Bachman v. Amco Ins. Co.

• Decision Date: 20 September 2012
• Docket Number: Case No. 3:10–CV–461 JD.
• Citation: 897 F.Supp.2d 780
• Parties: Jeremy BACHMAN and Debra Bachman, Plaintiffs, v. AMCO INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Indiana

897 F.Supp.2d 780

Jeremy BACHMAN and Debra Bachman, Plaintiffs,

v.AMCO INSURANCE COMPANY, Defendant.

Case No. 3:10–CV–461 JD.

United States District Court,

N.D. Indiana,

South Bend Division.

Sept. 20, 2012.

Christopher R. Whitten, Jason J. Hoy, Whitten Law Office, Greenwood, IN, for Plaintiffs.

Andrew S. Williams, Branch R. Lew, Michelle K. Floyd, Hunt Suedhoff Kalamaros LLP, Fort Wayne, IN, for Defendant.

OPINION AND ORDER

JON E. DEGUILIO, District Judge.

This action arises from a breach of contract dispute between Plaintiffs Jeremy and Debra Bachman (the Bachmans) and their insurer, AMCO Insurance Company (AMCO). The issue is whether AMCO properly limited the recovery for collector sports cards stolen during a burglary of the Bachmans' home under the business property coverage limitation contained in the Bachmans' homeowners insurance policy. AMCO's motion for summary judgment [DE 20, 21] is ripe since a response [DE 25, 26] and reply [DE 27] were filed. For the following reasons, AMCO's motion for summary judgment is DENIED.

I. BACKGROUND

Mr. Bachman started attending sports card shows in 1990 and during college he opened a sports memorabilia business named Spectator Sportscards, Inc., with the Bachmans serving as the only shareholders [DE 20–1 & 26–1 at 8–9, 21, 25–27 ¹]. Originally the business operated at two physical retail locations in Elkhart and Nappanee, Indiana, but in the late 1990's ebay® became popular and Mr. Bachman operated the business solely out of his home while still regularly attending card shows. Id. at 25–27, 33. Mr. Bachman admitted that he did not keep records because he accumulated his inventory over twenty years, it just never really occurred to him to maintain records for his personal sports memorabilia collection, and he did his best to keep some records of his business inventory but it was difficult to keep track of the inventory he acquired, traded, and sold because he often paid or received cash for a collection. Id. at 34, 36, 38–41. Mr. Bachman testified that he uses the revenue from the business to buy more cards, make his mortgage payment, and pay for meals. Id. at 76. Although Mr. Bachman stores his business inventory and his personal collection of sports memorabilia in essentially the same location—his home office, garage, and other locations in his home, Mr. Bachman testified that the difference between his business inventory and his personal collection is that he “wouldn't sell [his] personal stuff” because “they're investments” and he was keeping his personal collection for “down the road” for retirement or helping his son with college [DE 20–1 & 26–1 at 27, 36–38, 44, 115–16; DE 20–2 at 25–28]. Mr. Bachman admitted that his personal collection (or “investments”) was purchased with assets from Spectator Sportscards, Inc. and would some day be sold through his company when he was ready to retire [DE 20–1 & 26–1 at 114–15].

On November 27 or 28, 2009, the Bachmans' home was burglarized and they filed a residential burglary report with the Elkhart Sheriff's Department [DE 1 at 1–2, Exb. 2 at 46–76]. At the time, the Bachmans were insured by an AMCO homeowners policy, No. HA13008460, which covered the term of May 27, 2009 to May 27, 2010 ² [DE 1 at 1, Exb. 1 at 6–96; DE 8 at 1; DE 8–1]. AMCO admits that the coverage limit for the loss of personal property was $176,400 with a special limit of liability with regard to business property of $10,000 [DE 8 at 1–2, 4]. After the Bachmans filed a claim with AMCO and submitted a list of losses, AMCO issued payment for some items stolen but characterized certain sports memorabilia as business property limited by the business property coverage limitation [DE 1 at 2–4, Exb. 3 at 78–96].

At the center of the dispute, are sports cards which were stolen during the burglary including four unopened wax boxes of 1986–1987 Fleer basketball cards and one unopened box consisting of a twelve box case of 1986–1987 Fleer basketball cards [DE 1 at 86; DE 20–1 & 26–1 at 45–46; DE 20–3 at 4, Plfs' Resp. to Def's Interrog. No. 5]. Mr. Bachman indicated that the individual boxes are each worth $20,000 retail, or $80,000 total retail (with the wholesale value equaling about half of the retail value), and that he originally bought them at a card show and paid $5,000 cash for each box using money from Spectator Sportscards, Inc. [DE 20–1 & 26–1 at 47–51, 60]. The twelve box case is worth roughly $150,000 and was also purchased with money from Spectator Sportscards, Inc. [DE 20–1 & 26–1 at 60; Plfs' Resp. to Def's Interrog. No. 5]. These items were not listed for sale as part of the business operated by Mr. Bachman [DE 20–1 & 26–1 at 79, 114–16; Plfs' Resp. to Def's Interrog. No. 5], and Mr. Bachman considered them personal investments which were not going to be sold through his company until sometime in the distant future [DE 20–1 & 26–1 at 114–16; DE 26–2 at 25]. In fact, at some point prior to the burglary, Mr. Bachman had previously rejected an offer to sell the 1986 Fleer basketball cards as it was part of his personal collection [DE 26–4 at 2].

Mr. Bachman testified that he also had approximately $150,000 to $250,000 (book value) worth of cards located in his garage [DE 20–1 & 26–1 at 82] and that he had a separate business policy through General Casualty Insurance Company to provide coverage for the business related items located in his garage and home [DE 20–3 at 4, Plfs' Resp. to Def's Interrog. No. 5]. However his business policy through General Casualty only covered $50,000 worth of loss [DE 20–1 & 26–1 at 85], and he confirmed that he did not submit a claim to General Casualty for the loss of his personal property, including his personal investments at issue in this case [DE 20–1 & 26–1 at 114]. The Bachmans' insurance agent negotiated a payment from General Casualty for less than the policy limits for the theft of Spectator Sportscards, Inc.'s documented business inventory and equipment [DE 20–1 & 26–1 at 78–85].

Relative to the claim filed with AMCO, the Bachmans received a letter from AMCO explaining its decision to pay a total of $35,728.25 in actual cash value for losses sustained and noting that certain policy limits applied [DE 1 at 2–3, Exb. 3 at 79, 85–93; DE 8 at 3–4]. In particular, the business property limitation of the Bachmans' homeowners policy applied, see id., which provided in relevant part as follows:

HOMEOWNERS 3 SPECIAL FORM

* * *

DEFINITIONS

* * *

B. In addition, certain words and phrases are defined as follows:

* * *

3. “Business” means:

a. A trade, profession or occupation engaged in on a full-time, part-time or occasional basis; or

b. Any other activity engaged in for money or other compensation³

...

* * *

SECTION I PROPERTY COVERAGES

* * *

C. Coverage C–Personal Property

* * *

3. Special Limits of Liability

These special limits of liability do not increase the Coverage C limit of liability. The special limit for each category below is the total limit for each loss for all property in that category.

* * *

(h) $10,000 on property, on the “residence premises”, used mainly for “business” purposes.

[DE 1, Exb. 1 at 8, 11; DE 8–1 at 9, 19; DE 26–6 at 16, 26] (emphasis added).

As a result, the Bachmans filed suit in the Elkhart Circuit Court claiming that AMCO breached its contract of insurance by not covering the loss of the 1986–1987 Fleer basketball cards as personal property by reliance on the business property limitation [DE 1 at 3]. AMCO filed a notice of removal [DE 2], asserting diversity jurisdiction under 28 U.S.C. § 1332. The Court concludes that subject matter jurisdiction is established on the basis of diversity because the amount in controversy exceeds $75,000.00, AMCO is a citizen of Iowa because it is incorporated in Iowa and has its principal place of business in Iowa, and the Bachmans are citizens of Indiana. 28 U.S.C. § 1332(a), (c)(1).⁴

II. STANDARD OF REVIEW

Pursuant to Federal Rule of Civil Procedure 56, summary judgment is appropriate “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). A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: citing to particular parts of materials in the record, or by showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact. Fed R. Civ. P. 56(c)(1).

The court construes the evidence and all inferences that reasonably can be drawn from the evidence in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Seventh Circuit has cautioned against weighing evidence at summary judgment, Kodish v. Oakbrook Terrace Fire Prot. Dist., 604 F.3d 490, 507 (7th Cir.2010), and it has also said that “a factual dispute is ‘genuine’ only if a reasonable jury could find for either party,” SMS Demag Aktiengesellschaft v. Material Scis. Corp., 565 F.3d 365, 368 (7th Cir.2009). “Summary judgment cannot be used to resolve swearing contests between litigants.” McCann v. Iroquois Mem'l Hosp., 622 F.3d 745, 752 (7th Cir.2010) (citation omitted).

If the nonmoving party fails to establish the existence of an essential element on which it bears the burden of proof at trial, summary judgment is proper-even mandated. Massey v. Johnson, 457 F.3d 711, 716 (7th Cir.2006) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (holding that a failure to prove one essential element to the party's case which it bears the burden of proof on “necessarily renders all other facts immaterial”)).

As a federal court sitting in diversity, the Court will rely on state substantive law and attempt to predict how the Indiana Supreme Court would decide the issue presented here. See Lexington Ins. Co. v. Rugg &...