223 F. Supp. 3d 1155
D. Colo.2016Background
- Defendants (BonBeck Parker LLC and BonBeck HL LLC) held a commercial property insurance policy from Travelers for three buildings covering June 30, 2011–June 30, 2012; they claimed hail damage from a June 6, 2012 storm.
- Travelers acknowledged some hail damage to non-roof components but denied roof damage coverage, attributing roof issues to wear, deterioration, improper installation, and shrinkage.
- Defendants demanded appraisal of the “amount of loss”; Travelers agreed to appraisal only on a bifurcated basis (disputed vs. undisputed damages) and filed suit for declaratory relief about appraisal scope.
- Defendants counterclaimed and sought to compel appraisal; the district court addressed cross-motions for partial summary judgment and whether appraisers may determine causation.
- The policy’s appraisal provision allows appraisal when parties disagree on the “amount of loss,” and preserves the insurer’s right to deny coverage even after appraisal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appraisers may determine causation in an appraisal of the “amount of loss” | "Amount of loss" is limited to quantifying damages; causation (coverage) is a court issue | "Amount of loss" necessarily includes causation; appraisers must decide whether storm caused damage | Appraisers may determine causation; court compels appraisal |
| Whether court should issue appraisal directives (i.e., mandate Travelers’ proposed bifurcated method) | Court should order bifurcated appraisal (separate itemized determinations of disputed and undisputed damages) | No court directives needed; parties and appraisers/umpire should conduct appraisal without judicial micromanagement | Court declines to issue appraisal directives and denies Travelers’ request for them |
| Whether proceedings should be stayed pending appraisal | N/A (Travelers sought directives if appraisal ordered) | Defendants requested appraisal and stay until appraisal completed | Court stayed further proceedings pending completion of appraisal and ordered parties to proceed with appraisal |
Key Cases Cited
- Auto-Owners Ins. Co. v. Summit Park Townhome Ass’n, 100 F. Supp. 3d 1099 (D. Colo. 2015) (appraisers may determine causation as part of amount-of-loss appraisal)
- Cigna Ins. Co. v. Didimoi Prop. Holdings, N.V., 110 F. Supp. 2d 259 (D. Del. 2000) (definition of “amount of loss” contemplates causation)
- North Glenn Homeowners Ass’n v. State Farm Fire & Cas. Co., 854 N.W.2d 67 (Iowa App. 2014) (causation is integral to amount of loss and appropriate for appraisal)
- Hahn v. Allstate Ins. Co., 15 A.3d 1026 (R.I. 2011) (amount and causation are inextricably intertwined in appraisal)
- Fire Ins. Exchange v. Bentley, 953 P.2d 1297 (Colo. App. 1998) (coverage questions under an insurance policy are generally matters of law for the court)