Andres Trucking Co. v. United Fire and Casualty Co

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
September 20, 2018
2018COA144
No. 17CA1672 Andres Trucking v. United Fire — Insurance —
Regulation of Insurance Companies — Unfair Competition and
Deceptive Practices — Improper Denial of Claims — Remedies
for Unreasonable Delay or Denial of Benefits
In this insurance case, a division of the court of appeals
concludes that participation in a contractual appraisal process does
not preclude an insured’s suit for breach of contract and statutory
bad faith under sections 10-3-1115 and -1116, C.R.S. 2017.
After the parties participated in contractual appraisal, the
district court determined that the appraisal process resolved the
insured’s claims for breach of contract and statutory bad faith as a
matter of law and entered judgment in favor of the insurance
company under C.R.C.P. 12(b)(5).
The division analyzes the appraisal provision and concludes
that (1) the contractual appraisal provision was enforceable; (2) the
appraisal process resulted in a binding determination of the value
of the insured property; but that (3) the appraisal process did not
resolve the insurance company’s liability for breach of contract or
statutory bad faith; and therefore (4) the district court erred in
entering judgment in favor of the insurance company under Rule
12(b)(5).
Accordingly, the division affirms the order approving the
appraisal value but reverses the judgment and remands to the
district court for reinstatement of the insured’s complaint.
COLORADO COURT OF APPEALS 2018COA144
Court of Appeals No. 17CA1672
Routt County District Court No. 16CV30055
Honorable Shelley A. Hill, Judge
Andres Trucking Company,
Plaintiff-Appellant,
v.
United Fire and Casualty Company,
Defendant-Appellee.
JUDGMENT REVERSED, ORDERS AFFIRMED IN PART
AND VACATED IN PART, AND CASE REMANDED WITH DIRECTIONS
Division VII
Opinion by JUDGE HARRIS
J. Jones and Ashby, JJ., concur
Announced September 20, 2018
McGill Professional Law Corporation, Scott A. McGill, Robert L. Grover,
Steamboat Springs, Colorado, for Plaintiff-Appellant
Stuart D. Morse & Associates, LLC, Stuart D. Morse, Joseph P. Kiley,
Greenwood Village, Colorado, for Defendant-Appellee
¶1 Plaintiff, Andres Trucking Company (Andres Trucking),
appeals the judgment entered on its breach of contract and
statutory bad faith claims in favor of defendant, United Fire and
Casualty Company (United), after the district court determined that
the completion of the appraisal process called for in the parties’
policy necessarily resolved those claims.
¶2 Among questions we answer is whether Andres Trucking’s
participation in the contractual appraisal process resolved its
claims against United and effectively ended the litigation.
¶3 We conclude that the appraisal process did not fully resolve
Andres Trucking’s claims. The appraisal process determined the
value of the insured property, but it did not determine United’s
liability for breach of contract or statutory bad faith delay under
sections 10-3-1115 and -1116, C.R.S. 2017. Accordingly, we affirm
the order approving the appraisal value but reverse the judgment
and remand for reinstatement of the complaint.
I. Background
¶4 Andres Trucking operates a dump truck in Steamboat Springs,
Colorado. The truck was insured by United under a policy that
included the following provision:
1
If you and we disagree on the amount of “loss,”
either may demand an appraisal of the “loss.”
In this event, each party will select a
competent appraiser. The two appraisers will
select a competent and impartial umpire. The
appraisers will state separately the actual cash
value and amount of the “loss.” If they fail to
agree, they will submit their differences to the
umpire. A decision agreed to by any two will
be binding.
....
If we submit to an appraisal, we will still retain
our right to deny the claim.
¶5 In June 2015, while covered by the insurance policy, the truck
caught fire. Both parties agreed the truck was a total loss but
disagreed about the truck’s value.
¶6 After the parties’ discussions failed to lead to an agreement,
Andres Trucking filed an action against United on May 6, 2016.
The complaint alleged that United unreasonably refused to pay the
value of the truck and related damages, including storage fees, and
asserted claims for breach of contract and bad faith denial and
delay of an insurance claim under sections 10-3-1115 and -1116.
¶7 Two weeks later, in lieu of answering the complaint, United
moved to compel appraisal and stay the proceedings; over Andres
2
Trucking’s objection, the court granted the motion.1 Before
commencing the appraisal process, Andres Trucking filed an
amended complaint. The amended complaint contained a third
claim for relief challenging the enforceability of the contractual
appraisal provision, but it was otherwise substantially similar to the
initial complaint. The district court struck the amended complaint
on the ground that the insurance policy required an appraisal.
¶8 The parties proceeded to appraisal. Andres Trucking
submitted an appraisal valuing the truck at $42,500, United
submitted an appraisal of $33,454, and the umpire obtained an
appraisal of $54,289. The umpire ultimately settled on a value of
$39,507 plus $3907 in taxes, which United paid.
¶9 In January 2017, after United paid Andres Trucking the
appraised value of the truck, it moved for entry of judgment under
C.R.C.P. 12(b)(5), contending that, as a matter of law, the
completion of the appraisal process had resolved Andres Trucking’s
1 United says that it invoked the appraisal provision earlier and, in
its reply brief, Andres Trucking appears to concede that United
“unequivocally requested the appraisal process be initiated” in
January 2016. The precise date on which United invoked the
appraisal provision is not material to our resolution of this issue.
3
claims. Andres Trucking objected, contending that “several issues”
required determination by a jury, including whether United had
unreasonably denied or delayed paying the claim and whether
United had breached the insurance contract by failing to pay all of
Andres Trucking’s damages.
¶ 10 While United’s motion for entry of judgment was pending,
Andres Trucking again moved to amend its complaint. Its proposed
second amended complaint included additional allegations
concerning its damages and a fourth claim for unjust enrichment.
¶ 11 Relying on the enforceability of the appraisal provision, the
court again denied the motion. It reasoned that, upon completion
of the appraisal process, “the issues before the court were
concluded,” and that “[a]ll that remains is for judgment to enter.”
¶ 12 The court then entered judgment in favor of United on Andres
Trucking’s breach of contract and statutory bad faith claims. In its
order entering judgment, the court determined that Andres
Trucking’s claims “were subject to the appraisal process,” the
“appraisal process was completed and a value determined,” and
“[a]ccordingly, as a matter of law [Andres Trucking] can have no
claim for breach of contract, much less bad faith breach of
4
contract.” Without analyzing Andres Trucking’s allegations, the
court found “[t]here has been no breach of the insurance contract
or any unreasonable delay or denial of the claim that was caused by
[United].”
II. The District Court Erred in Dismissing Andres Trucking’s
Complaint
¶ 13 Andres Trucking argues that the district court erred in
dismissing its complaint, as the appraisal process did not resolve
whether United had breached the insurance policy or unreasonably
denied or delayed payment of benefits. We agree.
A. Standard of Review
¶ 14 The purpose of a motion under C.R.C.P. 12(b)(5) is to test the
legal sufficiency of the complaint to determine whether the plaintiff
has asserted a claim or claims upon which relief can be granted.
Hannon Law Firm, LLC v. Melat, Pressman & Higbie, LLP, 293 P.3d
55, 62 (Colo. App. 2011), aff’d, 2012 CO 61. In evaluating a motion
to dismiss under Rule 12(b)(5), we must determine whether,
accepting the complaint’s factual allegations as true and viewing
them in the light most favorable to the plaintiff, id., the complaint
5
states a plausible claim for relief, Warne v. Hall, 2016 CO 50, ¶¶ 9,
24.
¶ 15 Because it presents a question of law, we review de novo an
order granting a motion to dismiss under Rule 12(b)(5). Hannon,
293 P.3d at 63.
B. Analysis
¶ 16 The district court did not reach any conclusions about the
sufficiency of the complaint’s allegations or the plausibility of the
claims for relief. Instead, the district court determined that Andres
Trucking could not state any claim for relief because completion of
the appraisal process, like arbitration, precludes breach of contract
and statutory bad faith claims as a matter of law.
¶ 17 An appraisal is “an act of estimating” or “a valuation of
property by the estimate of an authorized person,” Unetco Indus.
Exch. v. Homestead Ins. Co., 67 Cal. Rptr. 2d 784, 789 (Cal. Ct.
App. 1997) (quoting Webster’s Third New International Dictionary
105 (1986)), and determines “only the amount of loss,” Hartford
Lloyd’s Ins. Co. v. Teachworth, 898 F.2d 1058, 1062 (5th Cir. 1990).
By its own terms, the appraisal provision in United’s policy was
triggered only when the parties disagreed “on the amount of ‘loss,’”
6
and the provision allowed either party to “demand an appraisal of
the ‘loss.’” (Emphasis added.)
¶ 18 The provision did not purport to be a mechanism for resolving
any other disagreements between the parties. Indeed, the provision
expressly reserved to United the right to contest liability,
notwithstanding the parties’ participation in the appraisal process.
See Auto-Owners Ins. Co. v. Summit Park Townhome Ass’n, 129 F.
Supp. 3d 1150, 1153-54 (D. Colo. 2015) (unlike arbitration,
appraisal “establishes only the amount of a loss,” and not other
issues including liability and coverage (quoting Minot Town &
Country v. Fireman’s Fund Ins. Co., 587 N.W.2d 189, 190 (N.D.
1998))); Hartford, 898 F.2d at 1062 (An appraisal does not “resolv[e]
issues such as whether the insurer is liable under the policy.”).
¶ 19 Thus, “an appraisal award, by itself, does not entitle either the
insured or the insurer to judgment in its favor” on the insured’s
claims of breach of contract or statutory bad faith. Sec. Nat’l Ins.
Co. v. Waloon Inv., Inc., 384 S.W.3d 901, 905 (Tex. App. 2012); see
also Hometown Cmty. Ass’n v. Phila. Indem. Ins. Co., Civ. A. No. 17-
cv-00777-RBJ, 2017 WL 6335656, at *6 (D. Colo. Dec. 12, 2017)
(an appraisal is determinative of the amount of loss, but issues
7
outside of the scope of the appraisal must be resolved by the court
or fact finder). Judgment does not follow directly from an appraisal
because, unlike arbitration, the “function of an appraisal award is
not to determine the merits of any claim.” Waloon Inv., 384 S.W.3d
at 905.
¶ 20 In American Family Mutual Insurance Co. v. Barriga, 2018 CO
42, ¶ 2, for example, the insurance company demanded an
appraisal, an appraiser fixed an award, and American Family paid
the award. Thereafter, the insured sued the insurer for breach of
insurance contract and statutory bad faith under section 10-3-
1116(1). Id. at ¶ 3. The jury found in favor of the insured on both
claims and awarded separate damages. Id. On appeal, the
supreme court concluded that where “the payments . . . were
unreasonably delayed but eventually paid . . . pursuant to the
third-party appraisal process outlined in the insurance agreement,”
the insured could keep the amount paid pursuant to the appraisal
process, recover any damages resulting from a breach of the
insurance contract, and receive an additional “two times the
covered benefit” under section 10-3-1116. Id. at ¶¶ 8-12 (quoting §
10-3-1116(1)). Thus, under Barriga, appraisal and litigation of
8
breach of contract and bad faith claims are not mutually exclusive.
And, contrary to United’s argument, partial payment of benefits is
not a complete defense, as a matter of law, to a bad faith claim. Id.
at ¶¶ 12-13.
¶ 21 In concluding that an appraisal necessarily precludes further
litigation, the district court appears to have relied on its
determination that “the appraisal process cannot be a violation of
an insurance company’s contractual or statutory duty to adjust a
claim.” In the same vein, United insists that Andres Trucking’s
complaint does not state a claim because “[i]t cannot be bad faith,
as a matter of law, to insist upon the enforcement of a valid
contractual provision.”
¶ 22 We do not disagree with these general propositions, but they
miss the point of Andres Trucking’s allegations. Andres Trucking
does not contend that adherence to the appraisal process itself
amounts to a breach of contract or bad faith. The crux of its
complaint is that United unreasonably delayed paying the claim;
attempted to pressure Andres Trucking into accepting less than the
full value of the insured property; refused to pay additional
damages related to the loss; did not invoke the appraisal provision
9
until months after submission of the claim; and then, during the
appraisal process, valued the claim at a lower amount than it had
offered during earlier negotiations. In later filings, Andres Trucking
suggested that United had also delayed paying the full appraisal
amount. (This allegation was not included in either of the proposed
amended complaints, however.)
¶ 23 The insurer’s mere invocation of the appraisal provision, at
some point during the dispute, does not immunize it from liability
for a claim of bad faith. Bad faith conduct may occur “before,
during, and after the appraisal process.” Hometown Cmty. Ass’n,
2017 WL 6335656, at *6.
¶ 24 Nor are we persuaded by United’s related, and unsupported,
argument that “there could be no breach [of the contract] as a
matter of law until the amount of the benefit was determined”
through the appraisal process.
¶ 25 A breach of insurance contract may be based not merely on
the insured’s ultimate financial liability, but also on “the insurer’s
conduct in unreasonably refusing to pay a claim,” “delaying
payments,” and “failing to act in good faith.” Goodson v. Am.
Standard Ins. Co. of Wis., 89 P.3d 409, 414 (Colo. 2004). And,
10
consistent with our earlier conclusion, the insurer’s failure to act in
good faith may occur before invocation of the appraisal provision.
¶ 26 Finally, we reject United’s contention that any error by the
district court in dismissing the claims based on its
misapprehension of the appraisal process was harmless. According
to United, the claims should nevertheless have been dismissed
because Andres Trucking “presented no evidence that convinced the
trial court that United Fire had acted unreasonably with respect to
paying the claim,” and, “[a]s the trial court found, any delay in
payment of the claim was due to Andres [Trucking’s] refusal to
participate in appraisal.”
¶ 27 Andres Trucking was not required, at this stage, to “present
evidence” of United’s unreasonableness in handling or paying the
claim. And the district court could not have properly “found” under
Rule 12(b)(5) that any delay in payment was attributable to Andres
Trucking. On a Rule 12(b)(5) motion to dismiss, the court had to
accept Andres Trucking’s allegations as true and construe those
allegations in the light most favorable to it. Hannon, 293 P.3d at
62.
11
¶ 28 To the extent United asserts that the district court bypassed
Rule 12(b)(5) and moved directly to summary judgment under
C.R.C.P. 56, as United suggested at oral argument, we disagree.
¶ 29 First, United’s “motion for entry of judgment” argued that
Andres Trucking “failed to state a claim upon which relief can be
granted” and requested relief under Rule 12(b)(5).
¶ 30 Second, when the court granted United’s motion, United had
not yet answered the complaint, the parties had not engaged in
discovery, neither party had filed a motion for summary judgment,
and the court did not tell the parties in advance that it would treat
the motion as one for summary judgment. Accordingly, the claims
were not susceptible of resolution under Rule 56.
¶ 31 We conclude that the district court erred in determining that
appraisal necessarily precluded Andres Trucking from pursuing its
breach of contract and statutory bad faith claims. We therefore
reverse the judgment and remand for reinstatement of the
complaint.
¶ 32 In light of our disposition, we vacate the district court’s order
awarding United its costs as the prevailing party. See Bainbridge,
Inc. v. Douglas Cty. Bd. of Comm’rs, 55 P.3d 271, 274 (Colo. App.
12
2002) (“[W]here a judgment has been successfully appealed, an
award of costs previously entered on that judgment is no longer
valid because, upon remand, that judgment no longer exists.”).
III. The Appraisal Award is a Binding Determination of the Value
of the Insured Property
¶ 33 Having determined that the appraisal process does not, as a
matter of law, preclude Andres Trucking from litigating its claims,
we now address its various challenges to the appraisal process
itself. For the reasons explained below, we reject those challenges
and conclude that the appraisal award is a binding determination of
the value of the insured property, and thus Andres Trucking may
not further litigate that issue.
A. The Appraisal Provision is Enforceable
¶ 34 In its briefing, Andres Trucking asserts that the district court
should not have enforced the appraisal provision because the
appraisal procedure “violates the constitutional right of litigants to
a speedy trial.” Andres Trucking offers no argument or relevant
authority to support this assertion.2 Ordinarily, we decline to
2Andres Trucking cites Huizar v. Allstate Insurance Co., 952 P.2d
342 (Colo. 1998), but that case involves a trial de novo provision of
13
address contentions that “lack any meaningful explanation.” Holley
v. Huang, 284 P.3d 81, 87 (Colo. App. 2011) (declining to address
“bald assertions of error”).
¶ 35 Moreover, at oral argument, Andres Trucking clarified that its
objection to the appraisal provision stems from the court’s
interpretation of the provision as an alternative to litigation.
Because we have reversed the court’s judgment in this regard, that
would seem to settle the matter.
¶ 36 Still, to the extent Andres Trucking contends that appraisal
provisions are generally unconstitutional because they delay
litigation of the insured’s claims, we disagree.
¶ 37 For one thing, we are not aware of a constitutional right to
resolve civil claims within a specific period. And even if there were
such a right, Andres Trucking has not alleged that the deprivation
of that right prejudiced its ability to litigate its claims against
United — for example, that witnesses’ memories have faded or
documents have been misplaced.
a binding arbitration clause and its analysis is inapplicable to the
appraisal provision at issue.
14
¶ 38 Furthermore, for nearly 100 years, appraisal provisions like
the one in Andres Trucking’s policy have been held enforceable
under Colorado law. See Norwich Union Fire Ins. Soc’y v. Rayor, 70
Colo. 290, 201 P. 50 (1921); see also Wagner v. Phoenix Ins. Co.,
141 Colo. 367, 348 P.2d 150 (1960). At this point, “[m]ost, if not
all, property insurance policy contracts include an appraisal clause
which may be invoked if there is a dispute between the insured and
the insurer over the amount of loss.” Colo. Div. of Ins., Bulletin No.
B-5.26(III) (Oct. 26, 2015), https://perma.cc/RAW4-FXAN. As
courts have uniformly recognized, these provisions provide a “plain,
speedy, inexpensive and just determination of the extent of the
loss.” Auto-Owners Ins. Co. v. Summit Park Townhome Ass’n, 100 F.
Supp. 3d 1099, 1103 (D. Colo. 2015) (quoting 46A C.J.S. Insurance
§ 1889 (2015)).
¶ 39 Accordingly, we conclude that the district court did not err in
enforcing the appraisal provision.
B. United Invoked Appraisal
¶ 40 Next, Andres Trucking insists that United did not properly
invoke appraisal because it “never demanded appraisal.” We reject
that contention.
15
¶ 41 As we have noted, Andres Trucking conceded that in a
January 2016 letter, United “unequivocally requested the appraisal
process be initiated.” An unequivocal request to proceed with
appraisal is sufficient to invoke the process. The absence of the
word “demand” in United’s letter is certainly not fatal. As a general
rule, we do not require that litigants use “talismanic language,” see
People v. Juarez, 2017 COA 127, ¶ 25 (cert. granted Mar. 12, 2018),
nor do we “elevate form over substance,” Perfect Place v. Semler,
2016 COA 152M, ¶ 32 (cert. granted Nov. 13, 2017).
C. The Appraisal Process Produced a Valid Loss Amount
¶ 42 Andres Trucking contends that the appraisal process did not
result in a binding loss valuation because (1) contrary to the policy
requirements, no two appraisals matched; and (2) the umpire’s
valuation was mathematically flawed.
¶ 43 To resolve the first contention, we must construe the
insurance policy. We construe an insurance policy like any other
contract, Smith v. State Farm Mut. Auto. Ins. Co., 2017 COA 6, ¶ 6,
giving words their plain and ordinary meanings and avoiding
strained constructions, Allstate Ins. Co. v. Huizar, 52 P.3d 816, 819
(Colo. 2002).
16
¶ 44 The appraisal provision directs that, in the event of a
disagreement as to the amount of loss, each party will select a
competent appraiser who will “state separately” the amount of the
loss. If the appraisers fail to agree, they will “submit their
differences” to an impartial umpire. “A decision agreed to by any
two will be binding.”
¶ 45 The appraisal process may therefore involve up to three actors:
the insured’s appraiser, the insurer’s appraiser, and the umpire. If
“any two” of the three “agree” to a “decision” as to the amount of
loss, that decision is “binding” on the parties. Thus, under the
plain language of the provision, the appraisal process will produce a
binding loss amount if, for example, the umpire and one of the
appraisers agree to a decision on the amount of the loss. That is
what occurred in this case. Though United’s appraisal was nearly
twenty percent lower than the umpire’s valuation, United’s
appraiser later agreed to the umpire’s loss amount, and thus a
decision was “agreed to by any two.”
¶ 46 Andres Trucking’s reading of the policy would require that we
substitute the phrase “[a] decision agreed to by any two will be
binding” with “the umpire’s decision will be binding if it matches
17
one of the party’s appraisals.” Because we “may not rewrite clear
and unambiguous contract provisions,” Bledsoe Land Co. LLLP v.
Forest Oil Corp., 277 P.3d 838, 842 (Colo. App. 2011), we may not
write that phrase into the contract.
¶ 47 Andres Trucking counters that the district court, in clarifying
the appraisal provision, instructed the parties that if the appraisers
could not agree on a value, “the umpire previously selected by them
will offer his/her opinion of value,” and that “[i]f two of the three do
not match in their opinions, the appraisal process is completed.”
Because United’s appraiser and the umpire did not “match in their
opinions,” Andres Trucking says, the umpire’s decision, though
ultimately agreed to by United’s appraiser, is not binding. We
commend the district court for attempting to provide guidance to
the parties during a somewhat contentious process, but like us, the
district court was bound by the policy language and could not
change the terms of the appraisal process. The district court
recognized as much in a later order, in which it construed the
appraisal provision and determined that the loss amount agreed to
by the umpire and United’s appraiser satisfied the provision,
resulting in a binding loss determination. We therefore reject
18
Andres Trucking’s reliance on the district court’s initial instructions
regarding appraisal.
¶ 48 We also reject Andres Trucking’s second contention — that the
umpire erred in calculating the loss amount.
¶ 49 The appraisal award issued under an insurance policy is
binding so long as the appraisers (including the umpire) have
performed the duties required of them by the policy. Dufrene v.
Certain Interested Underwriters at Lloyd’s of London Subscribing to
Certificate No. 3051393, 91 So. 3d 397, 403 (La. Ct. App. 2012). As
a general matter, an appraisal award entered by an umpire may be
disregarded only if the award was made without authority or was
made as a result of fraud, accident, or mistake. Barnes v. W. All.
Ins. Co., 844 S.W.2d 264, 267 (Tex. App. 1992); see also Emmons v.
Lake States Ins. Co., 484 N.W.2d 712, 715 (Mich. Ct. App. 1992)
(judicial review of appraisal award is limited to instances of bad
faith, fraud, misconduct, or manifest mistake). The burden of
demonstrating that the appraised loss amount should be set aside
falls on the party challenging it. Dufrene, 91 So. 3d at 403.
¶ 50 Andres Trucking asserts that the umpire’s calculation was
fatally flawed because rather than relying on his own third
19
appraisal, he averaged all three appraisals to arrive at a loss
amount. And, in averaging the appraisals, the umpire failed to take
into account that United’s appraisal was “artificially lower” because
it did not include taxes.
¶ 51 But Andres Trucking does not point to any provision of the
policy prohibiting this valuation method. And within the area in
which they are authorized to act, appraisers are “clothed with a
certain degree of discretion with the result that an award will not be
set aside merely because the reviewing judge does not agree with
the conclusion reached by them.” Steven Plitt et al., Couch on
Insurance § 213:2, Westlaw (3d ed. database updated June 2018).
¶ 52 We are certainly in no position to second-guess the
mathematical process adopted by an umpire whose competence and
impartiality were never challenged. That is why we require that
“[p]arties, after having selected their own judges . . . be bound by
the result.” Wilson v. Wilson, 18 Colo. 615, 620, 34 P. 175, 177
(1893).
¶ 53 Under the circumstances, Andres Trucking has failed to carry
its burden to establish a “manifest mistake” in the umpire’s
valuation. Emmons, 484 N.W.2d at 715. Accordingly, the district
20
court did not err in refusing to invalidate the umpire’s decision.
See Harleysville Mut. Ins. Co. v. Narron, 574 S.E.2d 490, 496 (N.C.
Ct. App. 2002) (“[M]istakes by appraisers, like those made by
arbitrators, are insufficient ‘to invalidate an award fairly and
honestly made.’” (quoting N.C. Farm Bureau Mut. Ins. Co. v. Harrell,
557 S.E.2d 580, 582 (N.C. Ct. App. 2001))).
IV. Attorney Fees
A. Attorney Fees for Andres Trucking’s Motion for Clerk’s Entry of
Default
¶ 54 On November 30, 2016, after completion of the appraisal
process, the parties filed conflicting notices to the court. Andres
Trucking, relying on the court’s clarification order, maintained that
the appraisal process had failed to produce a binding loss amount,
as the umpire’s appraisal did not “match” one of the appraiser’s.
United, on the other hand, asserted that the umpire’s award
constituted a binding loss amount.
¶ 55 In response, the court requested that counsel “clarify the file”
and explain whether the appraisal process was complete. On
December 22, Andres Trucking filed its response to the court’s
request for clarification. It also filed a motion for clerk’s entry of
21
default. Andres Trucking’s theory was that, upon the unsuccessful
completion of the appraisal process, the stay was automatically
lifted, and United was obliged to file an answer to the complaint.
When United failed to do so within twenty days, Andres Trucking
concluded that it was entitled to entry of default.
¶ 56 The district court found the motion substantially vexatious
and awarded United its attorney fees and costs:
The court has no idea why Plaintiff filed a
request for entry of clerk’s default. It was filed
a full 17 days after the court requested
clarification on what in the world was going on
in the appraisal process, given the conflicting
pleadings. Clearly, the court was not of the
belief that any default by Defendant could even
be imagined, since it had requested
information from both counsel. C.R.C.P. 55(a)
states, as noted by Defendant, that when a
party “has failed to plead or otherwise defend”
the other party may have a clerk’s default.
Rarely has this court seen such intense and
disputed litigation over such a seemingly
simple issue as this appraisal process.
Clearly, Defendant was in the process of
“defending.” And this process was far from
complete on December 22, 2016, when Plaintiff
filed his request for a clerk’s default. Caution
certainly dictated a Response from Defendant.
Plaintiff’s request for entry of clerk’s default
was substantially vexatious.
22
¶ 57 We review an award of attorney fees under section 13-17-102,
C.R.S. 2017, for an abuse of discretion. In re Estate of Shimizu,
2016 COA 163, ¶ 16. A court abuses its discretion where its
decision is manifestly arbitrary, unreasonable, or unfair. Id.
¶ 58 An award of attorney fees under section 13-17-102 is
warranted if a party’s conduct is “substantially frivolous,
substantially groundless, or substantially vexatious.” § 13-17-
102(4) “An action is substantially vexatious if brought or
maintained in bad faith to annoy or harass another, and
vexatiousness includes conduct that is arbitrary, abusive,
stubbornly litigious, or disrespectful of the truth.” In re Parental
Responsibilities Concerning I.M., 2013 COA 107, ¶ 29.
¶ 59 C.R.C.P. 55(a) empowers the clerk to enter default when “a
party against whom a judgment for affirmative relief is sought has
failed to plead or otherwise defend.”
¶ 60 Andres Trucking insists that, when United failed to file an
answer after completion of the appraisal process, it sought entry of
default in good faith. But Andres Trucking could not have had a
good faith belief that it was entitled to a clerk’s entry of default on
December 22 because (1) United was actively defending against
23
Andres Trucking’s claims and (2) the court had ordered
clarifications from the parties on December 5.
¶ 61 We agree with the district court that the parties were involved
in “intense and disputed litigation” and that United was “in the
process of defending” against Andres Trucking’s claims when
Andres Trucking requested a clerk’s entry of default. Accordingly,
the district court did not abuse its discretion in finding Andres
Trucking’s motion “substantially vexatious” and awarding United its
reasonable attorney fees. See Shimizu, ¶ 30.
B. Appellate Attorney Fees
¶ 62 United requests appellate attorney fees due to the “frivolous,”
“futile, irrational and unjustified” nature of Andres Trucking’s
appeal. But we have determined the appeal to be meritorious.
Accordingly, we deny United’s request for appellate attorney fees.
See Rademacher v. Becker, 2015 COA 133, ¶ 30 (denying the
appellee’s request for attorney fees as a sanction for filing a
frivolous appeal because the appellant prevailed on appeal).
¶ 63 Andres Trucking requests appellate attorney fees in a single
sentence of its opening brief: “Plaintiff hereby requests that
reasonable attorney fees and costs be awarded against Defendant
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pursuant to C.A.R. 39 and 39.5 or other applicable statute.” But
C.A.R. 39.1 provides that “the party claiming attorney fees must
include a specific request” and “explain the legal and factual basis”
for an award of attorney fees. Andres Trucking failed to provide any
factual recitation or legal authority for its request for attorney fees.
Accordingly, we will not consider its request. See Sos v. Roaring
Fork Transp. Auth., 2017 COA 142, ¶ 59 (declining to consider an
“undeveloped request” for attorney fees where the requesting party
failed to state any legal or factual basis for an award).
V. Conclusion
¶ 64 The order approving the appraisal value is affirmed but the
judgment is reversed and the case is remanded to the district court
for reinstatement of Andres Trucking’s complaint. The order
awarding United costs as the prevailing party is vacated but the
order awarding United its attorney fees for its response to Andres
Trucking’s motion for clerk’s entry of default is affirmed.
JUDGE J. JONES and JUDGE ASHBY concur.
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