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PB Property Holdings, LLC v. Auto-Owners Insurance Co.

United States District Court, D. Colorado

January 3, 2018

PB PROPERTY HOLDINGS, LLC, Plaintiff,
v.
AUTO-OWNERS INSURANCE COMPANY, Defendant.

          ORDER APPOINTING APPRAISAL UMPIRE

          William J. Martínez United States District Judge

         Now before the Court is Plaintiff's Motion to Reopen Proceedings for the Limited Purpose of Appointment of a Neutral Umpire. (ECF No. 36.) The Motion is granted in part, for the reasons set out below.

         I. BACKGROUND

         This insurance case was filed in Denver District Court on June 16, 2016, and removed to this Court pursuant to 28 U.S.C. § 1332 on July 1, 2016. (ECF No. 1; ECF No. 4.) On August 18, 2016, Plaintiff moved the Court to compel Defendant to participate in the appraisal process contemplated in the policy issued to Plaintiff by Defendant. (ECF No. 10.) That provision provides:

         Appraisal

If [Defendant] and [Plaintiff] disagree on the 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, [Defendant] will still retain [its] right to deny the claim.

(ECF No. 4-1 at 87 (emphasis added).)

         U.S. Magistrate Judge Scott T. Varholak recommended that Plaintiff's Motion to Compel Appraisal should be granted, despite Defendant's objection that this case raises coverage and causation issues which should be resolved by the Court and not in the appraisal process. (See ECF Nos. 10, 18, 30.) The Court adopted Judge Varholak's recommendation, reasoning that despite “a split of national authority on the issue of whether appraisers should be given authority to make damage causation determinations * * * at least three Colorado trial courts have held that appraisers may determine causation.” (ECF No. 34 at 7.) Accordingly, the parties were directed to participate in the appraisal process described in the policy, and this case was stayed and administratively closed pending completion of that process. (ECF Nos. 34, 35.)

         II. ANALYSIS

         Appraisal provisions such as the one here are “found in most, if not all, property insurance policy contracts.” Colorado Div. of Ins. Bulletin No. B-5.26, Requirements Related to Disputed Claims Subject to Appraisal (Oct. 26, 2015) (docketed at ECF No. 36-4). However, as this Court recently ruled in another case, the mere fact that parties have agreed to such a provision does not mean that courts have either the authority or the inclination to supervise all aspects of private parties' contractual performance while such an appraisal is underway. See Owners Ass'n of Bella Vista Villas, Inc. v. Owners Ins. Co., 2017 WL 6054887 (D. Colo. Dec. 7, 2017) (“Bella Vista”).

         Nevertheless, in appropriate cases, the Court may “choose to grant a request to select an umpire, and in many cases that [will] be a reasonable exercise of the Court's powers and jurisdiction, in service of the ‘just, speedy, and inexpensive determination'” of pending insurance litigation. Id. at *3. Here, the Court finds that judicial appointment of an umpire is appropriate. The appraisal provision expressly allows the appraisers to request such appointment, the parties have a pending case establishing the Court's ...


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