Boardwalk Apartments, L.C. v. State Auto Prop. & Cas. Ins. Co.

Decision Date28 March 2014
Docket NumberCase No. 11–2714–JAR–KMH.
CourtU.S. District Court — District of Kansas

11 F.Supp.3d 1062


Case No. 11–2714–JAR–KMH.

United States District Court, D. Kansas.

Signed March 28, 2014

Motions granted in part and denied in part.

[11 F.Supp.3d 1067]

Kirsten A. Byrd, Michael Thompson, Stacey M. Bowman, Husch Blackwell LLP, Kansas City, MO, for Plaintiff.

Robert W. Cockerham, Cockerham & Associates, LLC, St. Louis, MO, for Defendant.


JULIE A. ROBINSON, District Judge.

This is an insurance coverage action arising out of a 2005 fire at Boardwalk Apartments, L.C.'s (“Boardwalk”) apartment complex in Lawrence, Kansas. Boardwalk was insured under a commercial property insurance policy issued by State Auto Property and Casualty Insurance Company (“State Auto”). The Policy's business income, replacement cost, and coinsurance provisions are at issue in this case. Before the Court are motions for partial summary judgment filed by each party (Docs. 211, 214). On the business income coverage claim, State Auto moves for partial summary judgment; Boardwalk moves for full summary judgment. On the replacement cost claim, State Auto moves for summary judgment on the basis of certain affirmative defenses; Boardwalk moves for partial summary judgment. State Auto further moves for summary judgment on Boardwalk's alternative claims of misrepresentation and negligent claims handling. Boardwalk

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moves for summary judgment on State Auto's affirmative defenses and counterclaims. For the reasons explained in detail below, the Court grants in part and denies in part both motions.1

I. Summary Judgment Standard

Summary judgment is appropriate if the moving party demonstrates that there is no genuine dispute as to any material fact and that it is entitled to judgment as a matter of law.2 In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party.3 “There is no genuine issue of material fact unless the evidence, construed in the light most favorable to the nonmoving party, is such that a reasonable jury could return a verdict for the nonmoving party.” 4 A fact is “material” if, under the applicable substantive law, it is “essential to the proper disposition of the claim.” 5 An issue of fact is “genuine” if “ ‘the evidence is such that a reasonable jury could return a verdict for the non-moving party.’ ” 6

The moving party initially must show the absence of a genuine issue of material fact and entitlement to judgment as a matter of law.7 In attempting to meet this standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim.8

Once the movant has met this initial burden, the burden shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.” 9 The nonmoving party may not simply rest upon its pleadings to satisfy its burden.10 Rather, the nonmoving party must “set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant.” 11 To accomplish this, the facts “must be identified by reference to an affidavit, a deposition transcript, or a specific exhibit

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incorporated therein.” 12 Rule 56(c)(4) provides that opposing affidavits must be made on personal knowledge and shall set forth such facts as would be admissible in evidence.13 The non-moving party cannot avoid summary judgment by repeating conclusory opinions, allegations unsupported by specific facts, or speculation.14

Defendant has the burden of proof on the affirmative defenses, and thus in moving for summary judgment on the affirmative defense, “[t]he defendant ... must demonstrate that no disputed material fact exists regarding the affirmative defense asserted.” 15 Once the defendant makes this initial showing, “the plaintiff must then demonstrate with specificity the existence of a disputed material fact.” 16 If the plaintiff cannot meet this burden, “the affirmative defense bars [the] claim, and the defendant is then entitled to summary judgment as a matter of law.” 17

“Where, as here, the parties file cross motions for summary judgment, [the Court is] entitled to assume that no evidence needs to be considered other than that filed by the parties, but summary judgment is nevertheless inappropriate if disputes remain as to material facts.” 18 Cross motions should be considered separately.19 Just because the Court denies one does not require that it grant the other.20

Finally, summary judgment is not a “disfavored procedural shortcut;” on the contrary, it is an important procedure “designed to secure the just, speedy and inexpensive determination of every action.” 21 In responding to a motion for summary judgment, “a party cannot rest on ignorance of facts, on speculation, or on suspicion and may not escape summary judgment in the mere hope that something will turn up at trial.” 22

II. Facts A. Evidentiary Objections

Fed.R.Civ.P. 56(c)(2) provides that “a party may object that material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.” Boardwalk raises two evidentiary objections to several exhibits submitted by State Auto in support of its motion for summary judgment and in opposition to Boardwalk's motion for summary judgment. First, Boardwalk objects that the exhibits were not properly authenticated. State Auto attached modified exhibits to its reply memorandum for all of these exhibits except Exhibit II, adding authenticating evidence. Therefore, the authentication objections to Exhibits G, L,

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M, N, Z, GG, KK, LL, MM, NN, and OO are moot.

Exhibit II is a fax transmittal of Boardwalk's June 15, 2010 Building Permit Application to the City of Lawrence, by the architect of the apartment building, Paul Werner. State Auto submits this evidence in support of its factual contention that Boardwalk did not apply for a building permit until this time. There is no requirement that each piece of evidence submitted on summary judgment be accompanied by an authenticating affidavit.23 Instead, this Court is to determine whether there is “evidence sufficient to support a finding that the item is what the proponent claims it is.” 24

For purposes of summary judgment, the Court sustains this objection. This document appears to have been produced by Boardwalk during discovery, however the parties dispute when the operative building permit was filed with the City of Lawrence. Boardwalk submits similar documents showing the application was filed in February 2010, which were authenticated by Paul Werner, who signed the documents and on whose letterhead the documents were faxed to the City. Boardwalk also submitted an affidavit of Suzanne Rieger, who attests that she delivered the application in February. The record before the Court is insufficient to determine whether this June 2010 application was in fact filed with the City, and if so, if it was the operative application for purposes of determining when Boardwalk initiated the process of municipal approval.

Boardwalk argues in the alternative that most of the same exhibits also constitute inadmissible hearsay. Again, these objections are cured by the modified exhibits filed with State Auto's reply memorandum. They are admissible because they are not offered for the truth of the matter asserted, or because they fall under the hearsay exceptions as business records or statements of a party opponent.

B. Uncontroverted Facts

The following material facts are either uncontroverted or stipulated to. 25

The Policy

State Auto issued a commercial property insurance policy No. PBP–2–080–575 (the “Policy”) to Boardwalk for the period of February 12, 2005 to February 12, 2006.26 The Policy was written to insure the Boardwalk Apartments Complex located in Lawrence, Kansas, consisting of eight apartment buildings and one building used as a storage area (the “complex”). The complex was built in 1963. At all times material to this litigation, Ernest Fleischer was the managing member of Boardwalk and the person primarily responsible for Boardwalk's business dealings. The Policy provided for blanket building and replacement cost coverage for the complex to the policy limit of $7,207,200, plus a four percent inflation guard, subject to a $5000

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deductible and a 100% coinsurance provision.

The Policy includes a “building and personal property coverage form” that insures Boardwalk for “direct physical loss of Covered Property.” The Policy also provided for limited coverage of $10,000 for costs incurred to comply with laws and ordinances as part of the “Additional Coverages” section. The Policy' replacement cost coverage provides as follows:

E. Loss Conditions


4. Loss Payment

a. In the event of loss or damage covered by this Coverage Form, at our option, we will either:

(1) Pay the value of lost or damaged property;

(2) Pay the cost of repairing or replacing the lost or damaged property, subject to b. below;

(3) Take all or any part of the property at an agreed or appraised value; or

(4) Repair, rebuild or replace the property with other property of like kind and quality, subject to b. below.


G. Optional Coverages


3. Replacement Cost

a. Replacement Cost (without deduction for depreciation) replaces Actual Cash Value in Loss Condition, Valuation, of this Coverage Form.


c. You may make a claim for loss or damage covered by this insurance on an actual cash basis instead of on a replacement cost basis. In the event you elect to have loss or damage settled on an actual cash value basis, you may still make a claim for the additional coverage this Optional...

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