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Liberty Bell Moving & Storage Inc. v. Transguard Insurance Company of America, Inc.

United States District Court, D. Maine

November 27, 2018

LIBERTY BELL MOVING & STORAGE, INC., Plaintiff
v.
TRANSGUARD INSURANCE COMPANY OF AMERICA, INC., Defendant

          MEMORANDUM DECISION AND ORDER ON DEFENDANT'S MOTION TO COMPEL APPRAISAL AND STAY PROCEEDINGS

          JOHN H. RICH, III UNITED STATES MAGISTRATE JUDGE

         In this insurance coverage action, the defendant, Transguard Insurance Company of America, Inc. (“Transguard”), moves over the plaintiff's objection to (i) compel appraisal of the damaged real property at issue and (ii) stay this action until the appraisal process is complete. The parties' central disagreement is over whether or not Transguard waived its contractual right to invoke appraisal. Because I find that Transguard did not waive that right, I grant its motion to compel appraisal and for a stay of these proceedings. However, I also set a deadline of January 31, 2019, for the completion of the appraisal process.

         I. Background [1]

         The property that is the subject of this action, a nearly century-old building in Windham, Maine, caught fire on March 16, 2017. See Defendant Transguard Insurance Company of America, Inc.'s Motion To Compel Appraisal and To Stay Further Discovery and Proceedings (“Motion”) (ECF No. 35) at 2; Opposition to Motion To Compel Appraisal and To Stay (“Opposition”) (ECF No. 51) at 3. The next day, the plaintiff, Liberty Bell Moving & Storage, Inc. (“Liberty Bell”), notified Transguard of the loss. See Motion at 2. On April 19, 2017, at Transguard's request, Liberty Bell provided an estimate of the value of the loss in the amount of $1, 166, 040. See Motion at 2; Opposition at 3-4; see also Exh. 1 (ECF No. 32-1) to Opposition to Motion To Quash Subpoena or for Protective Order (“Subpoena Opposition”) (ECF No. 32). On May 19, 2017, Transguard engaged its own inspector, who inspected the building on May 25, 2017, and produced a report on June 30, 2017. See Motion at 3; Opposition at 4. On August 29, 2017, Transguard provided Liberty Bell with its own estimate of a cost of $135, 960 to restore the building to its pre-fire condition. See Motion at 3; Opposition at 5. Liberty Bell responded with a $1, 216, 972 cost estimate on October 2, 2017. See Motion at 4; Opposition at 5. Transguard, in turn, informed Liberty Bell on October 26, 2017, that its peer reviewer had reaffirmed its prior estimate. See Motion at 4; Opposition at 5. Transguard proposed a joint inspection of the property by the parties' respective engineers, but the parties could not agree on a schedule to complete it. See Motion at 5; Opposition at 5-6; see also Exh.12 (ECF No. 32-12) to Subpoena Opposition at 6.

         Liberty Bell made a final demand on December 6, 2017, following which it filed this suit on December 22, 2017. See Motion at 5; Opposition at 6. The summons was returned executed on January 8, 2018, and Transguard filed its answer on February 20, 2018, following the court's grant of two consented-to motions to extend its time to answer. See ECF Nos. 5-7, 10-12. The court entered a scheduling order on February 21, 2018. See ECF No. 13. From March 14, 2018, through July 11, 2018, the court granted a series of four unopposed or joint motions to extend deadlines, two of which accommodated the parties' unsuccessful effort to settle the case through a May 7, 2018, judicial settlement conference, see ECF Nos. 14-15, 19, 21-26.

         Transguard proposed to have a neutral third-party estimator provide a “nonbinding opinion” as to the value of the loss, and Liberty Bell rejected that proposal on July 27, 2018. See Motion at 5 & Exh. A (ECF No. 35-1) thereto; Opposition at 17-18. On August 7, 2018, Transguard made a written demand for appraisal, which Liberty Bell rejected on August 7, 2018. See Motion at 5; Opposition at 17. Transguard then filed this motion on August 20, 2018. See ECF No. 35. On October 24, 2018, I heard oral argument on the motion. See ECF No. 62.

         Transguard's request for appraisal is based on two provisions contained in the parties' insurance contract. The first, an endorsement to the Common Policy Conditions and the Commercial Property Conditions, provides:

If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:
a. Pay its chosen appraiser; and
b. Bear the other expenses of the appraisal and umpire equally.
If there is an appraisal, we will still retain our right to deny the claim.

         Exh. B (ECF No. 35-2) to Motion at 80. The second, an endorsement to the Maine - Standard Fire Policy Provisions, provides:

In case the insured and this Company 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 the insured or this 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 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 this Company shall determine the amount of actual cash value and loss. Each appraiser shall be paid by the party selecting that appraiser and the expenses of appraisal and umpire shall be paid by the parties equally.

Id. at 98, 100.

         II. Applicable Legal Standard

         In their briefs, both parties analogize the question of waiver of the right to an appraisal to the question of waiver of the right to arbitration. See Motion 10-15; Opposition at 7-9. The analogy is an apt one: both rights derive from a contractual agreement to utilize an extrajudicial method of resolving all or part of a dispute. Hence, in determining whether Transguard has waived its right to an appraisal, I apply the test for determining whether a party has waived its right to arbitration, which involves inquiry into “whether there has been an undue delay in the assertion of arbitral rights and whether, if arbitration supplanted litigation, the other party would suffer unfair prejudice.” Joca-Roca Real Estate, LLC v. Brennan, 772 F.3d 945, 948 (1st Cir. 2014).

         In turn, “[t]hat determination is informed by a salmagundi of factors, including: the length of the delay, the extent to which the party seeking to invoke arbitration has participated in the litigation, the quantum of discovery and other litigation-related activities that have already taken place, the proximity of the arbitration demand to an anticipated trial date, and the extent to which the opposing party would ...


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