Bednarz v. Castle Key Indem. Co.

• Decision Date: 15 September 2014
• Docket Number: Case No: 8:12-cv-2827-T-35EAJ
• Court: U.S. District Court — Middle District of Florida
• Parties: THERESA BEDNARZ, Plaintiff, v. CASTLE KEY INDEMNITY COMPANY and ALLSTATE FIRE & CASUALTY INSURANCE COMPANY, Defendants.

THERESA BEDNARZ, Plaintiff, v. CASTLE KEY INDEMNITY COMPANY and ALLSTATE FIRE& CASUALTY INSURANCE COMPANY, Defendants.

Case No: 8:12-cv-2827-T-35EAJ

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION

September 15, 2014

ORDER

THIS CAUSE comes before the Court for consideration of: (1) Defendants' Motion for Summary Judgment or Partial Summary Judgment (Dkt. 31) and Plaintiff's Response in Opposition thereto (Dkt. 47); and (2) Plaintiff's Motion for Final Summary Judgment, or Alternatively Partial Summary Judgment, on Claims against Defendant, Castle Key (Dkt. 35) and Defendant's Response in Opposition thereto (Dkt. 41). In connection with the motions, the parties filed a Stipulation of Agreed Material Facts (Dkt. 60), and Plaintiff filed a notice of supplemental of authority (Dkt. 61) and an additional statement regarding the Stipulation of Agreed Material Facts (Dkt. 62). Upon consideration of all relevant filings, case law, and being otherwise fully advised, the Court orders that the motions are DENIED IN PART AND GRANTED IN PART.

I. BACKGROUND

Defendant Castle Key Indemnity Company ("Castle Key") issued a policy of insurance to Plaintiff Theresa Bednarz ("Plaintiff") and Almerick Dolan ("Dolan") for their home and contents, effective June 10, 2011 to June 12, 2012. The Castle Keyhomeowners policy named the Plaintiff and Dolan as the insureds and listed Wells Fargo Bank and its successors/assigns as the mortgagee. Defendant Allstate Fire and Casualty Insurance Company ("Allstate") issued a policy of insurance to Plaintiff and Dolan for their vehicles, effective December 10, 2011 to June 10, 2012. On March 9, 2012, a fire damaged Plaintiff's and Dolan's home, its contents, and a vehicle. (Dkt. 60) After Castle Key and Allstate denied Plaintiff's claims, Plaintiff filed the instant action alleging that Defendants breached their obligations under the respective policies. (Dkt. 1)

On the morning of the fire, Dolan was at home. (Dkt. 35-2, p. 44) Plaintiff had left for work and their children were at daycare and school. (Dkt. 35-1, pp. 47-49, 53-54) At approximately 7:55 a.m., a neighbor, Shawn Bernier, was sitting on her back porch and heard a fire alarm at Plaintiff's house. She also saw white smoke coming out of the house. Bernier walked to the house and banged on the front door. Dolan came to the door, pulled the blind back, mouthed "I'm okay," and waved at her. Bernier returned home, went to her back porch, and saw that the smoke had turned black. She called 911. The Hillsborough County Fire Department arrived and extinguished the fire. (Dkt. 34-1, p. 3-9; Dkt. 34-4)

When Plaintiff returned to the house, Dolan was in an ambulance and looked dazed, as if he did not know who she was. (Dkt. 35-1, p. 53) Dolan was transported by ambulance to Tampa General Hospital and was admitted to the psychiatric unit until mid-April 2012. (Dkt. 35-1, p. 19) He was ultimately diagnosed with schizophrenia. (Dkt. 35-2, p. 37) On April 18, 2012, Dolan was arrested on first-degree arson charges.(Dkt. 34-6) On December 12, 2012, he was adjudicated not guilty by reason of insanity. (Dkt. 35-3)

In his deposition, Dolan testified that he knew that he set the fire, but he did not remember how the fire started. (Dkt. 35-2, pp. 40, 47-49, 65-67, 71) He recalled kicking a gas can into the house from the porch, but he could not recall pouring gas in the house. (Dkt. 35-2, pp. 47-49) He testified that he was pretty sure that he used matches to start the fire, but he did not recall getting the matches or lighting the fire. (Dkt. 35-2, pp. 66-67)

Fire Inspector Daniel Edwards determined that the fire was an incendiary fire. (Dkt. 34-8) In addition, Castle Key's adjuster ordered a report on the origin and cause of the fire, which was completed by Senior Fire Investigator Frank Hutton, of Casalinova Investigations, Inc. (Dkt. 34-9, p.1, 3; Dkt. 35-4, p. 34) Hutton concluded:

[I]t is my opinion that there were two separate and unrelated points of origin. First area of origin is at the floor area in the main living by the sliding doors and a heavily fire damaged couch. The second area of fire origin is also near sliding doors in the family sitting room. Also it is my opinion, based on the elimination and absence of all other heat sources in the area of origin, and characteristics of this fire loss that the first material ignited was a flammable liquid (gasoline), and the ignition source of this fire in both locations was an open flame due to an intentional human act.

(Dkt. 34-9, p. 9 (emphasis in original))

Plaintiff notified Castle Key of her claim on the day of the fire. She later provided two recorded statements and other documents, attended an Examination Under Oath ("EUO"), and allowed Castle Key to physically inspect the home. (Dkt. 35-4, pp. 32, 34-35, 38, 43, 45, 47, 49-50; Dkt. 35-1, p. 31). By letter dated August 9, 2012, Castle Key denied the claim based on Dolan's failure to attend his own EUO on three separateoccasions. (Dkt. 35-5; Dkt. 34-10) By letter dated August 14, 2012, Allstate denied Plaintiff's claim under a similar provision in the automobile policy. (Dkt. 34-10, p. 6-7)

By letter dated September 7, 2012, Plaintiff's attorney inquired as to whether Castle Key would forward the dwelling coverage limits to the mortgagee listed on the policy. (Dkt. 35-6) By letter dated September 14, 2012, Castle Key answered that it would not forward the coverage limits to the mortgagee because the loss was excluded from coverage as an "intentional or criminal act" by an insured. (Dkt. 35-7)

On December 17, 2012, Plaintiff filed the instant action for breach of contract against Castle Key (Count 1) and Allstate (Count 2), based on Defendants' failure to pay benefits to her or to other loss-payees, mortgagees, and third-party beneficiaries under the policy, including Wells Fargo. (Dkt. 1) In response, Defendants raised five affirmative defenses: (1) Dolan failed to provide a recorded statement, attend an EUO, or otherwise cooperate in the investigation; (2) Plaintiff and Dolan failed to file a sworn proof of loss form within 60 days of the loss; (3) Plaintiff and Dolan failed to execute the requested authorization forms relating to the mortgage records; (4) the intentional acts exclusions barred coverage; and (5) Plaintiff and Dolan concealed or misrepresented material facts or circumstances. (Dkt. 15)

Castle Key and Allstate have filed a joint partial motion for summary judgment, arguing that the intentional acts exclusions bar coverage under both policies, based on Dolan's involvement in the fire. Defendants do not seek summary judgment on their remaining affirmative defenses. (Dkt. 31)

Plaintiff has filed a partial motion for summary judgment as to Castle Key only. Plaintiff argues that the intentional acts exclusions do not apply, and even if they do,Castle Key is required to pay the mortgagee, Wells Fargo, in an amount equal to the dwelling coverage limits. Plaintiff also argues that Castle Key may not rely on failure to cooperate as a defense to coverage because she substantially complied with the investigation and Castle Key has failed to demonstrate that it suffered any prejudice. (Dkt. 35)

II. STANDARD OF REVIEW

Summary judgment is appropriate when the movant can show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fennell v. Gilstrap, 559 F.3d 1212, 1216 (11th Cir. 2009) (citing Welding Servs., Inc. v. Forman, 509 F.3d 1351, 1356 (11th Cir. 2007)). Which facts are material depends on the substantive law applicable to the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the burden of showing that no genuine issue of material fact exists. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991).

Evidence is reviewed in the light most favorable to the non-moving party. Fennell, 559 F.3d at 1216 (citing Welding Servs., Inc., 509 F.3d at 1356). A moving party discharges its burden on a motion for summary judgment by showing or pointing out to the Court that there is an absence of evidence to support the non-moving party's case. Denney v. City of Albany, 247 F.3d 1172, 1181 (11th Cir. 2001) (citation omitted).

When a moving party has discharged its burden, the non-moving party must then designate specific facts (by its own affidavits, depositions, answers to interrogatories, or admissions on file) that demonstrate there is a genuine issue for trial. Porter v. Ray, 461 F.3d 1315, 1320-1321 (11th Cir. 2006) (citation omitted). The party opposing a motion for summary judgment must rely on more than conclusory statements or allegationsunsupported by facts. Evers v. Gen. Motors Corp., 770 F.2d 984, 986 (11th Cir. 1985) ("conclusory allegations without specific supporting facts have no probative value."). "If a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact . . . the court may grant summary judgment if the motion and supporting materials . . . show that the movant is entitled to it." Fed. R. Civ. P. 56(e).

III. DISCUSSION

As noted by the parties, "[t]he interpretation of an insurance contract is a question of law." Kattoum v. N.H. Indem. Co., 968 So. 2d 602, 604 (Fla. 2d DCA 2007). It is undisputed that Florida law governs the interpretation of the policies in this case. (Dkt. 31, p. 12; Dkt. 35, p. 12) "Florida law provides that insurance contracts are construed in accordance with the plain language of the policies as bargained for by the parties." Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). Accordingly, the scope and extent of coverage is determined by the language and terms of the policy and the policy terms are given their plain and ordinary meaning. "It is a cardinal principle of insurance law that where the provisions of an insurance policy are clear and unambiguous, the terms of the policy will be accorded their plain...