United States District Court, D. Colorado
FIREMAN'S FUND INSURANCE COMPANY, a California corporation, Plaintiff,
STEELE STREET LIMITED II, a Colorado limited partnership, Defendant.
A. BRIMMER UNITED STATES DISTRICT JUDGE
matter is before the Court on Plaintiff Fireman's Fund
Insurance Company's Motion for Partial Summary Judgment
(Inapplicability of Appraisal Clause to Coverage Issues)
[Docket No. 35] and Defendant Steele Street Limited II's
Cross Motion for Partial Summary Judgment [Docket No. 43].
The Court has jurisdiction pursuant to 28 U.S.C. § 1332.
case arises out of an insurance dispute. Plaintiff issued an
insurance policy to Oberndorf Properties, providing first
party property coverage for a commercial building located at
250 Steele Street in Denver, Colorado. Docket No. 35 at 7,
¶¶ 1-2.The policy covers “direct physical
loss of or damage to” the building. Id.,
¶ 3. The policy contains an appraisal provision, which
provides that, “[i]f [insurer] and [insured] disagree
on the amount of the loss, either may make written demand for
an appraisal of the loss.” Id. at 7-8, ¶
4. The policy also includes an “examination under
oath” clause, which states that plaintiff “may
examine any insured under oath, while not in the presence of
any other insured and at such times as may be reasonably
required, about any matter relating to this insurance or the
claim, including an insured's books and records.”
Docket No. 35-2 at 46.
made a claim under the policy for over $1 million of damage
allegedly caused by a hailstorm on June 24, 2015.
Id. at 8, ¶ 5. Among the damages claimed were
damage to the building's brick facade (the “brick
claim”). Id. According to a public adjuster
hired by defendant, the damage caused by the storm required
the brick to be removed and replaced in its entirety.
Id., ¶ 6. Plaintiff issued payment for some
damage caused to the building, but did not make any payment
for the brick claim. Docket No. 44-2. In a reservation of
rights letter sent to defendant's public adjuster, an
employee of plaintiff explained that
“[b]ased on Mr. Peterson's report and
[plaintiff's] investigation, [plaintiff] has concluded
that the hailstorm caused no identifiable ‘direct
physical loss of or damage to' the brick facade. Although
the hail may have resulted in some flaking of the bricks, it
is impossible to identify any particular flaking that was
specifically caused by the hail, nor did the building
experience any significant amount of flaking in addition to
what has naturally occurred from normal exposure to the
elements over the past 30 years. In sum the hailstorm does
not appear to have demonstrably altered either the appearance
or the functionality of the brick facade in any way.”
Docket No. 44-2 at 3-4.
On April 21, 2017, plaintiff filed this lawsuit. Docket No.
1. Plaintiff's sole claim for relief is for a declaratory
judgment that the brick claim is not included within the
appraisal provision of the insurance policy, that defendant
is not entitled to an appraisal of the brick claim under the
insurance policy, and that plaintiff is not obligated to
participate in an appraisal of the brick claim under the
insurance policy. Id. at 9, ¶ 64. In its
answer, defendant asserts five counterclaims: (1) enforcement
of the policy's appraisal provision; (2) breach of
contract; (3) statutory bad faith under Colo. Rev. Stat.
§§ 10-3-1115 and 1116; (4) common law bad faith;
and (5) a declaratory judgment that defendant is excused from
appearing at an examination under oath. Docket No. 11 at
20-27, ¶¶ 19-49.
judgment is warranted under Federal Rule of Civil Procedure
56 when the “movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed.R.Civ.P. 56(a);
see Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248-50 (1986). A disputed fact is “material” if
under the relevant substantive law it is essential to proper
disposition of the claim. Wright v. Abbott Labs.,
Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). Only
disputes over material facts can create a genuine issue for
trial and preclude summary judgment. Faustin v. City
& Cty. of Denver, 423 F.3d 1192, 1198 (10th Cir.
2005). An issue is “genuine” if the evidence is
such that it might lead a reasonable jury to return a verdict
for the nonmoving party. Allen v. Muskogee, 119 F.3d
837, 839 (10th Cir. 1997).
“the moving party does not bear the ultimate burden of
persuasion at trial, it may satisfy its burden at the summary
judgment stage by identifying a lack of evidence for the
nonmovant on an essential element of the nonmovant's
claim.” Bausman v. Interstate Brands Corp.,
252 F.3d 1111, 1115 (10th Cir. 2001) (internal quotation
marks omitted) (quoting Adler v. Wal-Mart Stores,
Inc., 144 F.3d 664, 671 (10th Cir. 1998)). “Once
the moving party meets this burden, the burden shifts to the
nonmoving party to demonstrate a genuine issue for trial on a
material matter.” Concrete Works of Colo., Inc. v.
City & Cty. of Denver, 36 F.3d 1513, 1518 (10th Cir.
1994). The nonmoving party may not rest solely on the
allegations in the pleadings, but instead must designate
“specific facts showing that there is a genuine issue
for trial.” Celotex Corp. v. Catrett, 477 U.S.
317, 324 (1986) (internal quotation marks omitted). “To
avoid summary judgment, the nonmovant must establish, at a
minimum, an inference of the presence of each element
essential to the case.” Bausman, 252 F.3d at
1115. When reviewing a motion for summary judgment, a court
must view the evidence in the light most favorable to the
non-moving party. Id.
Applicability of Appraisal Provision
Plaintiff moves for partial summary judgment, asking the
Court to declare that the brick flaking is not “direct
physical loss” or “damage” within the
meaning of the policy and therefore is not subject to
appraisal. Docket No. 35 at 6-8. Defendant moves for partial
summary judgment, asking the Court to determine the opposite