United States District Court, N.D. Alabama, Northeastern Division
MEMORANDUM OPINION AND ORDER
K. KALLON, UNITED STATES DISTRICT JUDGE
case involves a dispute over an insurance claim. Plaintiff
Smith Lake Marina & Resort LLC (“the Marina”)
filed a claim for damage to its property resulting from a
storm in late 2015. After investigating the claim, Defendant
Auto-Owners Insurance Company denied it based on a water
damage exclusion in the policy. The Marina sued in state
court alleging breach of contract and bad faith, and
Auto-Owners timely removed the case to this court on
diversity grounds. Doc. 1. Presently before the court is
Auto-Owners' motion for summary judgment. Doc. 18. After
reading the briefs and considering the relevant law, the
court denies the motion as to the breach of contract claim
and grants the motion as to the bad faith claim. As to the
breach of contract claim, this matter is SET
for a pretrial conference at 9:00am on October 25, 2017 at
the federal courthouse in Huntsville, AL, and for a trial at
9:00am on November 27, 2017 at the federal courthouse in
LEGAL STANDARD FOR SUMMARY JUDGMENT
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.” Fed.R.Civ.P.
56. “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, 477 U.S.
317, 322 (1986) (alteration in original). 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).
summary judgment motions, 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. Any factual disputes
will be resolved in the non-moving party's favor when
sufficient competent evidence supports the non-moving
party's version of the disputed facts. See Pace v.
Capobianco, 283 F.3d 1275, 1276, 1278 (11th Cir. 2002)
(a court is not required to resolve disputes in the
non-moving party's favor when that party's version of
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 Mountain Park,
Ltd. v. Oliver, 863 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)).
Christmas day, 2015, a storm descended upon Smith Lake in
northern Alabama. According to weather data from the National
Oceanic and Atmospheric Association, that day had the
strongest maximum winds reported of any day that month. Doc.
18-3 at 25-26. Relevant here, the storm caused damage to the
Marina's swimming pier, fishing dock, and gangway. Docs.
1-1 at 2; 18 at 7; 22 at 3.
light of the damage it sustained, the Marina timely filed a
claim with Auto-Owners. Docs. 18 at 7; 22 at 7. As part of
its investigation, Auto-Owners retained independent
adjusters, United Storm Adjusters, and instructed them to
inspect the damage. Docs. 18 at 7; 22 at 7. An adjuster from
United conducted an initial inspection and reported to
Auto-Owners that there may be a coverage issue. Docs. 18 at
8; 22 at 7. Auto-Owners then instructed United to retain
engineers to further inspect the damage. Docs. 18 at 8; 22 at
7. United hired PT&C/LWG Forensic Consultants, who in
turn inspected the property and concluded that the damage to
the gangway and fishing dock was caused by a rise in lake
elevation and that the damage to the swimming pier was caused
by wave action. Docs. 18-2; 18-3. As a result, because the
policy excludes damage caused “directly or indirectly
by . . . [f]lood, surface water, waves (including tidal wave
and tsunami), tides, tidal water, overflow of any body of
water, or spray from any of these, ” including water
damage “driven by wind (including any storm surge),
” doc. 18-1 at 50-51, Auto-Owners denied the claim.
asks the court to enter summary judgment in its favor on both
claims. Doc. 18. The court considers each claim in turn, and,
in doing so, because this action is based on diversity
jurisdiction, the court applies Alabama's substantive
law. Erie R. Co. v. Tompkins, 304 U.S. 64, 78
Breach of Contract Claim
Alabama law, insurance policies are construed liberally in
favor of the insured. Ladner & Co. v. S. Guar. Ins.
Co., 347 So.2d 100, 103 (Ala. 1977); Pac. Indem. Co.
v. Run-A-Ford Co., 161 So.2d 789, 791 (1964);
Perkins v. Hartford Ins. Grp., 932 F.2d 1392, 1395
(11th Cir. 1991). “But, where there is no ambiguity in
the terms of the contract, it must be enforced as written,
for a court has no authority to make a new contract for the
parties.” Colonial Life & Acc. Ins. Co. v.
Collins, 194 So.2d 532, 535 (1967). The insured bears
the burden of proving coverage, id., but the insurer
bears the burden of proving the applicability of an
exclusion. Fleming v. Alabama Farm Bureau Mut. Cas. Ins.
Co., 310 So.2d 200, 202 (1975). “Policy exclusions
are to be narrowly interpreted, and, when an ambiguity exists
in the language of an exclusion, the exclusion will be
construed so as to limit the exclusion to the narrowest
application reasonable under the wording.”
Mid-Continent Cas. Co. v. Advantage Med. Elecs.,
LLC, 196 So.3d 238, 244 (Ala. 2015) (internal quotations
Marina has offered proof that it timely filed a claim for
insured property and that Auto-Owners denied the claim. The
Marina has therefore met its prima facie burden on its breach
of contract claim, and Auto-Owners bears the burden to show
the applicability of the water exclusion. Fleming,
310 So.2d at 202. Accordingly, to succeed on its motion,
Auto-Owners must demonstrate that there is no genuine issue
of material fact as to whether the water exclusion applies
and that it is entitled to judgment as a matter of law.
sole argument in support of its motion is that the deposition
testimony of Ronnie Reid and Lonnie Gonzalez, who testified
that they witnessed the fishing pier fall on its side,
docs. 18 at 15; 22 at 4, is inadmissible and that, without
this testimony, the Marina cannot rebut Auto-Owners'
expert testimony. Doc. 18 at 16-17. Specifically, Auto-Claims
contends that, because neither Reid nor Gonzales
“observed [the piers] immediately prior to [their]
loss, ” only an expert - such as an engineer or someone
with formal training in physics, fluid dynamics, or weather
analysis - is qualified to testify as to what caused the
damage to the piers that day. Doc. 18 at 16-17. In support of
this argument, Auto-Owners cites a federal district court
opinion about a case involving water damage to a
and an opinion from the Court of Appeals of North Carolina
involving a house where the second floor had dropped ...