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Pinon Sun Condominium Association, Inc. v. Atain Specialty Insurance Co.

United States District Court, D. Colorado

January 30, 2018

PINON SUN CONDOMINIUM ASSOCIATION, INC., a Colorado non-profit corporation, Plaintiff,
v.
ATAIN SPECIALTY INSURANCE COMPANY, a foreign corporation, INDIAN HARBOR INSURANCE COMPANY, a foreign corporation, and GREAT LAKES INSURANCE, SE, f/k/a Great Lakes Reinsurance UK, Plc, a foreign corporation, Defendants. ATAIN SPECIALTY INSURANCE COMPANY, a foreign corporation, INDIAN HARBOR INSURANCE COMPANY, a foreign corporation, and GREAT LAKES INSURANCE, SE, f/k/a Great Lakes Reinsurance UK, Plc, a foreign corporation, Defendants and Third-Party Plaintiffs,
v.
CLAIM SOLUTIONS LLC, a Colorado limited liability company, SCOTT BENGLEN, SHALZ CONSTRUCTION LLC, a Colorado limited liability company, and BRADLEY SHALZ, Third Party Defendants.

          ORDER DENYING PLAINTIFF'S MOTION TO COMPEL APPRAISAL AND TO STAY PROCEEDINGS PENDING COMPLETION OF APPRAISAL

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff Pinon Sun Condominium Association, Inc.'s Motion to Compel Appraisal and to Stay Proceedings Pending Completion of Appraisal. (Doc. # 50.) For the reason described below, the Court denies Plaintiff's Motion to Compel Appraisal and to Stay Proceedings Pending Completion of Appraisal.

         I. BACKGROUND

         The following facts are undisputed. Plaintiff is the homeowners association for a multi-family condominium property in Colorado Springs, Colorado, and is organized as a non-profit Colorado corporation. (Doc. # 43 at 2-3.) Plaintiff sought and obtained an insurance policy (the “Policy”) from Defendant Great Lakes Insurance, SE (“Defendant Great Lakes”) on its property for the period of August 15, 2015, to August 15, 2016. See (Doc. # 71-3). Defendant Great Lakes was the primary insurer of the Policy, covering up to $10, 000, 000.00 for any given incident. (Doc. # 43 at 25.) Defendant Atain Specialty Insurance Company (“Defendant Atain”) and Defendant Indian Harbor Insurance Company (“Defendant Indian Harbor”) were the excess carriers under the Policy. (Id.); see also (Doc. # 49 at 2.)

         The Policy included coverage for wind and hail losses, subject to a two percent deductible. (Doc. # 43 at 4.) Relevant here, the Policy provided for appraisal if the parties disagreed on the amount of loss (the “Appraisal Provision”):

If the Named Insured and the Company fail to agree on the amount of loss, each, upon the written demand either of the Named Insured or of the Company made within 60 days after receipt of proof of loss by the Company, shall select a competent and disinterested appraiser. . . Then, at a reasonable time and place, the appraisers shall appraise the loss, stating separately the value at the time of loss and the amount of loss. . . An award in writing by any two shall determine the amount of loss. The Named Insured and the Company shall each pay his or its chosen appraiser and shall bear equally the other expenses of the appraisal and of the umpire.

(Doc. # 71-3 at ¶ 26) (emphasis added.)

         On July 28, 2016, Plaintiff's property was damaged by a hail and wind storm. (Doc. # 43 at 4.) Plaintiff filed a claim with Defendants shortly thereafter. (Id.) The parties have since disputed the cost of repairs and amount of loss. (Doc. # 50 at 3.) At no time during the parties' dispute did any party issue a written demand for appraisal.

         Plaintiff filed the underlying action on June 30, 2017, (Doc. # 1), and alleges the following claims: (1) breach of contract against Defendant Great Lakes; (2) breach of contract against Defendant Atain; (3) breach of contract against Defendant Indian Harbor; (4) violation of Colo. Rev. Stat. § 10-3-1115 and relief pursuant to § 10-3-1116 against all Defendants; (5) breach of the covenant of good faith and fair dealing against all Defendants; and (6) violation of the Colorado Consumer Protection Act, § 6-1-101, et seq., against all Defendants (Doc. # 43 at 25-34.)

         On October 23, 2017, Plaintiff moved to compel appraisal pursuant to the terms of the Policy and to stay proceedings pending completion of appraisal. (Doc. # 50.) Defendants Atain and Indian Harbor jointly responded in opposition on November 13, 2017. (Doc. # 70.) Defendant Great Lakes responded in opposition on the day. (Doc. # 71.) Plaintiff replied to Defendants' briefs on November 17, 2017. (Doc. # 79.) Plaintiff's Motion to Compel Arbitration and to Stay Proceedings Pending Completion of Appraisal is therefore ripe for the Court's review.[1]

         II. LEGAL STANDARDS

         Because the Court's jurisdiction over this matter is founded on diversity of citizenship pursuant to 28 U.S.C. § 1332(a), the Court applies the substantive law of Colorado. Essex Ins. Co. v. Vincent, 52 F.3d 894, 896 (10th Cir. 1995). Under Colorado law, the interpretation of an insurance contract is a matter of law reserved for the courts. Fire Ins. Exch. v. Bentley, 953 P.2d 1297, 1300 (Colo.App. 1998). An insurance policy must be enforced as written, unless the policy contains an ambiguity. Cary v. United of Omaha Life Ins. Co., 108 P.3d 288, 290 (Colo. 2005). The policy should be construed to give effect of the parties' intent, id., and “[w]henever possible, this intent should be ascertained from the plain language of the policy alone.” Farmers Ins. Exch. v. Anderson, 260 P.23d 68, 72 (Colo.App. 2010). Finally, words should be given their plain meaning according to common usage, “and strained constructions should be avoided.” Allstate Ins. Co. v. Starke, 797 P.2d 14, 18 (Colo. 1990).

         Multiple decisions from this District have found that under Colorado law, an appraisal process like the one at issue in this dispute is properly classified as an arbitration pursuant to the Colorado Uniform Arbitration Act, Colo. Rev. Stat. § 13-22-201, et seq. (“CUAA”). See, e.g., Laredo Landing Owners Ass'n, Inc. v. Sequoia Ins. Co., No. 14-cv-014545-RM-KMT, 2015 WL 3619205, *1 (D. Colo. June 10, 2015); El Toledo, LLC v. Sequoia Ins. Co., No. 14-cv-01696-RM-KMT, 2015 WL 3457475, *1 (D. Colo. May 29, 2015); Auto-Owners Ins. Co. v. Summit Park Townhome Ass'n, 100 F.Supp.3d 1099, 1103 (D. Colo. 2015). Colorado has a “strong public policy in favor of arbitration.” Braata, Inc. v. Oneida Cold Storage Co., LLP, 251 P.3d 584, 590 (Colo.App. 2010). For example, the CUAA allows the stay of arbitration proceedings only in limited circumstances, including where “it is apparent from the language of the contract that the claim sought to be arbitrated is clearly beyond the scope of the arbitration clause.” Sopko v. Clear Channel Satellite Serv., Inc., 151 P.3d 663, 666 (Colo.App. 2006); see also El Toledo, LLC, 2015 WL 3457475 at *1; 15 Couch on Ins. § 209:8 (3d ed. 2017) (“Like the arbitration remedy, appraisal is designed to be consistent with the public policy of discouraging litigation.”).

         III. ...


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