United States District Court, D. Idaho
MICHAEL BOTAI and JENNIFER BOTAI, husband and wife, Plaintiffs,
SAFECO INSURANCE COMPANY OF ILLINOIS, an Illinois corporation Defendant.
MEMORANDUM DECISION AND ORDER RE: DEFENDANT'S MOTION FOR STAY AND TO COMPEL APPRAISAL Docket No. 6.
RONALD E. BUSH, Magistrate Judge.
Currently pending before the Court is Defendant Safeco Insurance Company of Illinois's ("Safeco") Motion for Stay and to Compel Appraisal (Docket No. 6). Having carefully considered the record and otherwise being fully advised, the Court enters the following Memorandum Decision and Order.
Plaintiff Jennifer Botai carried a homeowners insurance policy with Safeco, effective from May 2013 through May 2014 (the "Policy"). She and her husband, Michael, made a claim upon that Policy after their home sustained water damage on December 7, 2013. Safeco arranged for multiple inspections to assess the damage between December 2013 and July 2014, in addition to examining Jennifer under oath. The parties disagreed on the appropriate reimbursement amount for the mitigation work Plaintiffs said they had already done, and also could not agree upon the expense that would be incurred for remaining repair work. Each rejected the other's contractor estimates.
At present, Safeco has paid $26, 559.07 for both mitigation work and repairs. Plaintiffs contend that the total claim, based upon the lowest repair estimate combined with their mitigation invoice, totals $73, 574.42.
Based upon the failure of the parties to agree on the amount of any remaining aspects of the claim, Safeco invoked an "appraisal clause" in the Policy in an August 12, 2014 letter to the Botais' counsel. See Ex. J to Anderson Aff. (Docket No. 6, Att. 5). The appraisal clause reads in pertinent part:
If you and we do not agree on the amount of the loss, including the amount of actual cash value or replacement cost, then, on the written demand of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within 20 days of such demand. The appraisers shall first select a competent and disinterested umpire; and failing for 15 days to agree upon such umpire, then, on request of you or the company, 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 resolve the issues surrounding the loss, appraise the loss, stating separately the actual cash value or replacement cost of each item, and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two of these three, when filed with the company shall determine the amount of the loss.
See Ex. A to Anderson Aff., ¶ 7., p. 16 (Docket No. 6, Att. 4).
In its letter to Botai, Safeco identified its chosen appraiser in the letter and requested that Plaintiffs provide theirs. See Ex. J to Anderson Aff. (Docket No. 6, Att. 5). Plaintiffs responded on August 19, 2014, claiming Safeco violated the Policy by selecting an appraiser who is not "competent and disinterested" as is required in the appraisal clause. See Ex. K to Anderson Aff. (Docket No. 6, Att. 5). Safeco's August 26, 2014 reply did not agree with Plaintiffs' position, and Safeco renewed its request that Plaintiffs choose their own appraiser in order to proceed with the appraisal process. See Ex. L to Anderson Aff. (Docket No. 6, Att. 5).
Having been unable to persuade Safeco to a different course, Plaintiffs filed suit in state court on September 24, 2014, alleging breach of contract, negligence, and intentional bad faith (Docket No. 1, Att. 1). Their claims in that regard fall into two categories: (1) those directly referencing the contested reimbursement amount, and (2) ancillary bad faith claims alleging that Safeco delayed payments and inspections, and acted unreasonably throughout much of the time period involved. Id. Safeco removed the action to this Court (Docket No. 1) and filed an answer on November 3, 2014 (Docket No. 5).
On November 17, 2014, Safeco filed the pending Motion for Stay and to Compel Appraisal (Docket No. 6), asking the Court to stay the suit and compel Plaintiffs to complete the Policy's appraisal process. Plaintiffs responded on January 12, 2015 (Docket No. 12), alleging that Safeco's decision to select the particular appraiser that it did constituted an additional bad-faith action, and raising two objections to the Motion. First, they claim that if Safeco's Motion were granted, the Court would, in effect, be issuing a declaratory ruling that it was not bad faith for Safeco to choose an insurance defense attorney as its appraiser. Id. Second, Plaintiffs claim the Safeco's appraiser does not meet the contractually-specified "competent and disinterested" qualifications, and the Court should not compel them to participate in the process under these circumstances. Id.
A. Motion to Compel Appraisal
The crux of Plaintiffs' complaint stems from the parties' inability to agree on the amount of covered losses under the Policy. Considered in isolation, this fact implicates the Policy's appraisal provision. However, Plaintiffs go on to allege that Safeco acted in corresponding bad faith. Even so, these additional allegations do not foreclose as a matter of law this Court's consideration of the Policy and its pre-litigation appraisal process. That is, for the reasons that follow, proceeding with the contractually-agreed upon appraisal process ...