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Davis v. State Farm Fire and Casualty Co.

United States District Court, N.D. Alabama, Southern Division

September 13, 2017

ELIZABETH DAVIS, Plaintiff,
v.
STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

          MEMORANDUM OPINION [1]

          JOHN H. ENGLAND, III UNITED STATES MAGISTRATE JUDGE

         Plaintiff 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 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 “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).

         The 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).

         II. Summary Judgment Facts

         Until 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. (Doc. 24-5).

         In 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.[2] (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).

         In 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).[3] 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)).

         Davis's 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)).

         On November 29, 2013, Davis called State Farm Agent Kim Lee's office, but because no one was there, [4] she 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)).

         Following 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).

         No 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 drafted.
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)).

         At 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)).[5] 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 out.

(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 ...

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