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Owners Association of Bella Vista Villas, Inc. v. Owners Insurance Co.

United States District Court, D. Colorado

December 7, 2017



          William J. Martínez, United States District Judge.

         In this insurance case, Plaintiff, Owners Association of the Bella Vista Villas, Inc., brings claims against Defendant, Owners Insurance Company, for breach of contract, common law bad faith denial of insurance benefits, and unreasonable delay or denial of insurance benefits in violation of Colorado Revised Statutes §§ 10-3-1115 & -1116. (See generally ECF No. 1.) Now before the Court is Plaintiff's Opposed Motion to Re-Open and for Appointment of an Umpire. (ECF No. 45.) For the reasons explained below, the motion is denied.

         I. BACKGROUND

         This case arises from “wind and/or hail storm” damage to Plaintiff's property located in Centennial, Colorado, and the ensuing dispute over Defendant's handling of Plaintiff's claim(s) under its property insurance policy. (See ECF No. 1 ¶¶ 7-15.) That policy includes the following term governing appraisal of a claimed loss:

If we [i.e., Defendant] and you [i.e., Plaintiff] disagree on the value of the property or 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 value of the property and 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. Each party will:
a. Pay its chosen appraiser; and
b. Bear the other expenses of the appraisal and the umpire equally.
If there is an appraisal, we [Defendant] will still retain our right to deny the claim.

         (ECF No. 20-3 ¶ E.2. (the “Appraisal Clause”).)

         In its Complaint, Plaintiff sought to “compel appraisal” under this clause. At that time, Plaintiff alleged Defendant had “delay[ed] appraisal by objecting to [Plaintiff's] chosen appraiser, ” based on alleged bias, and that Defendant's objection forced Plaintiff to file suit. (See ECF No. 1 ¶¶ 18, 28-36.)

         Evidently, the parties were able to resolve this objection, however, since on June 30, 2016, they jointly sought to administratively close this case, representing they had “negotiated . . . an agreement to govern the appraisal process, which will allow the Parties to determine the disputed, unpaid amount of loss, if any exists, before proceeding to any litigation of the Plaintiff's claims.” (ECF No. 18 ¶ 2.) The parties represented this agreement would “permit counsel to work collaboratively, ” and “complete the appraisal in an orderly and efficient fashion.” (Id. ¶ 3.) In reliance on these representations, this case was administratively closed, “subject to reopening for good cause shown, which may include, but is not limited to, a disagreement between the appraisers on the appointment of an umpire.” (ECF No. 19.)

         Unfortunately, although the parties did enter an “Agreement Governing the Appraisal Process” (ECF No. 20-1 (the “Appraisal Agreement”)), their promises of working collaboratively and of an “orderly and efficient” process were soon broken.

         On August 26, 2016, Defendant sought to re-open the case for the Court to hear its “Expedited Motion to Disqualify” Plaintiff's new appraiser (who differed from the appraiser to whom Defendant had previously objected at the time of the complaint). (ECF No. 21.) In opposing disqualification, Plaintiff argued, in part, that Defendant's appraiser was equally biased. (ECF No. 41 at 11; ECF No. 23 at 10.)

         The Court re-opened the case to take up the motion to disqualify. On referral from the undersigned, U.S. Magistrate Judge Nina Y. Wang denied the request for disqualification, recommending the case once again be administratively closed to complete appraisal. (ECF Nos. 41, 42.) Judge Wang reasoned, in part, that while the insurance policy's Appraisal Clause contemplates selection of an “impartial” appraiser, that term is not defined, and the policy does not provide “what procedure is applicable to challenge the selection of an appraiser, ” nor “what authority a court has to disqualify an appraiser.” (ECF No. 41 at 4.) Judge Wang explained that the parties' Appraisal Agreement also failed to correct these omissions, and that there is a lack of “any Colorado appellate authority ...

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