United States District Court, N.D. Alabama, Southern Division
MEMORANDUM OF DECISION
JAMES H HANCOCK, District Judge.
The court has before it the August 26, 2014 Motion (Doc. # 26) for Summary Judgment filed by Defendant National Surety Corporation. Pursuant to the court's August 27, 2014 order (Doc. # 27), the motion was deemed submitted, without oral argument, on October 3, 2014. After careful consideration of the briefs and evidence before the court, the Motion (Doc. #26) for Summary Judgment is due to be denied for the following reasons.
I. Procedural History
Plaintiff Ambler, LLC commenced this action on December 28, 2012 by filing a complaint in the Circuit Court of Shelby County, Alabama, alleging breach of contract and bad faith under Alabama law. (Exh. A to Doc. #1.) On March 4, 2013, National Surety properly removed the Complaint to this court pursuant to 28 U.S.C. §§ 1332, 1441, and 1446, as amended. Defendant filed a Motion for Summary Judgment on May 15, 2014 and asserted that Plaintiff failed to present any evidence from which a reasonable jury could conclude that National Surety acted in bad faith in denying the claim or that National Surety breached the contract of insurance in denying the claim. (Doc. #12.) On July 10, 2014, the court granted Defendant's Motion for Summary Judgment as to Plaintiff's claim for bad faith. (Doc. #23.) Plaintiff's claim for breach of contract is all that remains.
Both parties have filed briefs and submitted evidence in support of their respective positions. Defendant submitted a brief (Doc. #26) and evidence (Exhs. A-J to doc. # 26) in support of its own motion for summary judgment. On September 4, 2014, Plaintiff filed a brief and evidence (Doc. # 28) in Opposition to Defendant's Motion for Summary Judgment. On September 23, 2014, Defendant filed a brief (Doc. # 29) in reply to Plaintiff's opposition.
II. Standards for Evaluating a Summary Judgment Motion
Under Federal Rule of Civil Procedure 56(c), summary 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 judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Chapman v. AI Transport, 229 F.3d 1012, 1023 (11th Cir. 2000). The party asking for 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 which it believes demonstrate the absence of a genuine issue of material fact. See id. at 323. Once the moving party has met its burden, Rule 56(e) requires the nonmoving party to go beyond the pleadings and by its own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial. See id. at 324.
The substantive law will identify which facts are material and which are irrelevant. See 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. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. See id. at 249.
The method used by the party moving for summary judgment to discharge its initial burden depends on whether that party bears the burden of proof on the issue at trial. See Fitzpatrick, 2 F.3d at 1115-17 (citing United States v. Four Parcels of Real Property, 941 F.2d 1428 (11th Cir. 1991)(en banc)). If the moving party bears the burden of proof at trial, then it can only meet its initial burden on summary judgment by coming forward with positive evidence demonstrating the absence of a genuine issue of material fact; i.e. facts that would entitle it to a directed verdict if not controverted at trial. See Fitzpatrick, 2 F.3d at 1115. Once the moving party makes such a showing, the burden shifts to the non-moving party to produce significant, probative evidence demonstrating a genuine issue for trial.
If the moving party does not bear the burden of proof at trial, it can satisfy its initial burden on summary judgment in either of two ways. First, the moving party may produce affirmative evidence negating a material fact, thus demonstrating that the non-moving party will be unable to prove its case at trial. Once the moving party satisfies its burden using this method, the non-moving party must respond with positive evidence sufficient to resist a motion for directed verdict at trial.
The second method by which the moving party who does not bear the burden of proof at trial can satisfy its initial burden on summary judgment is to affirmatively show the absence of evidence in the record to support a judgment for the non-moving party on the issue in question. This method requires more than a simple statement that the non-moving party cannot meet its burden at trial but does not require evidence negating the non-movant's claim; it simply requires the movant to point out to the district court that there is an absence of evidence to support the non-moving party's case. See Fitzpatrick, 2 F.3d at 1115-16. If the movant meets its initial burden by using this second method, the non-moving party may either point out to the court record evidence, overlooked or ignored by the movant, sufficient to withstand a directed verdict, or the non-moving party may come forward with additional evidence sufficient to withstand a directed verdict motion at trial based on the alleged evidentiary deficiency. However, when responding, the non-movant can no longer rest on mere allegations, but must set forth evidence of specific facts. See Lewis v. Casey, 518 U.S. 343, 358 (1996) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).
III. Relevant Undisputed Facts
National Surety issued an insurance policy to the Plaintiff for the policy period November 1, 2008 through November 1, 2009. (Ex. A-1 to Kauffman Aff.) This action arose after National Surety refused to provide coverage under the policy for the collapse of a balcony at Plaintiff's Woodbrook Trail Apartment Complex on October 29, 2009. Plaintiff contends that the balcony collapse was caused by hidden decay, which it contends is covered by the policy. National Surety, on the other hand, contends that the collapse was caused by improper workmanship, which is excluded by the policy.
A. The Policy
The policy at issue generally did not include any coverage for collapse. Under the "Additional Coverage" clause, however, the policy did provide coverage for collapse that occurred because of "hidden decay":
D. Additional Coverage - these additional coverages apply only when Special Cause of Loss is covered.
We will pay for loss or damage caused by or resulting from risks of direct physical loss involving collapse of a building or any part of a building ...