Bayle v. Allstate Ins. Co. - .
| Decision Date | 11 August 2010 |
| Docket Number | No. 09-30161.,09-30161. |
| Parties | William BAYLE; Darlene Bayle, Plaintiffs-Appellants, v. ALLSTATE INSURANCE COMPANY Defendant-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
OPINION TEXT STARTS HERE
COPYRIGHT MATERIAL OMITTED.
George Frazier (argued), New Orleans, LA, for Plaintiffs-Appellants.
Richard L. Fenton (argued), Sonnenschein, Nath & Rosenthal, L.L.P., Chicago, IL, Joe Boyd Henderson, III, Doyle, Restrepo, Harvin & Robbins, L.L.P., Houston, TX, Arthur Joseph Lentini, Law Office of Arthur J. Lentini, A.P.L.C., Metairie, LA, for Defendant-Appellee.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before DAVIS, WIENER, and SOUTHWICK, Circuit Judges.
In this appeal, we are called on to address one of the recurring questions encountered in hurricane-related property insurance disputes that are governed by Louisiana law: When the insured and the insurer agree that both a covered risk and a non-covered or excluded risk caused some of the damage incurred by the insured property, which party must bear the burden of identifying the discrete item or items of property that were damaged and proving what portion of the damage was caused by the non-covered or excluded risk? Here, siblings William and Darlene Bayle 1 sued Defendant-Appellant Allstate Insurance Company (“Allstate”), which had issued the Bayles' homeowners policy. They alleged that (1) Allstate failed to indemnify them adequately for wind-caused, structural damage 2 to their property, and (2) Allstate wrongly employed the “actual cash value” (“ACV”) of the property rather than the “building structure reimbursement” standard to calculate the dollar amount of structural damage caused by wind. The Bayles also claim statutory penalties against Allstate, alleging that it arbitrarily and capriciously refused to pay their wind damage claims timely. 3 The district court granted Allstate's motion for summary judgment and dismissed the Bayles' action. 4 We affirm.
Hurricane Katrina caused considerable damage to the Bayles' property in Chalmette, Louisiana. Ms. Bayle evacuated before the storm, and no one was present in the house when eight to ten feet of water (mixed with escaped oil from a nearby Murphy Oil storage tank) flooded the Bayles' one-story house. The damage to the house and a storage shed was, by all accounts, extensive, although the record reveals that little of the damage appears to have been caused by wind. 5 Ms. Bayle testified that, when she returned to view the wreckage, she saw just one cracked window pane in one of the bedrooms and that she was not able to look in the attic for roof damage. In his deposition testimony, Mr. Bayle noted that, when he viewed the damage in November 2005, he saw one or perhaps two small window panes that were broken, but conceded that these could have been damaged by vandals. Neither of the Bayles was able to identify or specify any structural damage that had gone uncompensated or, for that matter, any items damaged by wind whose repair costs exceeded the amount paid by Allstate; the Bayles' expert's report was silent on both issues.
In October 2005, the first claims adjuster was sent by Allstate to inspect the Bayles' property. He noted that the water line on the exterior of the house was ten feet above grade level and that an interior water line was eight feet above floor level. He observed severe damage to the interior and to the contents of the house, all of which he attributed to flood. He added that no contents could have been salvaged. Subsequent adjusters for Allstate inspected the roof and found a number of shingles missing and some damage to the gutters, but saw no substantial structural damage. They also reported that the storage shed had lost a side window to wind and that some items inside the shed appeared to have been exposed to rain water before the flood water arrived.
At the time of the hurricane, the Bayles' property was insured under an Allstate homeowners policy that covered wind damage and under a separate, National Flood Insurance Policy (“NFIP”) that covered flood damage. As the administrator of the federal flood policy, Allstate paid the Bayles the full policy limits of $75,000 for structural damage and $30,000 for contents, for a total of $105,000 in flood damage. Under its homeowners policy, Allstate paid the Bayles $3,628.87 for structural damage to the roof, $8,804.22 for personal property, and $5,127.64 in additional living expenses (“ALE”), for a total of $17,560.73 in wind damage.
The overall damage to the house was sufficiently severe that the Bayles elected not to repair it; instead, they “sold” it and the lot for $64,000, unrepaired, to Murphy Oil in connection with the settlement of their petroleum spill claim. The remnants of the house were subsequently demolished. The record does not reflect that either of the Bayles objected to or otherwise contested Allstate's adjustment of their claim before they filed suit in August 2007. In doing so, the Bayles joined twenty-eight other state court plaintiffs.
In February 2008, following removal from state court, the district court ordered the cases severed, and the Bayles filed their individual complaint the next month. In November 2008, Allstate filed a motion for summary judgment seeking dismissal of the Bayles' action.
The Bayles' homeowners policy provides that, if the insureds do not repair their damaged property, payment under the policy “will be on an actual cash value basis.” In support of its motion for summary judgment, Allstate offered three expert-witness reports to substantiate the ACV of the Bayles' property and to justify the sums that Allstate had already paid them under its policy's wind coverage. Allstate's first expert report, prepared by Timothy O'Brien in November 2008, offered a “drive-by” market-value appraisal of the then-vacant lot, and determined its ACV to be $10,000.
Allstate offered a second expert report by an engineering and construction firm, O'Keeda Company, LLC (“O'Keeda”), which reviewed the damage to the house relative to the payments made under the flood and wind policies. O'Keeda too performed its review in November 2008, basing it on photographs, videotape, adjusters' reports, and the Bayles' deposition testimony. The O'Keeda report stated that the roof of the house was “completely unscathed,” with the exception of some missing shingles, and concluded that adequate compensation had been paid for all damage caused by wind. In a supplemental report, again from November 2008, O'Keeda concluded that the ACV of the damage incurred by the Bayles' property totaled $108,220.00. Allstate's earlier ACV estimate of the house, as detailed in its NFIP Final Report and dated October 25, 2005, had stated that the ACV of the house was $74,284.80.
In opposing Allstate's motion for summary judgment, the Bayles' only submission was a report prepared by Steven Hitchcock, a claims adjuster who estimated the total cost of repairing and replacing the house. He based his conclusions on interviews with the Bayles and computer software used to estimate insurance, restoration, and remodeling costs. After offering a line-item listing of the materials and labor needed to restore the entire property, irrespective of whether the cause of the damage was wind or flood, or a combination of both, Hitchcock concluded that the total replacement cost value (“RCV”) of the Bayles' house was $182,863.13. He ventured no ACV.
The district court granted Allstate's motion for summary judgment, dismissing the Bayles' action. Relevant to this appeal, 6 the court held that (1) Louisiana law places the burden of segregating covered and non-covered losses on the insured, (2) as the Bayles had failed to point to any wind damaged items for which Allstate had not already compensated them, they were not entitled to any additional compensation for structural damage from wind; (3) ACV, not RCV, was the proper valuation standard for calculating the quantum of damages in this particular claims process, so the Bayles were not entitled to statutory penalties; and (4) the Bayles had adduced no competent evidence to support their assertion that Allstate had mishandled their claims. 7 The Bayles timely filed their notice of appeal.
When, as here, jurisdiction is based on diversity, we apply the forum state's substantive law. 8 The parties agree that Louisiana law applies.
We review a district court's grant of summary judgment de novo. Summary judgment should be granted only if there is no genuine issue of material fact. 9 A fact is material only if its resolution would affect the outcome of the action, and an issue is genuine only “if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party.” 10 “If the burden at trial rests on the non-movant, the movant must merely demonstrate an absence of evidentiary support in the record for the non-movant's case.” 11 Once a party meets the initial burden of demonstrating that there exists no genuine issue of material fact for trial, the burden shifts to the non-movant to produce evidence of the existence of such an issue for trial. 12 The non-movant must go beyond the pleadings and present specific facts indicating a genuine issue for trial. 13 On appeal we may affirm a grant of summary judgment “on any legal ground raised below, even if it was not the basis for the district court's decision.” 14
The parties vociferously disagree whether it is the insurer or the insured who must bear the burden of proving that the damage for which recovery is sought was caused by an insured risk (wind) or by an non-insured or excluded risk (flood) when, as here, both wind and flood contributed to the overall damage incurred by the property. 15 Neither party contends...
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