AUTO-OWNERS INSURANCE COMPANY, a Michigan corporation, Plaintiff Counter Defendant-Appellee,
SUMMIT PARK TOWNHOME ASSOCIATION, a Colorado corporation, Defendant Counterclaimant-Appellant.
from the United States District Court for the District of
Colorado (D.C. No. 1:14-CV-03417-LTB)
Bradley A. Levin (Jeremy A. Sitcoff, and Nelson A. Waneka,
with him on the briefs), Levin Sitcoff PC, Denver, Colorado,
for Defendant Counterclaimant-Appellant.
Bennett Stephenson (Michael L. O'Donnell, Terence M.
Ridley, and Cedric D. Logan, with him on the brief), Wheeler
Trigg O'Donnell LLP, Denver, Colorado, for Plaintiff
TYMKOVICH, Chief Judge, BRISCOE, and BACHARACH, Circuit
BACHARACH, Circuit Judge.
appeal grew out of a dispute between an insured (Summit Park
Townhome Association) and its insurer (Auto-Owners Insurance
Company) over the value of property damaged in a hail storm.
To determine the value, the district court ordered an
appraisal and established procedural requirements governing
the selection of impartial appraisers. After the appraisal
was completed, Auto-Owners paid the appraised amount to
Summit Park. But the court found that Summit Park had failed
to make required disclosures and had selected a biased
appraiser. In light of this finding, the court vacated the
appraisal award, dismissed Summit Park's counterclaims
with prejudice, and awarded interest to Auto-Owners on the
amount earlier paid to Summit Park.
Park appeals, making six arguments:
1. The district court lacked authority to issue the
2. Summit Park and its counsel did not violate the procedural
3. The district court erred by vacating the appraisal award.
4. The district court erred by using its inherent powers to
sanction Summit Park.
5. The sanction (dismissal of Summit Park's
counterclaims) constituted an abuse of discretion.
6. The award of interest based on the amount paid to Summit
Park constituted a deprivation of due process.
affirm. In the absence of a successful appellate challenge to
the disclosure order, Summit Park was obligated to comply and
did not. The court was thus justified in dismissing Summit
Park's counterclaims. In addition, Summit Park's
failure to select an impartial appraiser compelled vacatur of
the appraisal award under the insurance policy. Finally,
Summit Park obtained due process through the opportunity to
object to the award of interest.
Summit Park was sanctioned for violating the district
parties agreed that damage had occurred from a hail storm,
but they disagreed on the value of the damage. Auto-Owners
sued for a declaratory judgment to decide the value, and
Summit Park filed counterclaims.
Park retained Merlin Law Group attorneys Mr. William Harris
and Mr. David Pettinato, who successfully moved to obtain an
appraisal based on the insurance policy. In the event of an
appraisal, the insurance policy required:
[E]ach 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.
Appellee's Supp. App'x, vol. 1 at 123.
on continuing disputes between the parties, Auto-Owners moved
for an order compelling an "appraisal agreement"
that would set the procedural requirements for the appraisal.
The court granted the motion and set requirements, which
included disclosure of facts potentially bearing on the
An individual who has a known, direct, and material interest
in the outcome of the appraisal proceeding or a known,
existing, and substantial relationship with a party may not
serve as an appraiser. Each appraiser must, after making a
reasonable inquiry, disclose to all parties and any other
appraiser any known facts that a reasonable person would
consider likely to affect his or her impartiality, including
(a) a financial or personal interest in the outcome of the
appraisal; and (b) a current or previous relationship with
any of the parties (including their counsel or
representatives) or with any of the participants in the
appraisal proceeding . . . Each appraiser shall have a
continuing obligation to disclose to the parties and to any
other appraiser any facts that he or she learns after
accepting appointment that a reasonable person would consider
likely to affect his or her impartiality.
Appellant's App'x at 75-76. The court warned:
"Notice is given that, if the court finds that the
parties and/or their counsel have not complied with this
order, the court will impose sanctions against the parties
and/or their counsel pursuant to the court's inherent
authority." Id. at 78 (capitalization removed).
Park selected Mr. George Keys as its appraiser, but
Auto-Owners expressed doubt about Mr. Keys's
impartiality. These concerns escalated when Mr. Keys and the
court-appointed umpire agreed upon an appraisal award
exceeding $10 million, which was 47% higher than Summit
Park's own public adjuster had determined.
the appraisal award, Auto-Owners objected to Mr. Keys,
arguing that he was biased and that Summit Park had failed to
disclose evidence bearing on Mr. Keys's impartiality. The
district court agreed, disqualifying Mr. Keys and vacating
the appraisal order.
then moved for sanctions against Summit Park. The district
court granted the motion and dismissed with prejudice the
counterclaims against Auto-Owners. In addition, the court
ordered Summit Park to pay $97, 797.53 in interest based on a
Colorado statute governing withholding of funds. Colo. Rev.
Stat. § 5-12-102(1)(a).
Summit Park was bound by the district court's disclosure
Park challenges the district court's authority to enter
the disclosure order. This argument fails for the reasons
discussed in Auto-Owners Insurance Co. v. Summit Park
Townhome Ass'n, No. 16-1348, slip op. at 5-6 (10th
Cir. Mar. 23, 2018) (to be published). Regardless of whether
the court had authority to enter the order, Summit Park was
required to comply in the absence of a successful appellate
challenge. Thus, Summit Park could be sanctioned for
The district court reasonably found that Summit Park had
violated the disclosure order.
Park denies violating the disclosure requirement, arguing
. the district court misinterpreted the term
"impartial" as it applies to appraisers and
. Summit Park disclosed enough information
about Mr. Keys. We rejected both arguments in Auto-Owners
Insurance Co. v. Summit Park Townhome
Ass'n, No. 16-1348, slip op. at 6-14 (10th Cir. Mar.
23, 2018) (to be published). As we explained there, Summit
Park's counsel violated the disclosure order. And this
violation could be attributed to Summit Park itself. See
Link v. Wabash R.R. Co., 370 U.S. 626, 633-34 (1962) (a
party cannot "avoid the consequences of the acts or
omissions of [a] freely selected agent"). As a result, we
cannot disturb the finding that Summit Park violated the
The districtcourt didnot
err in ...