Auto-Owners Insurance v. Summit Park Townhome Ass'n
129 F. Supp. 3d 1150
D. Colo.2015Background
- Auto-Owners (insurer) issued a policy covering Summit Park (townhome association) for policy period March 1, 2013–March 1, 2014; Summit Park claims hail damage from September 14, 2013.
- Parties disputed whether claimed damage was caused by the insured storm or by other causes/exclusions; court ordered appraisal to determine amount of loss but reserved jurisdiction for appraisal disputes.
- Auto-Owners sought to compel Summit Park to sign a proposed written appraisal-agreement adopting procedures modeled on Colorado’s Uniform Arbitration Act (CUAA) and other formal protections.
- Summit Park resisted, arguing the CUAA does not apply to appraisal and that many proposed procedures (discovery, subpoenas, formal hearings, broad disclosure) would convert appraisal into quasi-judicial arbitration.
- The court addressed (1) whether appraisal is an "arbitration" under CUAA and (2) whether and what guidelines the court should impose to govern the appraisal process.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the policy appraisal is an "arbitration" governed by the CUAA | Appraisal is a form of arbitration; CUAA procedures (disclosure, standards) should apply | CUAA does not govern appraisal; applying it would turn informal appraisal into quasi-judicial process | Not arbitration under CUAA; appraisal does not resolve entire dispute or substitute for court; CUAA largely inapposite |
| Whether court may impose procedural guidelines for appraisal | Proposed guidelines ensure due process, impartiality, and follow CUAA standards | Court should not impose extensive procedures; avoids formalities that undermine appraisal's informality | Court may and will impose tailored guidelines to ensure competence, impartiality and orderly process |
| Scope of disclosures/conflict checks for appraisers/umpire | Require disclosures like CUAA (reasonable inquiry) to protect impartiality | Some disclosure items are burdensome given common industry relationships | Court adopts reasonable-inquiry disclosure rule; continuing duty to disclose; objections may be grounds to vacate award if timely raised |
| Restrictions on ex parte contact, hearings, and evidence sharing | Controls are needed to prevent bias and ensure fair notice | Prohibiting communications and formal procedures would make appraisal too formal | Court prohibits substantive ex parte communications, mandates contemporaneous exchange of written materials and an informal hearing before any award involving umpire; appraisers cannot decide legal issues |
Key Cases Cited
- Essex Ins. Co. v. Vincent, 52 F.3d 894 (10th Cir.) (choice-of-law: Colorado substantive law applies in diversity)
- Salt Lake Tribune Publ’g Co. v. Management Planning, Inc., 390 F.3d 684 (10th Cir.) (appraisal process did not constitute arbitration under FAA)
- Enzor v. N. Carolina Farm Bureau Mut. Ins. Co., 473 S.E.2d 638 (N.C. Ct. App.) (appraisal award invalid if umpire signs alone without concurrence of an appraiser)
- Minot Town & Country v. Fireman’s Fund Ins. Co., 587 N.W.2d 189 (N.D.) (appraisal fixes amount of loss but not liability or coverage)
- Portland Gen. Elec. Co. v. U.S. Bank Trust Nat’l Ass’n, 218 F.3d 1085 (9th Cir.) (distinguishing arbitration from appraisal; appraisal submits isolated issues)
- Hartford Lloyd’s Ins. Co. v. Teachworth, 898 F.2d 1058 (5th Cir.) (appraisals are informal; appraisers base decisions on independent investigations)
- Providence Washington Ins. Co. v. Gulinson, 215 P. 154 (Colo.) (appraisal award vacated where appraiser excluded other appraiser from meeting)
- St. Paul Fire & Marine Ins. Co. v. Walsenburg Land & Dev. Co., 278 P. 602 (Colo.) (vacating appraisal where insured denied notice/hearing)
- Terra Indus., Inc. v. Commonwealth Ins. Co. of Am., 981 F. Supp. 581 (N.D. Iowa) (court may resolve disputes over scope of appraisal and impose procedures)