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Lacey v. Allstate Indemnity Co.

United States District Court, Northern District of Alabama, Southern Division

March 2, 2015

RAYMOND LACEY, et al., Plaintiffs,



Plaintiffs Raymond and Sherry Lacey initiated this action against their insurer, Allstate Indemnity Company (“Allstate”), and their insurance agent, The Carbonie Agency, in the Circuit Court of Jefferson County for state-law claims of breach of contract, bad faith, misrepresentation, negligence, and emotional distress. (Doc. 1). Shortly after removal, the Laceys voluntarily dismissed The Carbonie Agency. (Doc. 4, 5). Allstate now seeks summary judgment on the Laceys’ claims. (Doc. 14). The motion is fully briefed and ripe for review. (Docs. 14-1, 19, & 20). For the reasons stated below, Allstate’s motion for summary judgment will be GRANTED.

I. Standard of Review

Under Rule 56(a) of the Federal Rules of Civil Procedure, 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.” “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.” Celotex Corp. v. Catrett, 447 U.S. 317, 322 (1986). The moving party bears the initial burden of proving the absence of a genuine issue of material fact. Id. at 323. The burden then shifts to the nonmoving party, who is required to “go beyond the pleadings” to establish that there is a “genuine issue for trial.” Id. at 324. (citation and internal quotation marks omitted). A dispute about a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The Court must construe the evidence and all reasonable inferences arising from it in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); see also Anderson, 477 U.S. at 255 (all justifiable inferences must be drawn in the non-moving party’s favor). Any factual disputes will be resolved in Plaintiff’s favor when sufficient competent evidence supports Plaintiff’s version of the disputed facts. See Pace v. Capobianco, 283 F.3d 1275, 1276-78 (11th Cir. 2002) (a court is not required to resolve disputes in the non-moving party’s favor when that party’s version of the events is supported by insufficient evidence). However, “mere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005) (per curiam) (citing Bald Mtn. Park, Ltd. v. Oliver, 836 F.2d 1560, 1563 (11th Cir. 1989)). Moreover, “[a] mere ‘scintilla’ of evidence supporting the opposing party’s position will not suffice; there must be enough of a showing that the jury could reasonably find for that party.” Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citing Anderson, 477 U.S. at 252).

II. Factual Background

This case arises out of property damage from the April 27, 2011 storm in Jefferson County. At the time of the loss, the Laceys had in effect a homeowner’s insurance policy issued by Allstate. (Doc. 15-1).[2] On April 28, 2011, the Laceys notified Allstate of the loss, and Allstate began processing the claim. (Doc. 15-2). Allstate assigned adjuster O’Dell Clayton and content specialist Kelli Dunn to inspect the loss and begin the claims process. (Id. at 5, 21-22). After the inspection on May 9, 2011, Clayton recommended a check be issued to the Laceys in the full amount of dwelling coverage, and on May 16, 2011, Allstate issued the check. (Id. at 12; Doc. 15-3). Before receiving the contents inventory, Allstate paid 25% of the personal property limits to the Laceys on May 17, 2011, pursuant to an Advanced Payment Agreement, which reserved all rights and requirements under the insurance contract, explicitly naming the rights to receive proof of loss and to request an examination under oath. (Doc. 15-4; Doc. 15-5). On June 6, 2011, Allstate issued a check for the full amount of Other Structures coverage. (Doc. 15-6).

On August 15, 2011, the Laceys submitted their completed contents inventory to Allstate with their remaining personal property claim. (Doc. 15-2 at 41-42). On September 13, 2011, Dunn noted some of the descriptions of the furniture and other items in the house did not match the photos contained in Allstate’s file (which included photos taken after the 2011 storm and earlier ones taken after water damage in 2009). (Id. at 48; Doc. 16-3).[3] Due to the alleged discrepancies in the contents inventory, Allstate referred the Laceys’ claim to the Special Investigation Unit (SIU). (Doc. 15-2 at 49). Allstate adjuster Nicholas Byrd was assigned to investigate. (Id. at 51). He spoke with Mrs. Lacey about the alleged discrepancy and obtained a recorded statement. (Id. at 52). Based on that conversation and the alleged discrepancy between the inventory and the photos, coverage attorney Mark Hart was contacted to conduct an examination under oath (“EUO”). (Id. at 53-54). On October 11, 2011, Hart contacted the Laceys to schedule their EUO for October 25, 2011. (Doc. 17-2; Doc. 16-2 at 11 (37)).

On October 24, 2011, Mr. Lacey contacted SIU adjuster Byrd and asked about the purpose of the EUO. (Doc. 15-2 at 56). When Byrd said it was to ask them about items he could not verify on their inventory, Byrd documented Mr. Lacey as saying “that maybe [Mrs. Lacey] put something different because they had heard that Allstate takes a lot of depr[eciation] on items and they would not have enough money to replace the items they had.” (Id.). Mr. Lacey denies saying items were added to the list that were not in the home. (Doc. 17-3 at 17 (64)). It is unclear what exactly was said during this conversation, but pursuant to the standard of review, the court assumes Mr. Lacey did not say Mrs. Lacey had claimed something different from what they actually owned. Ultimately, Mr. Lacey did tell Byrd they would not sit for the EUO, and the Laceys, in fact, did not appear on the scheduled date. (Id.; Doc. 16-2 at 11 (38)).

After the Laceys did not sit for the EUO, Hart reviewed the claim and recommended the remainder of the Laceys’ claim be denied: (1) for failure to appear for an EUO, a condition precedent under the policy; and (2) under the “Concealment Or Fraud” provision of the policy. (Doc. 17-5). After receiving the letter from Hart, Allstate denied the remainder of the Laceys’ claim. (Doc. 17-6).[4]

III. Analysis

Allstate has moved for summary judgment as to all five claims of the Laceys’ complaint (Doc. 14), but the Laceys have responded with arguments as to only the first two (Doc. 19 at 18-31). They merely ask the court to view Allstate’s requests for dismissal of all the claims “through the lens” of their arguments on the first two. (Id. at 31). After reviewing all of the arguments, it is clear the Laceys have not established a question of material fact as to any of their claims, and Allstate is, therefore, entitled to summary judgment on all five claims.

A. Count I – Breach of Contract

“The elements of a breach-of-contract claim under Alabama law are (1) a valid contract binding the parties; (2) the plaintiffs’ performance under the contract; (3) the defendant’s nonperformance; and (4) resulting damages.” Sirmon v. Wyndham Vacation Resorts, Inc., 922 F.Supp.2d 1261, 1287 (N.D. Ala. 2013) (quoting Reynolds Metals Co. v. Hill, 825 So.2d 100, 105 (Ala. 2002)). Allstate contends the Laceys’ breach of contract claim must fail for two reasons: (1) there was no coverage under the policy where the insured has misrepresented a material fact and, therefore, there was no nonperformance; and (2) the Laceys did not perform under the contract when they failed to meet the condition precedent of submitting to an examination under oath. (Doc. 14-1 at 14-22). The Laceys ...

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