Opinion ID: 2994449
Heading Depth: 1
Heading Rank: 2

Heading: Ill , Inc., 209 F.3d 687, 689 (7th Cir. 2000)

Text: (quoting McGuire v. United Parcel Serv., 152 F.3d 673, 675 (7th Cir. 1998)). Therefore, we too have accepted as true all material facts as submitted by the insurance companies and not properly contested by Jupiter./4 B. Jupiter is incorporated in Illinois, but the company’s principal place of business is Hammond, Indiana. In 1993, Jupiter held an insurance policy, issued by Home and reinsured by HSB, for its Hammond aluminum mill and one other Jupiter property in that city. The policy provided first party property, boiler, machine, and business interruption coverage. Jupiter obtained the policy through a Chicago insurance broker, Alexander & Alexander. In March 1993, the drive motor for one of the reducing stands at the aluminum mill failed, and it was not returned to service until May 6, 1993. On May 6, Jupiter filed a claim with the insurance companies stating that it had suffered a loss of over $100,000, including its business interruption loss, as a result of the drive motor’s failure. In response to this claim, the insurance companies conducted an investigation, and, after making an adjustment for Jupiter’s deductible under the policy, the parties agreed that the property damage portion of Jupiter’s loss amounted to $12,270. The parties could not reach an agreement as to the amount of Jupiter’s business interruption loss. In November 1993, the insurance companies paid Jupiter a $100,000 advance as partial payment for the agreed property damage loss and Jupiter’s yet-unresolved claim for its business interruption loss. Jupiter estimated that its business interruption loss exceeded $500,000, and in July 1994, it submitted a proof of claim to the insurance companies in the amount of $528,113. The insurance companies, however, estimated the business interruption loss to be closer to $100,000, after accounting for the deductible. With the parties at an impasse, Jupiter requested a formal appraisal, in accordance with the terms of the insurance policy, to determine the amount of its loss. The policy’s appraisal provision reads as follows: If the Insured and the Company fail to agree as to the amount of the loss, each shall, on the written demand of either, made within sixty (60) days after receipt of proof of loss by the Company, select a competent and disinterested appraiser and the appraisal shall be made at a reasonable time and place. The appraisers shall first select a competent and disinterested umpire and, failing for fifteen (15) days to agree upon such umpire, then on request of the Insured or the Company, such umpire shall be selected by a judge of a court of record in the county and state in which such appraisal is pending. The appraisers shall then appraise the loss in accordance with the insurance conditions, stating separately the amount of loss, and failing to agree, shall submit their differences to the umpire. An award in writing of any two (2) shall determine the amount of loss. The Insured and the Company shall each pay his or its chosen appraiser and shall bear equally the other expenses of the appraisal and the umpire. The Company shall not be held to have waived its rights by any act relating to appraisal. R.89 (Policy TR 789281, sec. I, K). The insurance companies agreed to the appraisal, and both Jupiter and the insurance companies designated their appraisers and selected the umpire in accordance with the procedure set forth in the policy. The parties agreed that the only matter to be resolved by the appraisal would be the total loss in production and sales that Jupiter had suffered while the drive motor had not been operational. Both appraisers conducted an appraisal and then submitted findings to the umpire. In January 1996, the appraisers met with the umpire, who placed three of his own loss calculations on the table. The umpire’s calculations were lower than those of the appraisers for both Jupiter and the insurance companies. The umpire then asked the appraiser for the insurance companies to choose one of the umpire’s three calculations on the table. The insurance companies’ appraiser picked the highest of the three, and both the umpire and the insurance companies’ appraiser signed the award in the amount of $66,105 for the total loss ($53,835 of that amount represented the business interruption loss). Jupiter’s appraiser refused to sign the award. In April 1996, Jupiter filed suit in Illinois state court seeking to vacate the appraisal award. The insurance companies removed the action to federal court, and they later added a counterclaim for unjust enrichment in the amount of $33,895, the difference between the $100,000 advance and the $66,105 awarded by the umpire. C. After the insurance companies moved for summary judgment on both Jupiter’s complaint and the insurance companies’ counterclaim, the district court granted the motion and entered judgment in favor of the insurance companies on both claims. Because this is a diversity action, the district court first had to determine which state’s substantive law would govern this dispute. The insurance policy does not contain a choice of law provision. The district court looked to the choice of law rules for Illinois, the forum state, to ascertain the appropriate choice of law rule. The district court observed that, in West Suburban Bank of Darien v. Badger Mutual Insurance Co., 141 F.3d 720, 724 (7th Cir. 1998), a case involving a fire insurance contract, this circuit regarded the situs of the insured property as the deciding factor under Illinois’ conflict-of-laws rules. Following our approach in West Suburban, the district court held that Indiana law governed this action because both of the properties insured by Jupiter’s policy were located in Indiana. Under Indiana law, the district court concluded, the appraisal in this case was binding on the parties. To reach this conclusion, the district court relied on the decision of the Court of Appeals of Indiana in Atlas Construction Co. v. Indiana Insurance Co., 309 N.E.2d 810 (Ind. Ct. App. 1974), in which the court held that an appraisal is binding unless it can be demonstrated that the appraisal was unfair or unjust. The district court also looked to our more recent application of Atlas in FDL, Inc. v. Cincinnati Insurance Co., 135 F.3d 503 (7th Cir. 1998), in which we held that, under Atlas, the parties were bound to their appraisal. In Jupiter’s case, the district court explained, Jupiter had not come forth with any objective evidence to establish that the umpire had been biased or partial; therefore, the district court concluded, the appraisal was binding on these parties./5