Jaccaud v. Owners Insurance Co.

          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 ...