United States District Court, D. Colorado
ORDER ON MOTION TO DISMISS OR ALTERNATIVELY TO
Brooke Jackson United States District Judge
matter is before the Court on defendant Philadelphia
Indemnity Insurance Company's motion to dismiss plaintiff
Hometown Community Association, Inc.'s complaint and
amended complaint, ECF Nos. 2, 32. Alternatively,
Philadelphia moves to strike various paragraphs in the
amended complaint. For the reasons stated below,
Hometown's motion to dismiss or alternatively to strike
is GRANTED in part and DENIED in part. The Court holds that
payment of the appraisal award mooted the breach of contract
claim but did not necessarily moot the bad faith claims.
is a residential townhome association in Arvada, Colorado
that was insured by defendant Philadelphia. ECF No. 31 at 2.
On July 7, 2014 a hailstorm damaged Hometown's property.
Id. This lawsuit stems from a subsequent
disagreement between Hometown and Philadelphia over the
insurance coverage for the damage Hometown sustained.
The Insurance Policy.
time of the hailstorm, Hometown maintained a commercial
property insurance policy with Philadelphia. The policy
provided that Philadelphia would pay for physical loss to
covered property as a result of covered causes of loss. ECF
No. 2-1 at 103. Additionally, the policy contained an
appraisal clause, which stated:
If we and you 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 umpire equally.
If there is an appraisal, we will still retain our right to
deny the claim.
Id. at 117 (emphasis in original).
Events Following the Storm.
March 28, 2015, eight months after the storm, Hometown
submitted a claim to Philadelphia for the damage caused by
the storm. ECF No. 31 at 2. On April 1, 2015, four days after
filing its initial claim, Hometown contracted for painting on
townhomes and flower boxes that had been damaged in the
storm. Id. On May 8, 2015 Philadelphia acknowledged
coverage for Hometown's March 28, 2015 claim.
Id. However, on May 14, 2015 Philadelphia's
adjuster Mr. Tom Bonnot denied Hometown's April 1st claim
for painting and its claim for damage to windows, claiming
that Hometown was responsible for these repairs. Id.
21, 2015 Mr. Bonnot assessed the damage to Hometown's
property, employing for this purpose Unified Building
Sciences, Inc. (“UBS”). Id. at 3.
Philadelphia also solicited bids from three contractors,
including BluSky Restoration Contractors, LLC, to determine
the cost of the required repairs. Id. Around the
same time, Hometown employed HomeGuard Restoration to inspect
the damage. Id. Despite objections from Hometown,
Philadelphia chose BluSky's bid as the basis of its claim
payment. Id. On August 31, 2015 Philadelphia used
BluSky's bid to issue an actual cash value claim of $152,
096.49 (after applying Hometown's deductible) in
satisfaction of Hometown's claim. Id.
December 1, 2015 Mr. Bonnot revised the scope of repairs to
include additional damages and painting, but this revised
scope still excluded some repairs Hometown thought necessary.
Mr. Bonnot passed these adjustments to UBS and BluSky for
revised estimates. Id. On February 8, 2016 BluSky
revised its proposal, and UBS revised its scope and cost
report to account for these adjustments. Id. On
February 15, 2016 HomeGuard submitted its own revised
estimate of damages “in an attempt to reach an
agreement with respect to the scope of the covered
Bonnot informed Philadelphia on February 26, 2016 that
BluSky's revised estimate now totaled $446, 585.83.
Id. This amount included an undisputed value of $95,
872.81 above Philadelphia's previous payment.
Id. at 3-4. However, Philadelphia did not make an
additional payment of this amount at this time. Id.
On March 25 and April 22, 2016 Mr. Bonnot reminded
Philadelphia of the remaining unpaid $95, 872.01, but it was
not paid. Id.
on March 3, 2016 Hometown had invoked the insurance
policy's appraisal clause by issuing a written demand for
an appraisal of the loss. Id. The parties each
appointed an appraiser, but on May 3, 2016 Philadelphia's
appraiser informed Hometown's appraiser that he would not
review the file until the parties had appointed an
independent umpire. Id. He eventually did look at
the matter, but the two appraisers were unable to agree on
the cost of repair. Id. at 5. Philadelphia's
appraiser would not discuss the appointment of an impartial
umpire with Hometown's appraiser, insisting instead that
the parties should obtain a court-appointed umpire.
Id. Accordingly, Hometown filed a petition for
appointment of an umpire in Jefferson County District Court.
Id. On August 30, 2016 Hometown removed the
appointment action to the United States District Court for
the District of Colorado on diversity grounds. Id.
After a magistrate judge expressed skepticism about the
federal court's jurisdiction over the case, the parties
stipulated to remand the matter to state court on October 18,
2016. Id. The court selected an umpire on November
22, 2016. Id. at 6.
January 31, 2017, now 11 months after Mr. Bonnot had informed
Philadelphia of his increased damages figure, the
court-appointed umpire issued an appraisal award that
provided a total actual cash value of $515, 580.43, along
with a depreciation figure of $32, 909.39. Id. Three
days later, on February 3, 2017 Philadelphia issued a check
for $186, 429.30, reflecting the award's actual cash
value less Philadelphia's previous payment and
Hometown's deductible. Philadelphia has not yet paid the
depreciation amount of $32, 909.39 despite having inspected
the property and confirmed that the repair work has been
filed this suit in the Jefferson County District Court on
March 6, 2017. Philadelphia removed the case to the United
States District Court for the District of Colorado on March
28, 2017. ECF No. 1 at 2. On the same day Philadelphia moved
this Court to dismiss the case, or alternatively, to strike
all paragraphs alleging either litigation or appraisal
conduct as a basis for a bad faith claim. ECF No. 2. The
initial motion to dismiss was fully briefed (see ECF
Nos. 2, 14, 15) when Hometown amended its complaint on
October 10, 2017. ECF No. 31. Because the amended complaint
was largely similar to the original complaint, I instructed
the parties to file short supplements incorporating their
prior briefing should Philadelphia move to dismiss the
amended complaint. ECF No. 30. Accordingly, Philadelphia
filed its supplement to the original motion to dismiss on
October 31, 2017, and Hometown filed its supplemental
response on November 9, 2017. ECF Nos. 32, 34.
Philadelphia's alternative motion to strike was expanded
to include all paragraphs relating to depreciation payments.
ECF No. 32 at 4-7.
STANDARD OF REVIEW
survive a 12(b)(6) motion to dismiss, the complaint must
contain “enough facts to state a claim to relief that
is plausible on its face.” Ridge at Red Hawk,
L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir.
2007) (quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 570 (2007)). A plausible claim is a claim that
“allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While
the Court must accept the well-pleaded allegations of the
complaint as true and construe them in the light most
favorable to the plaintiff, Robbins v. Wilkie, 300
F.3d 1208, 1210 (10th Cir. 2002), purely conclusory
allegations are not entitled to be presumed true,
Iqbal, 556 U.S. at 681. However, so long as the
plaintiff offers sufficient factual allegations such that the
right to relief is raised above the speculative level, he has
met the threshold pleading standard. See, e.g.,
Twombly, 550 U.S. at 556; Bryson v.
Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008).
to Rule 12(b)(6), the Court may only consider facts alleged
within the complaint. See Miller v. Glanz, 948 F.2d
1562, 1565 (10th Cir. 1991). “Should the court receive
and consider materials outside the complaint, the court may
convert a Rule 12(b)(6) motion to a motion for summary
judgment if the parties have notice of the changed status and
the nonmovant responded by supplying its own extrinsic
evidence.” MacKinney v. Allstate Fire and Cas. Ins.
Co., 16-CV-01447-NYW, 2016 WL 7034977, at *3-4 (D. Colo.
Dec. 1, 2016). However, the Court may consider documents
referred to in the complaint that are central to a