Auto-Owners Ins. Co. v. Bank
| Decision Date | 29 August 2022 |
| Docket Number | C. A. 3:20-cv-4015-SAL |
| Parties | Auto-Owners Insurance Company, Plaintiff, v. Michael Andrew Bank, Defendants. |
| Court | U.S. District Court — District of South Carolina |
This is an insurance contract case. Pending before the court are Defendant Michael Bank's Motion for Partial Summary Judgment, ECF No. 27, and Plaintiff Auto-Owners Insurance Company's Motion for Summary Judgment, ECF No. 28. For the reasons set forth below, the court GRANTS Bank's motion and DENIES Auto-Owners' Motion.
On November 17, 2020, Auto-Owners Insurance Company (“Auto-Owners”) filed this action against Defendant Michael Andrew Bank (“Bank”) seeking a declaratory judgment that no coverage exists under the applicable homeowner's insurance policy for the damage identified in Bank's insurance claim. [ECF No. 1, | 24]. Less than a month later, Bank filed an Answer to AutoOwners' Complaint and included two counterclaims alleging that Auto-Owners breached the parties' insurance contract by not providing coverage under the homeowner's insurance policy and the denial constituted bad faith, entitling him to damages plus reasonable attorney's fees and costs. [ECF No.6, H 15-32]. Auto-Owners answered Bank's counterclaims on January 4, 2021.
Bank filed his Motion for Partial Summary judgment on August 2 2021. [ECF No. 27]. AutoOwners filed its own Motion for Summary Judgment on the same day. [ECF No. 28]. Two weeks later, on August 16, 2021, the parties filed their respective Responses to the summary judgment motions. [ECF Nos. 29, 30]. Bank filed a Reply addressing Auto-Owners' Response on August 23, 2021. [ECF No. 31].
All pending motions, therefore, have been fully briefed and are ripe for consideration by this court.
On February 20, 2020, Auto-Owners issued Bank a homeowner's insurance policy, Policy No. 52-242-053-02 (“the Policy”), insuring the property located at 10 Turnberry Ct., Columbia, South Carolina 29223. [ECF No. 1, | 6]; [ECF No. 1-1, p. 11]; [ECF No. 6, | 2]. The Policy had effective dates of March 29, 2020 until March 29, 2021 and provided property coverage with Dwelling limits of $496,000.00. Id. Pursuant to the terms of the Policy, Auto-Owners covers “direct physical loss to covered property . . . except for losses excluded elsewhere in this policy.” [ECF No. 1-1, p. 21 (emphasis added)].
In accordance with the enumerated exclusions, and most pertinent to this matter, the parties agreed Auto-Owners would not cover loss resulting from the following:
The policy provides the following definition for pollutants:
10. Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, liquids, gases and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Id. at p. 17. The policy does not define vermin, nor does it provide a further definition of waste. See generally id. at pp. 16-18.
On August 17, 2020, Bank discovered a colony of bats had infiltrated his attic and had produced a large amount of guano (excrement) resulting in physical damage to his home. [ECF No. 27-1, p. 1]. Palmetto Wildlife Extractors (“PWE”), a company specializing in animal extraction and wildlife damage control, provided Bank an estimate for extraction of the bat colony and remediation of the home. Id. at pp. 1-2; see [ECF No. 28-2, Ludy Depo., pp. 5:13-6:3]. PWE extracted the bats and preventively sealed off the attic to ensure no further colonization. [ECF No. 28-2, Ludy Depo., p. 10:2-7]. Initially, PWE estimated the cost for its remediation services at $27,216.20. Id. at p. 16:9-24.
Less than two months later, on October 9, 2020, PWE prepared a second estimate for its remediation services amounting to $51,553.25. [ECF No. 27-2, pp. 3, 8]. Justin Ludy, PWE's CEO, testified that the cost of the estimate increased due to “several reasons” including the fact that once “guano dries out [it] becomes airborne [and] it travels through more areas of the house.” [ECF No. 28-2, Ludy Depo., pp. 17:22-18:11]. Mr. Ludy also cited the rising costs of building materials as contributing to the almost-doubled second estimate. Id. at p. 18:3-11. PWE recommended the remediation of both the second and first floors and reported they would need specialized equipment such as HEPA filters to accomplish the remediation task. Id. at p. 20:15- 21:3; see generally [ECF No. 27-2 4-7].
Following his consultation with PWE, Bank filed a claim with Auto-Owners on August 18, 2020, and alleged significant damage due to the bat colonization and subsequent production of guano. [ECF No. 1, | 8]; [ECF No. 6, | 2]. Bank submitted the estimate prepared by PWE along with his claim. [ECF No. 1, | 9]; [ECF No. 6, | 2]. On September 8, 2020, Auto-Owners responded to Bank's claim by denying coverage based on its understanding that “the homeowner's policy does not provide coverage for this as bat guano is considered a pollutant under the policy.” [ECF No. 27-1, p. 64]; [ECF No. 6, | 5]. Following this denial, Bank filed a complaint with the South Carolina Department of Insurance on September 14, 2020. [ECF No. 27-3, p. 12]. Auto-Owners responded to this complaint three days later and reasserted its position that bat guano constitutes a pollutant under the policy and cited “a supreme court case (Hirschhorn v. Auto-Owners Insurance Co.)” to justify its decision. Id. Auto-Owners failed to specify that the Supreme Court of Wisconsin, not the Supreme Court of South Carolina, decided the referenced case.
The parties dispute whether the Policy excludes the damage caused by the bat guano. Accordingly, Auto-Owners filed its Complaint seeking a declaratory judgment to resolve the parties' dispute.
Summary judgment is appropriate if a party “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 determining whether a genuine issue has been raised, the court must construe all inferences and ambiguities in favor of the nonmoving party.” HealthSouth Rehab. Hosp. v. American Nat'l Red Cross, 101 F.3d 1005, 1008 (4th Cir. 1996). The party seeking summary judgment shoulders the initial burden of demonstrating to the court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Once the moving party makes this threshold demonstration, the non-moving party may not rest upon mere allegations or denials averred in the pleading, but rather must, by affidavits or other means permitted by the Rule, set forth specific facts showing that there is a genuine issue for trial. See Fed.R.Civ.P. 56; see also Celotex Corp., 477 U.S. at 323. A party asserting that a fact is genuinely disputed must support the assertion by “citing 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.” Fed.R.Civ.P. 56(c)(1)(A). A litigant is unable to “create a genuine issue of material fact through mere speculation or the building of one inference upon another.” Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985). “[W]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, disposition by summary judgment is appropriate.” Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115, 119 (4th Cir. 1996).
“When faced with cross-motions for summary judgment, the court must review each motion separately on its own merits ‘to determine whether either of the parties deserves judgment as a matter of law.'” Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (citing Philip Morris, Inc. v. Harshbarger, 122 F.3d 58, 62 n.4 (1st Cir. 1997)). “[T]he court must take care to ‘resolve all factual disputes and any competing, rational inferences in the light most favorable' to the party opposing that motion.” Id. (citing Wightman v. Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir. 1996)).
On these cross motions for summary judgment, the issue before the court is one of contract interpretation. The court starts by outlining South Carolina law governing contract construction. The court then turns to the language of the Policy. At issue is whether bat guano constitutes a pollutant under the Policy. Auto-Owners maintains the Policy excludes damage caused by bat guano. Specifically, Auto-Owners argues the Policy excludes pollutants which, as defined in the Policy, includes waste. Thus, the argument goes: Damage caused by pollutants is excluded. Waste is a pollutant. Bat guano is a waste. Therefore, damage caused by bat guano is excluded. [ECF No. 28, pp. 4-14]; [ECF No. 1, | 15]. In contrast, Bank argues the Policy's pollutant exclusion, intended to be an industrial pollution exclusion, fails to unambiguously include animal waste, and the ambiguity should be resolved in his favor. [ECF No. 27-2, pp. 7-10].
The court determines that the pollutant exclusion, because of its reference to waste, is ambiguous. As such, the court construes the provision in favor of coverage for Bank. Necessarily then, the court finds that Auto-Owners breached its contractual...
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