United States District Court, D. Colorado
CONTINENTAL CASUALTY COMPANY, an Illinois corporation, Petitioner,
KIDNEY REAL ESTATE ASSOCIATES OF ARVADA, LLC, a Colorado limited liability company, Respondent.
RECOMMENDATION OF UNITED STATES MAGISTRATE
Kristen L. Mix United States Magistrate Judge.
matter is before the Court on Respondent's Motion
to Dismiss [#11] (the “Motion”). Petitioner
filed a Response [#13] in opposition to the Motion and
Respondent filed a Reply [#14]. Pursuant to 28 U.S.C. §
636(b)(1) and D.C.COLO.LCivR 72.1(c), the Motion [#11] has
been referred to the undersigned for a recommendation
regarding disposition. See [#12]. The Court has
reviewed the Motion, the Response, the Reply, the entire case
file, and the applicable law, and is sufficiently advised in
the premises. For the reasons set forth below, the Court
respectfully RECOMMENDS that the Motion
[#11] be DENIED.
an insurance company, issued Property Insurance Policy No. B
5094150675 (the “Policy”) to Respondent, the
owner of property in Arvada, Colorado (the
“Property”). Petition [#1] ¶ 4. The
Policy covered “direct physical loss of or damage to
covered property caused by or resulting from a covered cause
of loss, including damage caused by wind or hail during the
policy period.” Id. On May 8, 2017, the
Property sustained damage caused by a hailstorm and
Respondent subsequently submitted an insurance claim to
Petitioner in the amount of $162, 489.57. Id.
¶¶ 3, 5. Petitioner conducted its own investigation
of the Property damage and issued payment for the assessed
damages in the amount of $19, 002.21. Id.
¶¶ 6, 7. This amount was the net payment after
applying $1, 000 for the Policy's windstorm/hail
deductible and $9, 599.81 in depreciation. Id.
¶ 7. Respondent disagreed with the coverage
determination and invoked the appraisal provision of the
Policy, which states:
If we and you disagree on the amount of loss, either may make
written demand for an appraisal of the loss. In this event,
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 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. Each party will:
a. Pay its chosen appraiser; and
b. Bear the other expenses of the appraisal and umpire
equally. If there is an appraisal, we will still retain our
right to deny the claim.
Id. ¶¶ 8, 10. Pursuant to this provision,
Respondent and Petitioner retained their respective
appraisers. Id. ¶ 8. The appraisers could not
agree on selecting an umpire. Id. For that reason,
Petitioner filed the Petition to Appoint Umpire [#1] (the
“Petition”) in this Court on March 8, 2018. In
the Petition, Petitioner only seeks declaratory relief in the
form of the appointment of an appraisal umpire and states
that jurisdiction in this Court is proper pursuant to 28
U.S.C. § 1332, Fed.R.Civ.P. 57, and 28 U.S.C. §
2201. Id. ¶¶ 1-3. On April 6, 2018,
Respondent filed the present Motion [#11] pursuant to
Fed.R.Civ.P. 12(b)(1), arguing that the Court does not have
subject matter jurisdiction to appoint an appraisal umpire
and that, because of this, the “action should have been
filed in state court.” [#11] at 1.
Standard of Review
purpose of a motion to dismiss pursuant to Rule 12(b)(1) is
to test whether the Court has jurisdiction to properly hear
the case before it. Because “federal courts are courts
of limited jurisdiction, ” the Court must have a
statutory basis to exercise its jurisdiction. Montoya v.
Chao, 296 F.3d 952, 955 (10th Cir. 2002); Fed.R.Civ.P.
12(b)(1). Statutes conferring subject matter jurisdiction on
federal courts are to be strictly construed. F & S
Const. Co. v. Jensen, 337 F.2d 160, 161 (10th Cir.
1964). It is well established that “[t]he party
invoking federal jurisdiction bears the burden of
establishing such jurisdiction as a threshold matter.”
Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1224
(10th Cir. 2004). “The lack of federal jurisdiction
cannot be overcome by mere agreement of the parties.”
Mitchell v. Maurer, 293 U.S. 237, 244 (1934).
motion to dismiss pursuant to Rule 12(b)(1) may take two
forms: facial attack or factual attack. Holt v. United
States, 46 F.3d 1000, 1002 (10th Cir. 1995). When
reviewing a facial attack, the Court accepts the allegations
of the complaint as true. Id. By contrast, when
reviewing a factual attack, the Court “may not presume
the truthfulness of the complaint's factual
allegations.” Id. at 1003. With a factual
attack, the moving party challenges the facts upon which
subject matter jurisdiction depends. Id. The Court
therefore must make its own findings of fact. Id. In
order to make its findings regarding disputed jurisdictional
facts, the Court “has wide discretion to allow
affidavits, other documents, and a limited evidentiary
hearing.” Id. (citing Ohio Nat'l Life
Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir.
1990); Wheeler v. Hurdman, 825 F.2d 257, 259 n.5
(10th Cir.), cert. denied, 484 U.S. 986 (1987)). The
Court's reliance on “evidence outside the
pleadings” to make findings concerning purely
jurisdictional facts does not convert a motion to dismiss
pursuant to Rule12(b)(1) into a motion for summary judgment
pursuant to Rule 56. Id.
the Motion [#11] is not a model of clarity, Respondent
appears to argue that this Court lacks subject matter
jurisdiction to adjudicate the Petition for three reasons.
First, that there is no case or controversy between
Petitioner and Respondent (collectively, the
“Parties”) to raise a justiciable issue. See
Motion [#11] at 2-3; Reply [#14] at 5-6.
Second, that the amount in controversy requirement is not
satisfied to grant the Court diversity jurisdiction pursuant
to 28 U.S.C. § 1332(a). See Motion [#11] at 2;
Reply [#14] at 3-5. Third, that these two
deficiencies cannot be cured by Petitioner filing its
Petition under the Declaratory Judgment Act. See
Motion [#11] at 3-4; Reply [#14] at 6-8. The
Court will address each argument in turn.
Case or Controversy
stated above, Respondent first argues that the Court lacks
subject matter jurisdiction because the Petition fails to
demonstrate a case or controversy between the Parties which
raises a justiciable issue. See Motion [#11] at 2-3;
Reply [#14] at 5-6.
III of the United States Constitution limits the jurisdiction
of the federal courts to actual cases or controversies. U.S.
Const. art. III, § 2, cl. 1. To meet this jurisdictional
requirement, an actual case or controversy must be present at
all stages of the litigation. See Copar Pumice Co. v.
Tidwell, 603 F.3d 780, 792 (10th Cir. 2010). To
establish that a case or controversy exists, Petitioner must
demonstrate that the controversy is: (1) definite, concrete,
and touches on the legal relations of the Parties, and (2)
sufficiently immediate and real. Aetna Life Ins. Co. v.
Haworth, 300 U.S. 227, 240-41 (1937); Maryland Cas.
Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273
(1941). Another “element of the case-or-controversy
requirement is that [Petitioner] must establish that [it]
[has] standing to sue.” Clapper v. Amnesty
Int'l USA, 568 U.S. 398, 408 (2013) (internal
quotation marks and citations omitted). The elements of
standing are the existence of a particularized injury that is
fairly traceable to Respondent and capable of being redressed
by a favorable decision. Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-61 (1992). In other words,
Petitioner must allege an injury in fact, assert a causal
connection between the injury in fact and the challenged
action, and demonstrate that there is a likelihood that the
injury can be redressed by a favorable decision. See
Jordan v. Sosa, 654 F.3d 1012, 1019 (10th Cir. 2011). As
with all requisites to conferring subject matter
jurisdiction, parties cannot create standing by agreement.
Wilson v. Glenwood Intermountain Properties, Inc.,
98 F.3d 590, 593 (10th Cir. 1996).
first argues that “[t]he appointment of an umpire does
not directly translate into a justiciable issue because of
the possibility that [ ] the two appraisers will disagree as
to the amount of loss and thereafter submit their differences
to the Court-appointed umpire -- i.e., the umpire may not
even be utilized to resolve the underlying amount of loss
dispute.” Motion [#11] at 2-3. Respondent
cites no authority to support this argument.
Court agrees with Petitioner that, whether or not the
appraisers disagree at a future date, Respondent's
argument ignores the adversarial dispute, or
“disagreement, ” that presently exists between
the Parties. The Petition clearly demonstrates at least two
on-going controversies that include disputes over the value
of loss to the Property and the appointment of a neutral
umpire. See Petition [#1] ¶¶ 8, 9.
“Indeed, [Respondent's] invocation of appraisal is
premised on the existence of a contractual dispute between
the [Parties].” Response [#13] at 7; see
Cypress Chase Condo. Ass'n A v. QBE Ins. Corp., No.
10-61987-CIV, 2011 WL 1544860, at *5 (S.D. Fla. Apr. 15,
2011) (construing a similar appraisal provision as making
“disagreement a prerequisite to appraisal”).
Moreover, according to the Policy's appraisal provision,
the appointment of an umpire is a condition precedent to an
appraisal occurring. See Petition [#1] ¶
Therefore, the Parties' disagreement over selecting an
umpire precludes Petitioner (or Respondent) from obtaining
the appraisal that Respondent invoked, and further delays
resolution of the claim under the Policy. Response
[#13] at 7; see Maryland Casualty Co., 312 U.S. at
273 (An actual controversy exists for purposes of the
Declaratory Judgment Act where “there is a substantial
controversy, between parties having adverse legal interests,