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Nesavich v. Auto-Owners Insurance Co.

United States District Court, D. Colorado

August 6, 2018

JOHN NESAVICH d/b/a Nesavich Properties LLC, JUDY NESAVICH d/b/a Nesavich Properties LLC, and NESAVICH PROPERTIES, LLC, Plaintiffs,
v.
AUTO-OWNERS INSURANCE COMPANY, a Michigan Insurance Company, Defendant.

          ORDER

          PHILIP A. BRIMMER UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Auto-Owners' Motion for Summary Judgment [Docket No. 36] filed by defendant Auto-Owners Insurance Company, Plaintiff's [sic] Motion for Leave of Court to File a Surreply in Response to Defendant's Motion for Summary Judgment [Docket No. 65], Plaintiff's [sic] Motion for Reconsideration of Order Re: Plaintiff's [sic] Motion for Defendant to Submit to the Appraisal Provision Pursuant to the Terms of its Policy and Motion to Stay Proceedings Pending Completion of Appraisal [Docket No. 93], and plaintiffs' F.R.C.P. 72(a) Objection to Magistrate's Order (Docket No. 91) [Docket No. 94].

         I. BACKGROUND

         This case involves an insurance dispute. Defendant issued a commercial property insurance policy to plaintiffs for a building located in Colorado Springs, Colorado. Defendant's Statement of Undisputed Material Facts (“DSUMF”) 1-2; Docket No. 36 at 2-3, ¶¶ 1-2. Plaintiffs claim that their property was damaged by a hail storm on May 21, 2014. Docket No. 2 at 2, ¶ 7. Approximately fifteen months after the storm, on August 21, 2015, plaintiffs notified defendant about hail damage from the storm. DSUMF 6.

         On September 3, 2015, Steven Boyd, Jr., a professional engineer who has since been retained by defendant to testify as an expert, inspected the roof and windows of plaintiffs' property. DSUMF 15. Mr. Boyd prepared a report dated September 28, 2015, which noted that meteorological data showed a hailstorm occurred in the area of the property on May 21, 2014. Docket No. 36-7 at 13-14. He stated that “[s]patter marks generally remain visible for a time period as long as 6 to 9 months after the causal event, and provide the best evidence of the size of the hailstones that impacted the Property as well as the direction from which they fell.” Id. at 14. Mr. Boyd observed spatter marks during his inspection, but he concluded that “these spatter marks would not be an indicator of the size or direction of the hailstones that fell during the [May 21, 2014 hailstorm] due to the time” that had passed before his inspection. Id. at 14-15. Mr. Boyd also noted various instances of indentations, granular loss, and “alligator” cracking on portions of the buildings roof. Id. at 3-9; Plaintiffs' State of Additional Disputed Facts (“PSADF”) 1-2; Docket No. 79 at 4, ¶¶ 1-2. He concluded, however, that the “roof coverings were not damaged by hailstone impacts attributable” to the May 21, 2014 hailstorm. Docket No. 36-7 at 9. Mr. Boyd did conclude that “west-facing mill finished window sills and mullions were damaged by hailstones impacts attributable” to the May 21, 2014 hailstorm. Id. He recommended replacement of the “aluminum snap-in glazing beads for the window sills and mullions” that could be “obtained from a local metal fabrication shop and installed on the existing windows.” Docket No. 36-8 at 14, ¶ 3. With respect to the east-facing windows, by contrast, Mr. Boyd stated that they “may have been impacted by hailstones during another hailstorm event that occurred prior or after” the May 21, 2014 hailstorm. Docket No. 36-7 at 15. Defendant also received a report from Brian N. Strandjord, who “inspected all ten of the rooftop HVAC units and concluded . . . six units did not display any damage that was consistent with natural hail.” Docket No. 36-10 at 2, ¶ 5; DSUMF 27.[1] He opined that, “while fins cannot typically be restored to complete original appearance, straightening can restore air flow, performance, and efficiency if done correctly by qualified technicians.” Id., ¶ 8; DSUMF 28-30. Based on Mr. Boyd's and Mr. Strandjord's findings, Travis Epley of Catastrophe Specialist, a claims adjuster, prepared an estimate of the hail damage to plaintiffs' building. Docket No. 2 at 3, ¶ 14. On October 7, 2015, defendant paid plaintiffs $6, 032.49 based on Mr. Epley's estimate of the damage. DSUMF 7; see also Docket No. 79-7 at 1 (“Once we completed our assessment of the damages, an estimate was provided to you that included all appropriate repairs and also included an Actual Cash Value payment in the amount of $6, 032.49.”); Docket No. 89 at 5. This payment included the estimated cost of repairs to the sills and mullions of the windows on only the west-facing side of the building and straightening the condenser fins for the building's roof-top HVAC units. DSUMF 8-9.[2]

         In response to defendant's damage estimate, plaintiffs commissioned David G. Draper and Steven Thomas to perform a mechanical evaluation and desaturation testing[3] on the building's roof. Docket No. 2 at 3, ¶ 16. Mr. Draper concluded that extensive repairs to the building's HVAC system were necessary, including replacement of several large components. Docket No. 79-4 at 16. Mr. Thomas concluded that one of the four samples taken from the roof showed “hail strike related damage” to the “internal reinforcement layer, ” but the other three samples were inconclusive. Docket No. 79-15 at 9. Plaintiffs disclosed these reports to defendant before filing suit. Docket No. 91 at 6.

         On May 17, 2016, plaintiffs filed their complaint, alleging that defendant breached its insurance contract by failing to fully cover the hail damage and that defendant did so in bad faith. Docket No. 2 at 1, 4-7. Plaintiffs claim that they are entitled to a full roof replacement, replacement of the HVAC units (not just straightening of the condenser fins), and full replacement of the building's windows (not just the frame repair). Docket No. 36-5 at 12.

         On April 10, 2017, plaintiffs filed a motion to compel an appraisal of the hail damage and stay the case pending completion of the appraisal. Docket No. 26. On October 2, 2017, defendant filed its motion for summary judgment. Docket No. 36. On December 28, 2017, plaintiffs filed their motion seeking to disclose additional expert witnesses. Docket No. 66.

         In January and February 2018, plaintiffs requested leave to file supplemental briefing related to the motion for summary judgment to include evidence obtained during discovery. Docket Nos. 72, 76. The Court granted the parties leave to file substitute response and reply briefs related to the motion for summary judgment addressing the additional evidence plaintiffs sought to address. Docket No. 74, 78;[4]see also Docket No. 79, 80.

         On March 29, 2018, the Court denied plaintiffs' motion to compel an appraisal as untimely. Docket No. 90 at 3. On April 3, 2018, Magistrate Judge Scott T. Varholak denied plaintiffs' motion to disclose additional expert witnesses, finding that such untimely disclosure would prejudice defendant and interfere with the upcoming trial. Docket No. 91 at 7-8. On April 6, 2018, plaintiffs moved for reconsideration of the Court's March 29 order denying an appraisal. Docket No. 93. On April 10, 2018, plaintiffs filed an objection to the magistrate judge's order. Docket No. 94.

         II. ANALYSIS

         A. Motion for Reconsideration

         The Court addresses plaintiffs' motion for reconsideration first because plaintiffs' summary judgment arguments refer to their request for an appraisal. See Docket No. 79 at 6-10. The Federal Rules of Civil Procedure do not expressly provide for motions for reconsideration. See Hatfield v. Bd. of Cty. Comm'rs for Converse Cty., 52 F.3d 858, 861 (10th Cir. 1995). It is, however, within the Court's discretion to reconsider its rulings. See Fye v. Okla. Corp. Comm'n, 516 F.3d 1217, 1223 n.2 (10th Cir. 2008) (“The District Court's partial summary judgment ruling was not a final judgment. Thus, [plaintiff's] motion for reconsideration is considered an interlocutory motion invoking the district court's general discretionary authority to review and revise interlocutory rulings prior to entry of final judgment.”). When doing so, the Court considers whether new evidence or legal authority has emerged or whether the prior ruling was clearly in error. See Vigil v. Colorado Dep't. of Corrections, No. 09-cv-01676-PAB-KLM, 2011 WL 1518660, at *1 (D. Colo. Apr. 20, 2011); cf. Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000) (“[A] motion for reconsideration is appropriate where the court has misapprehended the facts, a party's position, or the controlling law. It is not appropriate to revisit issues already addressed or advance arguments that could have been raised in prior briefing.”) (citations omitted).

         The Court denied plaintiffs' motion to compel an appraisal as untimely, applying the factors for determining whether an request for alternative dispute resolution (“ADR”) is timely from City & Cty. of Denver v. Dist. Court, 939 P.2d 1353, 1369 (Colo. 1997) (“Dist. Court”). Docket No. 90 at 3. Plaintiffs' motion for reconsideration simply rehashes arguments that plaintiffs raised or could have raised in their briefing. First, plaintiffs argue that their request was timely because the policy lacks a time limit for requesting an appraisal. Docket No. 93 at 3. Second, plaintiffs argue that an appraisal is not a form of ADR and, therefore, Dist. Court does not apply. Id. at 5. These arguments are not well taken. Plaintiffs do not address the decision cited by the Court for the proposition that Dist. Court applies to determine whether a request for an appraisal is timely, namely, Laredo Landing Owners Ass'n, Inc. v. Sequoia Ins. Co., No. 14-cv-01454-RM-KMT, 2015 WL 3619205, at *1 (D. Colo. June 10, 2015); see also Lim v. Am. Economy Ins. Co., No. 13-cv-02063-CMA-KLM, 2014 WL 1464400, at *4 (D. Colo. Apr. 14, 2014). Although plaintiffs note two Colorado trial court decisions finding that requests for arbitration were timely even after litigation was initiated, neither of those cases indicates that the insurers raised the issue of timeliness or discusses the applicability of Dist. Court to appraisals. See Topaz II at the Mall Condominium Association v. American Family Mutual Insurance Co., No. 16CV33561 (Denver Dist. Ct., Order filed March 9, 2017), Docket No. 26-2; Bowles Place LLC v. State Farm Fire and Casualty Co, No. 16CV31857 (Denver Dist. Ct., Order filed March 30, 2017), Docket No. 26-3.[5] Because plaintiffs have not shown that the Court's prior ruling was clearly in error, the Court will deny plaintiffs' motion for reconsideration.

         B. Motion for ...


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