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Olga Despotis Trust v. Cincinnati Insurance Co.

United States District Court, E.D. Missouri, Eastern Division

October 17, 2014

OLGA DESPOTIS TRUST, Plaintiff,
v.
THE CINCINNATI INSURANCE COMPANY, Defendant.

MEMORANDUM AND ORDER

RONNIE L. WHITE, District Judge.

This matter is before the court on Defendant's Motion for Summary Judgment as to Count III of Plaintiff's Complaint (ECF No. 39) and Plaintiff's Motion for Partial Summary Judgment (ECF No. 49). These matters are fully briefed and ready for disposition.

BACKGROUND

Plaintiff Olga Despotis Trust ("Plaintiff") owned a commercial property which was destroyed by a tornado on December 31, 2010. (Defendant's Statement of Facts in Support of its Motion for Partial Summary Judgment as to Count III of Plaintiff's Complaint ("DSUMF"), ECF No. 41, ¶1; Plaintiff's Statement of Uncontroverted Facts in Support of Motion for Partial Summary Judgment ("PSUMF"), ECF No. 50, ¶50). Plaintiff's property was insured at the time of the tornado by Defendant The Cincinnati Insurance Company ("Defendant") under Policy No. 05EBP0030517 ("the Policy"). (DSUMF, ¶2, PSUMF, ¶2). The Policy provides the following appraisal provision:

Appraisal

If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser and notify the other of the appraiser selected within 20 days of the written demand for appraisal. The two appraisers will select an umpire. If they cannot agree upon an umpire within 15 days, we or you may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. The umpire shall make an award within 30 days after the umpire receives the appraisers' submissions of their differences. 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.
(DSUMF, ¶3; PSUMF, ¶3).

Defendant calculated its Actual Cash Value ("ACV") of the loss and paid $813, 931. (DSUMF, ¶4). By a letter dated March 9, 2011, Plaintiff notified Defendant that Plaintiff disagreed with Defendant's calculation of the ACV. (DSUMF, ¶5). By a letter dated April 19, 2011, Defendant advised Plaintiff of its intent to invoke its rights under the appraisal provision. (PSUMF, ¶5). Defendant's April 19, 2011 letter stated, "Cincinnati Insurance will select an appraiser within 10 days of the date of this letter and advise you of same." (PSUMF, ¶6). On April 20, 2011, Plaintiff's counsel sent Defendant a letter rejecting the demand for appraisal and stating that "using the appraisal process to determine the disputed portions of the loss under the Policy is completely unproductive." (DSUMF, ¶7). By letter dated May 2, 2011, Defendant requested that Plaintiff reconsider its position declining to participate in the appraisal process. (DSUMF, ¶8). In a letter dated May 4, 2011, Plaintiff asked Defendant to confirm, in writing, whether Defendant agreed to be bound by the outcome of the appraisal process as described in the policy of insurance. (PSUMF, ¶19). On May 11, 2011, Defendant responded that "the terms and conditions of the appraisal process set forth in the policy of insurance are binding upon both the insured and the insurance company." Plaintiff did not agree to participate in appraisal process. (DSUMF, ¶9). On May 18, 2011, Plaintiff filed a lawsuit (which was subsequently dismissed). (PSUMF, ¶25). On December 21, 2012, Plaintiff filed this Complaint. (DSUMF, ¶10). Count III of the Complaint was for declaratory judgment regarding the appraisal provision, seeking to have this Court declare that the appraisal provision of the Policy unenforceable because it was vague and ambiguous. (DSUMF, ¶11). In Count III, Plaintiff alleged that the appraisal provision was unenforceable because it states that a decision by any two of the three decisionmakers (the two appraisers and the umpire) is binding but, after an appraisal, Defendant retains the right to deny the claim. (DSUMF, ¶12). Plaintiff also complains that in Defendant's Answer to Plaintiff's Complaint and in Plaintiff's Supplemental Answers and Objections to Plaintiff's First Set of Interrogatories, Defendant did not identify the appraisal process as an affirmative defense. (PSUMF, ¶¶7-11).

Tore Swanson, Associate Manager, Property Claims for Defendant, testified that Defendant did not select an appraiser under the terms of the appraisal provision. (PSUMF, ¶¶12-15). Defendant's employee, Mr. Redick, supervised Plaintiff's claims. (PSUMF, ¶16). Mr. Redick testified that Defendant did not select an appraiser under the terms of the appraisal provision. (PSUMF, ¶¶17-18). Plaintiff was not notified of Defendant's selection of an impartial appraiser by May 9, 2011, which was 20 days after the date of Defendant's April 19, 2011 letter. (PSUMF, ¶¶20-21).

SUMMARY JUDGMENT STANDARD

The Court may grant a motion for summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Citrate, 477 U.S. 317, 322 (1986); Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011). The substantive law determines which facts are critical and which are irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Only disputes over facts that might affect the outcome will ...


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