Southern Fidelity Insurance Company v. Caillouet

Filing 8

ORDERED that Defendant's 5 Motion to Dismiss is DENIED. FURTHER ORDERED that this case be administratively closed pending the parties' providing the Court with evidence that the appraisers have failed to agree on umpire selection within the meaning of the Policy. Signed by Judge Carl Barbier. (gec, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

SOUTHERN FIDELITY INS. CO.

CIVIL ACTION

VERSUS

NO: 11-2041

CAILLOUET

SECTION: "J” (1)
ORDER AND REASONS

Before the Court are Defendant’s Motion to Dismiss (Rec.
Doc. 5) and Plaintiff’s opposition to same (Rec. Doc. 7), on
supporting memoranda without oral argument.

Having considered

the motion and legal memoranda, the record, and the applicable
law, the Court finds that Defendant’s Motion to Dismiss (Rec.
Doc. 5) should be DENIED.

PROCEDURAL HISTORY AND BACKGROUND FACTS
This case arises from a dispute between a homeowner and his
insurer regarding alleged damage to the homeowner’s Louisiana
home suffered as a result of a water leak that allegedly occurred
on or about January 24, 2011.

The insured filed an insurance

claim; Plaintiff insurer and Defendant insured reached an impasse
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regarding the value of the property damage.

On August 18, 2011,

the insurer filed an action in this Court seeking declaratory
judgment (1) that the appraisal provision in the insurance policy
(the “Policy”) is clear, unambiguous, and valid; (2) compelling
both parties to fully and completely participate in the appraisal
process pursuant to the appraisal provision; (3) that the
appraisal provision requires the selection of an umpire; (4) that
the Court will select an umpire if the parties cannot agree on
one, pursuant to the appraisal provision; and (5) for all other
general and equitable relief.
On April 7, 2011, Plaintiff insurer sent a letter to its
insured, Donald Caillouet, stating that Plaintiff felt that the
parties had reached an impasse on the cost of repairs.

The

insurer demanded appraisal under the policy and named its
appraiser.

Rec. Doc. 7-1, at 1.

The letter further stated that

it would be Caillouet’s appraiser’s duty to contact the insurer’s
appraiser so that the two appraisers could meet to agree on the
scope of the loss, and subsequently, to choose an umpire who
would make a decision.
appraiser.1

Id.

Caillouet likewise appointed his own

On September 2, 2011, counsel for the insurer sent

1

The insurer asserts that Caillouet named an appraiser in an email
interchange between the parties (Rec. Doc. 7-2). Regardless of when and where
Caillouet named an appraiser, Caillouet does not dispute that each party has
appointed its own appraiser. Rec. Doc. 5-1, at 1.

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Caillouet a letter invoking umpire selection under the Policy and
recommending three potential umpires.

Rec. Doc. 7-3, at 2.

The

letter requested that, pursuant to the Policy, Caillouet agree to
one of these individuals within 15 days of the date of the
letter.

Id. at 3.

On September 26, 2011, counsel for Caillouet

sent a fax to the insurer’s counsel effectively rejecting the
insurer’s proposed umpires and suggesting three other potential
umpires acceptable to Caillouet.

Rec. Doc. 7-4, at 1.

Caillouet

asserted that he “would like both appraisers to sit down and
choose an umpire between the two of them.”

Id.

On October 6,

2011, the insurer’s counsel countered yet again with the names of
two other individuals to potentially serve as an umpire.
Doc. 7-5, at 1.

Rec.

Finally, on October 19, 2011, Caillouet’s

counsel responded to that counter with two more suggestions and
invited the insurer’s counsel to suggest other companies or law
firms who offer umpire services.

Rec. Doc. 7-6, at 1.

THE PARTIES’ ARGUMENTS
Defendant Caillouet filed the instant motion to dismiss,
alleging that the insurer’s claims are premature and unripe for
adjudication.

The sole argument is that a condition precedent to

the parties’ ability under the Policy to obtain a court-appointed

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umpire is the appraisers’ failure to agree on umpire selection
for 15 days, which is alleged not to have occurred.

The Policy

provision at issue states:
The appraisers shall first select a competent and
disinterested umpire; and failing for fifteen days to
agree upon such umpire, then on request of you or us
such umpire shall be selected by a judge of a court of
record in the state in which the property covered is
located.
Rec. Doc. 1, at 4; see also Rec. Doc. 5-1, at 2.

Caillouet

argues that because neither appraiser has even attempted to
select an umpire, the insurer’s request that the Court select an
umpire is premature.

He asserts that the appraisers “have not

yet consulted, met, spoken, or corresponded in any way regarding
the selection of an umpire.”

Rec. Doc. 5-1, at 2.

Thus, he

argues, they cannot have failed for 15 days to agree upon an
umpire—the contingent future event that would ripen the claim for
judicial umpire selection under the Policy.

Caillouet asserts

that the Policy requires a good-faith attempt by the appraisers
to agree on an umpire, and a 15-day failure of same, prior to
judicial involvement.

Finally, Caillouet notes that although the

parties have communicated regarding umpire selection, the Policy
requires the appraisers to engage in such communication.
Although Caillouet requested that the appraisers become involved
in umpire selection, he asserts that such involvement still has
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not occurred.2

Thus, Defendant Caillouet argues, the instant

case is not justiciable.
In opposition, the insurer argues that because the
correspondence between the parties evidences their inability to
mutually agree upon an umpire, the case is ripe for adjudication.
It argues that the case is ripe because the complaint seeks
Caillouet’s full and complete participation in the appraisal
process and requests the appointment of an umpire.

It asserts it

has met its burden of establishing diversity jurisdiction.
Further, it alleges that the Declaratory Judgment Act provides
the Court with subject matter jurisdiction.

The insurer argues

that the case is ripe because the insurer will suffer hardship if
the Court does not compel appraisal and appoint an umpire, and
because the issues are fit for judicial decision.

In addition,

the insurer argues that Caillouet’s request for dismissal based
on policy language is more suited to an ultimate determination on
the merits.

Finally, the insurer points out that appraisal

provisions are subject to adjudication, and therefore argues that
the Court has jurisdiction to order the parties to submit to the
appraisal process.

2

The insurer does not appear to dispute this assertion.

5

DISCUSSION
A.

Rule 12(b)(1) Standard
In deciding a motion to dismiss for lack of subject matter

jurisdiction under Federal Rule of Civil Procedure 12(b)(1), “the
district court is ‘free to weigh the evidence and resolve factual
disputes in order to satisfy itself that it has the power to hear
the case.’”

Krim v. pcOrder.com, Inc., 402 F.3d 489, 494 (5th

Cir. 2005).

The party asserting jurisdiction must carry the

burden of proof for a Rule 12(b)(1) motion to dismiss.

Randall

D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 762 (5th Cir.
2011).

The standard of review for a motion to dismiss under Rule

12(b)(1) is the same as that for a motion to dismiss pursuant to
Rule 12(b)(6).

United States v. City of New Orleans, No. 02-

3618, 2003 WL 22208578, at *1 (E.D. La. Sept. 19, 2003).
To survive a Rule 12(b)(6) motion to dismiss, the plaintiff
must plead enough facts “to state a claim to relief that is
plausible on its face.”

Ashcroft v. Iqbal, __U.S.__, 129 S. Ct.

1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 547 (2007)).

A claim is facially plausible when the

plaintiff pleads facts that allow the court to “draw the
reasonable inference that the defendant is liable for the
misconduct alleged.”

Iqbal, 129 S. Ct. at 1949.

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A court must

accept all well-pleaded facts as true and must draw all
reasonable inferences in favor of the plaintiff.

Lormand v. U.S.

Unwired, Inc., 565 F.3d 228, 232-33 (5th Cir. 2009); Baker v.
Putnal, 75 F.3d 190, 196 (5th Cir. 1996).

The court is not,

however, bound to accept as true legal conclusions couched as
factual allegations.

Iqbal, 129 S. Ct. at 1949-50.

B. Ripeness
The complaint alleges that the pertinent appraisal portion
of the Policy reads as follows:
E. Appraisal. In case we and you shall fail to agree as
to the actual cash value or the amount of loss, then,
on the written demand of either, each shall select a
competent and disinterested appraiser and notify the
other of the appraiser selected within twenty days of
such demand. The appraisers shall first select a
competent and disinterested umpire; and failing for
fifteen days to agree upon such umpire, then on request
of you or us such umpire shall be selected by a judge
of a court of record in the state in which the property
covered is located. The appraisers shall then appraise
the loss, stating separately actual cash value and loss
to each item, and failing to agree, shall submit their
differences, only, to the umpire. An award in writing,
so itemized, of any two when filed with us shall
determine the amount of actual cash value and loss.
Each appraiser shall be paid by the party selecting him
and the expenses of appraisal and umpire shall be paid
by the parties equally.
Rec. Doc. 1, at 4 (emphasis added).3

3

The clear language of the

Louisiana statutory law automatically includes within Louisiana fire
insurance policies an appraisal provision that appears to be identical to the
appraisal provision in the Policy at issue. See LA. REV. STAT. § 22:1311(F).

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Policy requires the appraisers to attempt an umpire selection
prior to any judicial umpire selection.

In fact, a literal

reading appears to require umpire selection earlier than either
of the parties admits:

even before the appraisers make their

separate loss appraisals.

The Policy states that the appraisal

process proceeds as follows:

First, the appraisal provision is

triggered by the parties’ failure to agree regarding the amount
of loss.4

Second, upon written demand by either party, each

party selects an appraiser and informs the other party of its
selection.5

Third, the appraisers select an umpire, and “failing

for fifteen days to agree upon such umpire,” only then may either
party request that a judge select an umpire.6
dispute that steps one and two are complete:

The parties do not
the parties have

disagreed as to loss valuation, and each has named its appraiser.
Thus, the Policy requires that the appraisers select an umpire.
The insurer in its opposition seems to miss this point:

read

literally, the Policy does not permit the parties to select the
4

“In case we and you shall fail to agree as to the actual cash value or
the amount of loss . . . .” Rec. Doc. 1, at 4.
5

“[T]hen, on the written demand of either, each shall select a
competent and disinterested appraiser and notify the other of the appraiser
selected within twenty days of such demand.” Id.
6

Id. The Policy states, “The appraisers shall first select [an] . . .
umpire . . . .” Id. (emphasis added). “First” seems to mean “prior to
appraisal,” because the immediately following sentence states that the
appraisers “then appraise the loss.” Id. (emphasis added).

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umpire, but gives the appraisers—at least initially—this task.
Caillouet asserts, and the insurer does not dispute in its
opposition, that the appraisers have not even met to attempt to
select an umpire.

He points out that he has requested from the

insurer that each party’s appraiser “sit down and choose an
umpire,” Rec. Doc. 7-4, at 1, but this request has gone unheeded.
Thus, Caillouet persuasively argues that under a plain reading of
the Policy, the appraisers cannot have “failed” to agree upon an
umpire, which is clearly a prerequisite to either party’s request
for judicial selection of an umpire.

See Rec. Doc. 1, at 4 (the

Policy providing that “failing for fifteen days to agree upon
such umpire, then on request of you or us such umpire shall be
selected by a judge . . . .”) (emphasis added).

Further, the

fact that the Policy requires a 15-day failure of the appraisers
to select an umpire implies that something must trigger said 15day period.

It is unimaginable how a 15-day “failure-to-agree”

period of time can commence without palpable contact between the
appraisers for the purpose of discussing umpire selection.
The insurer cites no case providing a different
interpretation of policy appraisal language like the language at

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issue.7

Cases cited by Plaintiff are inapposite.

For example,

this Court in Jarrell v. Southern Fidelity Insurance Co., Civil
Action No. 11-1222 (E.D. La. Aug. 22, 2011) held that the
appraisal process was enforceable on the parties, but did not
address the issue of judicial selection of an umpire.

In fact,

the Court left the task of umpire selection “to the parties as
envisioned by the policy,” id. at *3, and noted that “the policy
specifically provides that the two appraisers are to select the
umpire.”

Id. n.3.

Although Caillouet’s point is well-taken regarding the need
for the appraisers to confer, he is not entitled to the dismissal
that he seeks.

It is true that a component of subject matter

jurisdiction is the ripeness of a case for decision.
City of Houston, 617 F.3d 336, 341 (5th Cir. 2010).

Lopez v.
However,

even though the insurer’s request for judicial appointment of an
umpire is not ripe, this does not make all the claims in this
case unripe.

As previously stated, the complaint requests

declaratory relief in several particulars:

(1) that the

appraisal provision in the Policy is clear, unambiguous, and
valid; (2) compelling both parties to fully and completely

7

As previously noted, the Policy’s appraisal provision duplicates the
provision stated in Louisiana statutory law. See LA. REV. STAT. § 22:1311(F).

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participate in the appraisal process pursuant to the appraisal
provision; (3) that the appraisal provision requires the
selection of an umpire; (4) that the Court will select an umpire
if the parties cannot agree on one, pursuant to the appraisal
provision; and (5) for all other general and equitable relief.
See Rec. Doc. 1, at 5-6.

The Court assumes for the sake of the

instant motion, based on the foregoing analysis, that the insurer
would be entitled to a declaration as to the third item—that the
appraisal provision requires umpire selection.
However, the insurer apparently misses the implication of
such a declaration that umpire selection is required.

The Court

has found that the appraisers are required to meet to select an
umpire, and that if they fail to agree after 15 days, only then
may this Court appoint an umpire.

Thus, the Court finds that

although it has subject matter jurisdiction over this action—and
thus Defendant’s motion must be denied—the parties must submit
evidence of the appraisers’ failure to agree on an umpire,
pending which the case will be stayed.8

8

The Fifth Circuit has noted a district court’s wide discretion in
staying proceedings before it. See In Re Ramu Corp., 903 F.2d 312, 318 (5th
Cir. 1990) (“The stay of a pending matter is ordinarily within the trial
court’s wide discretion to control the course of litigation . . . . This
authority has been held to provide the court the ‘general discretionary power
to stay proceedings before it in control of its docket and in the interests of
justice.’”) (citations omitted).

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For the foregoing reasons, IT IS ORDERED that Defendant’s
Motion to Dismiss (Rec. Doc. 5) be and the same is hereby DENIED.
IT IS FURTHER ORDERED that this case be administratively
closed pending the parties’ providing the Court with evidence
that the appraisers have failed to agree on umpire selection
within the meaning of the Policy.
New Orleans, Louisiana this 21st day of December, 2011.

____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

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