KCOM, Inc. v. Employers Mutual Casualty Co.
829 F.3d 1192
10th Cir.2016Background
- KCOM's motel was damaged by hail (June 2012); KCOM submitted a proof of loss for $631,726.87; EMC admitted coverage but disputed amount.
- The insurance policy contained an appraisal clause giving each party an appraiser and an umpire; appraisal was invoked and proceeded but KCOM alleged the process ‘‘went awry.’’
- KCOM sued in Colorado state court for breach of contract, unreasonable delay, and bad faith; EMC removed to federal court on diversity grounds and the district court stayed proceedings pending appraisal.
- An appraisal award for $208,445.57 was issued; KCOM objected and refused payment. EMC moved in district court to confirm the award under the Colorado Uniform Arbitration Act (CUAA § 13-22-222); KCOM moved to declare the appraisal non-arbitral or to vacate it under CUAA § 13-22-223.
- The district court denied both motions, ruling CUAA did not apply and that appraisal-related factual disputes were for a jury. EMC appealed the district court’s denial of confirmation, invoking CUAA and, belatedly, the Federal Arbitration Act (FAA).
- The Tenth Circuit concluded it lacked federal appellate jurisdiction and dismissed the interlocutory appeal.
Issues
| Issue | Plaintiff's Argument (KCOM) | Defendant's Argument (EMC) | Held |
|---|---|---|---|
| Whether the Tenth Circuit has jurisdiction to hear an interlocutory appeal from the district court’s denial of a motion to confirm an appraisal award brought under state law | CUAA governs the appraisal; district court correctly held CUAA applies and denied confirmation; no federal interlocutory jurisdiction claimed by KCOM | EMC contends the order denying confirmation is immediately appealable under Colorado law (CUAA § 13-22-228) or, alternatively, under the FAA (9 U.S.C. § 16(a)(1)(D)) because the appraisal is arbitration | Court held it lacked appellate jurisdiction: a state statute cannot create federal appellate jurisdiction; EMC did not invoke the FAA in the district court, so FAA § 16 interlocutory jurisdiction is unavailable |
| Whether a district-court motion brought under state confirmation statutes can be treated as a FAA § 9 motion for jurisdictional purposes | State-law motion only; FAA inapplicable unless invoked | EMC argues CUAA and FAA overlap; FAA § 16(a)(1)(D) authorizes appeals from denials of confirmation regardless of source of motion | Court held a motion must explicitly invoke FAA relief (or unmistakably seek it on its face); EMC’s motion invoked only CUAA, so FAA § 16 does not supply jurisdiction |
| Whether FAA § 16(a)(1)(D) should be read to permit interlocutory appeals from denials of confirmation under state statutes | No direct argument for expansion | EMC argues § 16(a)(1)(D) authorizes appeals from any order denying confirmation of an award, regardless of whether the underlying motion was under federal or state law | Court rejected expansive reading: § 16 applies to outcomes under the FAA and should not be read to allow interlocutory appeals from state-law confirmation schemes |
| Whether the collateral-order doctrine allows interlocutory review despite lack of FAA jurisdiction | KCOM implicitly argues no extraordinary right exists | EMC claims immediate review is required because denial forces litigation of amount of loss and may allow discovery from appraisers that would be barred if appraisal were deemed arbitration | Court held collateral-order doctrine inapplicable: EMC failed the ‘‘effectively unreviewable’’ prong; avoiding a trial is insufficient and discovery concerns did not present a sufficiently separable, unreviewable right |
Key Cases Cited
- Lindstrom v. United States, 510 F.3d 1191 (10th Cir.) (federal courts are courts of limited jurisdiction)
- Aspen Orthopaedics & Sports Med., LLC v. Aspen Valley Hosp. Dist., 353 F.3d 832 (10th Cir.) (Erie analysis governs what law applies in diversity actions)
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (Sup. Ct.) (FAA § 16 authorizes interlocutory appeals from denials of motions to confirm brought under the FAA)
- Conrad v. Phone Directories Co., 585 F.3d 1376 (10th Cir.) (to invoke FAA appellate jurisdiction, the movant must have sought FAA relief or it must be unmistakably clear they did)
- P & P Indus., Inc. v. Sutter Corp., 179 F.3d 861 (10th Cir.) (district court lacks power to confirm under FAA § 9 absent parties’ agreement that judgment will be entered on the award)
- Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100 (Sup. Ct.) (collateral-order doctrine is narrow; disclosure orders adverse to attorney-client privilege are not immediately appealable)
- Auraria Student Hous., LLC v. Campus Vill. Apartments, 703 F.3d 1147 (10th Cir.) (three-part test for collateral-order doctrine)
- Merrill Lynch v. Manning, 136 S. Ct. 1562 (Sup. Ct.) (courts should interpret jurisdictional statutes narrowly)