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Walker v. Auto Owners Insurance Co.

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

October 25, 2017

ROGER WALKER, Plaintiff,


         Plaintiff, Roger Walker, asserts causes of action against defendant, Auto-Owners Insurance Company ("Auto-Owners"), for breach of contract and bad faith, both related to Auto-Owners' denial of a commercial property insurance claim.[1] The case currently is before the court on defendant's motion for partial summary judgment with regard to plaintiffs bad faith claim.[2] Upon consideration of the motion, briefs, and evidentiary submissions, the court concludes the motion should be granted.


          Federal Rule of Civil Procedure 56 provides that a court "shall grant summary judgment 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(a). In other words, summary judgment is proper "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). "In making this determination, the court must view all evidence and make all reasonable inferences in favor of the party opposing summary judgment." Chapman v. AI Transport, 229 F.3d 1012, 1023 (11th Cir. 2000) (en banc) (quoting Haves v. City of Miami, 52 F.3d 918, 921 (11th Cir. 1995)). Inferences in favor of the non-moving party are not unqualified, however. "[A]n inference is not reasonable if it is 'only a guess or a possibility, ' for such an inference is not based on the evidence, but is pure conjecture and speculation." Daniels v. Twin Oaks Nursing Home, 692 F.2d 1321, 1324 (11th Cir. 1983) (alteration supplied). Moreover,

[t]he mere existence of some factual dispute will not defeat summary judgment unless that factual dispute is material to an issue affecting the outcome of the case. The relevant rules of substantive law dictate the materiality of a disputed fact. A genuine issue of material fact does not exist unless there is sufficient evidence favoring the nonmoving party for a reasonable jury to return a verdict in its favor.

Chapman, 229 F.3d at 1023 (quoting Haves, 52 F.3d at 921) (emphasis and alteration supplied). See also Anderson v. Liberty Lobby, Inc., Ml U.S. 242, 251-52 (1986) (asking "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law").


         Plaintiff, Roger Walker, owns commercial property located at 1003 Putnam Drive in Huntsville, Alabama, described more particularly as location 3, building 1 ("the property").[3] The roof of the property, which was constructed from a rubber material called "EPDM, "[4] was installed in approximately 1996.[5] The roof experienced a few small leaks beginning in approximately 2012. Plaintiff purchased a kit to repair some of the roof seams in 2012 or 2013, and he hired a roofing company to make other repairs during that same time frame.[6] The roof experienced another small leak in 2014, so plaintiff called Atlas Roofing to assist with the repairs. Because "the roof was older and out of warranty, " he asked Atlas to provide him with two quotes: one for repairing the seams, and another for replacing the entire roof.[7]

         Defendant, Auto-Owners Insurance Company ('Auto-Owners"), issued Policy No. 894617-38467926-13 ("the policy") to plaintiff, for the purpose of providing commercial property and commercial general liability coverage for the property from November 3, 2013 to November 3, 2014.[8] The policy provided coverage for physical damage to the property, unless one of the listed exclusions or limitations applied.[9]

         One of the listed exclusions was:

2. We will not pay for loss or damage caused by or resulting from any of the following:
d. (1) Wear and tear;
(2) Rust, corrosion, decay, deterioration, hidden or latent defect or any quality in property that causes it to damage or destroy itself;
(4) Settling, cracking, shrinking or expansion[.]

Doc. no. 16-7 (Policy), at ECF 32-33 (ellipses and alteration supplied). One of the listed limitations was:

1. We will not pay for loss of or damage to:
c. The interior of any building or structure, or to personal property in the building or structure, caused by or resulting from rain, snow, sleet, ice, sand or dust, whether driven by wind or not, unless:
(1) The building or structure first sustains damage by a Covered Cause of Loss to its roof or walls through which the rain, snow, sleet, ice, sand or dust enters; or
(2) The loss or damage is caused by or results from thawing of snow, sleet or ice on the building or structure.

Id. at ECF 35.

         Walker reported to Auto-Owners on March 17, 2014, that the property had recently been damaged by wind and water during a storm.[10] Auto-Owners assigned Sam Evers, an independent adjuster with Evers & Associates, Inc., to investigate the claim. Evers submitted a report, along with photographs of the interior and exterior damage, to Auto-Owners on March 24, 2014. His report stated the following with regard to the Cause of Loss:

The insured reported that wind caused damage to his roof cover during a storm on March 16, 2014. The insured further advised that this damage allowed water to enter the building and cause damage to the interior.
During my initial conversation with the insured, I was advised that he had hired Atlas Builders & Roofing, a local contractor, to repair two small leaks on the roof. The insured advised that these leaks were present in the front and rear corner of the building. The insured advised that he left town around March 16th, and found severe water damage to the interior of the building when he returned.
I have contacted the insured's roofer, Bill Willis, and discussed the time line of events.
According to Mr. Willis, he arrived at the insured's building on February 24th to address two potential water leaks on the front corner and rear corner of the building. At that time, the roofer had measured the roof and was going to provide an estimate to "recover" the roof. Mr. Willis further advises that he returned to the insured's building on March 18th [i.e., after the storm] to make repairs and found that the roofing seam had been "pulled apart" and that the rubber roofing had been pulled away from the parapet wall.

Doc. no. 16-3 (Evers & Associates, Inc. Report), at ECF 2 (alteration supplied).

         Evers also inspected the property on March 18, 2014. He confirmed water damage to the acoustic ceiling tile and ceiling installation in the interior storage room, and water stains on the exterior block wall. He was unable to access the roof by using the ladder he had with him at the time, so he returned the following day, March 19, 2014, to meet Willis, the roofer, at the property with a taller ladder. Willis accompanied Evers onto the roof, where Evers observed a loose roofing seam between two pieces of rubber roofing above the interior area that had suffered water damage. He also observed an area of rubber roofing that had "pulled away" from the parapet wall near the loose roofing seam, but there were no visible signs of any loose perimeter roof flashing. Evers also confirmed in his written report that "large amounts of water" had seeped under the rubber roof and "wicked" underneath the entire roof cover.[11]

         Willis testified by affidavit that, during his February 25, 2014 inspection, he had observed that the roof seams were "generally intact, were not separated, and the roof was holding water without any significant leakage."[12] At that time, he did not see any seams that needed to be resealed due to separation.[13] However, when Willis re-inspected the roof on March 19, after the weather event, he noticed that some seams had "come apart, " and "had the appearance of having been separated by wind uplift, resulting in water leaking into the building."[14] Willis theorized to Evers that "a strong wind storm has . . . created an 'up draft, ' which pulled the rubber roofing up and away from the building, " and that the '"up draft' caused the roofing seam to 'pull apart'" after the date of Willis's previous inspection. Evers did not express either agreement or disagreement with Willis's theory in his written report. Instead, he opined that "a structural engineer would be helpful to determine whether... there was strong enough wind in the area to have caused an 'up draft' to have damaged the roof cover."[15] He did find that there was "a small amount of wind damage to an aluminum awning" on the property.[16] Even so, plaintiff was not aware of any other buildings in the vicinity suffering wind damage from the same storm.[17]

         Evers did not ask Willis to provide any photographs depicting the condition of the roof before the storm.[18] He also did not take any notes of his conversation with Willis or request Willis to provide a written statement.[19] After Evers rendered his report on March 24, 2014, Auto-Owners did not ask him to do anything else, including re-questioning Willis, researching wind conditions at the time of the incident, or determining whether wind could have caused the seams to separate.[20]

         Instead, Evers' report was forwarded to James Spinks, Auto-Owners' in-house adjuster, who followed Evers' suggestion to engage a structural engineer.[21] Spinks did not take any additional actions to independently verify any of the information Auto-Owners had received from plaintiff, Willis, or Evers.[22] Spinks testified during his deposition that it is his duty as an insurance adjuster to fully investigate every claim, and that he should not stop investigating once he finds a reason to deny the claim.[23]

         Brett T. Burnside, a structural engineer with Donan Engineering Co., Inc., was engaged to inspect the property. He conducted the inspection, accompanied by plaintiff and Willis, on April 3, 2014, and provided a written report on April 8, 2014.[24] Burnside's report provided the following background information:

Mr. Walker stated that he had a leak along the south side of the building, and was in the process of getting estimates for repair. Shortly after receiving the estimates, a storm went through the neighborhood on February 20, 2014. According to him, the storm cause[d] a piece of the metal awning roof to be removed from the front of the building, and a seam on the EPDM roof had separated. He further stated that the separated seam allowed water to enter into the roof causing interior leaks in the warehouse area, which was noticed a few weeks after the storm event. According to him, the storm event caused most of the ceiling tiles in the warehouse area to fall onto the floor. In addition, he pointed out some areas ...

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