Continental Casualty Company v. Kidney Real Estate Associates of Arvada, LLC

Filing 35

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE re 1 MOTION for Order to by Magistrate Judge Kristen L. Mix on 2/22/19. IT IS HEREBY RECOMMENDED that the Petition 1 be GRANTED and that Neil Mekelburg of Pie Consulting & Engineering be appointed as umpire with respect to the insurance policy appraisal provision applicable to this case. (lgale, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 18-cv-00551-CMA-KLM
CONTINENTAL CASUALTY COMPANY, an Illinois corporation,
Petitioner,
v.
KIDNEY REAL ESTATE ASSOCIATES OF ARVADA, LLC, a Colorado limited liability
company,
Respondent.
_____________________________________________________________________
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Petitioner’s Petition to Appoint Umpire [#1] (the
“Petition”). In the Petition [#1], Petitioner seeks an order from the Court appointing an
umpire to assist with completion of the appraisal process for the property at issue in this
dispute. On October 16, 2018, Petitioner filed its List of Potential Umpires [#22] (the
“Petitioner’s List”) to which Respondent filed Objections [#25]. On October 30, 2018,
Respondent filed its List of Potential Umpires [#23] (the “Respondent’s List”) to which
Petitioner filed Objections [#26]. The Petition [#1] has been referred to the undersigned for
disposition pursuant to 28 U.S.C. § 636(b)(1) and D.C.COLO.L.CivR 72.1(c). See [#30].
The Court has reviewed the Petition, the parties’ respective Lists and Objections, the entire
case file, and the applicable law, and is sufficiently advised in the premises. For the
reasons set forth below, the Court respectfully RECOMMENDS that the Petition [#1] be
GRANTED and that Neil Mekelburg of Pie Consulting & Engineering be appointed as
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umpire with respect to the insurance policy appraisal provision applicable to this case.1
I. Background
For purposes of addressing the Petition [#1], the factual background of this matter
is as follows. Petitioner is an insurance company that issued Property Insurance Policy No.
B 5094150675 (the “Policy”) to Respondent, the owner of property in Arvada, Colorado (the
“Property”). Petition [#1] ¶ 4. The Policy covered “direct physical loss of or damage to
covered property caused by or resulting from a covered cause of loss, including damage
caused by wind or hail during the policy period.” Id. On May 8, 2017, the Property
sustained damage caused by a hailstorm for which Petitioner issued a payment of
$19,002.21 under the Policy. Id. ¶¶ 3, 5, 6, 7. Respondent disagreed with Petitioner’s
damage assessment and invoked the appraisal provision of the Policy, which states:
If we and you disagree on 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. 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 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.
Id. ¶¶ 8, 10. Pursuant to this provision, Respondent and Petitioner retained their respective
appraisers. Id. ¶ 8. The appraisers could not agree on an umpire. Id. Accordingly,

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A magistrate judge may issue orders on nondispositive motions only. Ocelot Oil Corp. v.
Sparrow Indus., 847 F.2d 1458, 1462-63 (10th Cir. 1988). Given that Petitioner initiated this suit
by filing the Petition [#1], the Court assumes that the Petition is dispositive and requires a
recommendation out of an abundance of caution.

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Petitioner filed the Petition [#1] in this Court on March 8, 2018. At the Scheduling
Conference held on October 3, 2018, the parties were directed to file their respective lists
of potential umpires and they complied. See Minute Entry [#20]; Petr’s List [#22]; Respt’s
List [#23].
II. Analysis
The parties appear to agree that the appointment of an appraisal umpire is guided
by the language of the Policy which requires an umpire who is both “competent and
impartial.” Petition [#1] ¶¶ 10-13; Respt’s List [#23] at 2. In addition, Petitioner asks that
the Court also consider the degree of the umpire’s “background, knowledge and experience
in construction matters, with commercial property insurance issues/disputes generally, and
particular knowledge regarding wind/hail storm coverage disputes.” Petition [#1] ¶ 11.
Respondent has raised no objection to this and the Court finds it an appropriate
consideration in determining the umpire’s competency.
Petitioner nominates the following seven individuals to serve as the appraisal
umpire: (1) Matthew J. Sitzmann (“Sitzmann”) of Haag Engineering; (2) Grant Trusler
(“Trusler”) of Madsen, Kneppers & Associates, Inc.; (3) Nick Lovato (“Lovato”) of CyberCon
Consulting, Inc.; (4) Chris Warlow (“Warlow”) of Unified Building Sciences; (5) Neil
Mekelburg (“Mekelburg”) of Pie Consulting & Engineering; (6) Hon. Sanford M. “Sandy”
Brook (“Brook”) of Judicial Arbiter Group, Inc.; and (7) Hon. Christopher Cross (“Cross”) of
JAMS Denver.2 Petr’s List [#22] at 1-2. Respondent names the following three individuals
from JAMS Denver: (1) Hon. James S. Miller (“Miller”); (2) Hon. John P. Leopold

2

The individuals named in Petitioner’s List [#22] are also named in the Petition [#1]. See
[#1] ¶ 12.

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(“Leopold”); and (3) Richard P. Myers (“Myers”). Respt’s List [#23] at 1-2. For each
individual nominated, the parties have provided curricula vitae for the Court’s review. See
Petr’s List, Ex. A [#22-1]; Respt’s List, Exs. 1-3 [#23-1, #23-2, #23-3]; Petr’s Obj., Ex. A
[#26-1].3
Petitioner objects to Respondent’s three “potential umpires on the basis of their
respective lack of competence and technical knowledge specifically relating to roofing
structures and components, as associated with a claim of hail and interior water damage,
which industry disciplines form the subject of this dispute.”

Petr’s Obj. [#26] at 1.

Specifically, Petitioner notes that Mr. Myers “does not have any experience or qualification
relating to roofing, hail, or water damage[,]” and argues that “Mr. Myers’ ownership and
operation of a real estate and rehab company falls far short of establishing any knowledge
of, or actual practice in, these disciplines.” Id. at 2 (internal quotations marks omitted).
With respect to Judge Miller and Judge Leopold, Petitioner asserts that neither has roofing,
hail, or other experience relevant to the technical factors involved in this dispute. Id.
Respondent’s Objections to the individuals nominated by Petitioner is somewhat
difficult to follow. See [#25]. Respondent first objects to Mr. Sitzmann and Mr. Lovato on
the basis that they were both hired by Petitioner’s appraiser in a recent case involving an
appraisal dispute in which Judge Cross served as an umpire. Id. at 1. Respondent then
appears to object to all seven individuals nominated by Petitioner on the basis that they
were selected by Petitioner’s appraiser. Id. at 1-2. Next, Respondent raises specific

3

The Court notes that Respondent failed to attach a curriculum vitae for Judge Leopold.
See [#23-1, #23-2, #23-3]. To assist the Court, Petitioner attached Judge Leopold’s curriculum
vitae to its Objections. See [#26-1].

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objections to Mr. Trusler and Mr. Warlow solely on the basis that “they work exclusively for
insurers in the appraisal process” without further explanation. Id. at 2. Respondent
concludes by indicating that it does not object to Judge Cross or Judge Brook, with the
caveat that “they were chosen by Petitioner’s appraiser who also chose others who would
not be impartial as they have worked with Petitioner’s appraiser in the past as hired
experts.” Id. Respondent fails to specifically address Mr. Mekelburg. See generally id.
As an initial matter, the Court is not persuaded by Respondent’s blanket opposition
to any individual selected by Petitioner’s appraiser given that the Policy clearly states that
the parties’ appraisers, rather than the parties themselves, will select an umpire. See
Petition [#1] ¶ 10. Although Respondent appears to approve of Petitioner’s nomination of
Judge Brook and Judge Cross, Petitioner states that these former judges may not be “ideal
candidates for the purpose of the appraisal” given their “lack of technical knowledge and
experience.” Id. ¶ 13; Petr’s List [#22] at 3. Petitioner’s concern regarding the lack of
technical knowledge and experience of Judge Brook, Judge Cross, and Respondent’s three
nominees is well taken. While Respondent does not address this point, the claim at dispute
involves roof and interior water damage caused by a hail storm. Petition [#1] at 1-2. An
umpire with technical experience in the subject matter would likely be a valuable asset to
both parties during the appraisal process. Although the former judicial officers have
undoubtedly presided over many insurance adjustment claims and Mr. Myers has a
substantial background in arbitrating and mediating litigation disputes, their curricula vitae
do not indicate specific experience in hail damage coverage assessments. See Curricula
Vitae of Judge Brook [#22-1] at 12-13, Judge Cross [#22-1] at 14-16, Judge Miller [#23-3],
Judge Leopold [#26-1], and Mr. Myers [#23-1].
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Petitioner suggests that Mr. Sitzmann, Mr. Trusler, and Mr. Mekelburg are the most
qualified individuals named in Petitioner’s List to serve as an umpire. See Petition [#1] ¶
13; Petr’s List [#22] at 2-3. Among these three candidates, Respondent raised specific
objections only to Mr. Sitzmann and Mr. Trusler. In light of this, the Court has reviewed
Mr. Mekelburg’s qualifications and finds him to be an acceptable candidate. Mr. Mekelburg
is employed by Pie Consulting & Engineering which, according to Petitioner, is regularly
employed to consult for both insurers and insureds. Petition [#1] ¶ 13; Petr’s List [#22] at
3. Relevant to this dispute, Mr. Mekelburg works in Arvada, Colorado, the location of the
Property, and has extensive experience in structural, civil, and property damage claims,
and forensic investigation experience in assessing damage caused by snow, wind, and
water. Curriculum Vitae of Mr. Mekelburg [#22-1] at 10-11. Accordingly, given Mr.
Mekelburg’s qualifications and given that no specific objection was raised by Respondent,
the Court concludes that Mr. Mekelburg would be competent and impartial in serving as an
umpire in the parties’ appraisal process.
III. Conclusion
Based on the foregoing,
IT IS HEREBY RECOMMENDED that the Petition [#1] be GRANTED and that Neil
Mekelburg of Pie Consulting & Engineering be appointed as umpire with respect to the
insurance policy appraisal provision applicable to this case.
IT IS HEREBY ORDERED that pursuant to Fed. R. Civ. P. 72, the parties shall have
fourteen (14) days after service of this Recommendation to serve and file any written
objections in order to obtain reconsideration by the District Judge to whom this case is

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assigned. A party’s failure to serve and file specific, written objections waives de novo
review of the Recommendation by the District Judge, Fed. R. Civ. P. 72(b); Thomas v. Arn,
474 U.S. 140, 147-48 (1985), and also waives appellate review of both factual and legal
questions. Makin v. Colo. Dep’t of Corr., 183 F.3d 1205, 1210 (10th Cir. 1999); Talley v.
Hesse, 91 F.3d 1411, 1412-13 (10th Cir. 1996).

A party’s objections to this

Recommendation must be both timely and specific to preserve an issue for de novo review
by the District Court or for appellate review. United States v. One Parcel of Real Prop., 73
F.3d 1057, 1060 (10th Cir. 1996).
Dated: February 22, 2019

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