United States District Court, N.D. Alabama, Southern Division
MEMORANDUM OPINION 
H. ENGLAND, III UNITED STATES MAGISTRATE JUDGE
Elizabeth Davis (“Davis”) initiated this action
against Defendant State Farm Fire and Casualty Company
(“State Farm”) alleging state law claims for
breach of contract and bad faith. (Doc. 1). Davis contends
State Farm failed to adequately investigate her claim after
her house burned and acted in bad faith when it failed to pay
her claim in accordance with the terms of the policy.
(See id.). State Farm has moved for summary
judgment. (Doc. 24). The motion is fully briefed and ripe for
review. (See docs. 26-29). For the reasons stated
below, State Farm's motion for summary judgment will be
Standard of Review
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
“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 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).
Court must construe the evidence and all reasonable
inferences arising from it in the light most favorable to the
non-moving 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).
Summary Judgment Facts
January 2013, Davis, together with her husband, Ed Davis,
lived in the home located at 220 Thomas Road, Hayden,
Alabama. (Doc. 24-2 at 4, 6 (12:8-13, 18:17-19:1)). Until at
least November 29, 2013, the Davises insured this house
through a homeowners' policy provided by State Farm.
January 2013, the couple separated, and Davis moved in with
her mother in Hoover, Alabama. (Doc. 24-2 at 6 (19:4-20:1)).
At that point, the Davises' son, Wesley, moved into the
house in Hayden due to concerns about vandalism.
(Id. at 6-7 (20:19-21:3)). Wesley lived in the house
in the months leading up to, and on the date of, the
fire. (Doc. 24-7 at 4 (11:1-20)). Davis
characterized her financial situation in the months leading
up to the fire as “bad.” (Doc. 24-2 at 14-15
(52:23-53:3)). Davis was a legal secretary earning $38,
000.00, annually. (Id. at 12-13 (43:10-18, 46:4-9)).
Mr. Davis was not contributing financially, so Davis was
paying for all of the bills herself, but could not manage all
of the expenses. (Id. at 15 (53:4-12)). She was
about three months behind on her mortgage at the end of 2013.
(Id. (54:1-6)). Davis had a new car note and was
paying the bills on the house. (Id. (54:14-21,
56:20-21)). Davis's checking account had a negative
ending balance on her November 2013 statement. (Id.
at 18 (68:11-20); doc. 24-3 at 1). The account had four
overdraft fees in November 2013, and on December 12, 2013,
the ending balance was $34.90. (Doc. 24-2 at 19 (69:4-11);
doc. 24-3 at 1-5).
September 2013, Davis bought a new car and asked State Farm
to change her mailing address to her mother's house in
Hoover. (Doc. 24-2 at 32-33 (124:16-125:2)). When State Farm
received the information about the address change, it sent a
cancellation notification for the homeowners' policy on
November 5, 2013, to the insured because the house was no
longer owner- occupied. (Doc. 24-8 at 12, 14 (43:14-44:9,
51:4-52:19)). After receiving the notice, on November 5,
2013, Davis called Agent Kim Lee's office. (Doc. 24-2 at
31 (118:15-119:2); doc. 24-3 at 20). Regarding the call,
Davis testified as follows:
She said well, we thought you weren't living there
anymore. I said that's not correct, my property is there.
I stay with my mom there during the week when I'm
working. I didn't get into it with her that I had
separated from my husband. And I said well, add it back in.
But changing that address and all, that's not correct.
(Doc. 24-2 at 31 (118:23-119:8). State Farm then reinstated
the policy on November 7, 2013. (Doc. 24-9 at 13 (46:16-21)).
State Farm contends the November 2013 notice regarding
whether the home was owner-occupied was entirely
separate from the cancellation it contends Davis later
instructed on November 29, 2013. (Doc. 24-8 at 12
(43:14-44:9); doc. 24-10 at 14 (50:2-12)).
State Farm premiums were set up to automatically draft from
her checking account at the end of November 2013, and she was
concerned about an overdraft. (Doc. 24-2 at 29, 55
(110:18-111:4, 112:16-20, 213:10-17)). If the State Farm
premium drafted, Davis knew it would bounce, leading to a
snowball effect where other charges to her bank account would
also bounce. (Id. at 34 (132:9-23)).
November 29, 2013, Davis called State Farm Agent Kim
Lee's office, but because no one was there,
was routed to the State Farm Customer Response Center
(“CRC”). (Doc. 24-2 at 29 (110:10-18); doc. 24-9
at 9 (31:8-17)). According to her deposition testimony, Davis
reported to the CRC representative she did not have enough
money to pay the premium and requested the automatic draft
stop. (Doc. 24-2 at 29, 35 (110:17-19, 133:11-19)).
the conversation, the CRC representative, Matthew Castillo
entered two “remarks” or notes relating to
Davis's homeowners' policy. First, Castillo typed a
note at 8:16 AM CST stating “Insured is requesting to
cancel policy, no reason given from insured. Effective as of
11/29/2013.” (Doc. 24-9 at 12 (41:10-13); doc. 24-9 at
23). Another note, dated November 29, 2013, entered by
Castillo one minute later at 8:17 AM CST, states
“Customer declined making payment using another payment
method. The Recurring Monthly will be reinstated
automatically when payment is received. To prevent a
cancellation notice being sent on the account, the payment is
due by 11-28-2013.” (Doc. 24-11 at 20). The CRC
representative's note was transferred to Agent Kim
Lee's office, and when that office reopened the following
Monday, her staff person, Jamie Stewart, reviewed the note
from the CRC representative. (Doc. 24-11 at 8 (26:1-9)). That
day, December 2, 2013, Davis spoke with Stewart on the phone.
(Doc. 24-2 at 31 (117:19-118:4); doc. 24-11 at 8 (27:19-21)).
Following the call, Stewart entered a note stating “she
canceled the house and only paid on the cars and life
insurance today. Changed Status from: Incomplete to:
Complete.” (Doc. 24-11 at 20). However, this note was
connected to Castillo's note regarding suspension of
recurring monthly payment. (Id.). In connection with
Castillo's note regarding a request for cancellation,
Stewart wrote “I made a change today to have this done.
Changed Status from Incomplete to: Complete.” (Doc.
24-9 at 23). Another note stated “CANCEL POLICY PER
CALL FROM ELIZABETH.” (Doc. 24-11 at 19). Stewart
testified that she would have obtained information from Davis
as to the date Davis wanted the cancellation to become
effective and that it is “always [her] practice to
verify [the effective date] with the customer.” (Doc.
24-11 at 9 (29:9-21)). She further testified that she
doesn't note that she asks the customer to verify the
effective date because “The request notes itself,
” meaning that “When we put in the request for
the cancellation, it will not allow us to submit anything
without an effective date.” (Id. (30:13-20)).
Stewart testified she manually entered the cancellation
effective date as November 29, 2013, in the cancellation
request for Davis's homeowners' policy. (Id.
(31:12-22)). Once Stewart entered a cancellation request, it
was transmitted to underwriting. (Doc. 24-10 at 22 (83:13-16,
84:23-25), 35). Underwriting received the request on December
3, 2013. (Id. at 23 (86:9-11), 35). Underwriting
understood the cancellation request to mean that the insured
requested policy cancellation with an effective date of
November 29, 2013. (Id. at 23 (86:8-16), 35).
payment was made on the homeowners' policy between
November 29, 2013 and December 13, 2013. (Doc. 24-2 at 44
(169:8-170:8)). Because Davis had stopped the automatic draft
on November 29, 2013, she provided a credit card number to
Stewart to pay for the auto and life insurance policies in
the amount of $169.25. (Id. at 36, 41 (137:3-10,
158:16-23); doc. 24-11 at 8 (28:12-16)). In a recorded
statement taken during the investigation, the following
exchange occurred regarding the November 29, 2013 phone call:
Q: [Jordan Justice] Okay Ms. Davis um can you please uh tell
me uh from my understanding is you called their main office
on November 29th and requested the cancellation of your
policy can you please explain uh what took place then? A:
[Davis] Well I I knew that I had gotten a thing in the mail I
knew that they were fixing to automatically deduct $ 478.70
and I knew that I did not have that amount in my checking
account right then and I didn't want it to get over
Q: Uh so it was w- um when did you call the office r- uh and
request that they cancel it?
A: Uh it was on n- November the 29th.
. . .
Q: Okay okay all right now the the 29th request you said you
called and requested it because I understand there was the
draft was fixing to come out of your account and you
didn't have it in there and that's when you called in
and request that the policy be canceled? A: yeah
(Doc. 24-3 at 16-17). Later, at her disposition, Davis
testified that she instructed the representative not to draft
the money from her account, but did not recall other
instructions or the language she used during the November
29th phone call. (Doc. 24-2 at 55 (213:14-214-8)). When asked
if either of his parents told him what was going on with the
insurance after the fire, Davis's son testified that he
thought Davis told him State farm had paid off the mortgage,
but she did not know what was going to happen with the
contents of the house. (Doc. 24-7 at 13-14 (48:21-495)). When
asked why, Davis's son answered that he thought his
mother told him “she had called and said cancel it, but
then Dad had called and said do not cancel it, what I
remember.” (Id. at 14 (49:7-10)).
several times during her deposition Davis was asked what she
asked State Farm to do when she called on November 29, 2013.
During one of these exchanges, Davis testified as follows:
Well, I had gotten a notice from them - notice a notice from
them. I had talked to the girl previously in Kim Lee's
office and she had told me that my insurance was good until
December 10th. And when I called this guy and talked with -
it was a male that I talked with on the 29th and told him
that I did not have the money in the bank for him to draft
the premium right then. It was my thinking and intention and
understanding that if I didn't make a payment before the
10th that nothing was going to happen because they had told
me I was good until December the 10th, that I was covered
until December 10th.
(Doc. 24-2 at 30 (114:9-115:2)). At other times during the
deposition, when asked about the November 29, 2013 phone
call, Davis testified as follows:
I don't recall that I said the words he used. I
wasn't there when that statement was transcribed. I
called him, called State Farm, told him not to take the money
(Doc. 24-2 at 43 (165:16-20)).
Well, it would have been around the 28th, 29th would be the
reason I called them then to say they are fixing to draft it,
I don't have enough.
Q: Were your instructions to -- well, was the point of your
call to say don't draft it, don't take the money out.
A: Don't draft it.
Q: And you don't recall any other instructions you would
have given to them at the time?
A: Not specifically.
Q: So if the person at State Farm you talked to says you
asked to cancel the policy, you don't - A: I would say I
don't recall what ...