Vista Pointe Townhome Ass'n Inc. v. Auto-Owners Ins. Co., Civil Action No. 16-CV-0973-MSK-NYW
| Decision Date | 13 April 2018 |
| Docket Number | Civil Action No. 16-CV-0973-MSK-NYW |
| Parties | VISTA POINTE TOWNHOME ASSOCIATION INC., Plaintiff, v. AUTO-OWNERS INSURANCE CO., Defendant. |
| Court | U.S. District Court — District of Colorado |
OPINION AND ORDER ON THE PLAINTIFF'S STANDING TO BRING SUIT
THIS MATTER comes before the Court upon the Court's Order to Show Cause (#34) as to why this case should not be dismissed to lack of subject-matter jurisdiction and Responses thereto (## 35,36). For the reasons that follow, the Court concludes that the Plaintiff has standing to bring some, but not all, of its claims.
This case arises from a hail storm that occurred in 2014, damaging the Plaintiff's ("Vista Pointe") property. Vista Pointe filed a claim with its insurer, Defendant Auto-Owners Insurance Co. ("Owners"). Owners determined that at least part of the claimed loss was covered by the insurance policy ("the Policy") and paid a portion of the amount claimed by Vista Pointe. The Policy provided that disputes over the value of a claim could be resolved via an "appraisal" process, and Vista Pointe invoked that process. Pursuant to that process, Vista Pointe and Owners each designated an "impartial appraiser" to present their claims, with the expectation that the two appraisers would then appoint a third-party "umpire" whose valuation of the claim would be binding. However, Owners disputed whether Vista Pointe designated appraiser was truly impartial, the parties reached impasse over that issue, and Vista Pointe filed this action.
In its Complaint (# 1), Vista Pointe asserts three causes of action: (1) a claim for breach of contract, apparently under Colorado law, in that Owners failed to pay the full amount of benefits called for under the Policy; (2) bad faith breach of insurance contract, apparently under Colorado common law, in that Owners failed to reasonably investigate Vista Pointe's claim, failed to promptly offer and pay the full amount of the claim, and compelled Vista Pointe to initiate litigation, among other things; and (3) unreasonable delay and denial of benefits in violation of C.R.S. § 10-3-1115 and -1116. The Complaint also purports to be a "Motion to Stay and Compel," requesting that the Court stay the newly-filed lawsuit and compel Owners to accept Vista Pointe's chosen appraiser and to thereafter proceed with the appraisal process.
Three provisions in the Policy are pertinent to the issue of Vista Pointe's standing in this case. First, the Policy's "Commercial Property Conditions" section states:
(# 36-2 at 113) (the "Action clause")
Second, the terms of the "Commercial Property Conditions" of the Policy expressly incorporate the Provisions of the "Loss Conditions" section of the Policy. These provisions dictate when Owners is required to make a payment for a covered loss:
(# 36-2 at 122) (the "Payment clause").
Third, if there is a disagreement as to the amount of loss, either party can invoke an appraisal process:
(# 36-2 at 120) (the "Appraisal clause").
Shortly after Vista Pointe commenced this action, the Court sua sponte raised concerns that the suit was premature, as it appeared that completion of the appraisal process was a condition precedent to Owner's obligation to pay and Vista Pointe's right to bring suit. At a hearing in April 2016, the parties agreed to administratively close the case pending completion of the appraisal process (# 18). The parties then entered into a new contract, referred to as an "Appraisal Agreement," that would govern how the parties would carry out the appraisalprocess. Among other things, the Appraisal Agreement substantially expanded the description of the appraisal process, but it was not made an amendment to the Policy.
In September 2016, Owners moved to reopen the case and to disqualify Vista Pointe's appraiser (## 19, 20). The Court found (# 27) that it lacked jurisdiction to rule on the motion to disqualify Vista Pointe's appraiser because it was premised upon the terms of the Appraisal Agreement, which had been entered into during the pendency of this lawsuit but, according to the parties, it did not amend or modify the terms of the Policy. The Court invited a motion for reconsideration if Owners could find authority indicating that the Court could exercise jurisdiction over a contract unrelated to the Policy, but none was filed.
Vista Pointe then requested that the Court reopen the case to appoint an umpire because the parties' appraisers disagreed over who should be selected as an umpire. (# 28). Owners argued that Vista Pointe's appraiser agreed to an umpire; Vista Pointe asserts that its appraiser withdrew his consent. The Court again raised its concerns about Vista Pointe's standing, repeating its understanding that according the express terms of the Policy, invocation of the appraisal process created a condition precedent to performance under the contract. Ultimately, the Court ordered the parties to show cause (# 34) as to why this case should not be dismissed for lack of standing.
Vista Pointe responded to that order, pointing to a number of alleged breaches of the Policy that it contended gave it standing to sue: 1) Owners refusal to pay the full amount of the proof of loss; 2) Owners taking more than 30 days to render a decision on the claim; and 3) Owners required Vista Point to submit information in support of its claimed loss when such information was not required by the Policy. Vista Pointe argued that, if it suffered no injury prior to filing this suit, insurers could hold claims hostage for unreasonable lengths of time andthen invoke appraisal after the Policy's limitation period ran. Additionally, Vista Pointe asserts that it suffered an injury because Owners took too long to process the claim, only to provide an insufficient payment without any reasonable basis. Vista Pointe also contends that the appraisal process is not a condition precedent to the Policy because it is permissive and not mandatory. Lastly, Vista Pointe maintains that the Court may freely govern the appraisal process by imposing guidelines as contemplated by the Policy, citing to Auto-Owners Insurance Co. v. Summit Park Townhome Ass'n, 129 F. Supp. 3d 1150, 1155-56 (D. Colo. 2015).
As the Court explained in its Order to Show Cause, federal courts are courts of limited jurisdiction,1 possessing only the authority given to them by the United States Constitution and federal statutes. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Article III of the Constitution restricts the authority of federal courts to adjudicating actual "cases" and "controversies." U.S. Const. art. III, § 2, cl. 1; Sprint Commc'ns Co. v. APCC Servs. Inc., 554 U.S. 269 (2008). The question of standing focuses on the party who seeks relief, rather than on the issues that he or she wants adjudicated. See Flast v. Cohen, 392 U.S. 83, 95 (1968). Agreements between the parties as to standing or a court's jurisdiction do not create it. Wilson v. Glenwood Intermountain Properties, Inc., 96F.3d 590, 593 (10th Cir. 1996).
For each claim, a plaintiff must show that there was a at the time of filing of the lawsuit. DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006). In this case, for each claim it asserts, Vista Pointe must demonstrate that, as of the commencement of the suit in April 2016: (1) it had suffered an "injury in fact" that is concrete, particularized and actual orimminent (not merely conjectural or hypothetical); (2) that the injury is fairly traceable to the challenged action of Owners; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by the relief requested. Friends of the Earth Inc. v. Laidlaw Envtl. Servs. Inc., 528 U.S. 167, 180-81 (2000); Tandy v. City of Wichita, 380 F.3d 1277, 1283 (10th Cir.2004); Nova Health Sys. v. Gandy, 416 F.3d 1149, 1154 (10th Cir. 2005). The Court turns to each claim in turn.
Vista Pointe's first claim for relief is for breach of contract - specifically, breach of the terms of the Policy. Under Colorado law, a claim for breach of contract requires proof of the following elements: (i) that an enforceable contract existed between the parties; (ii) that the plaintiff fully performed its obligations under the contract or that its performance was excused; (iii) that the defendant breached its obligations under the contract; (iv) that the plaintiff suffered an injury caused by the defendant's breach. Western Distributing Co. v. Diodosio, 841 P.3d 1053, 1058 (Colo. 1992). It is undisputed that the parties' agree that an enforceable contract - the Policy - exists.
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