Hoover v. United Servs. Auto. Ass'n

• Decision Date: 07 November 2013
• Docket Number: No. 2011–CA–01486–SCT.,2011–CA–01486–SCT.
• Citation: 125 So.3d 636
• Parties: Dr. Jack HOOVER and Margaret Ann Hoover v. UNITED SERVICES AUTOMOBILE ASSOCIATION.
• Court: Mississippi Supreme Court

125 So.3d 636

Dr. Jack HOOVER and Margaret Ann Hoover

v.UNITED SERVICES AUTOMOBILE ASSOCIATION.

No. 2011–CA–01486–SCT.

Supreme Court of Mississippi.

Nov. 7, 2013.

David Neil Harris Jr., Clyde H. Gunn, III, Christopher Collins Van Cleave, William Corban Gunn, Biloxi, attorneys for appellants.

Charles Patrick Copeland, Ridgeland, Charles G. Copeland, Rebecca Suzanne Blunden, Ridgeland, attorneys for appellee.

EN BANC.

RANDOLPH, Presiding Justice, for the Court:

¶ 1. This case arises out of an alleged breach of contract and bad-faith denial of Dr. Jack and Margaret Hoover's homeowner's insurance claim against United Services Automobile Association (“USAA”) following Hurricane Katrina (“Katrina”). The trial judge granted USAA's motion for directed verdict as to the Hoovers' claims for: (1) the unpaid portion of losses; (2) mental anguish and emotional distress; and (3) punitive damages. The trial court further determined that there were issues of fact for the jury as to whether the Hoovers' roof structure was damaged, and as to the Hoovers' claim for additional living expenses (“ALE”). The jury found for the Hoovers and returned a verdict of $81,342.97 in compensatory damages. The Hoovers appealed and USAA cross-appealed.

FACTS

¶ 2. The Hoovers presented evidence that they incurred $240,917.56 in costs to repair their property for losses inflicted by Katrina and $1,342.97 for ALE. The Hoovers also claimed an “additional $80,000 in future cost to replace ... [the] roof structure.” ¹ USAA provided homeowners' insurance for the Hoovers.² USAA posited that the majority of the Hoovers' loss occurred on the lower floor of the home and was the result of excluded storm surge. USAA limited the “covered loss” to $56,748.17 and made payments totaling that amount over time. USAA denied that the Hoovers' roof structure needed to be replaced and that coverage extended to ALE.

¶ 3. On August 11, 2008, the Hoovers filed a complaint against USAA in the Circuit Court of Jackson County alleging, inter alia, breach of contract and tortious bad-faith breach of contract. USAA filed its “Answer and Defenses [,]” and raised, as its seventh affirmative defense, that the “damages for which Plaintiffs seek recovery were either caused or contributed to by excluded water damage as defined in the policy.”

¶ 4. A four-day jury trial was held before the Honorable Frank Vollor. Following the close of the Hoovers' case-in-chief, USAA moved for a directed verdict on all claims. The trial court granted USAA's motion as to the Hoovers' claims for mental anguish and emotional distress.

¶ 5. At the close of all evidence, the trial court ruled that “the only evidence present [was] that the damage to the lower part of the floor was done by the storm surge[,]” and, thus, did not allow that issue to go to the jury. However, the trial court determined that whether the roof structure was damaged was “still in dispute[,]” and “allow[ed] that [issue] to go to the jury [,]” along with the ALE claim. The jury awarded the Hoovers $81,342.97 in compensatory damages.³ Thereafter, the trial court denied the Hoovers' claim for punitive damages. Final judgment was entered on September 2, 2011.

ISSUES

¶ 6. On appeal, the Hoovers raise the following issues, restated as follows:

I. Whether the trial judge erred by granting directed verdict in favor of USAA regarding the contractual damages in the amount of $240,917.56.

II. Whether the trial judge erred by granting directed verdict in favor of USAA regarding the Hoovers' mental-anguish and emotional-distress claims.

III. Whether the trial judge erred by granting a directed verdict in favor of USAA regarding the Hoovers' punitive-damages claims.

¶ 7. On cross-appeal, USAA raises the following issues:

IV. Whether the trial judge failed to properly apply the Daubert standards to Dr. Ralph Sinno's testimony that the Hoovers' roof structure was damaged.

V. Whether the trial judge erred in allowing Sinno to testify as to the cost of replacing the roof structure.

ANALYSIS

I. Whether the trial judge erred by granting directed verdict in favor of USAA regarding the contractual damages in the amount of $240,917.56.

¶ 8. The standard of review for the trial court's grant or denial of a motion for directed verdict is de novo. Braswell v. Stinnett, 99 So.3d 175, 177–78 (Miss.2012) (citing Thompson v. Nguyen, 86 So.3d 232, 236 (Miss.2012)).

¶ 9. In Corban v. United Services Automobile Association, 20 So.3d 601, 619 (Miss.2009), this Court unanimously held that:

[w]ith respect to the “all-risk” coverage of “Coverage A–Dwelling” and “Coverage B–Other Structures,” the Corbans are required to prove a “direct, physical loss to property described.” Thereafter, USAA assumes the burden to prove, by a preponderance of the evidence, that the causes of the losses are excluded by the policy, in this case, “ [flood] damage.” USAA is obliged to indemnify the Corbans for all losses under “Coverage A–Dwelling” and “Coverage B–Other Structures” which USAA cannot establish, by a preponderance of the evidence, to have been caused or concurrently contributed to by “[flood] damage.”

(Emphasis added.) In the case sub judice, several facts are uncontradicted. The Hoovers had a USAA “all-risk” homeowners' policy that was in effect at the time of Katrina.⁴ The proof presented by the Hoovers is that they suffered $240,917.56 in “direct physical loss” to their dwelling and other structures as a result of Katrina. The Hoovers satisfied the burden required by Corban.⁵ The Hoovers were entitled to payment for those losses, unless USAA could “prove, by a preponderance of the evidence, that the causes of the losses are excluded by the policy, in this case, ‘flood damage.’ ” Id.

¶ 10. Nevertheless, at the close of all evidence, the trial court granted a directed verdict for USAA as to the unpaid portion of the Hoovers' dwelling losses. The trial court stated, in pertinent part,

the proof is overwhelming that the lower part [of the house] was involved in a surge. There's nothing to contradict that. So the Court finds that the evidence—that's the only evidence present, that the damage to the lower part of the floor was done by the storm surge, saltwater surge, which I understand a lot of the testimony comes from Dr. Hoover himself.... The court thinks the plaintiff should have had to put on something to show it was other than surge.

(Emphasis added.)

¶ 11. USAA acknowledges the standard set forth in Corban but argues that it met its burden of proof “through documents, its own investigation, and the cross examination of [Dr. Hoover] that the lower part of the house was damaged by storm surge flooding, not wind.” USAA contends that, “at that point, the burden shifted back to the Hoovers to put on some proof to create an issue of fact,” and the Hoovers failed to meet the burden to put on contradictory evidence.

¶ 12. In support of its argument that the burden shifted back to the Hoovers, USAA cites Bayle v. Allstate Insurance Co., 615 F.3d 350 (5th Cir.2010). In Bayle, a Katrina case, the Fifth Circuit held that if the insurer “make [s] out a prima facie case that the cause of the uncompensated or under-compensated damage was excluded from coverage[,]” then “the burden shifts to the insured to present evidence demonstrating there remains a material issue of fact.” Id. at 359. USAA's reliance on Bayle is unavailing, as that case applied Louisiana law. Id. USAA cites no authority under Mississippi law for the proposition that the burden of proof shifts back to the insured.

¶ 13. In Broussard v. State Farm Fire & Casualty Co., 523 F.3d 618, 627 (5th Cir.2008), the same court noted that “[t]he Mississippi Supreme Court has not explicitly addressed the ‘shifting back’ theory when considering an ‘open peril’ policy.” ⁶ In Broussard, State Farm argued, inter alia, that “under the dwelling coverage, once it advance[d] evidence to establish its affirmative policy exclusion defenses, the burden shifts back to the Broussards to prove that there is an exclusion to the defenses or to segregate covered from non-covered damages.” Id. at 626. State Farm's argument mirrored the one advanced by USAA in this case. After a thorough examination of Mississippi caselaw, the Broussard court rejected State Farm's “shifting back theory” as the rule in Missisissippi. Id. at 627.Appleman on Insurance refers to Broussard as “[t]he signature case on allocation of burden of proof for hurricane damages.” Eric M. Holmes, Appleman on Insurance § 192.09 (2d ed.2008).

¶ 14. In Grace v. Lititz Mutual Insurance Co., 257 So.2d 217, 219, 224–25 (Miss.1972) (citing Commercial Union Insurance Co. v. Byrne, 248 So.2d 777, 781 (Miss.1971)), this Court stated, “[t]he rule is well established in this state that where the question presented to the jury was whether the loss was due to windstorm or water, the entire question of proximate cause is treated as one of fact independent of the explicit application of any rule of law.” (Emphasis added.) Broussard interpreted “State Farm's ‘shifting back’ theory ... to be the sort of ‘rule of law’ which would operate in many cases to take the issue of causation away from the jury.” Broussard, 523 F.3d at 627. The Broussard court stated, “the ultimate allocation of wind and water damages under the Broussard's dwelling coverage is a question of fact for the jury.” Id. This statementis consistent with this Court's holding in Corban that the issue of whether the damage was caused by wind or excluded storm surge is “a question of fact for the jury.” Corban, 20 So.3d at 619.

¶ 15. The trial court's finding that the Hoovers “should have put on something to show that it was other than surge” was erroneous and in conflict with this Court's prior decisions, including Corban. USAA bears the burden to prove, by a preponderance of the evidence, that the loss was caused by, or concurrently contributed to, by an excluded peril. This issue of fact is one for the jury, and the...