United States District Court, D. Colorado
CONTINENTAL CASUALTY COMPANY, an Illinois corporation, Petitioner,
v.
KIDNEY REAL ESTATE ASSOCIATES OF ARVADA, LLC, a Colorado limited liability company, Respondent.
RECOMMENDATION OF UNITED STATES MAGISTRATE
JUDGE
Kristen L. Mix, United States Magistrate Judge
This
matter is before the Court on Petitioner's
Petition to Appoint Umpire [#1] (the
“Petition”). In the Petition [#1], Petitioner
seeks an order from the Court appointing an umpire to assist
with completion of the appraisal process for the property at
issue in this dispute. On October 16, 2018, Petitioner filed
its List of Potential Umpires [#22] (the
“Petitioner's List”) to which Respondent
filed Objections [#25]. On October 30, 2018, Respondent filed
its List of Potential Umpires [#23] (the
“Respondent's List”) to which Petitioner
filed Objections [#26]. The Petition [#1] has been referred
to the undersigned for disposition pursuant to 28 U.S.C.
§ 636(b)(1) and D.C.COLO.L.CivR 72.1(c). See
[#30]. The Court has reviewed the Petition, the parties'
respective Lists and Objections, 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 Petition
[#1] be GRANTED and that Neil
Mekelburg of Pie Consulting & Engineering be
appointed as umpire with respect to the insurance policy
appraisal provision applicable to this case.[1]
I.
Background
For
purposes of addressing the Petition [#1], the factual
background of this matter is as follows. Petitioner is an
insurance company that 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 for which
Petitioner issued a payment of $19, 002.21 under the Policy.
Id. ¶¶ 3, 5, 6, 7. Respondent disagreed
with Petitioner's damage assessment 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 an umpire. Id. Accordingly, Petitioner
filed the Petition [#1] in this Court on March 8, 2018. At
the Scheduling Conference held on October 3, 2018, the
parties were directed to file their respective lists of
potential umpires and they complied. See Minute
Entry [#20]; Petr's List [#22];
Respt's List [#23].
II.
Analysis
The
parties appear to agree that the appointment of an appraisal
umpire is guided by the language of the Policy which requires
an umpire who is both “competent and impartial.”
Petition [#1] ¶¶ 10-13; Respt's
List [#23] at 2. In addition, Petitioner asks that the
Court also consider the degree of the umpire's
“background, knowledge and experience in construction
matters, with commercial property insurance issues/disputes
generally, and particular knowledge regarding wind/hail storm
coverage disputes.” Petition [#1] ¶ 11.
Respondent has raised no objection to this and the Court
finds it an appropriate consideration in determining the
umpire's competency.
Petitioner
nominates the following seven individuals to serve as the
appraisal umpire: (1) Matthew J. Sitzmann
(“Sitzmann”) of Haag Engineering; (2) Grant
Trusler (“Trusler”) of Madsen, Kneppers &
Associates, Inc.; (3) Nick Lovato (“Lovato”) of
CyberCon Consulting, Inc.; (4) Chris Warlow
(“Warlow”) of Unified Building Sciences; (5) Neil
Mekelburg (“Mekelburg”) of Pie Consulting &
Engineering; (6) Hon. Sanford M. “Sandy” Brook
(“Brook”) of Judicial Arbiter Group, Inc.; and
(7) Hon. Christopher Cross (“Cross”) of JAMS
Denver.[2] Petr's List [#22] at 1-2.
Respondent names the following three individuals from JAMS
Denver: (1) Hon. James S. Miller (“Miller”); (2)
Hon. John P. Leopold (“Leopold”); and (3) Richard
P. Myers (“Myers”). Respt's List
[#23] at 1-2. For each individual nominated, the parties have
provided curricula vitae for the Court's review. See
Petr's List, Ex. A [#22-1]; Respt's List,
Exs. 1-3 [#23-1, #23-2, #23-3]; Petr's Obj., Ex.
A [#26-1].[3]
Petitioner
objects to Respondent's three “potential umpires on
the basis of their respective lack of competence and
technical knowledge specifically relating to roofing
structures and components, as associated with a claim of hail
and interior water damage, which industry disciplines form
the subject of this dispute.” Petr's Obj.
[#26] at 1. Specifically, Petitioner notes that Mr. Myers
“does not have any experience or qualification relating
to roofing, hail, or water damage[, ]” and argues that
“Mr. Myers' ownership and operation of a real
estate and rehab company falls far short of establishing any
knowledge of, or actual practice in, these
disciplines.” Id. at 2 (internal quotations
marks omitted). With respect to Judge Miller and Judge
Leopold, Petitioner asserts that neither has roofing, hail,
or other experience relevant to the technical factors
involved in this dispute. Id.
Respondent's
Objections to the individuals nominated by Petitioner is
somewhat difficult to follow. See [#25]. Respondent
first objects to Mr. Sitzmann and Mr. Lovato on the basis
that they were both hired by Petitioner's appraiser in a
recent case involving an appraisal dispute in which Judge
Cross served as an umpire. Id. at 1. Respondent then
appears to object to all seven individuals nominated by
Petitioner on the basis that they were selected by
Petitioner's appraiser. Id. at 1-2. Next,
Respondent raises specific objections to Mr. Trusler and Mr.
Warlow solely on the basis that “they work exclusively
for insurers in the appraisal process” without further
explanation. Id. at 2. Respondent concludes by
indicating that it does not object to Judge Cross or Judge
Brook, with the caveat that “they were chosen by
Petitioner's appraiser who also chose others who would
not be impartial as they have worked with Petitioner's
appraiser in the past as hired experts.” Id.
Respondent fails to specifically address Mr. Mekelburg.
See generally id.
As an
initial matter, the Court is not persuaded by
Respondent's blanket opposition to any individual
selected by Petitioner's appraiser given that the Policy
clearly states that the parties' appraisers, rather than
the parties themselves, will select an umpire. See
Petition [#1] ¶ 10. Although Respondent appears to
approve of Petitioner's nomination of Judge Brook and
Judge Cross, Petitioner states that these former judges may
not be “ideal candidates for the purpose of the
appraisal” given their “lack of technical
knowledge and experience.” Id. ¶ 13;
Petr's List [#22] at 3. Petitioner's concern
regarding the lack of technical knowledge and experience of
Judge Brook, Judge Cross, and Respondent's three nominees
is well taken. While Respondent does not address this point,
the claim at dispute involves roof and interior water damage
caused by a hail storm. Petition [#1] at 1-2. An
umpire with technical experience in the subject matter would
likely be a valuable asset to both parties during the
appraisal process. Although the former judicial officers have
undoubtedly presided over many insurance adjustment claims
and Mr. Myers has a ...