Silverado Park Association v. Country Mutual Insurance Company

Background

Silverado Park Association, a common interest community consisting of seventeen townhome units, insured the property under a Country Mutual business owner’s policy covering, among other things, hail and windstorm losses. A wind and hailstorm damaged the townhomes, including their roofs and gutters, on April 12, 2022.

Silverado’s contractor estimated repair costs at $936,522.79. Silverado’s public adjuster later estimated the replacement cost at $1,300,230.29, while Country Mutual’s revised estimate was $648,742.56. Country Mutual had paid Silverado $455,068.91, which represented its revised estimate reduced by the deductible.

The policy allowed either party to demand an appraisal when the parties disagreed about the property’s value or the amount of loss. An appraisal panel could decide the amount of loss but could not interpret the policy or decide whether Country Mutual was required to pay. Silverado demanded an appraisal in writing, but the appraisal did not occur after Country Mutual requested additional documentation and later said it would not proceed without it.

Motion to Compel Appraisal

The court treated the motion to compel appraisal as a motion for partial summary judgment. Summary judgment is appropriate when there is no genuine dispute over a material fact and the moving party is entitled to judgment under the law.

The court held that Silverado established the requirements for compelling appraisal: the policy was a valid agreement, Silverado had demanded appraisal, and the parties disagreed about the amount of loss. The three materially different repair estimates showed that disagreement. By refusing to participate, Country Mutual breached its obligations under the policy’s appraisal provision.

Country Mutual argued that the policy’s loss-payment provision created conditions that Silverado had to satisfy before demanding appraisal, including proving that repairs had been completed, that Silverado had actually paid for them, and that the payments were necessary. The court rejected that argument. It found that the loss-payment provision did not make participation in appraisal dependent on those events, and the appraisal provision did not refer to the loss-payment provision.

The court also found that the authorities Country Mutual cited did not support refusing appraisal in this case. Unlike some of those cases, Country Mutual had not shown a genuine factual dispute about whether Silverado complied with its duties after the loss. The court therefore granted Silverado’s motion to compel appraisal.

Motion to Stay

Silverado also requested a stay, meaning a pause in the litigation, until the appraisal was completed. The court found that a stay could conserve judicial resources because the appraisal might resolve a substantial part of the dispute. It also found that Silverado could otherwise incur significant litigation expenses on a claim that might become moot, while Country Mutual would not be significantly prejudiced by waiting to conduct further discovery.

The court granted Silverado’s request for a stay. The order requires Country Mutual to comply with the policy’s appraisal provision and stays the litigation until the appraisal process is complete—when the amount of loss is set by the appraisers or by an appraiser and the umpire. The parties must contact the court within seven days after the appraisal process ends.