Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Auto-Owners Insurance Co. v. Summit Park Townhome Association

United States Court of Appeals, Tenth Circuit

March 30, 2018

AUTO-OWNERS INSURANCE COMPANY, a Michigan corporation, Plaintiff Counter Defendant-Appellee,
v.
SUMMIT PARK TOWNHOME ASSOCIATION, a Colorado corporation, Defendant Counterclaimant. WILLIAM C. HARRIS; DAVID J. PETTINATO, Appellants. AUTO-OWNERS INSURANCE COMPANY, a Michigan corporation, Plaintiff Counter Defendant-Appellee,
v.
SUMMIT PARK TOWNHOME ASSOCIATION, a Colorado corporation, Defendant Counterclaimant - Appellant.

          Appeal 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.

          Evan 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 Counter Defendant-Appellee.

          Before TYMKOVICH, Chief Judge, BRISCOE, and BACHARACH, Circuit Judges.

         ORDER

         These matters are before us, sua sponte, to withdraw and amend the decisions issued in these appeals originally on March 23, 2018. Those original opinions are hereby VACATED, and the attached revised opinions shall issue effective the date of this order and with a filing date of today. The Clerk is directed to issue and distribute the amended opinions accordingly.

          BACHARACH, Circuit Judge.

         This 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.

         Summit Park appeals, making six arguments:

1. The district court lacked authority to issue the procedural requirements.
2. Summit Park and its counsel did not violate the procedural requirements.
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.

         We 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.

         I. Summit Park was sanctioned for violating the district court's order.

         The 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.

         Summit 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.

         Based 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 appraisers' impartiality:

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).

         Summit 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.

         Following 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.

         Auto-Owners 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).

         II. Summit Park was bound by the district court's disclosure order.

         Summit 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. 30, 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 noncompliance.

         III. The district court reasonably found that Summit Park had violated the disclosure order.

         Summit Park denies violating the disclosure requirement, arguing that

• 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 ParkTownhome Ass'n, No. 16-1348, slip op. at 6-14 (10th Cir. Mar. 30, 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] ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.