United States District Court, N.D. Alabama, Southern Division
For Tawanna Morton, Plaintiff: James R Bosarge, Jr, THE BOSARGE LAW OFFICE PC, Pelham, AL.
For Travelers Insurance, Defendant: Joel S Isenberg, Susan H McCurry, ELY & ISENBERG LLC, Birmingham, AL.
R. DAVID PROCTOR, UNITED STATES DISTRICT JUDGE.
This case is before the court on Defendant Automobile Insurance Company of Hartford, Connecticut's Motion for Summary Judgment (Doc. 34), filed November 19, 2014. The Motion has been fully briefed. (Docs. 35, 38, 39). The only claim remaining before the court is Count Five of Plaintiff's Complaint for breach of contract. ( See Doc. 1, Ex. A, Pl. Compl. ¶ ¶ 36-38; Doc. 12 (dismissing all other counts)). Specifically, Plaintiff alleges in that count that Defendant unlawfully breached its contract with her ( i.e., Defendant is in breach of obligations imposed by Plaintiff homeowner's insurance policy covering certain property Plaintiff owned) after a fire loss in July 2007. For the purposes of this Motion, Defendant argues that, because Plaintiff rented out the insured premises and failed to satisfy certain of her post-loss obligations, Plaintiff is not entitled to recover under that insurance policy.
After careful review of Defendant's Motion (Doc. 34), along with the briefs and submissions filed in connection with it, and for the reasons outlined in this opinion, the court concludes that there are no material issues of fact in this case and that Defendant is entitled to summary judgment on Plaintiff's breach of contract claim as a matter of law. Accordingly, Defendant's Motion is due to be granted, and Plaintiff's case is due to be dismissed with prejudice.
I. Standard of Review
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, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). 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. Celotex, 477 U.S. at 323. Once the moving party has met its burden, Rule 56(e) requires the nonmoving party to go beyond the pleadings and by her 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; Gargiulo v. G.M. Sales, Inc., 131 F.3d 995, 999 (11th Cir. 1997) (facing a " properly supported motion for summary judgment, [the nonmoving party] must come forward with specific factual evidence, presenting more than mere allegations." ).
The substantive law will identify which facts are material and which are irrelevant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). All reasonable doubts about the facts and all justifiable inferences are resolved in favor of the nonmovant. 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.
Plaintiff owned a house located on 2407 Longbow Drive in Birmingham, Alabama (the " Property" ), but she had not lived there since 2004 when she moved into her
husband Al Morton's house at 701 Cedarbrook Circle, Birmingham, Alabama. (Doc. 36, Ex. B, Pl. Dep. 44:5-9, 46:7-14, 47:8-14). In 2004 or 2005, Plaintiff began renting the Property through the U.S. Department of Housing and Urban Development's Section 8 housing program. ( Id. at 64:12-65:8). Plaintiff claims she rented the Property fully furnished, up to and including the time of the fire. ( Id. at 68:17-69:3, 204:16-206:8). In March 2006, Plaintiff began renting the Property to Shaunna Reese. ( Id. at 74:11-75:5; Doc. 36, Def.'s Ex. 3 to Pl. Dep., Reese Lease). Reese lived at the Property with her two daughters. (Doc. 36, Ex. C, Reese Dep. 29:16-18). Plaintiff received $445 through Section 8 and an additional $200 directly from Reese in monthly rent. (Doc. 36, Ex. B, Pl. Dep. 88:16-90:22).
Despite the fact that Plaintiff had not resided at the Property since 2004, Plaintiff continued to purchase and renew an AICH homeowner's insurance policy on the Property (the " AICH policy" ), which ran through August 6, 2007. (Doc. 36, Ex. I, AICH Policy). The AICH policy only provides coverage for the insured's " residence premises," which it defines as " the one or two family dwelling, other structures, and grounds or that part of any other building where you reside and which is shown as the 'residence premises' in the Declarations." ( Id. at 2 of 21 (emphasis added)). Plaintiff is the named insured under the AICH policy, and the policy defines " you" and " your" as the named insured. ( Id. at 1 of 21). The Declarations page of the AICH policy lists the location of the " Residence Premises" as 2407 Longbow Drive, Birmingham, Alabama, 35214. (Doc. 36, Ex. I, Declarations, at 1 of 2).
The AICH policy excludes coverage for personal property owned by an insured, if that " property [is] contained in an apartment regularly rented or held for rental to others by any insured" or that " property [is] rented or held for rental to others away from the residence premises." (Doc. 36, Ex. I, AICH Policy, at 4 of 21). In addition, the AICH policy contains certain limitations for property used for business purposes. ( See, e.g., id. at 3 of 21). Defendant argues that, as amended by policy forms HA-300 AL (12-02) and 55621 (06-99), its liability is limited to $1,250 for Plaintiff's personal property used for business purposes. ( See Doc. 36, Ex. I, HA-300 AL (12-02), at 1 of 4; Doc 36, Ex. I, 55621 (06-99), at 1 of 4).
In Plaintiff's Objection to Summary Judgment, Plaintiff claims that, before renting out her Property, she contacted an insurance agent at Clark and Associates. (Doc. 38 at 2). According to Plaintiff, she explained that she intended to rent the Property through Section 8 housing and wanted to make certain " that her insurance was good under the circumstances." ( Id.). Plaintiff alleges the agent assured her that she had no reason for concern. ( Id.). Additionally, Plaintiff suggests Section 8 authorities contacted Clark and Associates to verify that the AICH policy was in good standing. ( Id.). Plaintiff argues she detrimentally relied upon her insurance agent's answers concerning the AICH policy's validity and verification of policy rules. ( Id.).
On July 23, 2007, six days before the fire, Reese arrived home to the Property to find the back door unlocked, lighter fluid poured over the kitchen counter, and the stove on. (Doc. 36, Ex. C, Reese Dep.
64:11-66:9, 68:4-12; Doc. 36, Ex. D, Incident Report, July 23, 2007, at 2). Reese did not leave the back door unlocked, and did not leave the stove on. (Doc. 36, Ex. C, Reese Dep. 64:18-65:7, 68:4-12). There was no sign of forced entry. ( Id. at 68:8-12). Reese immediately reported the matter to the police and filed an incident report. (Doc. 36, Ex. C, Reese Dep. 70:3-7; Doc. 36, Ex. D, Incident Report, July 23, 2007). After this incident, Reese spoke with Plaintiff about the incident and told Plaintiff that she was likely going to have to move out of the house. (Doc. 36, Ex. E, Recorded Pl.-Reese Conversation 7). During the call, Reese also told Plaintiff that her (Reese's) furniture was in the house. ( Id. at 5). Plaintiff recorded the telephone call, and at no time in the telephone call did Plaintiff state that her own personal property items were in the house, or that the furniture in the house did not belong to Reese. ( See id.; Doc. 36, Ex. F, Pl. EUO 69:6-72:19).
On July 24, 2007, five days before the fire, the Property was foreclosed. (Doc. 36, Ex. N, Foreclosure Deed). Initially, Plaintiff argued that she was unaware that the house was going through foreclosure proceedings at the time of the fire. (Doc. 36, Ex. B, Pl. Dep. 93:4-17; Doc. 36, Ex. F, Pl. EUO 121:14-18). However, the record shows that on July 17, 2007, Plaintiff actually attended a hearing at which she voluntarily and orally dismissed a complaint that she had filed to stop the foreclosure proceedings. (Doc. 36, Ex. Q, Order of Dismissal, July 20, 2007; see also Doc. 36, Ex. P, Compl. for Injunctive Relief to Stop Foreclosure, June 25, 2007 (filed by Plaintiff)). Furthermore, it is undisputed that, at the time of the fire, Plaintiff and her husband, Al Morton, were in bankruptcy. (Doc. 36, Ex. H, Pl. Bankr. Petition; Doc. 36, Ex. K, Al Morton Bankr. Petition).
On July 29, 2007, a fire occurred at the Property while Reese and her children were away. (Doc. 36, Ex. A, Fire Dep't Rep.; Doc. 36, Ex. C, Reese Dep. 85:2-3, 87:4-10). Due to the suspicious circumstances surrounding the fire, Defendant investigated the incident and conducted testing on multiple samples from different areas of the house, which showed the presence of accelerants, including gasoline. (Doc. 36, Ex. J, Lab. Analysis). Based on its investigation, Defendant concluded the fire was intentionally set. ( See Doc. 34 at ¶ 1). Under the AICH policy, Plaintiff immediately made a claim to Defendant for the dwelling and her personal property that she claimed was in the rental house at the time of the fire. (Doc. 36, Ex. G, Pl. Sworn Statement in Proof of Loss; see also Doc. 36, Ex. B, Pl. Dep. 204:5-23). Plaintiff's claim for personal property alone totaled $92,472.41. (Doc. 36, Ex. G, Pl. Sworn Statement in Proof of Loss, at 2).
Plaintiff's AICH policy includes certain mandatory " duties after loss." (Doc. 36, Ex. I, AICH Policy, at 11 of 21). In the event of a loss, these provisions require a claimant to submit to a signed examination under oath (" EUO" ) and provide a detailed inventory of allegedly damaged property, along with various records and supporting documentation. ( See id.). The AICH policy provides: " No action shall be brought UNLESS THERE HAS BEEN COMPLIANCE WITH THE POLICY PROVISIONS." (Doc. 36, Ex. I, AICH Policy, at 13 of 21). On September 21, 2007, pursuant to these " duties after loss" provisions of the AICH policy, Defendant demanded an EUO from Plaintiff and her husband. (Doc. 36, Ex. S, EUO Demand to Pl.; Doc. 36, Ex. AA, EUO Demand to Al Morton). Defendant's letter specifically requested that Plaintiff produce documents at the EUO and warned that Plaintiff's failure to comply with the conditions of the AICH policy could result in a loss of coverage. (Doc. 36, Ex. S, EUO Demand to Pl. at 5).
On October 26, 2007, Defendant conducted the requested EUOs. (Doc. 36, Ex. F, Pl. EUO 2:1-5; Doc. 36, Ex. T, Al Morton EUO 2:1-5). During Plaintiff's EUO, Defendant's counsel reminded Plaintiff of her obligation to sign the witness certification and errata sheet for the EUO before a notary and return it to Defendant as a condition to recovery. (Doc. 36, Ex. F, Pl. EUO 6:25-7:2). Defendant also requested that Plaintiff produce certain additional items for use in its investigation, including (1) payroll information from her employment at Crossroads of Intervention, Plaintiff's family-owned company ( id. at 21:7-12), (2) a copy of Crossroads' 501(C)(3) report (as it is allegedly a family-owned, nonprofit organization) ( id. at 22:14-16), (3) loan documents for a consumer loan from that was outstanding at the time of the loss ( id. at 33:23-34:3), (4) records regarding conversations with her insurance agent regarding the Property ( id. at 39:13-17), (5) her " house file," which Plaintiff claimed contained documents regarding the rental of the Property and her personal property within the house ( id. at 40:24-41:8), (6) certain Section 8 paperwork regarding her request for increase in rent ( id. at 44:2-45:3), (7) contact information for the person Plaintiff claims was to perform work on the Property and was the excuse Plaintiff provided to be at the property around the time of the fire ( id. at 52:16-23), (8) Section 8 inspection documents ( id. at 55:17-56:3), (9) banking records regarding Plaintiff's financial condition and alleged ownership of personal property ( id. at 74:15-75:16), (10) receipts for personal property items in question ( id. at 102:17-21), and (11) contact information for an individual who Plaintiff claims gave her a $4700 television ( id. at 111:13-20).
On December 14, 2007, Defendant sent Plaintiff a letter setting out a list of twenty items requested during the EUO, including the above-enumerated items. (Doc. 36, Ex. U, Def. Letter to Pl., Dec. 14, 2007, at 2-3). Defendant's letter also enclosed a copy of the EUO and instructed Plaintiff to sign the witness certification and errata sheet and return them to Defendant as conditions to coverage under the AICH policy. ( Id.). Having not received a response from Plaintiff, Defendant again sent a letter to Plaintiff on February 27, 2008, checking on the status of the documents and the completion of the errata ...