Ins. v. Dakota Station II
2021 COA 114
Colo. Ct. App.2021Background
- Dakota Station II (a condominium association) submitted storm-damage claims to its insurer, Owners; the policy’s appraisal clause required each party to select a competent and impartial appraiser, the two appraisers to select an umpire, and a decision agreed to by any two of the three to be binding.
- Dakota’s public adjuster Benglen retained Laura Haber as Dakota’s appraiser; Haber had a fee agreement with a 5% cap and worked on related matters with Benglen.
- The appraisers and an umpire issued an award (~$3M) signed by Haber and the umpire; Owners paid the award then moved to vacate under the CUAA, alleging Haber was not impartial.
- The trial court initially denied vacatur; the court of appeals affirmed under a different impartiality standard; the Colorado Supreme Court reversed, articulating a stricter impartiality standard (appraiser must be unbiased, disinterested, unswayed by personal interest, and not favor one side) and remanded to determine whether Haber met that standard.
- On remand the trial court held an evidentiary hearing, found Haber not impartial based on credibility, advocacy, financial interest, and questionable inclusions in her estimate, vacated the appraisal award, and entered judgment; the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Owners) | Defendant's Argument (Dakota) | Held |
|---|---|---|---|
| Whether an appraisal award is invalid if the only agreeing appraiser is partial | The policy requires at least one impartial appraiser; if the only appraiser who agreed was partial, the award is invalid | Appraisal awards bind unless misconduct is attributable to the umpire or the award itself; appraiser partiality alone shouldn’t automatically invalidate the award | Held: Policy language requires an impartial appraiser; lack of impartiality by the only agreeing appraiser invalidates the award (affirmed) |
| Whether the remand court violated the law-of-the-case/mandate by revisiting prior findings | Supreme Court’s new standard required reassessment of Haber’s conduct; remand permitted further proceedings consistent with that standard | Remand court should have deferred to prior findings affirmed by the court of appeals and limited scope of remand | Held: Remand court properly applied the Supreme Court’s new impartiality standard and reassessed facts; no law-of-the-case violation |
| Whether the remand court abused discretion by deferring pre-hearing rulings, denying a stay, or making evidentiary rulings | Scope of remand and procedural rulings were within the court’s discretion; Dakota suffered no prejudice | Court’s procedural handling (late rulings, denying stay, inconsistent handling of objections) prejudiced Dakota | Held: No abuse of discretion; any procedural errors were harmless because Dakota showed no prejudice |
| Whether the remand court applied the correct legal standard and whether its factual findings were supported | Court applied the Supreme Court’s Owners Ins. II impartiality standard; findings (credibility, advocacy, financial interest, meritless line items) were supported | Court applied an incorrect or overbroad standard and made unsupported credibility and factual findings | Held: Court applied the correct legal standard and the factual findings were supported by record evidence; vacatur affirmed |
Key Cases Cited
- Auto-Owners Ins. Co. v. Summit Park Townhome Ass'n, 886 F.3d 852 (10th Cir. 2018) (interpreting identical policy language and holding an appraisal award invalid where only one agreeing appraiser was impartial)
- Harleysville Mut. Ins. Co. v. Narron, 574 S.E.2d 490 (N.C. Ct. App. 2002) (noting that ordinary mistakes by appraisers generally do not invalidate an otherwise fair award)
- Providence Washington Ins. Co. v. Gulinson, 215 P. 154 (Colo. 1923) (older Colorado authority addressing appraisal/arbitration principles)