Discuillo v. Allstate Insurance Company
Filing
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ORDER. For the reasons set forth within the attached, the 38 motion to compel appraisal is hereby DENIED. Signed by Judge Michael P. Shea on 8/3/2018. (Self, A.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
ELAINE DISCUILLO,
No. 3:17-cv-00234-MPS
Plaintiff,
v.
ALLSTATE INSURANCE COMPANY,
Defendant.
RULING ON MOTION TO COMPEL APPRAISAL AND STAY LITIGATION
Elaine Discuillo brings this suit against her homeowner’s insurance provider, Allstate
Insurance Company (“Allstate”), for breach of contract. (ECF No. 1-1.) Specifically, Discuillo
alleges two counts against Allstate in her revised complaint: (1) demanding “Specific
Performance” of the appraisal provision in the insurance policy (the “Policy”), (ECF No. 24 at ¶¶
1–11); and (2) “Breach of Contract” for allegedly refusing to pay Discuillo for losses to her
property (id. at ¶¶ 11–13). Discuillo moves to compel appraisal and stay this action based on
“Connecticut General Statutes § 52-410 and the insurance policy that is the subject of this
action.” (ECF No. 38 at 1.) Allstate opposes the motion, arguing: (1) that the parties’ dispute
concerns coverage issues while the appraisal clause concerns valuation issues, and that their
dispute thus falls outside of the appraisal clause (ECF No. 39 at 5–7); and (2) that Discuillo
waived any right to compel appraisal by participating in discovery and motion practice in this
lawsuit for over a year before filing the motion to compel (id. at 7–8).
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Because I agree with Allstate’s second argument, I DENY the motion and do not address
the first argument.
I.
Background
A. Relevant Facts
The following facts are taken from Discuillo’s revised complaint, the parties’ briefs, and
the attached exhibits.
On February 10, 2015, while Discuillo “was insured under a homeowner’s property
insurance policy issued by [Allstate] [(the “Policy”)], . . . a snow and/or ice storm caused damage
to [Discuillo’s] home and personal property.” (ECF No. 24 at ¶ 3–4 (alteration in original).) On
April 26, 2016, Discuillo “submitted an insurance claim under the Policy to Allstate” for the
alleged property damage. (ECF No. 39 at 1.)
On May 13, 2016, Allstate sent “Allstate adjuster Dale Laprise . . . [to] inspect[] the
property to identify various categories of claimed damage to the interior and exterior of the
property.” (ECF No. 39 at 2.) Laprise concluded that the following areas of Discuillo’s home—
the areas with interior water damage caused by ice damming, (id.)—were covered under the
Policy: front left bedroom, front right bedroom, hall bathroom, hallway, main upper roof, and
right lower roof (ECF No. 38-1, Ex. 3 at 91–96). Laprise estimated the “replacement cost value”
for those areas to be $9,077.36. (Id. at 98.) After Allstate applied “the Policy’s $750 deductible
and a deduction for recoverable depreciation” (ECF No. 39 at 2), it issued a payment to Discuillo
in the amount of $4,591.64 (ECF No. 38 at ¶ 5). “Laprise wrote to [Discuillo] to deny her claim
for damage to the exterior trim, siding, mold, master bathroom skylight, garage duct work leak,
and basement based on certain exclusions in the Policy.” (ECF No. 39 at 2.)
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After concluding that “a potential exist[ed] for a difference of opinion on the damages”
(ECF No. 38, Ex. 4), “[Discuillo] demanded appraisal of [her] claim . . . and appointed
Catastrophe Services, Inc. as her appraiser.” (ECF No. 38 at ¶ 6.) The Policy provides, in
relevant part:
If you and we fail to agree on the amount of loss, either party may make a written
demand for an appraisal. Upon such demand, each party must select a competent
and impartial appraiser and notify the other of the appraiser’s identity within 20
days after the demand is received. The appraisers will select a competent and
impartial umpire. If the appraisers are unable to agree upon an umpire within 15
days, you or we can ask a judge of a court of record in the state where the
residence premises is located to select an umpire.
The appraisers shall then determine the amount of loss, stating separately the
actual cash value and the amount of loss to each item. If the appraisers submit a
written report of agreement to you and to us the amount agreed upon shall be the
amount of loss. If they cannot agree, they will submit their differences to the
umpire. A written award agreed upon by any two will determine the amount of
loss.
(ECF No. 38-1, Ex. 1 at 39.) Allstate informed Discuillo, however, that her “demand for
appraisal was premature given [her] failure to provide Allstate with documents relevant
to her claim.” (ECF No. 39 at 3; ECF No. 39-2 at 3.) Discuillo then “provided [Allstate]
an estimate to repair said damage in the amount of $101,201.38.” (ECF No. 38 at ¶ 4; see
ECF No. 39-3 at 2–3.)
Upon receiving Discuillo’s estimate, Allstate informed her that it “disagreed with the
estimate on both coverage and valuation grounds.” (ECF No. 39 at 3; ECF No. 39-3 at 2.)
Allstate proposed a “limited-scope appraisal” “to address those issues for which the parties
agreed there was coverage under the Policy.” (ECF No 39-3 at 2.) On September 14, 2016,
Discuillo, through her prior counsel, declined, stating that “[w]e have determined this claim will
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not be handled via the appraisal process as it is not appropriate in this case.” (ECF No. 39-4 at
2.)1
B. Procedural History
On January 20, 2017, Discuillo filed this action against Allstate in Connecticut Superior
Court alleging six counts of breach of insurance contract. (See ECF No. 1-1.) On February 14,
2017, Allstate removed the case to this Court. (See ECF No. 1.) On April 12, 2017, the Court
held a Rule 16 Pretrial Conference in which it set deadlines for discovery, dispositive motions,
and expert reports. (ECF No. 18 at 1–2.) Further, at the parties’ request (id. at 2), the Court
referred the case to Magistrate Judge Donna F. Martinez for mediation (ECF No. 19). Discuillo
filed an amended complaint on May 10, 2017. (ECF No. 24.) In response, Allstate filed a motion
to dismiss count one of the amended complaint (ECF No. 25), which the Court denied. (See ECF
No. 36).
On September 8, 2017, Magistrate Judge Martinez held a settlement conference, but the
case did not settle and instead “[t]he parties agreed to a further inspection of the property.” (ECF
No. 29.) In their joint status reports following the settlement conference (ECF No. 31; ECF No.
33), the parties indicated that they partook in inspections of Discuillo’s property, had completed
initial discovery requests, and were in the process of scheduling depositions and securing
relevant documentation through third-party subpoenas (ECF No. 33).
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The parties have also filed statements of material facts regarding Allstate’s pending summary judgment
motion (ECF No. 40), portions of which concern the issue of appraisal (ECF No. 47-2; ECF No. 49). Those
statements reveal no disagreement as to the material facts concerning appraisal, except that Allstate denies that it did
not appoint an appraiser and states instead that it agreed to “proceed with a limited-scope appraisal only to have
plaintiff’s prior counsel refuse to proceed with appraisal.” (ECF No. 49 at 2.)
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On February 2, 2018, Allstate filed its answer to Discuillo’s amended complaint. (ECF
No. 37.) On March 19, 2018, Discuillo filed this motion to compel appraisal and stay litigation.
(ECF No. 38.)
II.
Legal Standards
Discuillo invokes Section 52-410 of the Connecticut General Statutes, which provides in
pertinent part as follows:
A party to a written agreement for arbitration claiming the neglect or refusal of
another to proceed with an arbitration thereunder may make application to the
superior court for the judicial district in which one of the parties resides . . . for an
order directing the parties to proceed with the arbitration in compliance with their
agreement.
Conn. Gen. Stat. § 52-410(a).2
“[B]oth federal law and Connecticut law strongly favor arbitration as a means of
resolving disputes with limited involvement from heavily-burdened courts.” Singleton v. Grade
A Mkt., Inc., 607 F. Supp. 2d 333, 339 n.3 (D. Conn. 2009). Arbitration, however, “is a creature
of contract . . . [and therefore,] [a] person can be compelled to arbitrate a dispute only if . . . he
2
Although Discuillo invokes Conn. Gen. Stat. § 52-410 in her motion (ECF No. 38 at 1), it appears that the
Federal Arbitration Act is equally applicable, see Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 272
(1995) (holding that the language of the FAA should be construed broadly and applies in all transactions affecting
commerce); see also Levine v. Advest, Inc., 244 Conn. 732, 747 (1998) (concluding that because “[t]he [FAA]
governs written arbitration agreements that pertain to contracts involving interstate commerce . . . the arbitration act
is to be applied by state courts as well as by federal courts.”). Nevertheless, principles concerning whether a party
has waived its right to arbitrate are similar under both federal and state law. See, e.g., Sutherland v. Ernst & Young,
LLP, 600 Fed. Appx. 6, 7 (2d Cir. 2015) (internal quotations omitted) (“In determining whether a party has waived
its right to arbitration by expressing its intent to litigate the dispute in question, we consider the following three
factors: (1) the time elapsed from when litigation was commenced until the request for arbitration; (2) the amount of
litigation to date, including the motion practice and discovery; and (3) proof of prejudice.”); see also, e.g., MSO,
LLC v. DeSimone, 313 Conn. 54, 64 (2014) (internal quotations omitted) (“[U]njustifiable delay in seeking
arbitration may warrant a finding of waiver . . . . The same result follows from going to trial without insisting upon
the arbitration condition.” Additionally, “[a] party seeking to assert the defense of waiver must show that he was
substantially prejudiced . . . [i]n order to determine whether a party has been substantially prejudiced, many factors
must be considered, not the least of which is whether the claims that the defendants seek to assert in the arbitration
are the same as those asserted in the prior litigation and whether initiation of the arbitration constituted an
unjustifiable delay.”). Accordingly, I rely on both federal and state case law in this ruling.
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has agreed to do so . . . .” Stack v. Hartford Distribs., Inc., 179 Conn. App. 22, 28 (2017)
(alteration in original).3
III.
Analysis
I conclude that Discuillo has waived her right to compel appraisal under the Policy. I
therefore do not reach Allstate’s argument about the scope of the appraisal clause.
A party can waive its contractual right to arbitration by actively participating in a lawsuit
or taking other action inconsistent with that right. Umbach v. Carrington Inv. Partners (US), LP,
851 F.3d 147, 161 (2d Cir. 2017) (affirming the district court’s conclusion that the defendants,
by their participation in litigation, including filing a motion for leave to amend its answer to the
plaintiff’s first amended complaint, waived their right to demand arbitration). “In determining
whether a party has waived its right to arbitration by expressing its intent to litigate the dispute in
question,” the Second Circuit considers three factors: “(1) the time elapsed from when litigation
was commenced until the request for arbitration; (2) the amount of litigation to date, including
the motion practice and discovery; and (3) proof of prejudice.” Sutherland, 600 Fed. Appx. at 7.
“The key to a waiver analysis is prejudice. Waiver of the right to compel arbitration due
to participation in litigation may be found only when prejudice to the other party is
demonstrated.” Id.; MSO, LLC, 313 Conn. at 68 (reaffirming “the waiver standard that has
developed through common law” in concluding that “a party opposing arbitration on the ground
of waiver must demonstrate that it will be prejudiced by enforcement of the arbitration clause.”).
The Second Circuit has recognized that prejudice may result from, among other things,
3
“Under Connecticut law, an appraisal clause contained in an insurance policy ‘constitutes an agreement to
arbitrate and falls within the ambit of [the State’s] arbitration statues, General Statutes §§ 52-408–52-424.’” S. Air,
Inc., v. Chartis Aerospace Adjustment Servs., Inc., No. 3:11CV1495 (JBA), 2012 WL 162369, at *2 (D. Conn. Jan.
18, 2012) (alteration in original) (quoting Middlesex Mut. Assurance Co. v. Clinton, 38 Conn. App. 555, 557 n.2
(1995)).
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“excessive cost and time delay,” which is typically accompanied by substantial motion practice
or discovery. Sutherland, 600 Fed. Appx. at 8 (holding that, because there was no substantial
motion practice during the four months elapsed between commencing litigation and the
defendant asserting its arbitration rights, the defendant did not waive its right to compel
arbitration); see also Gambacorta v. Covenant Ins. Co., No. CV136006583S, 2015 WL 1867090,
at *2 (Conn. Super. Ct. Mar. 23, 2015) (finding that the plaintiffs established they would be
prejudiced by enforcement of the appraisal clause because “the issue the defendants [sought] to
litigate [was] substantially the same . . . [and] the plaintiffs [had] committed substantial time and
expense in pursuing [the] litigation for almost two years.”).
In the present case, although Discuillo initially sought to compel appraisal under the
Policy on July 14, 2016 (ECF No. 38 at ¶ 6), she later unequivocally withdrew that demand,
responding to Allstate’s limited-scope appraisal proposal with the definitive assertion that she
had determined that “this claim [would] not be handled via the appraisal process as it [was] not
appropriate in this case.” (ECF No. 39-4 at 2). Four months later, Discuillo filed this lawsuit.
(ECF No. 1-1.) Rather than immediately request that the Court compel appraisal and stay
litigation, Discuillo filed a six-count complaint (ECF No. 1-1), in which one count demanded
specific performance of the appraisal process (id. at ¶¶ 1–11).
It was not until March 19, 2018, that Discuillo actually moved to compel appraisal and
stay litigation. (ECF No. 38.) This was fourteen months after the case was filed, eleven days
before the close of discovery, and less than six weeks before the deadline for dispositive
motions. In the meantime, as indicated in the parties’ joint status reports (ECF No. 31; ECF No.
33), joint motion for extension of time (ECF No. 34), and other filings (ECF No. 42; ECF No.
47), the parties actively litigated the case. They litigated Allstate’s motion to dismiss,
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participated in the discovery process—including an inspection, documentary discovery, and
Discuillo’s January 29, 2018 deposition (ECF No. 42-3)—and mediated the case unsuccessfully
with a Magistrate Judge.
Permitting Discuillo now to invoke the appraisal process and stay this action would be
prejudicial to Allstate under the Second Circuit’s waiver principles. Discuillo litigated her case
for fourteen months before requesting the Court to compel appraisal and stay litigation, she took
full advantage of the litigation process by filing and responding to motions and participating in
the discovery process, and Allstate devoted substantial time and resources to motion practice and
discovery before Discuillo filed her motion, and shortly thereafter filed a motion for summary
judgment within the time limit set by the Court. Allstate would thus incur substantial prejudice if
the Court now stayed the case and referred the parties to arbitration.
IV.
Conclusion
For the reasons discussed above, Discuillo’s Motion to Compel Appraisal and Stay
Litigation (ECF No. 38), is DENIED.
IT IS SO ORDERED.
/s/
Michael P. Shea, U.S.D.J.
Dated:
Hartford, Connecticut
August 3, 2018
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