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Hometown Community Association, Inc. v. Philadelphia Indemnity Insurance Co.

United States District Court, D. Colorado

April 30, 2018




         This matter is before the Court on defendant's motion for reconsideration (ECF No. 39); and (2) plaintiff's motion to dismiss defendant's counterclaims (ECF No. 40). The motion for reconsideration is GRANTED in part and DENIED in part, and the motion to dismiss the counterclaims is DENIED.


         A. Factual Background.

         This suit arises from Philadelphia's treatment of insurance claims for property damage that Hometown sustained in a July 7, 2014 hailstorm. Philadelphia acknowledged coverage for Hometown's insurance claim and issued an initial payment according to its valuation of the claim. However, the parties disagreed about the amount of damage and the scope and cost of repairs, so Hometown invoked an appraisal process provided in the insurance policy.

         As will be discussed in more detail later in this order, the appraisal process required each party to select a competent and impartial appraiser, and because the appraisers could not agree, an umpire was appointed to resolve the differences. Ultimately an appraisal award was issued setting the loss amount at $548, 489.82, comprised of $540, 089.82 for roofs and exteriors and $8, 400 for windows and screens. ECF No. 31 at 6, ¶43. That figure, sometimes referred to as the replacement cost value, has two main components: “actual cash value” of the damaged property, payable whether or not the repairs are made, and depreciation, payable only after the repairs are completed. The actual cash value of the appraisal award was set at $515, 580.43. The depreciation component was $32, 909.39. Id.

         Philadelphia paid the actual cash value amount, less its previous payment and Hometown's deductible. Id. at ¶44. The depreciation component has not been paid, and whether it is owed is one of the parties' remaining disputes.

         B. Procedural History.

         Despite Philadelphia's payment of the appraisal award, Hometown sued Philadelphia in the Jefferson County District Court asserting breach of contract and two types of “bad faith” claims: unreasonable delay or denial of an insurance benefit contrary to Colo. Rev. Stat. §§ 10-3-1115 and 10-3-1116, and common law bad faith. Philadelphia removed the case and moved to dismiss. Plaintiff asserted additional facts in an amended complaint, mooting the motion to dismiss, but Philadelphia again moved to dismiss on the grounds that (1) its participation in the appraisal process and payment of the appraisal award extinguished plaintiffs' claims; (2) even if payment of the appraisal award did not preclude the bad faith claims, (a) conduct during the appraisal process, including litigation conduct, could not be considered as grounds for bad faith claims; (b) Philadelphia did not in any event act in bad faith during the appraisal process or in its litigation conduct during that process and (c) plaintiff did not allege pre-appraisal bad faith conduct. ECF No. 32.

         On December 12, 2017 I granted Philadelphia's motion to dismiss in part, dismissing the contract claim but not the bad faith claims. I concluded that Philadelphia's participation in the appraisal did not necessarily preclude a bad faith claim, finding that Hometown had alleged a course of bad faith conduct occurring before, during and after the appraisal process, ECF No. 35 at 12-13; that conduct during the appraisal process, including litigation conduct, could constitute bad faith conduct, id. at 13-16; and that Hometown had plausibly alleged bad faith conduct sufficiently to withstand a Rule 12(b)(6) motion, id. at 16-18.

         Following the Court's order on the motion to dismiss, Philadelphia filed an answer and counterclaim. ECF No. 38. In the counterclaim Philadelphia alleges that Hometown breached its contractual obligation to select a competent and impartial appraiser such that the appraisal award should be vacated, and damages should be awarded against Hometown in the amount of the appraisal award (Counts I and III). The counterclaim also seeks a declaration that Philadelphia owes nothing beyond the “actual cash value” of the repairs, i.e., no depreciation (Count II) and an award of damages based on fraud allegedly committed by Hometown and its appraiser (Count IV). In addition, Philadelphia moves the Court to reconsider its order on the motion to dismiss. ECF No. 39. Hometown has moved to dismiss the First, Third and Fourth Counts of Philadelphia's counterclaim. ECF No 40.


         The Federal Rules of Civil Procedure do not explicitly provide for motions for reconsideration. After judgment has entered in a case, such motions are “generally accepted and construed under Federal Rules of Civil Procedure 59(e) and 60(b).” Montano v. Chao, 07-CV-00735-EWN-KMT, 2008 WL 4427087, at *5 (D. Colo. Sept. 28, 2008). “On the other hand, where a party files a motion for reconsideration prior to the entry of judgment, Rules 59(e) and 60(b) do not apply.” United Fire & Cas. Co. v. Boulder Plaza Residential, LLC, 06-CV-00037-PAB-CBS, 2010 WL 420046, at *3 (D. Colo. Feb. 1, 2010). “Instead, the motion falls within a court's plenary power to revisit and amend interlocutory orders as justice requires.” Id.

Grounds warranting a motion to reconsider include (1) an intervening change in the controlling law, (2) new evidence previously unavailable, and (3) the need to correct clear error or prevent manifest injustice. Thus, a motion for reconsideration is appropriate where the court has misapprehended the facts, a party's position, or the controlling law.

Lyons v. New Mexico Dep't of Corrections, 12 Fed.Appx. 772, 773 (10th Cir. 2001) (unpublished) (internal citation omitted). However, a motion to reconsider is not to be used to “reargue issues by rehashing facts and arguments already addressed or available, yet neglected, in the original proceeding.” Jaffrey v. Portercare Adventist Health Sys., No. 15-CV-02297-NYW, slip op., 2017 WL 3437986, at *2 (D. Colo. Aug. 10, 2017).

         To survive a 12(b)(6) motion to dismiss, the counterclaim must contain “enough facts to state a claim to relief that is plausible on its face.” Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).


         Because the Court's analysis of the appraisal clause affects its ruling on both parties' pending motions, I will begin there. The clause provides that if the parties disagree on the value of the property or the amount of the loss, either party may demand an appraisal of the loss. See Property Coverage Form ¶E(2), ECF No. 2-1 at 117. Then,

each 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.

Id. (emphasis added).

         The term “impartial” is not defined in the policy. One well-known dictionary defines “impartial” to mean “not partial or biased; treating or affecting all equally.” Meriam-Webster, However, a decision of the Colorado Court of Appeals defines the term somewhat differently. In Owners Ins. Co. v. Dakota Station II Condominium Association, Inc., 2017 WL 3184568 (Colo.App. 2017), cert. granted, 2018 WL 948601 (Colo. Feb. 20, 2018), the court held that an impartial appraiser must act “fairly, without bias, and in good faith, ” but that the appraiser is not forbidden from favoring one side more than the other, i.e., that the appraiser need not be impartial “in the sense that a judge or arbitrator (or the umpire under this policy) would be required to be impartial.” Id. at *4.


         I. Philadelphia's Motion for ...

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