Cobblestone Condo. Ass'n, Inc. v. Travelers Cas. Ins. Co. of Am.

• Court: U.S. District Court — Northern District of Alabama
• Writing for the Court: MADELINE HUGHES HAIKALA, UNITED STATES DISTRICT JUDGE
• Citation: Cobblestone Condo. Ass'n, Inc. v. Travelers Cas. Ins. Co. of Am., 377 F.Supp.3d 1291 (N.D. Ala. 2019)
• Decision Date: 27 March 2019
• Docket Number: Case No.: 5:16-cv-00573-MHH
• Parties: COBBLESTONE CONDOMINIUM ASSOCIATION, INC., Plaintiff v. TRAVELERS CASUALTY INSURANCE COMPANY OF AMERICA, Defendant.

377 F.Supp.3d 1291

COBBLESTONE CONDOMINIUM ASSOCIATION, INC., Plaintiff

v.TRAVELERS CASUALTY INSURANCE COMPANY OF AMERICA, Defendant.

Case No.: 5:16-cv-00573-MHH

United States District Court, N.D. Alabama, Northeastern Division.

Signed March 27, 2019

Gary V. Conchin, Craig Neil Rosler, Kenneth Bridges Cole, Jr., Conchin Cloud & Cole LLC, Huntsville, AL, for Plaintiff.

Brenen G. Ely, Seth T. Hunter, Candace H. Newton, Ely & Isenberg LLC, Birmingham, AL, for Defendant.

MEMORANDUM OPINION AND ORDER

MADELINE HUGHES HAIKALA, UNITED STATES DISTRICT JUDGE

This diversity action involves an insurance coverage dispute. Plaintiff Cobblestone Condominium Association bought an insurance policy from defendant Travelers Casualty Insurance Company of America that provided damage coverage for its condominiums. Cobblestone filed two claims under the policy, the first relating to building damage from a fire and the second to roof damage from a storm. The parties agree that both claims are covered under the insurance policy. Cobblestone invoked the policy's appraisal provision after the parties could not agree on a damage amount for the two claims, but the appraisal process went awry, and Cobblestone filed this lawsuit alleging breach of contract and bad faith.¹

Cobblestone seeks partial summary judgment on its breach of contract claims, asking the Court to find as a matter of law that Travelers was required to participate in the appraisal process on the fire and roof claims under the terms of the insurance policy but failed to do so. (Doc. 51). Travelers asks the Court to enter judgment in its favor with respect to Cobblestone's breach of contract and bad faith claims. (Doc. 48). For the reasons described below, the Court grants Cobblestone's motion as to the fire claim only, and it denies Travelers's motion except as to Cobblestone's claim of bad faith regarding the roof.

I. STANDARD OF REVIEW

"The court shall grant summary judgment 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). To demonstrate that there is a genuine dispute as to a material fact that precludes summary judgment, a party opposing a motion for summary judgment must cite "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).

When considering a motion for summary judgment, a district court must view the evidence in the record in the light most favorable to the non-moving party and draw reasonable inferences in favor of the non-moving party. White v. Beltram Edge Tool Supply, Inc. , 789 F.3d 1188, 1191 (11th Cir. 2015). "A litigant's self-serving statements based on personal knowledge or observation can defeat summary judgment." United States v. Stein , 881 F.3d 853, 857 (11th Cir. 2018) ; see Feliciano v. City of Miami Beach , 707 F.3d 1244, 1253 (11th Cir. 2013) ("To be sure, Feliciano's sworn statements are self-serving, but that alone does not permit us to disregard them at the summary judgment stage."). Even if a district court doubts the veracity of the evidence, the court cannot make credibility determinations of the evidence; that is the work of a factfinder. Feliciano , 707 F.3d at 1252 (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). Still, conclusory statements in a declaration cannot by themselves create a genuine issue of material fact. See Stein , 881 F.3d at 857 (citing Lujan v. Nat'l Wildlife Fed'n , 497 U.S. 871, 888, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990) ).

Cross motions for summary judgment do not alter the Rule 56 standard. See United States v. Oakley , 744 F.2d 1553, 1555-56 (11th Cir. 1984) ("Cross motions for summary judgment will not, in themselves, warrant the court in granting summary judgment unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely disputed."). "In practice, cross motions for summary judgment may be probative of the nonexistence of a factual dispute, but this procedural posture does not automatically empower the court to dispense with the determination whether questions of material fact exist." Georgia State Conference of NAACP v. Fayette Cty. Bd. of Comm'rs , 775 F.3d 1336, 1345 (11th Cir. 2015) (quoting Lac Courte Oreilles Band of Lake Superior Chippewa Indians v. Voigt , 700 F.2d 341, 349 (7th Cir. 1983) ) (internal quotation marks and brackets omitted). "If both parties proceed on the same legal theory and rely on the same material facts ... the case is ripe for summary judgment." NAACP , 775 F.3d at 1345 (quoting Shook v. United States , 713 F.2d 662, 665 (11th Cir. 1983) ) (internal quotation marks omitted) (alteration supplied by NAACP ).

II. SUMMARY JUDGMENT EVIDENCE

Cobblestone is an association of condominium homeowners in Huntsville, Alabama. (Doc. 45-1, pp. 2-3; Doc. 45-3, p. 5, tr. p. 14). Cobblestone's property consists of 26 residential two-story buildings, each with four downstairs and four upstairs units. (Doc. 46-10, p. 4; Doc. 46-11, pp. 25-27). Travelers issued a condominium-homeowners insurance policy to Cobblestone. (Doc. 55, p. 4). The policy covered all of the condominium units in the Cobblestone complex during the coverage period. (See Doc. 45-1). It is undisputed that Cobblestone paid its premiums for the relevant coverage year and that the insurance policy was in full force and effect when the two incidents in question took place. (Doc. 37, pp. 1, 2, ¶¶ 1, 5; Doc. 55, p. 4).

In 2015, Cobblestone made two separate claims under the insurance policy regarding physical damage to its condominiums. The first claim stemmed from a fire, and the second claim concerned roof damage resulting from hail and wind in a storm. (Docs. 46-10, 46-11). The parties do not dispute that the policy provides coverage for the two losses. (Doc. 55, p. 4).

Cobblestone's insurance policy contains an appraisal provision. (Doc. 55, p. 4; Doc. 45-1, p. 64). In the insurance context, appraisal is a dispute resolution technique wherein a representative for each party works with an umpire to resolve disputes concerning the amount of an insured's loss. (Doc. 45-1, p. 64). The appraisal provision of the insurance policy states:

E. PROPERTY LOSS CONDITIONS:

...

4. Legal Action Against Us

If we and you disagree on the value of the property, the amount of Net Income and operating expense or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property, the amount of Net Income and operating expense or the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any of the two will be binding. Each party will:

a. Pay its chosen appraiser;

b. Bear the other expenses of the appraisal and umpire equally.

(Doc. 45-1, p. 64). Travelers initially agreed to submit Cobblestone's fire claim to appraisal, but Travelers later withdrew from the appraisal process. (Doc. 55, p. 5). With respect to Cobblestone's roof claim, Travelers rejected Cobblestone's demand for appraisal as premature. (Doc. 55, p. 5).

A. The Fire Claim

On February 17, 2015, a fire occurred in Building T of the Cobblestone complex. (Doc. 46-10; Doc. 45-3, p. 11, tr. p. 37; Doc. 45-4, p. 50). The fire destroyed four units and seriously damaged four additional units within Building T. (Doc. 46-10).² On March 26, 2015, Travelers estimated that the "replacement cost value" to restore Building T to its pre-loss condition would be $826,047.78. (Doc. 45-15, p. 2). After deducting amounts for depreciation, Travelers paid Cobblestone an "actual cash value" on the fire claim of $649,424.73. (Doc. 55, p. 4).³ Travelers indicated that the amount withheld for depreciation would be payable upon completion of repairs up to the actual amount spent for the repairs. (Doc. 45-15, p. 2). During its investigation of the fire loss, Travelers obtained a "Marshall & Swift" report, dated March 16, 2015, which estimated a total "ground up" reconstruction cost for Building T at $1,167,060. (See Doc. 45-4, p. 35, tr. pp. 134-35).⁴

On April 1, 2015, Cobblestone retained The Howarth Group to represent it with respect to the fire claim. (Doc. 45-20, p. 2). One week later, The Howarth Group demanded appraisal of the fire loss under the insurance policy. (Doc. 45-21, p. 2). Without providing details to Travelers, The Howarth Group stated that Cobblestone had "several differences with the settlement offer provided by [Travelers]." (Doc. 45-21, p. 2). Chuck Howarth of The Howarth Group later testified that Travelers's estimate omitted numerous basic items such as plumbing supply lines, paint, primer, framing, electrical wiring, outlets, switches, and panel boxes, among other items necessary to restore Building T to its pre-loss condition and to bring the building into compliance with city building codes:

It was obvious that the ... estimate on which [Travelers relied] left a lot of damage out. There's holes in the estimate that are surprising. There are things – there are parts of the building he just left out. And this is the kind of stuff that a first-year adjustor would not leave out. This was a surprise to me. And those errors were duplicated room after room after room. ... [W]e agreed on the general work. Just put the stuff you left out in the estimate.

(Doc. 50-17, p. 17, tr. p. 63; see pp. 17-25, tr. pp. 63-103).

On April 16, 2015, Travelers rejected Cobblestone's demand for appraisal as premature. (Doc. 45-22, pp. 2-3)....