United States District Court, N.D. Alabama, Northeastern Division
MEMORANDUM OPINION AND ORDER
MADELINE HUGHES HAIKALA UNITED STATES DISTRICT JUDGE.
diversity action involves an insurance coverage dispute.
Plaintiff Cobblestone Condominium Association bought an
insurance policy from defendant Travelers Casualty Insurance
Company of America that provided damage coverage for its
condominiums. Cobblestone filed two claims under the policy,
the first relating to building damage from a fire and the
second to roof damage from a storm. The parties agree that
both claims are covered under the insurance policy.
Cobblestone invoked the policy's appraisal provision
after the parties could not agree on a damage amount for the
two claims, but the appraisal process went awry, and
Cobblestone filed this lawsuit alleging breach of contract
and bad faith.0F
seeks partial summary judgment on its breach of contract
claims, asking the Court to find as a matter of law that
Travelers was required to participate in the appraisal
process on the fire and roof claims under the terms of the
insurance policy but failed to do so. (Doc. 51). Travelers
asks the Court to enter judgment in its favor with respect to
Cobblestone's breach of contract and bad faith claims.
(Doc. 48). For the reasons described below, the Court grants
Cobblestone's motion as to the fire claim only, and it
denies Travelers's motion except as to Cobblestone's
claim of bad faith regarding the roof.
STANDARD OF REVIEW
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). To demonstrate that there is a genuine
dispute as to a material fact that precludes summary
judgment, a party opposing a motion for summary judgment must
cite “to particular parts of materials in the record,
including depositions, documents, electronically stored
information, affidavits or declarations, stipulations
(including those made for purposes of the motion only),
admissions, interrogatory answers, or other materials.”
considering a motion for summary judgment, a district court
must view the evidence in the record in the light most
favorable to the non-moving party and draw reasonable
inferences in favor of the non-moving party. White v.
Beltram Edge Tool Supply, Inc., 789 F.3d 1188, 1191
(11th Cir. 2015). “A litigant's self-serving
statements based on personal knowledge or observation can
defeat summary judgment.” United States v.
Stein, 881 F.3d 853, 857 (11th Cir. 2018); see
Feliciano v. City of Miami Beach, 707 F.3d 1244, 1253
(11th Cir. 2013) (“To be sure, Feliciano's sworn
statements are self-serving, but that alone does not permit
us to disregard them at the summary judgment stage.”).
Even if a district court doubts the veracity of the evidence,
the court cannot make credibility determinations of the
evidence; that is the work of a factfinder.
Feliciano, 707 F.3d at 1252 (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). Still,
conclusory statements in a declaration cannot by themselves
create a genuine issue of material fact. See Stein,
881 F.3d at 857 (citing Lujan v. Nat'l Wildlife
Fed'n, 497 U.S. 871, 888 (1990)).
motions for summary judgment do not alter the Rule 56
standard. See United States v. Oakley, 744 F.2d
1553, 1555-56 (11th Cir. 1984) (“Cross 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.”). “In practice, cross
motions for summary judgment may be probative of the
nonexistence of a factual dispute, but this procedural
posture does not automatically empower the court to dispense
with the determination whether questions of material fact
exist.” Georgia State Conference of NAACP v.
Fayette Cty. Bd. of Comm'rs, 775 F.3d 1336, 1345
(11th Cir. 2015) (quoting Lac Courte Oreilles Band of
Lake Superior Chippewa Indians v. Voigt, 700 F.2d 341,
349 (7th Cir. 1983)) (internal quotation marks and brackets
omitted). “If both parties proceed on the same legal
theory and rely on the same material facts ... the case is
ripe for summary judgment.” NAACP, 775 F.3d at
1345 (quoting Shook v. United States, 713 F.2d 662,
665 (11th Cir. 1983)) (internal quotation marks omitted)
(alteration supplied by NAACP).
SUMMARY JUDGMENT EVIDENCE
is an association of condominium homeowners in Huntsville,
Alabama. (Doc. 45-1, pp. 2-3; Doc. 45-3, p. 5, tr. p. 14).
Cobblestone's property consists of 26 residential
two-story buildings, each with four downstairs and four
upstairs units. (Doc. 46-10, p. 4; Doc. 46-11, pp. 25-27).
Travelers issued a condominium-homeowners insurance policy to
Cobblestone. (Doc. 55, p. 4). The policy covered all of the
condominium units in the Cobblestone complex during the
coverage period. (See Doc. 45-1). It is undisputed
that Cobblestone paid its premiums for the relevant coverage
year and that the insurance policy was in full force and
effect when the two incidents in question took place. (Doc.
37, pp. 1, 2, ¶¶ 1, 5; Doc. 55, p. 4).
2015, Cobblestone made two separate claims under the
insurance policy regarding physical damage to its
condominiums. The first claim stemmed from a fire, and the
second claim concerned roof damage resulting from hail and
wind in a storm. (Docs. 46-10, 46-11). The parties do not
dispute that the policy provides coverage for the two losses.
(Doc. 55, p. 4).
insurance policy contains an appraisal provision. (Doc. 55,
p. 4; Doc. 45-1, p. 64). In the insurance context, appraisal
is a dispute resolution technique wherein a representative
for each party works with an umpire to resolve disputes
concerning the amount of an insured's loss. (Doc. 45-1,
p. 64). The appraisal provision of the insurance policy
PROPERTY LOSS CONDITIONS:
4. Legal Action Against Us
If we and you disagree on the value of the property, the
amount of Net Income and operating expense or the amount of
loss, either may make written demand for an appraisal of the
loss. In this event, each party will select a competent and
impartial appraiser. The two appraisers will select an
umpire. If they cannot agree, either may request that
selection be made by a judge of a court having jurisdiction.
The appraisers will state separately the value of the
property, the amount of Net Income and operating expense or
the amount of loss. If they fail to agree, they will submit
their differences to the umpire. A decision agreed to by any
of the two will be binding. Each party will:
a. Pay its chosen appraiser;
b. Bear the other expenses of the appraisal and umpire
(Doc. 45-1, p. 64). Travelers initially agreed to submit
Cobblestone's fire claim to appraisal, but Travelers
later withdrew from the appraisal process. (Doc. 55, p. 5).
With respect to Cobblestone's roof claim, Travelers
rejected Cobblestone's demand for appraisal as premature.
(Doc. 55, p. 5).
The Fire Claim
February 17, 2015, a fire occurred in Building T of the
Cobblestone complex. (Doc. 46-10; Doc. 45-3, p. 11, tr. p.
37; Doc. 45-4, p. 50). The fire destroyed four units and
seriously damaged four additional units within Building T.
(Doc. 46-10).1F On March 26, 2015, Travelers estimated
that the “replacement cost value” to restore
Building T to its pre-loss condition would be $826, 047.78.
(Doc. 45-15, p. 2). After deducting amounts for depreciation,
Travelers paid Cobblestone an “actual cash value”
on the fire claim of $649, 424.73. (Doc. 55, p.
4).2F Travelers indicated that the amount
withheld for depreciation would be payable upon completion of
repairs up to the actual amount spent for the repairs. (Doc.
45-15, p. 2). During its investigation of the fire loss,
Travelers obtained a “Marshall & Swift”
report, dated March 16, 2015, which estimated a total
“ground up” reconstruction cost for Building T at
$1, 167, 060. (See Doc. 45-4, p. 35, tr. pp.
April 1, 2015, Cobblestone retained The Howarth Group to
represent it with respect to the fire claim. (Doc. 45-20, p.
2). One week later, The Howarth Group demanded appraisal of
the fire loss under the insurance policy. (Doc. 45-21, p. 2).
Without providing details to Travelers, The Howarth Group
stated that Cobblestone had “several differences with
the settlement offer provided by [Travelers].” (Doc.
45-21, p. 2). Chuck Howarth of The Howarth Group later
testified that Travelers's estimate omitted numerous
basic items such as plumbing supply lines, paint, primer,
framing, electrical wiring, outlets, switches, and panel
boxes, among other items necessary to restore Building T to
its pre-loss condition and to bring the building into
compliance with city building codes:
It was obvious that the . . . estimate on which [Travelers
relied] left a lot of damage out. There's holes in the
estimate that are surprising. There are things - there are
parts of the building he just left out. And this is the kind
of stuff that a first-year adjustor would not leave out. This
was a surprise to me. And those errors were duplicated room
after room after room. . . . [W]e agreed on the general work.
Just put the stuff you left out in the estimate.
(Doc. 50-17, p. 17, tr. p. 63; see pp. 17-25, tr.
April 16, 2015, Travelers rejected Cobblestone's demand
for appraisal as premature. (Doc. 45-22, pp. 2-3). Travelers
explained that Cobblestone had not “presented its
formal claim for damages, ” leaving it “unable to
identify any differences that may exist with our offer and
Cobblestone's claim.” (Doc. 45-22, p. 2). On June
9, 2015, The Howarth Group provided Travelers with a proof of
loss and estimate on the fire claim, which reflected a
replacement cost value of $1, 129, 388.57 and an actual cash
value of $993, 861.94. (Doc. 45-23, pp. 2-172). Arthur
Grandinetti prepared the estimate on behalf of The Howarth
Group. (Doc. 45-23, p. 2). One week later, Travelers rejected
Mr. Grandinetti's estimate: “we must reject the
proof of loss since we are not in agreement on the amount of
the damages.” (Doc. 45-24, p. 2). Travelers cited the
estimate's omission of an actual cash value and requested
additional information. (Doc. 45-24, p. 2). Cobblestone
denied Travelers's request and insisted on proceeding
with appraisal. (Doc. 45-25, p. 2). On July 6, 2015,
Travelers responded to Cobblestone's request to continue
with appraisal: “we are in agreement to proceed with
the appraisal process at this time. We have retained Harrison
Jones . . . as our appraiser.” (Doc. 45-26, p. 2). On
July 17, 2015, Travelers and Cobblestone formally submitted
the fire claim to appraisal. (Doc. 50-2, p. 2). The parties
mutually agreed to the appointment of Dale Mullin as the
umpire. (Doc. 50-3, p. 2).
the parties engaged in appraisal conversations, Cobblestone
hired an architectural and engineering firm, Bird and
Kamback, LLC, to create plans to rebuild Building T and to
secure bids for the construction. (Doc. 45-27, pp. 37-40).
Cobblestone asserts that it retained Bird and Kamback in an
effort to comply with multiple citations from the City of
Huntsville requiring that Cobblestone either tear down the
damaged building or produce blue prints with plans for
rebuilding. Cobblestone also wanted to “have an
available contractor ready to begin construction once the
umpire awarded damages [through appraisal].” (Doc. 26,
p. 4; see Doc. 26-7, p. 4, ¶¶ 11-12).
Travelers does not dispute that Cobblestone was permitted to
seek out contractors and to secure bids in anticipation of
construction. (Doc. 50-13, p. 10, tr. p. 36).
October 6, 2015, Mr. Grandinetti and Mr. Jones, as appraisers
for Cobblestone and Travelers, respectively, met with the
umpire at the Cobblestone property to conduct a walk-through.
(Doc. 45-33, p. 19, tr. p. 69). Mr. Jones testified that
several weeks before the onsite meeting, he learned that
Cobblestone was soliciting bids on the project through an
architect and engineering firm. (Doc. 45-33, p. 19, tr. pp.
70-71). After the topic of the bids surfaced, the parties
discontinued the meeting pending submission and production of
the bids. (Doc. 45-33, pp. 20, 23, tr. pp. 75-76, 87-88; Doc.
45-11, p. 17, tr. pp. 62-63).
October 9, 2015, Bird and Kamback received sealed bids from
local contractors. (Doc. 46-27, p. 2, ¶ 4; Doc. 46-28,
p. 1, ¶ 1; Doc. 46-29, p. 3, ¶ 6; Doc. 47-1, p. 2,
¶ 4). On October 12, 2015, Travelers requested copies of
the bids. (Docs. 45-35, 46-3). Chris Scaife, president of
Cobblestone's homeowners association, declined to produce
the bids and instead instructed Bird and Kamback to return
the bids unopened to the bidders. (Doc. 46-2, p. 2). Mr.
Scaife testified that Cobblestone did not open the bids and
that Cobblestone returned the sealed bids to the bidders.
(Doc. 45-12, p. 38, tr. pp. 146-48). Mr. Scaife explained in
an email to Bird and Kamback:
We had assumed the Referee in the independent appraisal would
have had his final meeting with both sides before the bids
were due. The meeting did not take place until afterwards as
it was rescheduled a couple / few times. Your specs were
based on insurance information to ensure we did not overspec
the project and obtain offers that were over and above our
final settlement amount. We need to settle with the insurer
before we determine the price payable to the contractors. We
don't want the referee to request the bid packages and
award us a dollar amount based on the lowest compliant offer.
Please advise the offerors that we are awaiting settlement
with the insurance company and don't want to hold onto
offers that have expired. We also don't want them to
believe that we opened their offers and are trying to conduct
an auction. Returning their packages to them unopened will
give them the surety that we have not favored one over the
(Doc. 46-2, p. 2).
October 29, 2015, Travelers wrote to Cobblestone, stating:
Until we receive the [bid] documents and have an opportunity
to review them were are not in position to go further with
the appraisal on the building.
(Doc. 46-3, p. 2). On November 11, 2015, Travelers followed
up on its requests for the bids and informed Cobblestone that
it was “suspending the appraisal process pending
receipt and an opportunity to review the previously requested
documents that we have not yet received.” (Doc. 46-4,
p. 2). Cobblestone's fire claim has lay dormant since
Travelers withdrew its participation from the appraisal
The Roof Claim
of 2015, a thunderstorm with high winds and hail damaged
roofs in the Cobblestone complex. (Doc. 46-11, pp. 25-30).
Cobblestone filed a claim under its insurance policy with
Travelers. (Doc. 45-11). The parties dispute the number of
roofs impacted-Cobblestone contends that the roofs of all 26
buildings in the complex were damaged while Travelers
maintains that the roofs of only eight buildings suffered
damage. (Doc. 51, p. 3, n. 2). On June 24, 2015, Travelers
inspected approximately half of the roofs in the complex.
(Doc. 50-8, p. 7, tr. p. 20). Twenty-two of the roofs were
replaced in 2009 pursuant to a separate storm damage claim,
(Doc. 46-12, pp. 5-6; see Docs. 46-13, Doc. 46-14),
and, according to Travelers's adjuster, the newer roofs
did not need to be replaced, (Doc. 50-8, p. 20, tr. pp.
20-21). Following Travelers's inspection, the company
agreed to repair damaged shingles on eight roofs in the
complex using a hand-seal or gluing process. (Doc. 45-12, p.
11, tr. p. 38; Doc. 46-16, pp. 1-13). Travelers initially
paid Cobblestone $17, 238.55 on the roof claim, which
included a $1, 000 deductible. (Doc. 46-16, p. 9, Doc. 45-12,
p. 11, tr. pp. 37-38).
receiving Travelers's estimate, Cobblestone retained
Superior Roofing to provide an estimate. (Doc. 45-12, pp.
12-13, tr. pp. 43-45). Superior Roofing examined the damaged
roofs on August 5, 2019 and determined that the roofs could
not be repaired using the hand-seal or gluing method proposed
by Travelers. (Doc. 45-12, p. 11, tr. p. 38). Superior
Roofing estimated that it would cost $121, 280.00 to repair
the roofs. (Doc. 46-18, p. 2; Doc. 45-12, p. 5).
August 25, 2015, Cobblestone demanded appraisal on the roof
claim. (Doc. 46-19, p. 2). Travelers did not submit to
appraisal but instead agreed to pay the Superior Roofing
estimate at a replacement cost value of $114, 466.88. (Doc.
46-20, p. 11; Doc. 45-12, p. 15, tr. p. 54). After
depreciation, Travelers paid Cobblestone $57, 798.50 on the
roof claim. (Doc. 45-12, p. 15, tr. p. 54; Doc. 45-13, p.
16). On September 17, 2015, Cobblestone demanded appraisal on
the roof claim for a second time and advised that The Howard
Group would serve as its appraiser. (Doc. 46-22, pp. 2-3).
Travelers responded on December 2, 2015, rejecting
Cobblestone's demand for appraisal as premature. (Doc.
46-23, pp. 2-3). Travelers explained that Cobblestone had not
“presented its formal claim for damages as a result of
wind damage, ” leaving it “unable to identify any
differences that may exist with our offer and
Cobblestone's claim.” (Doc. 46-23, p. 2). The
Howarth Group retained an expert, Dr. Neil B. Hall, Ph. D.,
to assess the roof damage. (Doc. 46-25, p. 8, tr. p. 27).
Based on a report prepared by Dr. Hall, The Howarth Group