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Bonbeck Parker, LLC v. Travelers Indemnity Company of America.

No. 20-1192.  D.Colo. Judge Moritz. Declaratory Action—Disputed Insurance Policy Provision—“Amount of Loss”—Summary Judgment.

September 27, 2021

A hailstorm damaged three buildings plaintiff owned. Plaintiff submitted a claim for damages under its commercial insurance policy with Travelers Indemnity Company of America (Travelers). The policy covered hail damage, and Travelers acknowledged that some hail damage occurred to all building components except the roofs. It covered the undisputed damage with two payments totaling about $34,200. Travelers denied coverage for the roof damage, asserting that it resulted from uncovered events like wear and tear, deterioration, and improper installation.

Plaintiff then invoked a policy provision allowing either party to request an appraisal by an appraisal panel (Panel) of certain issues on which they might disagree during the claims process, including the “amount of loss.” Travelers agreed to the request under certain conditions, including that the Panel would not decide whether the hailstorm caused the disputed damage. Plaintiff rejected these conditions, and Travelers commenced a declaratory action seeking declarations that the policy precluded the Panel from determining causation issues and that it owed plaintiff nothing more because the remaining damage was caused by excluded causes of loss. Plaintiff counterclaimed for breach of contract and a declaration that the policy allowed the Panel to decide the cause of loss.

The parties each moved for summary judgment, and the district court concluded that the appraisal provision authorized the Panel to make cause-of-loss determinations. The Panel then issued its appraisal award, estimating total repair costs to be about $216,000. Travelers paid this amount, less the amount it previously paid. The district court then granted summary judgment to plaintiff on its counterclaim, finding no genuine dispute that Travelers breached the policy by not agreeing to the appraisal. Plaintiff was awarded $1 in nominal damages and statutory interest in the approximate amount of $36,000.

Travelers appealed both summary judgment rulings. As threshold matters, the Tenth Circuit (1) rejected plaintiff’s argument that Travelers waived its challenge to the scope of the appraisal provision by stating in district court briefing that the causation issue was moot, because this assertion simply acknowledged that the district court had resolved the issue; (2) determined that Colorado law did not bar Travelers from challenging the appraisal provision’s scope, given that it paid the award without protest or reservation (while the payment precluded Travelers from recouping the payment itself, it did not affect its attempt to overturn the nominal damages and statutory interest awards); and (3) dismissed Travelers’ appeal of its claim for declaratory judgment, because it was rendered moot when Travelers paid the awarded amount without protest or reservation.

On the merits, Travelers argued that the district court granted summary judgment on plaintiff’s breach of contract claim based on an erroneous view that the policy allowed the Panel to decide the cause of loss. The Tenth Circuit concluded that under the policy’s plain language, the parties could request an appraisal for disputes over the “amount of loss.” Accordingly, the district court properly interpreted the policy to conclude that the Panel could determine the cause of plaintiff’s roof damage, and it therefore properly granted summary judgment for plaintiff on its breach of contract claim.

The summary judgment on the breach of contract claim was affirmed. The appeal from the order denying summary judgment on the declaratory judgment claim was dismissed as moot.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

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