United States District Court, D. Colorado
ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY
JUDGMENT
CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE
This
matter is before the Court on Defendant Owners Insurance
Company's Motion for Summary Judgment. (Doc. # 21.) For
the reasons stated below, the Court DENIES Defendant's
motion.
I.
BACKGROUND
The
following facts are undisputed. Defendant insured Plaintiff
Steven Jaccaud's residential property in Centennial,
Colorado (hereinafter the “Property”), under
Homeowner's Insurance Policy Number 46-749-410-00
(hereinafter the “Policy”). (Doc. # 12 at 2.)
Relevant here, the Policy included an appraisal provision in
form 17909 (2-96):
If you or we fail to agree
on the actual cash value or amount of loss covered by this
policy, either party may make written demand for an
appraisal. Each party will select an appraiser and notify the
other of the appraiser's identity within 20 days after
the demand is received. The appraisers will select a
competent and impartial umpire. If the appraisers are unable
to agree upon an umpire within 15 days, you
or we can ask a judge of a court of record
in the state where the residence premises is
located to select an umpire.
The appraisers shall then appraise the loss, stating
separately the actual cash value and loss to each item. If
the appraisers submit a written report of an agreement to
us, the amount agreed upon shall be the
actual cash value or amount of loss. If they cannot agree,
they will submit their differences to the umpire. A written
award by two will determine the actual cash value or amount
of loss.
Each party will pay the appraiser is chooses, and equally pay
the umpire and all other expenses of the appraisal.
(Doc. # 13 at 8.)
After
the Property sustained damage from a wind and hail storm on
September 29, 2014, Plaintiff submitted a claim for benefits
to Defendant on October 8, 2014. (Doc. # 12.) Defendant
inspected the Property on October 13, 2014, and subsequently
issued Plaintiff a settlement claim check on November 4,
2014, in the amount of $15, 722.12. (Id.) Plaintiff
considered this amount insufficient to cover the loss. On
December 5, 2014, Plaintiff sent Defendant an estimate from a
private contractor that stated a replacement cost value of
$80, 902.28. (Id. at 2.) In response, Defendant
issued a supplemental payment in the amount of $12, 641.75,
on April 6, 2015, acknowledging additional repairs that were
covered under the Policy, and bringing the total amount
Defendant paid out to Plaintiff $28, 363.87. (Doc. # 13 at
2.) Plaintiff was not satisfied with this supplemental
amount. (See Doc. # 12 at 2.)
Plaintiff
invoked the Policy's appraisal provision on April 30,
2015, and his public adjuster sent an appraisal demand to
Defendant. (Doc. # 13 at 3.) In response, on May 19, 2015,
Defendant explained that “appraisal is only appropriate
under the policy to the extent that there are, in fact,
disagreements over the actual cash value or amount of
loss.” (Doc. # 24-2 at 1.) Defendant thus requested a
copy of Plaintiff's contract with his private contractor
for the repairs related to the loss and requested further
documentation pertaining to the items in dispute that
Plaintiff believed should be covered under the Policy. (Doc.
# 24-2 at 7.) Relevant here, Defendant wrote:
While Auto-Owners agrees that appraisal is appropriate with
regard to the disputed items identified above, we believe the
commencement of the appraisal process itself should be
deferred until the scope of appraisal is clarified after our
review and consideration of the documentation we have
requested. Auto-Owners hereby appoints as its appraiser
Gimple Roof Engineers, Inc.
(Id.) The parties dispute the meaning of
Defendant's May 19, 2015, letter. Defendant alleges it
“provisionally” appointed an appraiser, Gimple
Roof Engineers, Inc., (hereinafter “Gimple”).
(Doc. # 21 at 4.) However, Plaintiff understood Gimple's
appointment by Defendant to be definite. See (Doc. #
12 at 2.)
As a
result of Plaintiff's belief that Gimple had been
appointed as Defendant's appraiser, Plaintiff commenced
an appraisal on August 3, 2015, despite Defendant's
statement in the letter that it wished to delay the appraisal
process until the requested documentation was provided. (Doc.
# 24-5); see (Doc. # 12 at 2.) The appraisal,
completed and signed by both Defendant's appraiser
Gimple, and Plaintiff's appraiser Trever Karas awarded
Plaintiff a replacement cost value of $75, 955.05 on
September 17, 2015. (Doc. ## 24-5, 24-4.) No umpire was
needed to settle the award amount, implying that the
appraisers agreed on the amount of loss. (Doc. ## 24-4, 21-9
at 9.)
Defendant,
through undersigned counsel, Gregory R. Giometti &
Associates (hereinafter “Giometti”), issued a
letter to Plaintiff on November 4, 2015. (Doc. # 21-9 at 15.)
The letter explained that because “[Plaintiff] did not
provide requested documentation prior to the appraisal
process, the resulting appraisal award would not survive
judicial scrutiny, as certain contractual, conditions
precedent [had] not been satisfied.” (Id.)
Defendant informed Plaintiff that per Policy language,
Plaintiff had a duty to cooperate in the adjustment of the
claim, which included providing the requested documentation
to Defendant and submitting to an examination under oath
(“EUO”). (Doc. # 21-9 at 16.)
Thus,
Defendant alleged certain grounds existed for vacating the
award pursuant to Colorado's Uniform Arbitration Act
(“CUAA”). (Doc. # 21-9 at 17.) Defendant asserted
that under Bulletin B-5.26, which governs the process of
appraisals in Colorado, [1] the appraisal would not survive a
judicial challenge first because Plaintiff failed to provide
requested documentation to Defendant that would have allowed
Defendant to determine the appropriate scope of the
appraisal. (Doc. ## 21-9 at 17.) Second, Defendant reasoned
that because Gimple investigated the claim prior to receiving
any information from Defendant, Gimple must have obtained
this information from Plaintiff or his representative and,
therefore, engaged in prohibited ex parte
communications with Plaintiff.[2] (Doc. # 21-10 at 1.) In exchange
for pursuing judicial review, Defendant “propose[d]
that Mr. Jaccaud voluntarily vacate the appraisal
award.” (Doc. # 21-10 at 1.) Defendant also requested
that Plaintiff fulfill the pending request for documentation
and complete an EUO. (Doc. # 21-10 at 1.) This, Defendant
stated, would allow it to determine whether a disagreement
over the amount of loss exists, and, if so, the proper scope
of an ensuing appraisal. (Id.)
Plaintiff's
then-counsel, Kate Silburn, responded on November 12, 2015,
stating “[Plaintiff] is willing to vacate the appraisal
award and agrees that the appraisal was not a valid
appraisal. [Plaintiff] does so without waiving the valid
amount of the estimate in the amount of $65,
862.94.”[3] (Doc. # 21-11.) Defendant took
Plaintiff's EUO on January 21, 2016. (Doc. ## 12 at 4, 13
at 5.) On August 21, 2016, Defendant issued a supplemental
check to Plaintiff in the amount of $8, 015.09. (Doc. ## 12
at 4, 13 at 5.) Thus, the total claim award granted to
Plaintiff by Defendant was $36, 378.96. As pertinent here,
Plaintiff asserts he is still owed $37, 227.62. (Doc. # 24 at
6.)
Plaintiff
commenced this suit on January 19, 2016 (Doc. # 1), alleging
breach of contract, statutory claims pursuant to §§
10-3-1115 and 10-3-1116, and common law bad faith breach of
contract (Doc. # 12). Plaintiff argues that he did not agree
to vacate the appraisers' award of $75, 955.05. (Doc. #
24 at 2.) He also argues that Defendant failed to pay amounts
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