Riordan v. Nationwide Mut. Fire Ins. Co.
| Decision Date | 02 October 1992 |
| Docket Number | D,No. 1793,1793 |
| Citation | 977 F.2d 47 |
| Parties | John W. RIORDAN; Jane Fox, Plaintiffs-Appellees, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Defendant-Appellant. ocket 92-7160. |
| Court | U.S. Court of Appeals — Second Circuit |
Neil A. Goldberg, Buffalo, N.Y. (Lawrence A. Schulz, Richard J. Cohen, Saperston & Day, of counsel), for defendant-appellant.
Jonathan J. Wilkofsky, New York City (Mark L. Friedman, David B. Karel, Wilkofsky, Friedman, Karel & Cummins, of counsel), for plaintiffs-appellees.
Eugene R. Anderson and Leonard W. Stewart, New York City (Anderson Kill Olick & Oshinsky, P.C., of counsel), submitted a brief for amici curiae Beverly Brooks, et al. in support of plaintiffs-appellees.
Before: WINTER, MINER, and McLAUGHLIN, Circuit Judges.
Defendant-appellant Nationwide Mutual Fire Insurance Company appeals from a judgment entered on January 15, 1992 after a jury trial in the United States District Court for the Southern District of New York (Brieant, Ch. J.), awarding a total of $349,304.34 in damages and $174,652.17 in attorney's fees to plaintiffs-appellees John Riordan and Jane Fox (the "Riordans"). The Riordans, a married couple, commenced this action after their house and its contents suffered severe damage as a result of a fire. The Riordans initially made a claim under their homeowners insurance policy with Nationwide. After six months elapsed without settlement of their claim, the Riordans brought this action, alleging that Nationwide breached the insurance contract and committed deceptive acts and practices in violation of N.Y.Gen.Bus.Law § 349 (McKinney 1988) ("GBL § 349"). The Riordans sought compensatory, statutory and punitive damages as well as the attorney's fees permitted by GBL § 349(h). At the close of trial, the jury returned a verdict in favor of the Riordans, awarding compensatory and punitive damages in addition to damages under GBL § 349. The district court then approved an attorney's fees award.
In 1988, the Riordans purchased from Nationwide an "Elite II" homeowners insurance policy to insure their residence located at 48 Overlook Road, Ossining, New York. The policy covered the building and its contents, guaranteeing payment of the replacement cost of both in the event of loss. On July 17, 1989, a fire occurred at the residence, completely destroying the downstairs family room and causing varying degrees of damage to other areas of the house. Most of the house and its contents, with the exception of the attic, suffered significant damage due to heat, soot, smoke, and water. Approximately ninety percent of the contents of the house, including clothing, artwork, antiques, and personal effects, was in need of repair or cleaning or had been totally destroyed.
After learning of the fire and its effects, the Riordans contacted their insurance agent at Nationwide and engaged Steven Seltzer, a public insurance adjuster with the firm of Goldstein Affiliates, to assist in handling their claim. Seltzer and the Riordans set about retaining the appropriate persons to estimate the damages to the house and its contents. They also began to prepare for submission to Nationwide an inventory listing the approximate values of all personal effects damaged or destroyed in the fire. Nationwide's claims adjuster, John Hahn, visited the premises on two occasions after the fire. The first time, within two days of the occurrence, Hahn made a preliminary evaluation of the scene and had a contractor estimate the cost of repairing the damage to the house. The second and final time, on August 2, 1989, Hahn went through the entire house with Seltzer. The Riordans previously had provided Hahn with their completed inventory, so Hahn took notes on the inventory sheets regarding the condition of the items and the likelihood and cost of repair. Hahn did not authorize the start of any repairs or cleaning for the house or its contents, despite several attempts thereafter by Seltzer to obtain such authorization. Although he already had the Riordans' inventory with item values, Hahn demanded that the Riordans compile for Nationwide a sworn Statement in Proof of Loss, a document listing each item of inventory for which reimbursement was claimed and its value.
The Riordans, after tiring of Hahn's failure to communicate with them, proceeded to have their personal effects removed from the house for cleaning and restoration by companies which Seltzer recommended. Seltzer and the Riordans began compiling the information for the Proof of Loss based on the reports and estimates provided by the companies hired to clean and restore the personal effects. Nationwide never sent anyone to evaluate the damage to these items, although Seltzer continually requested Hahn to do so. The Riordans timely submitted the Proof of Loss to Nationwide, but detailed only those items known at that point to be irreparably damaged or destroyed. Not included were items on which restoration or cleaning was being attempted. For this reason, at the end of the Proof of Loss the Riordans reserved the right to amend the document upon completion of the analysis of the damage and the attempts at restoration.
Between Between the time Hahn demanded the Proof of Loss and the submission of the document, Hahn and Nationwide did not take any steps to ascertain the amount of damage to the contents of the house. Although Hahn had the inventory during this period, he did not question the amounts claimed therein or send appraisers to evaluate the condition of the Riordans' personal effects, or the possibility of repairing or cleaning them. Nor did Hahn answer Seltzer's numerous letters and telephone calls requesting meetings, advances, or other action by Nationwide on the claim. Even after receipt of the Proof of Loss, Hahn failed to respond, neither approving or denying the claim nor requesting additional information. In mid-November, over a month after receiving the Proof of Loss, Hahn sent experts to evaluate the damage to certain of the antiques and artwork in the possession of the restoration company, although much restoration work had been completed by this time. Nationwide's experts did not cooperate with the restoration company personnel, and Nationwide never produced the results of the appraisals to the Riordans or explained whether their claim would be affected.
With regard to the building portion of the claim, Seltzer had retained a construction contractor to evaluate the cost to repair the damage to the Riordans' home. Seltzer then sought an advance on this portion of the Riordans' claim so that construction could start. Nationwide obliged with a $25,000 advance, but the Riordans could not utilize the money for repairs without prior approval from Citibank, the mortgagee of the property. Citibank would not release the funds until the building portion of the claim had been settled, so the Riordans were forced to leave the house in its damaged condition and live in their summer home on Long Island.
Finally, on January 16, 1990, Hahn met with Seltzer in an attempt to settle the Riordans' claim. At that meeting, Seltzer agreed to accept the amount offered by Hahn to settle the building portion of the claim, although it was below what the Riordans sought. Hahn telephoned his supervisor, Joseph Kenyon, for approval to settle that portion of the claim, but Kenyon refused to do so unless the Riordans agreed to accept Nationwide's offer on the contents portion of the claim. Nationwide, through Hahn, had offered approximately $21,000 to settle the contents portion of the claim, but Seltzer previously had rejected the same amount as too far below the figure of more than $160,000 sought by the Riordans based on the Proof of Loss. As a consequence, Seltzer felt constrained to reject settlement of the building portion of the claim because it was contingent on settlement of the contents portion at the low amount.
In December 1989, the Riordans, at this point tired of waiting for Nationwide to settle their claim, registered a complaint with the New York Department of Insurance. The Department did not respond to the complaint until April 1990 and then only recommended that the Riordans retain an attorney and sue. The Riordans had already commenced this suit on January 24, 1990, alleging that Nationwide's actions amounted to a breach of the insurance contract and that Nationwide had committed deceptive acts and practices in violation of GBL § 349 in the claims settlement process. The Riordans sought to recover compensatory and punitive damages, damages as permitted by statute for the deceptive acts of Nationwide, and attorney's fees as permitted under GBL § 349(h). On December 12, 1990, the...
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