Bonbeck Parker, LLC v. Travelers Indem. Co. of Am.

• Decision Date: 03 February 2020
• Docket Number: Civil Action No. 1:14-cv-02059-RM-NRN
• Parties: BONBECK PARKER, LLC ; and Bonbeck HL, LLC, Plaintiffs, v. The TRAVELERS INDEMNITY COMPANY OF AMERICA, Defendant.
• Court: U.S. District Court — District of Colorado

611 F.Supp.3d 1115

BONBECK PARKER, LLC ; and Bonbeck HL, LLC, Plaintiffs,

v.The TRAVELERS INDEMNITY COMPANY OF AMERICA, Defendant.

Civil Action No. 1:14-cv-02059-RM-NRN

United States District Court, D. Colorado.

Signed February 3, 2020

David John Pettinato, William Corretti Harris, Merlin Law Group, P.A., Tampa, FL, for Plaintiffs.

Jeri Jean Wettestad, Amy M. Samberg, Jonathan Thomas Koehler, Thomas Henry Blomstrom, Foran Glennon Palandech Ponzi & Rudloff PC, Allison L. Gambill, Brownstein Hyatt Farber Schreck LLP, Denver, CO, for Defendant.

ORDER

RAYMOND P. MOORE, United States District Judge

This is a property insurance dispute arising from hail damage to Plaintiffs' three commercial buildings in Parker, Colorado. At issue now are the following motions: Plaintiffs Bonbeck Parker, LLC and Bonbeck HL, LLC's ("Plaintiffs" or "Bonbeck") Motion for Partial Summary Judgment (ECF No. 137) on their Count I for breach of contract; and Defendant The Travelers Indemnity Company of America's ("Defendant" or "Travelers") Motion for Summary Judgment (ECF No. 139) on Plaintiffs' remaining two Counts (collectively, "Motions"). The parties filed responses and replies. The Motions are ripe for resolution. Upon review of the Motions, relevant parts of the court record, and the applicable statutes and case law, and being otherwise fully advised, the Court finds and orders as follows.

I. BACKGROUND

On or about June 6, 2012, Bonbeck's commercial property suffered damage due to a hail storm. At that time, Bonbeck was insured by Travelers under a commercial property insurance policy, Policy No. H680-569A020 (the "Policy"). Thereafter, on June 14, 2012, Bonbeck notified Travelers of the loss to three commercial buildings¹ (collectively, "Property"). Travelers opened a claim and assigned an adjuster to investigate and adjust the claim. Travelers also retained a third-party consultant, Altitude Property Claims, LLC ("APC"), to assist with the inspection of the Property.

On June 25, 2012, Travelers' adjuster inspected the Property with a representative from APC. Bonbeck also had a representative present during the inspection; he advised Travelers and APC the roof to one of the buildings, 11000 S. Parker Road, did not need to be inspected because it had recently been replaced and Bonbeck was not having any problems with it. Thus, Travelers and APC did not inspect the roof of 11000 S. Parker Road.

On June 26, 2012, the day after its initial inspection, Travelers hired an independent third-party, PIE Consulting and Engineering, to determine the extent of hail damage to condenser fins on 32 individual rooftop HVAC units.

APC's report, dated June 28, 2012, addressed the two roofs which were inspected. (ECF No. 140-3, p. 1.) PIE's report, dated July 9, 2012, concluded there was minor hail damage to condenser fins on the HVAC units which could be repaired by combing (straightening). (ECF No. 140-4, p. 5.)

Thereafter, based on its investigations and the APC and PIE reports, Travelers prepared an estimate of damages dated July 11, 2012. Travelers' estimated replacement cost of covered damages were $3,153.15 and, accordingly, after accounting for Bonbeck's $1,000 deductible, issued Bonbeck a check for $2,153.15. (ECF Nos. 140-7, 140-8.)

Bonbeck remained silent for a year. Then, on July 11, 2013, Bonbeck disputed Travelers' estimate and submitted an estimate of $114,000 to repair/replace the HVAC units on the two roofs inspected. Other than the HVAC units, Bonbeck did not dispute Travelers' roof assessment. When Travelers contacted Bonbeck to discuss its HVAC estimate, Bonbeck advised it was hiring a public adjuster and would provide Travelers a letter of representation. It was not until December 23, 2013, however, that Travelers received a letter of representation from Bonbeck's public adjuster.

On January 9, 2014, Bonbeck's public adjuster provided Travelers a report alleging the Property's roofs required full removal and replacement. On January 16, 2014, Bonbeck's public adjuster provided Travelers a replacement cost estimate totaling $2,201,133.96. After receipt of the estimate, Travelers agreed to re-inspect the Property and hired Nelson Forensics ("Nelson") to assist.

Travelers inspected the Property with Nelson on February 17, 18, and 21, 2014 and March 3, 2014.² By report dated March 11, 2014, Nelson disagreed with Bonbeck's public adjuster as to what conditions or damages were hail related. Nelson recommended certain repairs to restore the Property. (ECF No. 140-12, pp. 51-53.)

By letter dated April 2, 2014, Travelers notified Bonbeck not all claimed damages were covered under the Policy, citing to, for example, exclusions for wear and tear, deterioration, improper installation, and shrinkage. On April 15, 2014, Travelers issued a supplemental estimate adding sums for the straightening of the HVAC condenser coils and additional shake shingles. The revised estimate was for a replacement cost value ("RCV") of $50,386.27. Also on that date, Travelers issued a supplemental payment for $32,045.27, which represented the actual cash value ("ACV") of the damaged Property ($50,386.27 (RCV) - $17,341.00 (depreciation) - $1,000 (deductible)). Travelers withheld the depreciation amount until Bonbeck completed the repairs/replacements at issue.

On June 30, 2014, Bonbeck submitted a Proof of Loss claiming damages totaling $2,395,627.56 and demanded Travelers appraise the entire claimed loss under the Policy's appraisal provision (the "Appraisal Clause"). The Appraisal Clause provides:

Appraisal

If we and you disagree on the value of the property, the amount of Net Income and operating expense or the amount of loss, either may make a written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property, the amount of Net Income and operating expense or the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:

a. Pay its chosen appraiser; and

b. Bear the other expenses of the appraisal and umpire equally.

If there is an appraisal, we will still retain our right to deny the claim.

(ECF No. 1 at ¶ 15; No. 14 at ¶ 15; No. 14-3, p. 1 (bold in original; Bates 00237).)

Bonbeck asserted appraisal was appropriate for "causation, scope and pricing" (ECF No. 172 at ¶ 26) and named its appraiser. In response to Bonbeck's appraisal demand, by letter dated July 2, 2014, Travelers disputed the term "amount of loss" used in the Policy's appraisal provision applied to issues of causation. In other words, Travelers disputed the scope of the appraisal proposed by Bonbeck. Thus, Travelers suggested a bifurcated appraisal where the appraisers would determine the value of the undisputed hail damage and the value of items damaged by disputed causes; and coverage defenses would be reserved for future resolution. Bonbeck disputed this approach; it would not agree to a bifurcated appraisal. This action followed.

On July 24, 2014, Travelers filed this declaratory judgment action raising two claims.³ First, Count I to determine coverage issues. And, second, Count II to stay appraisal until coverage is determined under the first claim or, alternatively, the Court issues an order concerning the scope of the appraisal and the authority of the appraisal panel. Bonbeck answered and filed four counterclaims. Thereafter, the parties filed cross motions for summary judgment as to the claims concerning the scope of the appraisal, Travelers' Count II and Bonbeck's Count IV. By Order dated October 24, 2016, the Court found in favor of Bonbeck, holding appraisers may determine the issue of causation and ordered the parties to proceed with an appraisal. This case was then stayed pending completion of the appraisal process.

Traveler's appraiser agreed $50,386.27⁴ was the replacement cost value for the damages to the Property. Bonbeck's appraiser submitted an estimated replacement cost value of $1,512,545.77. Ultimately, on or about July 19, 2017, the appraisal panel entered an award in the amount of $305,248.76 (RCV) / $215,724.65 (ACV).⁵ As relevant here, Travelers' Policy provides:

Loss Payment – Building and Personal Property

* * *

h. We will pay for covered loss or damage within 30 days after we receive the sworn proof of loss provided that you have complied with all the terms of the policy; and

(1) We have reached an agreement with you on the amount of loss; or

(2) An appraisal award has been made.

(ECF No. 14-3, p. 5 (bold in original; Bates 00241); ECF No. 171 at ¶ 33.)⁶

On September 21, 2017, Travelers paid the actual cost value amount awarded; Travelers' total supplemental payment was $184,832.53, with a depreciation holdback amount of $89,524.11. As to the recovery of depreciation holdback, the Policy provides:

Loss Payment – Building and Personal Property

* * *

e. We will determine the value of Covered Property in the event of covered loss or damage as follows:

(1) At replacement cost (without deduction for depreciation), except as provided in Paragraphs (2) through (18) below.

(a) You may make a claim for loss or damage covered by this insurance on an actual cash value basis instead of on a replacement cost basis. In the event you elect to have loss or damage settled on an actual cash value basis, you may still make a claim on a replacement cost basis if you notify us of your intent to do so within 180 days after the loss or damage.

(b) We will not pay on a replacement cost basis for any loss or damage:

(i) Until the lost or damaged property is actually repaired or replaced; and

(ii) Unless the repairs or replacement are made as soon as reasonably possible after the loss or damage.

(ECF No. 140-26, p. 2 (emphasis in original); No. 171 at ¶ 36.)

On September...