history with Lochwood's counsel, and he
had been rejected as impermissibly partial due to that
relationship by a number of courts in a number of
jurisdictions (including the District of Colorado on multiple
noted above, the Court has significant doubt that it had
jurisdiction resolve the claims pending before the Court.