United States District Court, N.D. Alabama, Middle Division
VIRGINIA EMERSON HOPKINS, District Judge.
This matter is before the Court on the Objections (doc. 90) of the defendant, Travelers Insurance Company("Travelers") to Magistrate Judge John H. England, III's report and recommendation (the "R & R") (doc. 89), which recommends that Traveler's Motion for Summary Judgment (doc. 60) be granted as to the bad faith claim against it and otherwise be denied. The plaintiff, Joanne Pearson ("Pearson") has responded (doc. 91) in support of the R&R.
Travelers' Motion for Summary Judgment (doc. 60) was filed on July 30, 2012. In opposition, Pearson filed a Response (doc. 62) on August 9, 2012, a Brief (doc.66) on August 14, 2012, and a Brief re Brief (doc 71) on August 20, 2012. Travelers replied (doc. 74) to these oppositions on September 4, 2012. The R&R (doc. 89) was entered on July 2, 2014. Travelers' Objections (doc. 90) were filed on July 16, 2014. Pearson's Response (doc. 92) to Travelers' Objections was filed on July 24, 2014. This case was reassigned to the undersigned judge on July 30, 2014. The matter therefore is under submission.
For the reasons stated herein, the magistrate's recommendation is ADOPTED to the extent that it is consistent with this memorandum opinion, and to the extent to which no objections were made. To the extent that the objections are inconsistent with this opinion, they are OVERRULED. The magistrate's conclusions that questions of fact remain as to whether the plaintiff committed or directed the commission of arson and as to whether the plaintiff possessed an intent to deceive when she misrepresented as to material facts in her policy claim are not adopted. The defendant's objections to those conclusions are SUSTAINED. Summary Judgment will be GRANTED to the defendant by separate order.
A. Motion for Summary Judgment
Under Federal Rule of Civil Procedure 56, summary judgment is proper if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986) ("[S]ummary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.") (internal quotation marks and citation omitted). The party requesting summary judgment always bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the pleadings or filings that it believes demonstrate the absence of a genuine issue of material fact. Celotex , 477 U.S. at 323. Once the moving party has met its burden, Rule 56(e) requires the non-moving party to go beyond the pleadings in answering the movant. Id. at 324. By its own affidavits - or by the depositions, answers to interrogatories, and admissions on file - it must designate specific facts showing that there is a genuine issue for trial. Id.
The underlying substantive law identifies which facts are material and which are irrelevant. Anderson v. Liberty Lobby , Inc., 477 U.S. 242, 248 (1986). All reasonable doubts about the facts and all justifiable inferences are resolved in favor of the non-movant. Chapman , 229 F.3d at 1023. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson , 477 U.S. at 248. A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. If the evidence presented by the non-movant to rebut the moving party's evidence is merely colorable, or is not significantly probative, summary judgment may still be granted. Id. at 249.
How the movant may satisfy its initial evidentiary burden depends on whether that party bears the burden of proof on the given legal issues at trial. Fitzpatrick v. City of Atlanta , 2 F.3d 1112, 1115 (11th Cir. 1993). If the movant bears the burden of proof on the given issue or issues at trial, then it can only meet its burden on summary judgment by presenting affirmative evidence showing the absence of a genuine issue of material fact -that is, facts that would entitle it to a directed verdict if not controverted at trial. Id. (citation omitted). Once the moving party makes such an affirmative showing, the burden shifts to the non-moving party to produce "significant, probative evidence demonstrating the existence of a triable issue of fact." Id. (citation omitted) (emphasis added).
For issues on which the movant does not bear the burden of proof at trial, it can satisfy its initial burden on summary judgment in either of two ways. Id. at 1115-16. First, the movant may simply show that there is an absence of evidence to support the non-movant's case on the particular issue at hand. Id. at 1116. In such an instance, the non-movant must rebut by either (1) showing that the record in fact contains supporting evidence sufficient to withstand a directed verdict motion, or (2) proffering evidence sufficient to withstand a directed verdict motion at trial based on the alleged evidentiary deficiency. Id. at 1116-17. When responding, the non-movant may no longer rest on mere allegations; instead, it must set forth evidence of specific facts. Lewis v. Casey , 518 U.S. 343, 358 (1996). The second method a movant in this position may use to discharge its burden is to provide affirmative evidence demonstrating that the non-moving party will be unable to prove its case at trial. Fitzpatrick , 2 F.3d at 1116. When this occurs, the non-movant must rebut by offering evidence sufficient to withstand a directed verdict at trial on the material fact sought to be negated. Id.
B. District Court Review of Report and Recommendation
After conducting a "careful and complete" review of the findings and recommendations, a district judge may accept, reject, or modify the magistrate judge's report and recommendation. See 28 U.S.C. § 636(b)(1) ("A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge."); Williams v. Wainwright , 681 F.2d 732 (11th Cir. 1982) (quoting Nettles v. Wainwright , 677 F.2d 404, 408 (5th Cir. 1982), overruled on other grounds by Douglass v. United Services Auto. Ass'n , 79 F.3d 1415 (5th Cir. 1996)). The district judge may also receive further evidence or recommit the matter to the magistrate judge with instructions. 28 U.S.C. § 636(b)(1).
A district judge "shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). This requires that the district judge "give fresh consideration to those issues to which specific objection has been made by a party." Jeffrey S. v. State Bd. of Educ. , 896 F.2d 507, 512 (11th Cir. 1990) (citing H.R. Rep. No. 94-1609, 94th Cong., 2nd Sess., reprinted in 1976 U.S. Code Cong. & Admin. News 6162, 6163). In contrast, those portions of the R&R to which no objection is made need only be reviewed for clear error. Macort v. Prem, Inc. , 208 Fed.App'x. 781, 784 (11th Cir. 2006).
"Neither the Constitution nor the statute requires a district judge to review, de novo, findings and recommendations that the parties themselves accept as correct." United States v. Woodard , 387 F.3d 1329, 1334 (11th Cir. 2004) (internal quotation marks omitted) (quoting United States v. Reyna-Tapia , 328 F.3d 1114, 1121 (9th Cir. 2003)). It is incumbent upon the parties to timely raise any objections that they may have regarding a magistrate judge's findings contained in a report and recommendation, as the failure to do so subsequently waives or abandons the issue, even if such matter was presented at the magistrate judge level. See, e.g., United States v. Pilati , 627 F.3d 1360 at 1365 (11th Cir. 2010) ("While Pilati raised the issue of not being convicted of a qualifying offense before the magistrate judge, he did not raise this issue in his appeal to the district court. Thus, this argument has been waived or abandoned by his failure to raise it on appeal to the district court."). However, the district judge has discretion to consider or to decline to consider arguments that were not raised before the magistrate judge. Stephens v. Tolbert , 471 F.3d 1173, 1176 (11th Cir. 2006); see also Williams v. McNeil , 557 F.3d 1287, 1292 (11th Cir. 2009) ("Thus, we answer the question left open in Stephens and hold that a district court has discretion to decline to consider a party's argument when that argument was not first presented to the magistrate judge.").
"Parties filing objections must specifically identify those findings objected to. Frivolous, conclusive or general objections need not be considered by the district court." Nettles , 677 F.2d at 410 n.8. "This rule facilitates the opportunity for district judges to spend more time on matters actually contested and produces a result compatible with the purposes of the Magistrates Act." Id . at 410. Indeed, a contrary rule "would effectively nullify the magistrate judge's consideration of the matter and would not help to relieve the workload of the district court." Williams , 557 F.3d at 1292 (internal quotation marks omitted) (quoting United States v. Howell , 231 F.3d 615, 622 (9th Cir. 2000)).
Neither party has made objections to the magistrate's findings of fact. The court finds that the following facts, which are set out in the R&R, and to which no objection has been made, are not clearly erroneous:
Pearson was the named insured under a High Value Homeowner's Policy ("Policy") issued by Travelers for a home located at 205 Roseland Drive, Rainbow City, Alabama 35906 ("the home"). (Doc. 60-2, Policy). The policy has effective dates of December 14, 2009 through December 14, 2010, and states in pertinent part as follows:
SECTION I - EXCLUSIONS
* * *
8. Intentional Loss
We do not provide coverage for any loss arising out of any act committed by or at the direction of an "insured" with the intent to cause a loss....
(Doc. 60-2 at 44, Endorsement HV-300 at 2).
SECTION I - CONDITIONS
* * *
18. Concealment of Fraud. We provide coverage to no "insureds" under this policy if, whether before or after a loss, an "insured" has:
a. Intentionally concealed or misrepresented any materialfact or circumstance;
b. Engaged in fraudulent conduct; or
c. Made false statements; related to this insurance.
( Id. at 32, Policy at 18).
On or about April 19, 2010, the home suffered a fire loss. (Doc. 60-17 at 14-15). By the time the fire units arrived on scene, the fire had self-extinguished. ( Id. at 17). A second fire was discovered at the home around 1:00 a.m. on Thursday, April 22, 2010. ( Id. at 16). The April 22, 2010 fire was fully involved, resulting in nearly total destruction of the home. ( Id. at 51). As a result of the fire loss, Pearson made a claim under her Policy with Travelers. (Doc. 60-4 at 8).
The Home Insured by Travelers
Pearson and her husband purchased the home for $450, 000, with a fifteen year mortgage. (Doc.60-5 at 104 (EUO)). Pearson's husband, Dr. Pearson, passed away in April 2009. (Doc. 60-5 at 51-52). Pearson was previously married to Edward Charles Lettau ("Mr. Lettau"). ( Id. at 97). They were married until Mr. Lettau passed away in 1989. ( Id. ).
Sometime after Dr. Pearson passed away in 2009, Pearson listed the home for sale. ( Id. at 286). Pearson listed the home with ERA Realty, but after a period of time passed and the home did not sell, the realtor suggested lowering the price. ( Id. at 287). When the home still did not sell after lowering the asking price, the agent suggested Pearson again lower the price, and Pearson refused. (Doc. 60-5 at 289). The contract with the realtor eventually expired, and Pearson took the home off the market later in 2009. ( Id. at 290).
At the time of the fires, only Pearson, her daughter, and perhaps the real estate company had keys to the home. ( Id. at 315-16). The home had an ADT monitored fire/smoke alarm system, but, several months prior to the fire, it was disconnected and was no longer being monitored at the time of the fires. ( Id. at 344-45).
Pearson's Financial Condition at the Time of the Fires
Pearson was unemployed at the time of the fires at her home. ( Id. at 146-47, 171-72). The last job she held prior to the fire was at a local restaurant in the kitchen approximately three years prior to the fires. ( Id. at 171-72; at 21 (EUO)). At the time of the second fire, Pearson was drawing Social Security benefits. ( Id. at 183). According to Pearson's bank records, she received $1, 514.00 each month. ( Id. at 234; doc. 60-6 at 73). Pearson also received $300 a month from the rental of a home she owned in Dillon, South Carolina. (Doc. 60-5 at 183).
Pearson contends she received royalties from the use and sale of photographs taken by her late husband, Mr. Lettau. ( Id. at 184). However, Pearson's bank statements for the months leading up to the fires contain no evidence of any income from this source. ( Id. at 184, 242; doc. 60-6 at 26-86). Pearson also testified she received about $150, 000 in death benefits from life insurance policies on Dr. Pearson and that she used all the money to pay the bills. (Doc. 60-5 at 201, 203-04). Pearson also testified she is a cosmetologist, and in the year 2009-2010 she made an annual income of roughly $12, 000, but bank records do not corroborate this assertion. ( Id. at 169-70, 178-79). At the time of the second fire, Pearson had no expectation to receive any other funds from any other source. ( Id. at 195).
At the time of the fires, all of Pearson's bank accounts were with Wachovia. (Id. at 217). Pearson had a Money Market account. At the end of October 2009, Pearson withdrew $15, 763.78, leaving only $365.83 in the account at the end of November 2009. ( Id. at 224-25; doc. 60-6 at 23). The Money Market account balanced remained ...