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Lord v. Allstate Insurance Co.

United States District Court, N.D. Alabama, Middle Division

September 17, 2014

MICHAEL LORD, Plaintiff,

Page 1289

For Michael Lord, Plaintiff: Myron K Allenstein, ALLENSTEIN & ALLENSTEIN LLC, Gadsden, AL.

For Allstate Insurance Company, Defendant: Michael B Almond, T E Bazemore, III, HUIE FERNAMBUCQ & STEWART, Birmingham, AL.

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On January 14, 2014, the defendant, Allstate Insurance Company (" Allstate" ), filed its motion for partial summary judgment, seeking dismissal only of plaintiff Michael Lord's[1] claim for bad faith. (Doc. 16) The motion was fully briefed and orally argued before the court on August 6, 2014, which was followed by additional briefing at the request of the court.[2] For the reasons explained below the motion is DENIED.

I. Procedural History

Plaintiffs filed their original complaint in this action in the Circuit Court of Etowah County, Alabama, on January 9, 2013, alleging that a rental cabin owned by Lord and his wife, and insured by Allstate, was damaged by a tornado on April 27, 2011, and that Allstate has refused to pay all of the covered damage to the house in breach of the insurance contract. Further, in Count II of the complaint, plaintiff alleged a claim for " normal and abnormal" bad faith, asserting that Allstate has refused to pay his claim for damage without lawful justification and has " intentionally failed to determine whether or not there was any lawful basis for its refusal to pay" the claim. (Doc. 1-1). Defendant Allstate removed the action to this court on March 29, 2013 on the basis of diversity jurisdiction, which plaintiff has not challenged. Upon completion of discovery, Allstate filed its motion for partial summary judgment.

II. Summary Judgment Standard of Review

Under Federal Rule of Civil Procedure 56(a), summary judgment is proper " if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The party asking for summary judgment " always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together

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with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting former Fed.R.Civ.P. 56(c)). The movant can meet this burden by presenting evidence showing there is no dispute of material fact, or by showing that the nonmoving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Celotex, 477 U.S. at 322-23. There is no requirement, however, " that the moving party support its motion with affidavits or other similar materials negating the opponent's claim." Id. at 323.

Once the moving party has met his burden, Rule 56 " requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the 'depositions, answers to interrogatories, and admissions of file,' designate 'specific facts showing that there is a genuine issue for trial.'" Id. at 324 (quoting former Fed.R.Civ.P. 56(e)). The nonmoving party need not present evidence in a form necessary for admission at trial; however, he may not merely rest on his pleadings. Celotex, 477 U.S. at 324. " [T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322.

After the plaintiff has properly responded to a proper motion for summary judgment, the court " shall" grant the motion if there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The substantive law will identify which facts are material and which are irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute is genuine " if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248. " [T]he judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249. His guide is the same standard necessary to direct a verdict: " whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52; see also Bill Johnson's Restaurants, Inc. v. N.L.R.B., 461 U.S. 731, 745 n.11, 103 S.Ct. 2161, 76 L.Ed.2d 277 (1983). However, the nonmoving party " must do more than show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The evidence supporting a claim must be " substantial," Marcus v. St. Paul Fire and Marine Ins. Co., 651 F.2d 379 (5th Cir., Unit B, 1981); a mere scintilla of evidence is not enough to create a genuine issue of fact. Young v. City of Palm Bay, 358 F.3d 859, 860 (11th Cir. 2004); Kesinger ex rel. Estate of Kesinger v. Herrington, 381 F.3d 1243, 1249-1250 (11th Cir. 2004). If the non-movant's evidence is so thoroughly discredited by the rest of the record evidence that no reasonable jury could accept it, the evidence fails to establish the existence of a genuine issue of fact requiring a jury determination. See Scott v. Harris, 550 U.S. 372, 127 S.Ct. 1769, 1776, 167 L.Ed.2d 686 (2007) (" Respondent's version of events is so utterly discredited by the record that no reasonable jury could have believed him. The Court of Appeals should not have

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relied on such visible fiction; it should have reviewed the facts in the light depicted by the videotape." ); Lewis v. City of West Palm Beach, Fla., 561 F.3d 1288, 1290 n. 3 (11th Cir. 2009). If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Anderson, 477 U.S. at 249 (citations omitted); accord Spence v. Zimmerman, 873 F.2d 256 (11th Cir. 1989). Furthermore, the court must " view the evidence presented through the prism of the substantive evidentiary burden," so there must be sufficient evidence on which the jury could reasonably find for the plaintiff. Anderson, 477 U.S. at 254; Cottle v. Storer Communication, Inc., 849 F.2d 570, 575 (11th Cir. 1988). Nevertheless, credibility determinations, the weighing of evidence, and the drawing of inferences from the facts are the function of the jury, and therefore the evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor. Anderson, 477 U.S. at 255. The non-movant need not be given the benefit of every inference but only of every reasonable inference. Brown v. City of Clewiston, 848 F.2d 1534, 1540 n.12 (11th Cir. 1988).

III. Summary Judgment Facts

Applying these standards to the proper evidence before the court, the following facts are undisputed or taken in a light most favorable to the non-moving plaintiff.

On April 27, 2011, a series of devastating tornadoes ripped across north and central Alabama, killing dozens of people and doing hundreds of millions of dollars in property damage. Due to the high volume of insurance claims made in the wake of the storm, Allstate regarded the event as a " catastrophe." (Plaintiff's Opposition, Ex. 5, Carroll Depo, doc. 21-5, at 29). On that date, plaintiff owned a cabin in Scottsboro, Alabama, built by him in 2003 to 2005, initially used as a home for himself and his wife, but later as rental property after 2009. (Lord Aff., doc. 21-1). Plaintiff built the cabin himself, without a contractor or engineer and without a set of plans. Plaintiff obtained casualty insurance on the cabin from Allstate on March 31, 2010, through agent Timothy Watwood in Boaz, Alabama. As part of the insurance underwriting, Allstate sent an inspector named Michael to inspect the cabin.[3] After the inspection, plaintiff and agent Watwood agreed that the replacement value of the cabin was $120,000.00. ( Id.).

Plaintiff and his wife lived in the cabin until 2010, but rented it thereafter for $450.00 per month. At time of the 2011 tornado, the cabin was vacant and listed for sale with a realtor for $59,000.00. Just prior to the tornado, a buyer contracted to buy the cabin for the asking price of $59,000.00. A home inspection was performed as part of the buyer's effort to obtain financing, and no problems with the cabin were noted. The sale ultimately fell through when the buyer was unable to obtain financing, and it remained for sale when the tornado occurred.

As a result of high wind on April 27, 2011, a large tree fell in the driveway, near the cabin. The tree fell on the electrical service line to the cabin, pulling a weather mast away (but not loose) from the structure and doing roof damage in the area of the weather mast. When plaintiff went into the cabin after the storm, he noticed additional structure damage that had not been present before the storm, such as cracks in walls and door facings, cracks in

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the ceiling and floor, and wet and mildewed carpets.

Plaintiff contacted Allstate to make a claim for damage. Allstate made its first contact with him on May 2, 2011. A claim log note written by Gregory Schimmel summarized the nature of the claim as follows:

Tree took down power lines to rental home (not rented) taking down the mast head and pulling away from building. Subsequent inside inspection shows shifting based on new cracks in drywall and ceramic floors. He's also found wetness on carpets and pantry.

( Plaintiff's Opposition, Ex. 2, doc. 21-2, p. 3). Four days later, on May 6, 2011, David Barnes was assigned as the adjuster on the claim. David Barnes was an employee of Pilot Catastrophe Services, an independent company brought in to help with adjusting. Barnes works principally as a barber, but he also did independent insurance adjusting as a " back up job." (Plaintiff's Opposition Ex. 4, Barnes Depo., doc. 21-4 at 5-6). Although Barnes had thirty years' experience in construction, he took a course in insurance adjusting in 2010, and this was his first association with both Pilot and Allstate as an adjuster. ( Id. at 8). This was his first opportunity to adjust an insurance claim. ( Id. at 9-10, 58).

Barnes went to the cabin alone on May 8, 2011, walking around the outside. (Plaintiff's Opposition, Ex. 3, Barnes Depo., doc. 21-4, at 48). On May 12, plaintiff's wife, Sandra, called to inquire about the status of their claim and was informed that David Barnes and Gregory Schimmel could be contacted about it. (Plaintiff's Opposition, Ex. 2, doc. 21-2, p. 5). On May 16, an entry was made in the Allstate claim log indicating that Barnes had contacted the Lords and was planning an inspection of their property for May 19, together with his supervisor, Curtis Henderson of " Tech Support." ( Id. at 6).

Barnes and Henderson inspected the plaintiff's cabin on May 19, 2011. A note written by Karen Wyont in Allstate's claim log for that date states:

REASON FOR CALL: Insured's [sic] came to the agent's office after inspection with adjuster and field support stating they were unsure where they were on the claim process.
ACTION TAKEN: Reviewed the claim and contacted the field support. Field Support indicated they were going to request an engineering report based on the damage in relation to the storm conditions in the area. Relayed that information to the agent. Insureds inquired through the agent what the schedule for that might be. Explained to the agent there was a process to requesting an engineering report, and, if approved, the appointment would be according to the independent engineering firm's schedule.
Ensured [sic] the agent I would monitor the claim and notify him when there was a decision made on the claim.
There were no other concerns or issues at this time.

( Id. at 6). Four hours after this note, Curtis Henderson wrote the following note in the claim log:

Field Support Inspection - Curtis Hcnderson P# 827- 1:20 pm- Re inspected loss with adjuster David Barrnes and insureds Mr.& Mrs Michael Lord present. The home was vacant at the time of this inspection.
The purpose of the inspection at this time was to evaluate the damages insureds were claiming that occurred as a result of tornado. The inspection revealed that there was [sic] floors buckling in the dwelling, there are some cracks in some of the beams and cracks

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in some of the drywall in some of the rooms. This damage is consistent with settlement damage. There was no storm related damage exterior of the home except some debris dents to metal roofing, also the neighboring homes had no visible damages. There was a tree blown down in insureds [sic] driveway as well as trees blown down several hundred yards behind his home in a pasture.
I asked insured the age of home and the contractor who built the home. He stated it was built in 2005 and that he had built the home with help from other workers. The home has very poor design and poor workmanship.
The insured admitted that he had added additional foundation piers to the foundation at rear of the home after the tornado. He also stated that he had two different contractors inspect the home but they have not completed repair estimates. He said that one contractor stated that repairs would be very expensive and that the other contractor stated that home was unrepairable. Insured also stated that home had been inspected several times over the past several years when it was insured with Allstate and when it was listed with Real Estate Agents. Will have adjuster attempt to obtain information regarding contractors [sic] names and phone numbers that have inspected home.
I explained to Insureds that we would request an [sic] structural engineer to inspect the home and determine the cause of damages and repairs necessary but explained that if the damage was the result of settlement there would be no coverage. They became very upset and stated that the damages should be covered. The Insureds also wanted to know how long it would take to obtain engineer report. I explained that it would depend on engineers [sic] schedule but that it should be approx. 3-4 weeks. I explained that engineer would call them and set up inspection appointment. Insureds stated they understood but seemed very upset with the process.
Adjuster agreed to call admin and request engineer report asap. I explained that he could complete estimate on the roof damage, water damage to the ceiling, tree removal from driveway and any apparent storm damages.

( Id. at 7). In a separate claim-log note, adjuster Barnes also noted that he and Henderson had met with plaintiff, inspected the damage to the cabin, and told the plaintiff that they would have a structural engineer come for an inspection. ( Id.). The next day, May 20, plaintiff Lord called Allstate to voice his concern about the inspection the day before. In that call, he told Allstate representative Spencer Apple that his cabin had been inspected by Allstate when the company first insured it and that he was told by the inspector that the house was in " excellent condition." ( Id.). Lord also spoke to Allstate representative Kaylen Murciciak, who told him that if the damage to plaintiff's cabin were " not from storm as determined by engineer then those damages can not be included." ( Id. at 7-8).

On May 23, adjuster Barnes was still attempting to get approval for engaging an engineer to inspect the damage to the plaintiff's cabin, and he talked to Curtis Henderson to get assistance. As recorded in the claim log, Henderson spoke to Chad Carroll and asked him about reviewing plaintiff's claim " to determine if ordering an outside engineer was justified." Henderson wrote, " He asked me about the damage and I explained that the damage appeared to be the result of settlement and there was no impact or damage to the exterior. He stated he would review file

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and give me a decision in a few days." ( Id. at 8). The decision, as recorded by Henderson in the claim log, came two days later, on May 25:

Received call from OCR Chad Carroll and he stated that he had driven by loss location. he [sic] stated that he did not feel an engineer report would be necessary on this claim. He stated that damages should be written as could be documented. Agreed to have adjuster give him a call if there are any questions.

( Id.).

On May 26, 2011, noted at the time of 11:44 a.m., Barnes made an entry in the claim log indicating that he " [m]et with MICHAEL LORD at loss location...; inspected damage, completed scope and secured photos." He wrote further, " My inspection of the property found the following damages: Mr. Lord had stated that his home had shifted do [sic] to very high winds and that he had structure damaging to floors and crated [cracked] wall and crated [cracked] foundation, had A TA go out to inspire [sic] the home with me and we suggested that a structure engineer go and do a follow up with Mr. Lord we replaced the roof." ( Id. at 10). At that time Barnes delivered an estimate to Lord of $4,378.56 for repair of the obvious roof ...

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