United States District Court, N.D. Alabama, Northeastern Division
OWEN BOWDRE, CHIEF UNITED STATES DISTRICT JUDGE.
Coles' home caught fire and almost burned down on
February 10, 2015. The Coles filed a claim with their
homeowners' insurance provider, Defendant Owners
Insurance. Although Owners paid part of the Coles' claim
under its Policy, the Coles say that Owners owes them far
more money. Furthermore, the Coles assert that Owners has
steadfastly refused to work with them or use the Policy's
“appraisal” provision to resolve the parties'
disputes over the extent and value of the loss caused by the
matter is now before the court on the parties' cross
motions for summary judgment (doc. 31; doc. 33; doc. 35) and
Owners's “Motion to Strike Trial and Deposition
Testimony of Plaintiffs' Proffered Expert Chuck
Howarth” (doc. 36).
stated, the Coles allege breach of contract, bad faith, and
fraud-all based on Owners's action and inaction after
their house fire. As to breach of contract, the Coles ask for
specific performance of the appraisal provision in the Policy
to determine the ultimate value of their claim; payment of
“additional living expenses”; and payment for
debris-removal expenses. As to fraud, the Coles appear to
plead three different kinds: suppression, misrepresentation,
brings seven causes of action in its counterclaim. First, it
charges that the Coles breached the contract by submitting a
claim that violated the Policy's misrepresentation and
fraud provisions. Second, Owners asserts that the Coles
committed fraud. Third, Owners claims spoliation of evidence.
Fourth, fifth, and sixth, Owners asks for declarative relief
about its liability under the Policy regarding additional
living expenses, debris removal, and any additional liability
it has under the Policy, essentially contending that it owes
the Coles nothing because the Coles failed to meet the
conditions precedent under the Policy. Seventh, Owners
appears to seek recovery of the amounts already paid to the
Coles because of the alleged fraud.
court first addresses the parties' cross motions for
summary judgment. The cross motions before the court involve
the Coles' breach of contract cause of action on the
Policy's appraisal provision and Owners's
counterclaim for declarative relief on the Coles'
requests for debris-removal expenses and additional living
expenses. (Doc. 31; Doc. 33; Doc. 35). The court also
addresses Owners's motion for summary judgment on the
Coles' breach of contract causes of action relating to
debris-removal expenses and additional living expenses
alongside the parties' cross motions on Owners's
similar counterclaim assertions.
the court addresses the Coles' motion for summary
judgment on Owners's other counterclaim allegations:
breach of contract as to the fraud and misrepresentation
provision of the Policy, spoliation, fraud, and repayment of
the sums already paid to the Coles because of the alleged
fraud. (Doc. 31).
the court addresses Owners's motion for summary judgment
on the Coles' remaining unaddressed causes of action:
fraud and bad faith. (Doc. 35).
reasons discussed below, the court will GRANT the Coles'
“Motion for Summary Judgment Against Defendant As to
the Liability Portion of the Breach of Contract Claim”
(doc. 33); the court will GRANT IN PART and DENY IN PART the
Coles' “Motion For Summary Judgment And/Or To
Dismiss Defendant Owners Insurance Company's
Counterclaims” (doc. 31); and the court will DENY
Owners's motion for summary judgment (doc. 35).
addition, the court has before it Owners's “Motion
to Strike Trial and Deposition Testimony of Plaintiffs'
Proffered Expert Chuck Howarth.” (Doc. 36). The court
will GRANT Owners's motion to strike that testimony to
the extent Mr. Howarth testified as an “expert”
about legal conclusions regarding Owners's bad faith. In
making its findings in this Opinion, the court has not given
weight to Mr. Howarth's opinions on those matters.
judgment is an integral part of the Federal Rules of Civil
Procedure. Summary judgment allows a trial court to decide
cases when no genuine issues of material fact are present and
the moving party is entitled to judgment as a matter of law.
See Fed. R. Civ. P. 56. When a district court
reviews a motion for summary judgment, it must determine two
things: (1) whether any genuine issues of material fact
exist; and if not, (2) whether the moving party is entitled
to judgment as a matter of law. Fed.R.Civ.P. 56(c).
moving party “always bears the initial responsibility
of informing the district court of the basis for its motion,
and identifying those portions of ‘the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, ' which it
believes demonstrate the absence of a genuine issue of
material fact.” Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986) (quoting Fed.R.Civ.P. 56). The moving
party can meet this burden by offering evidence showing no
dispute of material fact or by showing that the non-moving
party's evidence fails to prove an essential element of
its case on which it bears the ultimate burden of proof.
Id. at 322-23.
the moving party meets its burden of showing the district
court that no genuine issues of material fact exist, the
burden then shifts to the non-moving party “to
demonstrate that there is indeed a material issue of fact
that precludes summary judgment.” Clark v. Coats
& Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991).
In reviewing the evidence submitted, the court must
“view the evidence presented through the prism of the
substantive evidentiary burden, ” to determine whether
the nonmoving party presented sufficient evidence on which a
jury could reasonably find for the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254
(1986); Cottle v. Storer Commc'n, Inc., 849 F.2d
570, 575 (11th Cir. 1988). Furthermore, all evidence and
inferences drawn from the underlying facts must be viewed in
the light most favorable to the non-moving party. Graham
v. State Farm Mut. Ins. Co., 193 F.3d 1274, 1282 (11th
filing of cross motions for summary judgment does not affect
the applicable Rule 56 standard. See, e.g.,
United States v. Oakley, 744 F.2d 1553, at 1555-56
(11th Cir. 1984). The Eleventh Circuit has noted that
“[c]ross motions for summary judgment will not, in
themselves, warrant the court in granting summary judgment
unless one of the parties is entitled to judgment as a matter
of law on facts that are not genuinely disputed.”
Id. at 1555.
The Fire & The Claim Investigation
and Tammy Coles's two-bedroom, three-bath home caught
fire on February 10, 2015. Photographs taken in the aftermath
of the fire reveal charred walls, melted curtains, and smoke
stains throughout the home. The fire originated in the
Coles' laundry and utility room; that room, the kitchen,
and attic all suffered direct fire damage. The house filled
with smoke as the fire grew. Two rooms in the house suffered
water damage when the fire department extinguished the fire.
Coles filed a claim with Owners, their homeowners'
insurance company. The Coles ultimately sought four different
types of payments under the Policy coverage:
“dwelling” payments for structural damages to the
home; “contents” payments for their lost personal
property; debris-removal expenses; and additional living
expenses for the time they could not live in their home.
Coles contacted Owners the day of the fire. The same day,
Owners mailed to the Coles' address a letter including
details on the Coles' obligations in making a claim. The
letter included a “proof of loss” form,
“blank personal property inventory forms, ” and
noted that the Coles needed to fill out the forms and return
them to Owners within 60 days of the loss. The letter also
included a copy of the “What To Do In The Case of
Loss” section of the Policy, which the court discusses
in further detail below.
“proof of loss” is a one-page form that requests
basic information about the claim, such as the insured's
policy number and the type and time of loss. The form also
includes a short section breaking down the overall damage
value or cost for each type of claimed loss.
also sent Stanly Bonhomme, its insurance adjustor, to the
Coles' home on the day of the fire. Mr. Bonhomme met with
the Coles and began Owners's investigation into the loss.
Mr. Bonhomme asked Mr. Cole about where he believed the fire
started, walked through the home, and took pictures. Mr.
Bonhomme also issued to the Coles a $3, 000 payment, which
Mr. Bonhomme stated was to be used for immediate necessities
that the Coles may have required after the fire, including a
place to stay. (Bonhomme Depo. at 45-46). Mr. Bonhomme
suggested to the Coles that the extent of the damage was
severe, observing that the Coles could throw everything from
the living room into a dumpster. Mr. Bonhomme had full access
to the home and the Coles did not impede him in any way.
assessing the value of the Coles' claim, Owners hired a
third-party firm to investigate the cause of the fire. That
firm determined that the cause of the fire was lint from the
also hired ServiceMaster, a third-party property salvaging
and restoration service, to inspect the contents of the
Coles' home. Mr. Bonhomme told the Coles that he would
contact ServiceMaster and that ServiceMaster would determine
what was salvageable and what was not. In particular, at
issue in this claim were losses related to smoke damage,
which Mr. Bonhomme noted could not be reliably determined
until ServiceMaster examined the property.
ServiceMaster's inspectors arrived two days after the
fire. The inspectors examined the home and found 13
salvageable items, which they removed on March 18. Owners did
not tell the Coles how long they should keep the remaining
unsalvageable items in their house.
deposition, Mr. Bonhomme stated that, for this kind of claim,
ServiceMaster would report to Owners about what property
could or could not be restored. ServiceMaster would then tell
Owners's adjustor what steps it planned to take;
i.e., either restoring the property or throwing it
out. The report from ServiceMaster discussed by Mr. Bonhomme
does not appear in the materials before the court, although a
report from “National Vendor, ” another third
party apparently hired by Owners, indicates that the value of
the lost contents was $91, 095.54 replacement cost value or
$65, 065.46 actual cash value. (Doc. 34-9). Owners did not
share that report with the Coles during the claim
investigation. (Doc. 33 ¶ 7).
also found that the value of the Coles' dwelling claim
was $46, 551.71 replacement cost and $34, 006.20 actual cash
value. Owners initially paid the Coles $33, 006.20 for the
dwelling claim (having subtracted the Coles' $1, 000
deductible), but did not include payment for personal
property. The Coles accepted the check as a partial payment
on their dwelling claim.
mid-March, the Coles hired their own third-party consultant,
The Howarth Group, to help them evaluate the dwelling damage,
prepare a contents inventory of their home for Owners's
review, and assess the value of their claims.
Grandanetti, a contents inspector for The Howarth Group, went
to the Coles' home after the fire in March or April 2015.
Ms. Cole gave Ms. Grandanetti a three-ring binder with notes
about the lost contents of her home, although Ms. Cole had
already disposed of most of the home's damaged contents
by the time Ms. Grandanetti began her inspection. Ms.
Grandanetti remarked in her deposition that “the house
was gutted” when she got there and the only contents
remaining had been placed on the home's back porch.
Nonetheless, Ms. Grandanetti drew up a report on the contents
of the Coles' home based on Ms. Coles's notes and on
what she observed.
developing her report, Ms. Grandanetti asked the Coles not
just about whether the property existed, but about the
property's specific characteristics. For example, Ms.
Grandanetti asked the Coles about the materials used in the
construction of their furniture. She also asked the Coles
where they bought their property and “most of the time
they knew.” Using that information, Ms. Grandanetti
found a replacement price for every item, and she included
that information on the inventory she prepared and that the
Coles ultimately submitted to Owners. Ms. Grandanetti
emphasized that she researched replacement values for every
item that the Coles said they lost, down to the price of a
box of Honey-Nut Cheerios from Wal-Mart. (Grandanetti Depo.
Howarth Group also evaluated the Coles' home for the
value of dwelling damages, which included damages to the
structure such as the Coles' roof.
end of March, the Coles, through a letter mailed by The
Howarth Group, told Owners that they disagreed with
Owners's conclusion about the value of their dwelling
claim. In that letter, The Howarth Group told Owners that it
calculated the dwelling damages to be $164, 458.19 actual
cash value, well above Owners's valuation and payment for
that part of the Coles' claims. However, The Howarth
Group did not present to Owners a value for the Coles'
contents claim at that time. The Coles asked Owners to begin
the requested appraisal process to resolve the dispute about
the claims' values. The Coles and The Howarth Group, who
the Coles had designated as their appraiser, also offered to
meet an Owners adjustor and go through the house and discuss
specifically the losses that the Coles disputed.
did not respond to the Coles' request for nearly a month.
On April 20, when Owners finally responded, Owners stated
that the requested appraisal process was premature. Owners
contended that, despite the Coles' stated disagreement
about Owners's belief on the value of the claim, they had
no dispute because the Coles had not “formally”
presented their claim amount. Owners also included in its
letter another “proof of loss” form and reminded
the Coles of their obligations under the Policy, such as
submitting the “proof of loss” form. Owners,
which noted that the 60-day period for sending in a proof of
loss had expired, offered the Coles an additional 30 days to
submit their proof of loss, until May 20, 2015.
Coles mailed the proof of loss form to Owners on June 3,
2015, and Owners received it the next day. The proof of loss
form noted that the claimed amounts for additional living
expenses and personal property were “open, ” but
included a requested amount for dwelling damages.
later, on July 2, 2015, Owners told the Coles that it
believed that they had claimed losses for undamaged items.
Nevertheless, Owners again refused appraisal because the
“coverage, scope, [and] amount of loss” were in
dispute, making appraisal of the value of the loss premature.
Owners's letter also asked the Coles, for the first
time, to retain any damaged property.
16, David Eshenour, an Owners adjustor who had earlier taken
over the claim from Mr. Bonhomme, inspected the Coles'
home. He observed additional, previously-uncompensated damage
to the home, and increased Owners's estimate of the
dwelling loss to $57, 458.10 replacement cost value and $43,
227.15 actual cash value-still substantially less than the
Coles' valuation for the dwelling loss of $164, 458.19
actual cash value. Owners issued a check for $9, 220.95 to
the Coles, supplementing Owners's initial dwelling-loss
payments. At this point, neither Owners nor the Coles had
presented to the other party a proposed value for the
August 5, the Coles informed Owners, once again by letter,
that they would accept the supplemental check, but that they
still disputed Owners's valuation of their dwelling
claim. The Coles again demanded appraisal. At the end of that
month, Owners responded, reiterating its earlier response
that appraisal was inappropriate because it disputed coverage
and scope of loss.
the end of August, ServiceMaster returned the 13 items that
it had taken in March to restore. However, Ms. Cole concluded
that 12 of the 13 items had not been satisfactorily restored.
weeks later, the Coles submitted their contents inventory and
claim valuation to Owners. The Coles' inventory of
personal property was 43 pages long and enumerated in excess
of 1, 000 items. For many, but not all items, the inventory
included hyperlinks to the same or similar items on various
retailers' websites, such as Sears and Dillard's. The
inventory included items as small as a box of Honey-Nut
Cheerios from the Coles' kitchen and as big-ticket as a
living-room recliner. The inventory included estimated ages
of the items and noted the items for which the Coles could
not remember the purchase date. The Coles and The Howarth
Group stated that the contents loss was $102, 660.86
replacement value or $88, 563.44 actual cost
October 22, 2015, the Coles sent Owners another demand for
the appraisal process based on the valuation disputes. Owners
responded on November 5, asking for examinations under oath
from the Coles and observing that the Coles had already
offered dates for those examinations. Owners requested that
the Coles preserve all items on their inventory and stated
that they needed to determine whether the items had fire,
smoke, or water damage, because only some of the items were
in rooms that had suffered direct fire damage.
November 24, Owners once again told the Coles that it would
not agree to appraisal until the disputes over coverage had
been resolved. Owners stated-without further elaboration-that
these coverage disputes included possible, but unidentified,
misrepresentations by the Coles, “a question as to
whether a covered loss as defined by the policy occurred,
” and the Coles' failure to timely submit an
inventory. Owners reiterated the necessity of the Coles'
examinations under oath and emphasized that, although it had
singled out some of the Coles' duties under the Policy,
it did not waive any of the Coles' other possible
failures to comply.
December 22, Owners took the Coles' examinations under
oath pursuant to the Policy. The Coles sent another letter
through counsel again demanding appraisal.
all this time, the Coles' house was uninhabitable.
Although they attempted some cleanup by renting a dumpster
and hiring people to assist in cleaning out the house, they
had to live somewhere else. The Coles and Owners appeared to
agree that placing them in a hotel as a long-term
accommodation would not be the most cost-effective way to
provide an alternative living situation while the home was
repaired. Ultimately, the Coles moved into another property
they owned but typically rented. The Coles accordingly added
a claim for lost rents on that property under the
Policy's additional living expenses coverage and also
made a claim for debris removal. At their examinations under
oath, the Coles submitted amended proofs of loss for their
contents, additional living expenses, and debris removal
January 12, 2016, Owners sent the Coles the transcripts of
their examinations. The Coles signed and returned those
transcripts with corrections on March 14, 2016.
April 18, 2016, -more than a year after the fire-Owners
mailed to the Coles' attorney a letter stating that it
had received the Coles' signed examinations under oath,
but that it had “come to [Owners's] attention that
the amounts claimed on each Proof of Loss (Debris Removal,
Contents, and Additional Living Expenses) may be
incorrect.” (Doc. 34-13). In addition, Owners said it
was “unable to accept the amounts presented as accurate
with the information we know at this time.” But Owners
added that it was “not able to accept or reject your
proof of loss as submitted.” (Id.).
did not explain what, specifically, caused it to doubt the
accuracy of the Coles' claims. Nor did Owners note what
further steps it would be taking to investigate the
Coles' claims and to determine whether it would deny the
claims. Nor did Owners request that the Coles submit any
further information or documentation to support their claim.
Coles filed the instant lawsuit soon thereafter.
Coles' homeowners' insurance policy with Owners
contains the following relevant provisions.