Owners Ins. Co. v. Dakota Station II Condo. Ass'n, Inc.

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ADVANCE SHEET HEADNOTE
June 24, 2019

2019 CO 65

No. 17SC583, Owners Ins. v. Dakota Station II Condo. Ass’n—Insurance Appraisal—
Contract Interpretation.

In this case, the supreme court interprets language in the appraisal provision of an

insurance policy requiring each party to “select a . . . impartial appraiser.” It concludes,

based on the plain meaning of the word “impartial,” that the policy requires the

appraisers to be unbiased, disinterested, and unswayed by personal interest. The

appraisers must not favor one side more than another, so they may not advocate for either

party.

The supreme court also considers whether a contingent-cap fee agreement

between a party and an appraiser rendered the appraiser partial as a matter of law. The

supreme court holds that the agreement in this case didn’t.
 The Supreme Court of the State of Colorado
2 East 14th Avenue • Denver, Colorado 80203

2019 CO 65

Supreme Court Case No. 17SC583
Certiorari to the Colorado Court of Appeals
Court of Appeals Case No. 16CA733

Petitioner:

Owners Insurance Company, a Michigan corporation,

v.

Respondent:

Dakota Station II Condominium Association, Inc., a Colorado corporation.

Judgment Affirmed in Part and Reversed in Part
en banc
June 24, 2019

Attorneys for Petitioner:
Wheeler Trigg O’Donnell LLP
Terence M. Ridley
Evan Bennett Stephenson
Kayla L. Scroggins-Uptigrove
Denver, Colorado

Wheeler Waters, P.C.
Karen H. Wheeler
Jami A. Maul
Greenwood Village, Colorado

Attorneys for Respondent:
Orten Cavanagh & Holmes, LLC
Jonah G. Hunt
Denver, Colorado
Attorneys for Amicus Curiae American Insurance Association:
Foran Glennon Palandech Ponzi & Rudloff PC
Amy M. Samberg
Matthew S. Ponzi
Thomas Orlando
Denver, Colorado

Attorneys for Amicus Curiae Colorado Defense Lawyers Association:
American Family Insurance Legal Group
Dylan Lewis
Englewood, Colorado

Ruebel & Quillen, LLC
Jeffrey Clay Ruebel
Westminster, Colorado

Attorneys for Amicus Curiae Colorado Trial Lawyers Association:
The Frankl Law Firm, P.C.
Keith E. Frankl
Greenwood Village, Colorado

Speights & Worrich Colorado LLC
David Roth
Denver, Colorado

Attorneys for Amici Curiae National Association of Public Insurance Adjusters and
Rocky Mountain Association of Public Insurance Adjusters:
Sherman & Howard, LLC
Christopher R. Mosley
Denver, Colorado

Attorneys for Amici Curiae Property Casualty Insurers Association of America and
Colorado Civil Justice League:
Sweetbaum Sands Anderson PC
Jon F. Sands
Marilyn S. Chappell
Denver, Colorado

Attorneys for Amicus Curiae United Policyholders:
Reed Smith, LLP
Jim Davis
Chicago, Illinois
JUSTICE HOOD delivered the Opinion of the Court.
JUSTICE SAMOUR concurs in parts and dissents in part, and CHIEF JUSTICE
COATS joins in the concurrence in part and dissent in part.
¶1 A condominium association, Dakota, filed two claims with its insurer, Owners, for

weather damage. The parties couldn’t agree on the money owed, so Dakota invoked the

appraisal provision of its insurance policy.

¶2 The appraisal provision requires each party to “select a competent and impartial

appraiser.” An umpire would be selected by the parties or appointed by the court. The

appraisers would assess the value of the property and amount of loss. Any disagreement

would be submitted to the umpire. Any agreement as to the values reached by at least

two of the three would bind them all.

¶3 The parties each selected an appraiser, putting the rest of the provision’s terms

into motion. Ultimately, the appraisers submitted conflicting value estimates to the

umpire, and the umpire issued a final award, accepting some estimates from each

appraiser. Dakota’s appraiser signed onto the award, and Owners paid Dakota.

¶4 Later, Owners called foul. It moved to vacate the award, arguing that Dakota’s

appraiser was not “impartial” as required by the insurance policy’s appraisal provision

and that she failed to disclose material facts. The trial court disagreed and “dismissed”

the motion to vacate. A division of the court of appeals affirmed.

¶5 Having agreed to review the case, we must interpret the policy’s impartiality

requirement and determine whether a contingent-cap fee agreement between Dakota and

its appraiser rendered the appraiser partial as a matter of law. We conclude that the plain

language of the policy requires appraisers to be unbiased, disinterested, and unswayed

by personal interest. They must not favor one side more than another, so they may not

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advocate for either party. We also hold that the contingent-cap fee agreement didn’t

render Dakota’s appraiser partial as a matter of law.

¶6 Accordingly, we affirm the judgment of the court of appeals with respect to the

contingent-cap fee agreement, reverse with respect to the impartiality requirement, and

remand for further proceedings consistent with this opinion.

I. Facts and Procedural History

¶7 Dakota Station II Condominium Association Inc., the owner of a condominium

development in Littleton, filed two claims with its insurer, Owners Insurance Company,

for weather damage to the development.

¶8 Dakota disagreed with Owners about the value of the claims, so it invoked the

following appraisal provision of its insurance policy:

If [Owners] and [Dakota] disagree on the value of the property or the
amount of loss, either may make a written demand for an appraisal of 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.

(Emphasis added.)

¶9 In accordance with this provision, each party selected an appraiser. The two

appraisers couldn’t agree on an umpire, so the court appointed one. The appraisers

evaluated the property and submitted their conflicting estimates to the umpire. Each

estimate included six cost categories.

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¶10 After reviewing the appraisers’ estimates and supporting documentation, the

umpire adopted Owners’ appraiser’s estimates in four of the six cost categories and

Dakota’s appraiser’s estimates in the other two. In total, the umpire found that the

replacement cost reached almost $3 million.1

¶11 Even though the umpire adopted four of Owners’ appraiser’s six cost estimates,

Owners’ appraiser didn’t agree with the roof-cost estimate, the big-ticket category

($2,553,434.50), and wouldn’t sign the final determination of costs.2 However, Dakota’s

appraiser and the umpire both signed the award. Owners then paid Dakota.

¶12 Months later, Owners filed a petition to vacate the award pursuant to section

13-22-223, C.R.S. (2018), of the Colorado Uniform Arbitration Act, arguing that Dakota’s

appraiser was impermissibly partial and failed to disclose material facts. Owners

asserted that appraisers must be competent and impartial “like arbitrators.” Owners later

filed a clarification of the relief requested, explaining that the appraiser’s “duties of

impartiality stem from the Policy.”

¶13 As relevant here, Owners alleged that Dakota’s appraiser acted improperly by

entering into a contract with the public adjuster that capped her fees at five percent of the

insurance award (allegedly giving her a financial interest in the outcome).

1 The appraisal award included adopted estimates for “replacement cost” and “actual
cost.” The parties focus their attention on the “replacement cost” estimates, so we do the
same.
2Owners’ appraiser believed that the total replacement cost was closer to $2.3 million
and placed the roof-cost estimate at $1,865,402.74.

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¶14 Later, at an evidentiary hearing, Owners’ counsel asked Dakota’s appraiser

whether she felt that “it’s appropriate to be an advocate for an insured when you’re acting

as an appraiser.” The appraiser replied: “I think it’s natural. I think you’re an advocate

for . . . Owners.” In closing arguments, Owners’ counsel argued that this testimony

further demonstrated the appraiser’s partiality.

¶15 The trial court “dismissed” the petition. Ultimately, the court concluded that

Dakota’s appraiser didn’t act improperly or unlawfully. The trial court rejected Owners’

contention that appraisers must act as impartially as an umpire or arbitrator in every

instance. It reasoned that the law requires appraisers to be impartial in the sense that

they must render their decisions based upon experience and not allow their findings to

be influenced by the side that hired them or the side for whom they work.

¶16 The trial court also rejected Owners’ contention that a contingent-cap fee provision

of Dakota’s appraiser’s contract gave her an impermissible financial interest in the

outcome of the appraisal. The appraiser’s contract included a provision capping the

appraiser’s fees at five percent of the overall award but indicated that the provision

would not apply unless it was initialed by the parties. The parties didn’t initial it.

However, the trial court concluded that the provision likely would have been enforceable

against the appraiser if her fees had indeed exceeded five percent of the final award. The

court reasoned that including the provision created an ambiguity that would be resolved

against the appraiser, as the drafter.

¶17 Still, the trial court determined that the provision didn’t render the appraiser

impermissibly biased. It found the evidence “clear” that neither party thought that the

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cap applied. It also found the cap didn’t come into play because, regardless of whose

estimates the umpire adopted, the fee would have been well under the cap. It rejected

the contention that the provision rendered the appraiser biased as a matter of law. (The

trial court didn’t explicitly address Owners’ concern about the appraiser testifying that it

is “natural” for an appraiser to be an advocate.)

¶18 Owners appealed, and in a split, published decision, a division of the court of

appeals affirmed the trial court’s judgment. Owners Ins. Co. v. Dakota Station II Condo.

Ass’n, Inc., 2017 COA 103, ¶ 1, __ P.3d __.

¶19 The division majority agreed with the trial court’s reading of the impartial

appraiser requirement, understanding it “to mean that an impartial appraiser in

rendering his or her valuation opinion applies appraisal principles with fairness, good

faith, and lack of bias.” Id. at ¶ 20.

¶20 In reaching this conclusion, the majority first noted that any ambiguity in the

definition of “impartial” is construed against Owners. Id. at ¶ 21 (citing Union Ins. Co. v.

Houtz, 833 P.2d 1057, 1061 (Colo. 1994)). Next, it acknowledged that Black’s Law

Dictionary defines impartial as “not favoring one side more than another; unbiased and

disinterested; unswayed by personal interest.” Id. at ¶ 22. However, based on the context

of the appraisal provision, the majority “[didn’t] agree that the impartial appraiser called

for in this policy may not favor one side more than the other.” Id. Because the provision

requires the two appraisers to submit any differences to an umpire, the majority reasoned

that “[t]he policy plainly contemplates that the appraisers will put forth a value on behalf

of the party that selects them.” Id. at ¶ 23. The majority agreed with the Iowa Supreme

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Court that, while the appraisers “must act fairly, without bias, and in good faith,” they

“do not violate their commitment by acting as advocates for their respective selecting

parties.” Id. at ¶ 24 (quoting Cent. Life Ins. Co. v. Aetna Cas. & Sur. Co., 466 N.W.2d 257,

261 (Iowa 1991)). Thus, the majority concluded, “[s]o long as the selected appraiser acts

fairly, without bias, and in good faith, he or she meets the policy requirement of an

impartial appraiser.” Id.

¶21 The majority declined to apply the standard of impartiality applicable to

arbitrators. Id. at ¶ 25 (citing Noffsinger v. Thompson, 54 P.2d 683, 683 (Colo. 1936) (“An

arbitrator . . . is bound to exercise a high degree of impartiality, without the slightest

degree of friendship or favor towards either party.”)). In rejecting the application of this

standard, the majority declined to follow language in a 1923 case from this court,

Providence Washington Insurance Company v. Gulinson, which states that “[a]ppraisers are

not [arbitration] referees, but their duty of impartiality is the same.” Id. at ¶ 26 (quoting

Providence Washington Ins. Co. v. Gulinson, 215 P. 154, 155 (Colo. 1923)). The majority

distinguished Providence from the instant case. Providence, the majority explained,

concerned an appraiser and the umpire entering an award without notice to the second

appraiser—not the conduct at issue here. See id.

¶22 Finally, the majority addressed each of Owners’ contentions regarding Dakota’s

appraiser’s alleged misconduct. Id. at ¶¶ 27–69. Ultimately, the majority agreed with the

trial court’s findings that no misconduct occurred. Id.

¶23 As relevant here, the majority agreed with the trial court that, under the

circumstances, the five percent cap on Dakota’s appraiser’s fees didn’t demonstrate bias.

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Id. at ¶ 55. Because five percent of the final appraisal far exceeded the appraiser’s actual

billed fees and the parties didn’t invoke the contract provision, the majority saw “no basis

for concluding that [the appraiser’s] impartiality was compromised.” Id.

¶24 Judge Terry concurred in part and dissented in part. Id. at ¶ 71. In relevant part,

she concluded that the trial court failed to “hold the insured’s appraiser to the standard

of impartiality provided for in the insurance policy.” Id. Judge Terry gleaned the parties’

intent “by looking to the plain and generally accepted meaning of the contract language.”

Id. at ¶ 73 (citing Copper Mountain, Inc. v. Indus. Sys., Inc., 208 P.3d 692, 697 (Colo. 2009)).

She found the phrase “impartial appraiser” unambiguous, as Black’s Law Dictionary

clearly defines “impartial” as “[n]ot favoring one side more than another; unbiased and

disinterested; unswayed by personal interest.” Id. at ¶ 76 (quoting Impartial, Black’s Law

Dictionary (10th ed. 2014)). Allowing for an appraiser to advocate for the selecting party,

according to Judge Terry, “would be to read the term ‘impartial’ completely out of the

contract.” Id. at ¶ 77.

¶25 Unlike the majority, Judge Terry concluded that Providence controlled. Id. at ¶ 79.

She read Providence to establish “a general duty of impartiality for appraisers” to be as

impartial as an arbitrator. Id. (citing Providence, 215 P. at 155). Because the trial court

“never made specific findings as to whether [Dakota’s appraiser] was in fact impartial,”

Judge Terry would have “reverse[d] and remand[ed] for the trial court to make additional

factual findings as to whether [Dakota’s] appraiser was impartial under the impartiality

standard described in Providence.” Id. at ¶¶ 81–82.

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¶26 Owners appealed, and we granted certiorari.3

II. Analysis

¶27 First, we consider Owners’ contention that Providence mandates that insurance

appraisers act as impartially as arbitrators. We conclude that Providence’s holding is

limited to notice issues and doesn’t control our interpretation of the impartiality

requirement here.

¶28 Next, we turn to the language of the insurance policy’s appraisal provision. Based

on the plain meaning of the word impartial, we conclude that the policy requires

appraisers to be unbiased, disinterested, and unswayed by personal interest. They must

not favor one side more than another. This means no advocacy on behalf of either party.

¶29 Finally, we consider Owners’ contention that the contingent-cap fee agreement

rendered Dakota’s appraiser partial as a matter of law. Because the award did not reach

3 We granted certiorari to address the following issues:
1. Whether the court of appeals’ rule permitting insurance appraisers to
“favor one side more than the other” and act as “advocates” for the
selecting party conflicts directly with this court’s holding in Providence
Washington Insurance Co. v. Gulinson that such “[a]ppraisers are not
[arbitration] referees, but their duty of impartiality is the same.” 215 P.
154, 155 (Colo. 1923).
2. Whether the court of appeals’ rule permitting insurance appraisers to
utilize contingent-cap fee agreements that tie the appraiser’s own
compensation to the ultimate appraisal award conflicts directly with the
holding from Providence Washington Insurance Co. v. Gulinson, 215 P. 154,
155 (Colo. 1923), that such appraisers must be impartial in the same
manner as an arbitrator.

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the stated cap and the parties didn’t believe the cap was in effect, we conclude that the

cap didn’t come into play and therefore doesn’t demonstrate bias.

A. The Impartiality Requirement

¶30 Owners argues that the impartiality requirement in the insurance policy must be

read to require appraisers to be as impartial as arbitrators. In support of this contention,

it principally relies on Providence. See 215 P. at 155. First, we conclude that Providence

doesn’t control our interpretation of the impartiality requirement in this insurance policy.

Then, we turn to the language of the policy.

1. Standard of Review

¶31 Insurance policies are contracts, interpretations of which we review de novo. See

Cary v. United of Omaha Life Ins. Co., 108 P.3d 288, 290 (Colo. 2005). Therefore, we review

the meaning of the insurance policy’s impartiality requirement de novo.

2. General Principles of Contract Interpretation

¶32 Employing general principles of contract interpretation, “we give effect to the

intent and reasonable expectations of the parties” by enforcing the plain language of the

contract. Hoang v. Assurance Co. of Am., 149 P.3d 798, 801 (Colo. 2007). “When

determining the plain and ordinary meaning of words, we may consider definitions in a

recognized dictionary.” Renfandt v. N.Y. Life Ins. Co., 2018 CO 49, ¶ 18, 419 P.3d 576, 580.

3. Providence is Inapposite

¶33 Owners argues that Providence requires appraisers to be held to the same standards

of impartiality as arbitrators. We disagree. Owners suggests that Providence articulated

a general legal duty of appraisers, namely that, although they aren’t arbitrators, “their

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duty of imparti[a]lity is the same.” But Providence does not impose a general legal duty

of impartiality on appraisers; the language Owners points to is dicta.

¶34 Providence involved a fire insurance policy that included a similar appraisal

provision to the one at issue here. See 215 P. at 154. The relevant portion of the Providence

policy stated: “In the event of disagreement as to the amount of loss, the same shall . . . be

ascertained by two competent and disinterested appraisers, the insured and this

company each selecting one and the two so chosen shall first select a competent and

disinterested umpire.” Id.

¶35 When the parties disagreed as to the amount of loss, each selected an appraiser,

and the two appraisers selected an umpire. Id. at 154–55. However, one of the appraisers

met with the umpire without notice to the second appraiser, and the two came to an

agreement about the amount of loss. Id. at 155. We held that the award was invalid

because of the lack of notice to the second appraiser. Id. at 155–56.

¶36 In reaching this conclusion, we invoked principles of “[n]atural justice” and

compared appraisers to arbitrators, reasoning that “[a]ppraisers are not [arbitration]

referees, but their duty of imparti[a]lity is the same.” Id. at 155.

¶37 But ultimately, our holding was limited. We didn’t establish a general duty of

impartiality applicable to appraisers. We simply concluded that an award is invalid

when one appraiser and the umpire agree to an award without notice to the second

appraiser. That holding is confined to the specific notice problem presented in Providence.

Because the conduct at issue here doesn’t present a notice problem, Providence is

inapposite.

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 4. An Individual Acting as an “Advocate” for One Side Cannot
Simultaneously Be Considered “Impartial”

¶38 While the division majority’s interpretation of the impartiality requirement

doesn’t conflict with Providence, it does conflict with the plain meaning of the word

“impartial.” The majority concluded that an appraiser can simultaneously advocate for

a party and be impartial. Owners Ins. Co., ¶ 67. However, the plain meanings of the

words “impartial” and “advocate,” as defined by commonly used dictionaries, see

Renfandt, ¶ 18, 419 P.3d at 580, can’t be reconciled.

¶39 Black’s Law Dictionary defines “impartial” as “[n]ot favoring one side more than

another; unbiased and disinterested; unswayed by personal interest.” Impartial, Black’s

Law Dictionary (10th ed. 2014). Webster’s New World College Dictionary similarly

defines “impartial” as “favoring no one side or party more than another; without

prejudice or bias; fair; just.” Impartial, Webster’s New World College Dictionary (5th ed.

2016).

¶40 In contrast, relevant definitions of “advocate” include “[s]omeone who assists,

defends, pleads, or prosecutes for another,” Advocate, Black’s Law Dictionary (10th ed.

2014), and “a person who speaks or writes in support of something,” Advocate, Webster’s

New World College Dictionary (5th ed. 2016).

¶41 To “advocate” for a party, by definition, involves acting for or in support of that

party. Thus, to advocate for only one side in a dispute necessarily involves favoring one

side over another. These definitions are fundamentally incompatible. In construing the

phrase “each party will select a competent and impartial appraiser,” we can’t endorse a

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reading of the impartiality requirement that suggests one can simultaneously be an

“advocate” for one of the parties and be “impartial.”4

¶42 The language of the appraisal provision doesn’t create an ambiguity as to whether

the meaning of the word “impartial” could encompass advocacy. The division majority

reasoned that, because the provision requires the appraisers to submit differences to an

umpire, the language of the provision both “distinguishes the ‘impartial’ appraisers from

the umpire” and “plainly contemplates that the appraisers will put forth a value on behalf

of the party that selects them.” Owners Ins. Co., ¶ 23. Thus, the division concluded that

“the policy does not hold an appraiser to the standard of ‘not favoring one side more than

another.’” Id. at ¶ 24.

4 To the extent that one could attempt to resolve this tension by focusing on the word
“select,” we find that interpretation unreasonable. It occurs to us that one might seize on
the word “select” to suggest that the appraiser need only be impartial when chosen. But
none of the parties or amici ask us to adopt that reading, and we know of no court that
has relied on the word “select” to reach that conclusion. In contrast, several courts have
used dictionary definitions of “impartial” to interpret this common appraisal provision.
See, e.g., Landmark Am. Ins. Co. v. H. Anton Richardt, DDS, PA, No. 2:18-cv-600-FtM-
29UAM, 2019 WL 2462865 at *2, *3 (M.D. Fla. June 13, 2019) (using Black’s Law
Dictionary’s definition of “impartial” to interpret an insurance policy instructing parties
to “select a competent and impartial appraiser”); Veranda Gardens, LLC v. Secura Ins., No.
3:18-cv-611-DJH-RSE, 2019 WL 2438788 at *1, *3 (W.D. Ky. June 10, 2019) (same); Verneus
v. Axis Surplus Ins. Co., No. 16-21863-CIV-MARTINEZ/GOODMAN, 2018 WL 4150933 at
*1, *3 (S.D. Fla. Aug. 29, 2018) (same); Great N. Ins. Co. v. 100 Park Ave. Homeowners Ass’n,
Inc., No. 16-cv-02009-RPM at 1, 3–4 (D. Colo. Mar. 13, 2017) (order granting summary
judgment) (using definitions of “impartial” and “partial” in Webster’s II New Riverside
University Dictionary to interpret an insurance policy instructing parties to “select and
pay a competent and impartial appraiser”). Moreover, even if we were to adopt such a
reading, it would leave unanswered the question of what parameters, if any, should
govern post-selection.

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¶43 We disagree with the majority’s reasoning. The provision certainly contemplates

that the appraisers might submit conflicting values, but a difference in opinion could

result for many reasons, including a legitimate difference of methodology. Nothing in

the language suggests that values will be put forth on behalf of a party, and we decline to

accept such a reading when it directly conflicts with the plain meaning of “impartial.”

¶44 We conclude that the appraiser’s conduct must be evaluated using the plain

meaning of the word impartial.5 Thus, the policy requires the appraiser to be unbiased,

disinterested, without prejudice, and unswayed by personal interest. She must not favor

one side more than another. To conclude otherwise, in the words of Judge Terry, “read[s]

the term ‘impartial’ completely out of the contract.” Id. at ¶ 77 (Terry, J., dissenting). We

reverse the holding of the court of appeals and remand so the trial court can determine

whether Dakota’s appraiser’s conduct conformed to this standard.

5In reaching this conclusion, we acknowledge a distinction between advocating for a
party and explaining a position. An appraiser can certainly explain her position without
running afoul of the provision’s impartiality requirement. An appraiser may, for
example, defend her choice of methodology or use of certain data. Conversely, an
appraiser may explain why she feels another appraiser’s methodology or use of data is
wrong. In neither instance would the appraiser necessarily be acting as an advocate on
behalf of a party to the dispute. An appraiser advocates for or on behalf of a party when her
actions are motivated by a desire to benefit a party. For example, if an appraiser simply
seeks top dollar for a client, that is improper. In contrast, explaining a position or
defending a choice in methodology can be motivated by a desire to reach an accurate
outcome.

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 B. The Fee Cap

¶45 Next, Owners argues that a five percent contingent-cap fee agreement tying

Dakota’s appraiser’s compensation to the ultimate appraisal award rendered her partial

as a matter of law. Dakota, on the other hand, argues that no such contractual cap was

in place.

1. Standard of Review

¶46 Whether contingent-cap fee agreements that tie appraisers’ compensation to the

ultimate appraisal award render appraisers partial as a matter of law is a question of law,

which we review de novo. See Palizzi v. City of Brighton, 228 P.3d 957, 962 (Colo. 2010)

(noting that a ruling “as a matter of law” is a legal conclusion reviewed de novo).

Therefore, we consider de novo whether the contingent-cap fee agreement rendered

Dakota’s appraiser partial as a matter of law.

2. The Fee Cap Didn’t Render the Appraiser Partial as a Matter
of Law

¶47 The trial court found that Dakota’s appraiser drafted a document that included a

provision capping the appraiser’s recovery at five percent of the insurance award.

However, “clear” evidence showed “that neither party thought that the five percent cap

applied to this case.” And, regardless of whose estimates the umpire adopted, the fee

would have been well under the alleged cap. Even if the umpire had agreed with all six

of Owners’ appraiser’s estimates, the total fees would have amounted to less than two

percent of the final award. Thus, because the appraiser didn’t believe the cap was in

place and the award didn’t appear to correspond to the estimates put forth by the

17
appraiser, the trial court concluded that the provision didn’t render the appraiser

impermissibly partial.

¶48 Like the division majority, “we see no basis for concluding that [the appraiser]’s

impartiality was compromised by this [five percent] fee cap when [five percent] of the

final appraisal was far in excess of the actual billed fees and the contract provision was

not invoked.” See Owners Ins. Co., ¶ 55. In such a case, where the appraiser didn’t believe

the cap was in effect and there is seemingly no relationship between the fees billed by the

appraiser and the estimates she put forth, we can’t say that hypothetical incentives

rendered her partial. Thus, while we are wary of the possible incentives these agreements

create, we decline to hold that they render appraisers partial as a matter of law.

III. Conclusion

¶49 We conclude that the plain language of the policy requires appraisers to be

unbiased, disinterested, and unswayed by personal interest. They must not favor one

side more than another, so they may not advocate for either party. We also hold that the

contingent-cap fee agreement didn’t result in partiality on these facts.

¶50 Accordingly, we affirm the judgment of the court of appeals with respect to the

contingent-cap fee agreement, reverse with respect to the impartiality requirement, and

remand for further proceedings consistent with this opinion.

JUSTICE SAMOUR concurs in parts and dissents in part, and CHIEF JUSTICE

COATS joins in the concurrence in part and dissent in part.

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JUSTICE SAMOUR, concurring in part and dissenting in part.

¶51 I agree with the majority’s determinations that our decision in Providence

Washington Insurance Company v. Gulinson, 215 P. 154 (Colo. 1923), is inapposite, maj. op.

¶¶ 33–37, and that the contingent-fee cap agreement did not render Dakota’s appraiser

partial as a matter of law, id. at ¶¶ 47–48. But I disagree with the majority’s conclusion

that the plain language of the policy prohibits appraisers from advocating for or favoring

either party. Id. at ¶¶ 38–44.

¶52 The majority holds that the plain language of the policy essentially requires the

same level of impartiality from appraisers as that expected of judges. See id. at ¶¶ 5, 44.

On paper, today’s decision has appeal. However, in practice, it is not feasible. After all,

there is a reason why we do not allow judges, who must be impartial, to be selected and

compensated by one of the parties. The policy requires each party to select and

compensate its own appraiser. But the majority nevertheless rules that appraisers may

not advocate for or favor one side. I fear that today’s decision will lead to more disputes

between insurance companies and their insureds and will result in an increase in

litigation. Indeed, the majority draws a line between partial and impartial that is easily

smudged. According to the majority, an appraiser who advocates for a party is partial,

but an appraiser who explains her position, defends her work, and attacks the other

appraiser’s work is impartial. Id. at ¶ 44 n.5. Were we living in a utopia, I might consider

joining the majority. Because we are not, I cannot do so. Therefore, I respectfully dissent

in part.

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¶53 The appraisal provision in the parties’ insurance policy reads as follows:

If [Owners] and [Dakota] disagree on the value of the property or the
amount of loss, either may make a written demand for an appraisal of 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 [of the] umpire
equally.

The majority zeroes in on a single word, “impartial,” and reads it out of context. This is

what leads it to misinterpret the provision.

¶54 Consistent with our caselaw, I would give effect to the intent and reasonable

expectations of the parties by enforcing the plain and ordinary meaning of all the words

used, see Hoang v. Assurance Co. of Am., 149 P.3d 798, 801 (Colo. 2007), and by reading the

provisions of the policy as a whole, rather than in isolation, Sachs v. Am. Family Mut. Ins.

Co., 251 P.3d 543, 545–46 (Colo. App. 2010). In doing so, I would “construe the policy so

that all provisions are harmonious and none is rendered meaningless.” Id. at 546

(emphasis added). Where appropriate, I would consult recognized dictionaries to

ascertain the meaning of the terms used. Sch. Dist. No. 1 v. Denver Class. Teach. Ass’n, 2019

CO 5, ¶ 13, 433 P.3d 38, 41.

¶55 The plain and ordinary meaning of the policy requires the insurer and the insured

each to select an appraiser who is “impartial.” I do not take issue with the dictionary

definitions of “impartial” on which the majority relies. The flaw in the majority’s position
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is that it reads some of the language out of the provision, and that, in turn, renders the

provision overly broad. Rather than construe the policy as simply requiring each party

to select an appraiser who is “impartial,” the majority holds that, in addition, a selected

appraiser may not advocate for either party or favor one side. The majority ignores the

term “select,” which the parties presumably included in the policy to narrow the scope

of the provision.

¶56 The provision does not address the conduct of a selected appraiser; it addresses the

selection of an appraiser. The most sensible reading of the provision is that neither party

may appoint a family member, a close friend, or an interested person (such as someone

with a financial stake in the matter) as its appraiser. The provision does not say that an

appraiser selected by a party must submit an impartial appraisal or that the work

performed by an appraiser or the method used to arrive at an appraisal must be impartial.

And the provision certainly contains no information related to whether a selected

appraiser may advocate for anything or favor anyone. The provision is silent on all those

issues. Had the parties intended the majority’s construction, they presumably would

have said so in the policy.

¶57 If, as the majority determines today, an appraiser must be impartial in all her work,

why would there be a need for two appraisers (one selected by each party)? And why

would the policy allow each party to pay for its own appraiser? We do not require two

judges (one selected by each party), much less allow a judge to be paid by a party. One

judge who is compensated by neither party suffices because we expect the judge’s work

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and decisions to be impartial. Considering that the same impartiality expectation exists

for appraisers, at least according to the majority, then one appraiser unpaid by either

party should suffice. But that’s not what the provision calls for.

¶58 The provision not only requires each party to select and pay for its own appraiser,

it indicates that the two appraisers must select an umpire or, if they cannot agree on an

umpire, either may request that a judge make that selection. The umpire is charged with

resolving differences between the appraisals. Consequently, the policy contemplates that

there may be disagreement on the final valuations submitted by the two appraisers and

that the umpire will address any conflicts between those valuations. Not surprisingly,

the parties are to bear the expenses related to the umpire’s compensation equally. Given

that the appraisers must select one umpire together and that the parties must pay an

equal share of his expenses, and given further the role of the umpire, it makes sense to

interpret the provision as not requiring that each appraiser’s work and final valuation be

impartial. The umpire is responsible for addressing any disagreements between the

appraisers, including as a result of any partiality. In this sense, umpires are much more

like judges than appraisers are.

¶59 I worry that today’s decision, apart from its impracticality (or perhaps because of

it), will lead to increased litigation between insurance companies and policyholders by

either opening appraisers to attack as soon as there is disagreement on their valuations,

or, as happened here, allowing parties to intentionally sit on an impartiality issue so that

they may later upend an unsatisfactory decision by an umpire. Even more troubling is

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the fact that the majority’s interpretation further tips the scale in favor of the insurance

industry. There is already an imbalance of power in this area because, unlike

policyholders, insurers are repeat players in the appraisal process. Allowing an appraiser

to advocate for the policyholder to an umpire helps level the playing field. Today the

majority takes that away.

¶60 I see nothing in the policy that prevents an appraiser from advocating for a

position in favor of the party that retained her. Because formulating an appraisal is not

an exact science, two selected appraisers may be partial and advocate for and favor

different parties while remaining fair and reasonable.

¶61 Significantly, when an appraiser advocates for her own work and final valuation,

she essentially advocates for one party, and it’s human nature to expect (and want) an

appraiser to advocate for her own work and final valuation. Stated differently, having

an appraiser advocate for her own work and valuation will almost certainly favor one

side. Does the majority believe that this runs afoul of the policy? And if not, what is the

difference between, on the one hand, an appraiser explaining and defending her final

valuation and attacking the other appraiser’s final valuation, all of which the majority

says is allowed, and, on the other, an appraiser advocating for her final valuation, which

the majority says is prohibited? Are there magic words that transform a permissible

defense of one’s appraisal or an acceptable attack of the other appraiser’s work into

prohibited advocacy? Or is the determining factor the appraiser’s tone or gestures? And

how do we divine whether an appraiser’s explanation is “motivated by a desire to benefit

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a party,” such as by seeking “top dollar,” or “by a desire to reach an accurate outcome”?

Maj. op. ¶ 44 n.5.

¶62 Because I cannot make heads nor tails of the distinction the majority draws

between partial and impartial conduct, and because I believe the majority does a

disservice by further muddying what are already murky waters, I respectfully dissent in

part. I would affirm the division’s judgment on other grounds.

I am authorized to state that CHIEF JUSTICE COATS joins in this concurrence in

part and dissent in part.

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