Opinion ID: 4409923
Heading Depth: 2
Heading Rank: 1

Heading: The Impartiality Requirement

Text: ¶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.
¶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 12 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. 13 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 14 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-FtM29UAM, 2019 WL 2462865 at ,  (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 ,  (W.D. Ky. June 10, 2019) (same); Verneus v. Axis Surplus Ins. Co., No. 16-21863-CIV-MARTINEZ/GOODMAN, 2018 WL 4150933 at ,  (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. 15 ¶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. 16