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Vidhi, LLC v. Arch Insurance Co.

United States District Court, N.D. Indiana, South Bend Division

August 13, 2019

VIDHI LLC d/b/a Clarion Inn Michigan City, Plaintiff,
v.
ARCH INSURANCE COMPANY d/b/a Arch Specialty Insurance Company, Defendant.

          OPINION AND ORDER

          Michael G. Gotsch, Sr. United States Magistrate Judge

         After denying Defendant's motion for summary judgment, the Court referred this case to the undersigned for a judicial settlement conference. [DE 38, DE 39]. After two telephonic conferences [DE 41, DE 42] attempting to schedule the settlement conference, the undersigned is persuaded that the parties will not be able to engage in a meaningful settlement conference before determining the amount of Plaintiff's loss from the fire at issue in this insurance coverage case. Plaintiff's insurance policy includes an appraisal process for resolving any dispute between the parties over the amount of loss. However, the parties are unable to proceed with the appraisal process due to disputes over the selection of Plaintiff's appraiser and an umpire.

         Specifically, Plaintiff has filed a Renewed Motion for Court-Ordered Umpire (“Motion for Umpire”) [DE 43] while Defendant challenges Plaintiff's selection of an appraiser through its Motion to Disqualify Jay Hatfield of Indiana Public Adjusting as Plaintiff's Appraiser (“Motion to Disqualify”) [DE 47]. Both motions are ripe and ready for the Court's review.

         I. Relevant Background

         This case arises from a fire in June 2016 at a hotel and restaurant owned by Plaintiff. Plaintiff's operative amended complaint raises counts of breach of contract, consequential damages, and bad faith against Defendant-its insurance company.

         Shortly after the fire, Plaintiff hired Jay Hatfield of Indiana Public Adjusting as its public adjuster. In that role, Mr. Hatfield assisted Plaintiff with its insurance claim for almost two years handling all claim communications and payments. Mr. Hatfield served as Plaintiff's representative and advocated for Plaintiff in the claims process. He was the primary, if not only, person communicating with Defendant about Plaintiff's claims during that time. For that work, he was paid based on a percentage-based fee. Notably, Mr. Hatfield's communications with Defendant included a letter dated September 1, 2017, outlining his beliefs that Defendant had mistreated Plaintiff in this process and had acted in bad faith. [DE 47-4].

         When Plaintiff terminated Mr. Hatfield as its public adjuster, it then appointed him as its appraiser for purposes of the Appraisal Process in its insurance policy. Plaintiff contracted to pay Mr. Hatfield at an hourly rate for his appraisal services.

         The Appraisal Provision of Plaintiff's policy states:

E. Loss Conditions
The following conditions apply in addition to the Common Policy Conditions and the Commercial Property Conditions: . . .
2. Appraisal
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 ...

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