Glenn v. USAA Casualty Insurance Company

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 24-cv-01040-SKC-NRN
SEAN GLENN, as Trustee of Sean F. Glenn Living Trust,
Plaintiff,
v.
USAA CASUALTY INSURANCE COMPANY, a Texas corporation,
Defendant.
ORDER ON PLAINTIFF’S MOTION TO STAY PROCEEDINGS AND COMPEL
APPRAISAL (ECF No. 28) AND SUPPLEMENTAL MOTION TO STAY
PROCEEDINGS AND COMPEL APPRAISAL (ECF No. 39)
N. REID NEUREITER
United States Magistrate Judge
This matter came before the Court on Plaintiff Sean Glenn’s Motion to Stay
Proceedings and Compel Appraisal (“Motion to Compel”), ECF No. 28. The Motion to
Compel was referred to me by Judge Crews on February 20, 2025. ECF No. 29.
Defendant USAA Casualty Insurance Company (“USAA”) filed an opposition, ECF No.
33, and a supplemental response, ECF No. 36. The Court heard argument on March
26, 2025. ECF No. 38. Subsequent to that argument, Plaintiff filed a Supplemental
Motion to Stay Proceedings and Compel Appraisal (“Supplemental Motion”), ECF No.
39, which was also referred to me by Judge Crews, ECF No. 40. Defendant filed a
response to the Supplemental Motion. ECF No. 41. The Court heard argument on the
Supplemental Motion on April 23, 2025.
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Having considered the various filings and heard the arguments of the parties, the
Court will grant Plaintiff’s request to compel appraisal and stay the proceedings pending
the appraisal process.
I. 	Background
This case involves a claim by an insured, Plaintiff, for damage to a residential
home after an August 20, 2021 hailstorm loss. There are disputes as to USAA’s
estimate for the roof replacement. There is also a dispute as to whether Plaintiff’s
replacement of the damaged Masonite wood shingled roof with a different and more
expensive concrete tile roofing system should be covered under the policy. So there are
really two disputes. First is whether USAA’s estimate to replace the damaged roof with
a roof of like kind and quality was a fair estimate. For example, whether USAA should
have included the cost of a supervising general contractor, whether USAA’s Xactimate
price list reflected current pricing levels for the appropriate geographic area, and
whether USAA should have adjusted the claim to accurately reflect the current cost of
repairs. The second issue, which USAA insists is a coverage question, is whether
USAA should have to pay for a much improved, and more expensive replacement
roofing system that originally existed on the house. Plaintiff has replaced the roof with a
new system—a concrete tile roof—which required additional materials such as
sheathing to be added to support the weight of the heavier concrete tiles. USAA says
that the issue of whether a concrete tile replacement roof was appropriate and must be
paid for by USAA is a coverage question, not susceptible to the appraisal process.
USAA valued the replacement cost value of the roof at $85,192.83. See ECF No.
28-1. (USAA estimate completed February 16, 2023). This estimate was based on wood
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shake shingles—comparable to the discontinued Masonite Woodruff shingles previously
on the roof. ECF No. 28-1 at 8. Plaintiff’s contractor’s estimate was $156,642.26. ECF
No. 28-2. This estimate was also based on using wood shake replacement shingles.
See id. at 1 (“Wood shake is chosen as the replacement material as Wood shake was
comparable in cost to wood fiber at the time this policy went through underwriting. Wood
Shake was used for the current value as it is currently still available and reflects the full
cost of the premium still paid based on underwriting.”).
Given the dramatic discrepancy between the insured’s contractor’s estimate and
USAA’s estimate, Plaintiff requested appraisal of the loss under the policy’s appraisal
provision. ECF No. 28-4 (appraisal demand letter of February 2, 2024). USAA rejected
the request for appraisal. ECF No. 28-5 (USAA letter of February 19, 2024, denying
insured’s appraisal request because it is based on a “disagreement with our coverage
decision not cost of claim”).
The subject policy contains an appraisal clause which states, in part,
6. Appraisal. If you and we fail to agree on the amount of loss, either may
demand an appraisal of the loss. In this event, each party will choose a
competent and impartial appraiser within 20 days after receiving a written
request from the other. The two appraisers will choose an umpire. If they
cannot agree upon an umpire within 15 days, you or we may request that
the choice be made by a judge of a court of record in the state where the
“residence premises” is located. The appraisers will separately set the
amount of the loss. If the appraisers submit a written report of an agreement
to us, the amount agreed upon will be 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 set the amount of the loss. . . . .
This is not a provision providing for or requiring arbitration. The appraisers
and umpire are only authorized to determine the “actual cash value”,
replacement cost, or cost to repair the property that is the subject of the
claim. 	They 	are 	not 	authorized 	to 	determine 	coverage, 	exclusions,
conditions, 	forfeiture 	provisions, 	conditions 	precedent, 	or 	any 	other
contractual issues that may exist between you and us. The appraisal award
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cannot be used by either you or us in any proceeding concerning coverage,
exclusions, forfeiture provisions, conditions precedent, or other contractual
issues. However, once contractual liability is admitted or determined, the
appraisal award is binding upon you and us. This appraisal process and
authority granted to the appraisers can only be expanded or modified by
written mutual consent signed by you and us.
ECF No. 28-6 (terms of insurance policy).
In the Motion to Compel, Plaintiff seeks to enforce the contractual appraisal
provision and stay the proceedings in this case pending the appraisal. In opposing the
appraisal request, USAA claims that the matter is not subject to appraisal because the
dispute here centers on a coverage issue: “whether the new [concrete tile] material
Plaintiff chose to utilize on the roof of the premises, requiring significantly greater
structural support than the former material, constitutes ‘like kind and quality’ under the
USAA CIC policy language.” ECF No. 33 at 1.
II. 	Analysis
Appraisal, like other forms of alternative dispute resolution, is favored in Colorado
“as a convenient, efficient alternative to litigation.” City & Cnty. of Denver v. Dist. Ct.,
939 P.2d 1353, 1357 (Colo. 1997). As a result, Colorado courts have routinely
compelled the insurer to participate where the insured validly invoked the right to
appraisal under the policy. See generally Garcia v. State Farm Mut. Fire & Cas. Co.,
No. 20-CV-02480-PAB-MEH, 2021 WL 4439792 (D. Colo. Sept. 27, 2021); see also
Auto-Owners Ins. Co. v. Summit Park Townhome Ass’n, 100 F.Supp.3d 1099, 1100 (D.
Colo. 2015) (granting motion to compel appraisal “because the policy unambiguously
commits the parties' dispute regarding the amount of loss from the storm, if any, to the
appraisal process”). ”[S]imilar to an arbitration agreement, the court ‘must accord the
parties a presumption in favor of appraisal and must resolve all doubts about the scope
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of the appraisal clause in favor of the appraisal mechanism.’” Church Mut. Ins. Co. v.
Rocky Mountain Christian Church, No. 20-cv-01769-WJM-KLM, 2021 WL 1056515, at
*2 (D. Colo. Mar. 19, 2021) (quoting Laredo Landing Owners Ass’n, Inc. v. Sequoia Ins.
Co., No. 14-cv-01454-RM-KMT, 2015 WL 3619205, at *2 (D. Colo. June 10, 2015)).
Here, there is an apparent dispute as to the amount of the loss from the
hailstorm. Plaintiff has requested appraisal consistent with the terms of the policy.
Plaintiff is entitled to appraisal. The fact that there may be other questions (such as
coverage questions) that are left to be resolved after the conclusion of the appraisal
process is irrelevant to Plaintiff’s entitlement to appraisal of the amount of the loss. For
example, in Summit Park, there was a dispute about the amount of the loss and also
other disputes about coverage, such as whether the policy should pay for undamaged
property, so as to achieve “matching” or “visual consistency” with damaged property
that required replacement. 100 F.Supp.3d at 1101. The insurer there contended that the
appraisal process was inappropriate, or premature, given the outstanding coverage
questions that only the Court could resolve. Judge Babcock there ordered an appraisal
to address the issues that appraisal should properly address, while noting that the
“parties may still dispute coverage issues after the appraisal process has been
completed.” Id. at 1103. Judge Babcock instructed the appraisers to not decide the
parties’ legal issues, but to make appropriate factual conclusions to enable the court to
do so. Id. at 1104. In that case, the appraisers were directed to address the cost of
replacing the undamaged property to achieve matching, and “separately calculate and
identify disputed costs so that the Court can either include or exclude them once it has
determined whether the policy provides coverage for them.” Id.
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The same logic applies here. The appraisers will not be deciding whether the
policy covers the cost of replacing the original roof with a more robust and expensive
version. But the appraisers should certainly determine the fair cost of replacing the
damaged roof with a roof of like kind and material, and leave it for the Court to
determine whether the roof that was actually put on the home fit that description or
whether, instead, the insured replaced the Chevy-quality roof with a new Mercedes.
III. 	Conclusion
It is hereby ORDERED that Plaintiff’s Motion to Compel (ECF No. 28) and
Supplemental Motion (ECF No. 39) are GRANTED. The parties are to expeditiously
engage in the appraisal process. This action is stayed pending resolution of the
appraisal process. Within five days of the appraisal award, the parties should contact
the Court to set a status conference to re-start the litigation calendar.
Dated at Denver, Colorado this 24th day of April, 2025
_______________________
N. Reid Neureiter
United States Magistrate Judge
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