Devonshire Real Estate & Asset Mgmt., LP v. Am. Ins. Co., CIVIL ACTION NO. 3:12-CV-2199-B
| Decision Date | 26 September 2014 |
| Docket Number | CIVIL ACTION NO. 3:12-CV-2199-B |
| Parties | DEVONSHIRE REAL ESTATE & ASSET MANAGEMENT, LP, Plaintiff, v. AMERICAN INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
Before the Court are Defendant American Insurance Company's and Plaintiff Devonshire Real Estate & Asset Management, LP's Cross Motions for Partial Summary Judgment, both filed on January 27, 2014. Docs. 93, 94. For the reasons that follow, Defendant's Motion is GRANTED, and Plaintiff's Motion is GRANTED in part, and DENIED in part.
This case arises out of a dispute over the amount owed on several insurance claims submitted by Plaintiff Devonshire Real Estate & Asset Management, LP ("Devonshire") to Defendant American Insurance Company ("American") under a commercial property insurance policy. Devonshire first submitted a claim under this policy in May 2011 after a commercial apartmentcomplex it owns was damaged in a wind and hailstorm. In August and October of that year, American made partial payments of this claim to Devonshire. In March 2012, Devonshire submitted a supplemental claim for damage to an ice and water shield. American fully settled both of these claims in April 2012.
In May 2012, Devonshire submitted a second supplemental claim for damage to certain metal carport roofs, gutters, and downspouts. American refused to pay this supplemental claim, but invited Devonshire to proceed to appraisal. Instead, Devonshire filed this suit, alleging claims for breach of contract, breach of the duty of good faith and fair dealing, violations of Chapter 541 of the Texas Insurance Code and Deceptive Trade Practices Act, and violations of the prompt payment provisions of the Insurance Code.
Shortly after litigation commenced, American demanded appraisal of Devonshire's second supplemental claim as provided for by the parties' insurance policy. On July 24, 2013, the parties' respective appraisers agreed to an award with a replacement cost value of $220,725.19, and an actual cash value of $198,308.13, less prior payments. On July 31, 2014, American issued a check to Devonshire for $66,905.32, the amount American believed it owed under the appraisal award after various deductions and adjustments. The parties dispute whether this payment fully satisfied the appraisal award. In particular, they disagree as to whether payment should have been made on a replacement cost or actual cash value basis, the amount of prior payments on the claim, and whether American was entitled to deduct from its payment an amount equal to its alleged prior overpayment of Devonshire's claim for damage to the ice and water shield.
These facts are outlined in detail, below.
On or about May 2011, Plaintiff Devonshire Real Estate & Asset Management, LP, ("Devonshire") purchased a commercial property insurance policy, No. S 67 MXF 80466440 (the "Policy"), from Defendant American Insurance Company ("American") to cover certain risks for its Burn Brae Apartments property in Irving, Texas (the "Property" or "Apartments"). Doc. 17, Am. Compl. ¶ 5. Devonshire alleges that on May 24, 2011, the Property sustained extensive damage to its roof, chimney, carports, and windows from wind and hail. Id. On or about May 25, 2011, Devonshire reported this damage to American. Docs. 17, Am. Compl. ¶ 5; 33, Am. Answer ¶ 5; 93-7, Ex. B-1, First Notice of Loss Snapshot Report. In May and June of 2011, American's adjuster, Kenneth Bourque, investigated the damage to the Apartments and estimated that the replacement cost value of the loss was $391,485.93. Docs. 17, Am. Compl. ¶ 6; 3, Am. Answer ¶ 6. After subtracting $99,247.01 for depreciation and $155,841.17 for Devonshire's deductible, Bourque concluded that the actual cash value of Devonshire's claim was $136,397.75. Id. On August 15, 2011, American issued a check to Devonshire for that amount. Docs. 17, Am. Compl. ¶ 6; 33, Am. Answer ¶ 6; 95, Ex. B, Check from American.
Dissatisfied with Bourque's estimate, Devonshire hired Gary Pennington, a Texas licensed public adjuster, to present a claim on the Apartments. Docs. 17, Am. Compl. ¶ 7; 33, Am. Answer ¶ 7. Pennington estimated that the cost to repair the damage to the Apartments was $764,987.37. Id. ; see also doc. 18-2, Loree Letter. Devonshire submitted Pennington's estimate to American on September 5, 2011. Id. On October 14, 2011, after further discussions between Devonshire's and American's respective adjusters, American issued Devonshire another check in the amount of $178,588.50. Docs. 17, Am. Compl. ¶ 6; 33, Am. Answer ¶¶ 6, 8.
Thereafter, American decided to hire Aaron McKinney of Belfor Property Restoration to complete an independent estimate of the damage to the Apartments. Docs. 17, Am. Compl. ¶ 9; 33, Am. Answer ¶ 9. On November 2, 2011, McKinney returned an estimate of $610,177.19 based on the replacement cost value of the loss. Docs. 17, Am. Compl. ¶ 9; 33, Am. Answer ¶ 9; see also doc. 95, Belfor Estimate Ex. D. Around that same time, Devonshire received and submitted to American an estimate from its contractor Smart Roofing & Restoration that it would cost $715,662.47 to repair the Apartments. Docs. 17, Am. Compl. ¶ 10; 33, Am. Answer ¶ 10; see also doc. 95, Ex. C, Smart Roofing Contract. Devonshire's President, John Redden, then sent a letter to American in which he reported Smart Roofing's estimate and, after applying a deductible of $155,841.17, adding a glass repair of $10,008.06, and subtracting $314,653.25 for prior payments, demanded an additional $99,316.16 to cover the loss to the Apartments. Docs. 17, Am. Compl. ¶ 10; 33, Am. Answer ¶ 10.
Several months later, on February 28, 2012, Laurie Stover, the Regional General Adjuster for American, emailed Devonshire to indicate that American was prepared to settle the claim based on the Smart Roofing estimate of $715,662.47, plus an additional $10,008.06 for out-of-pocket repairs. Doc. 95, Ex. E, Stover Email. Instead, on or about March 1, 2012, Devonshire submitted a supplemental claim for damage to an ice and water shield in the amount of $49,253.61. Doc. 95, Ex. F, Pennington Email. American later paid $304,096.72 to Devonshire on April 10, 2012. Docs. 17, Am. Compl. ¶ 9; 33, Am. Answer ¶ 11; 95, Ex. A-5, Check from American. This amount included payment for the cost of replacing the ice and water shield. Doc. 95, Ex. A-1, Stover Email. Devonshire, however, has yet to actually replace the shield. Docs. 83-1, Aff. of Perry Little 1-2; 96, Pl.'s Resp. Br. 14-15.
On May 10, 2012, Devonshire again submitted a supplemental claim, this time for damage to certain gutters, downspouts, and carports in the amount of $90,938.81. Docs. 17, Am. Compl. ¶ 12; 33, Am. Answer ¶ 12; 95, Ex. G, Pennington Email. In response to this second supplemental claim, Stover indicated that American would not pay any supplements for additional damages to gutters or metal roofing and invited Devonshire to proceed to appraisal if it wished. Doc. 18-3, Ex. C, Stover Email. Instead, on June 6, 2012, Devonshire filed this action against American in state court, alleging claims for breach of contract, breach of the duty of good faith and fair dealing, violations of the Texas Insurance Code, and violations of the Texas Deceptive Trade Practices Act. Doc. 1-5, Pl.'s Orig. Compl. American removed the case to federal court on July 10, 2012. Doc. 1, Not. of Removal.
On November 29, 2012, several months after commencement of this litigation, Devonshire increased its claimed damages from $90,938.81 to $164,637.21. Docs. 17, Am. Compl. ¶ 12; 95, Ex. H, Statement of Loss. Shortly thereafter, American filed a motion seeking to compel Devonshire to participate in the appraisal process to determine the amount of loss on the Property and to abate litigation while the appraisal was underway. Doc. 18. The Court granted this motion in part on March 26, 2013 and ordered Devonshire to submit its claim for damage to the carports, gutters, and downspouts to appraisal. Doc. 35.
The parties' appointed appraisers subsequently inspected the Property and on July 24, 2013, agreed to an appraisal award with a replacement cost value of $220,725.19, and an actual cash valueof $198,308.13, less prior payments. Doc. 73-1, Ex. A, Marshall Letter and Appraisal Award.2 On July 31, 2013, after deducting prior payments for the carports, gutters, and downspouts, applying an offset for its alleged overpayment of Devonshire's claim for damage to the ice and water shield, and adding an unpaid cost not addressed by the appraisal, American issued a check to Devonshire for $66,905.32. Doc. 73-1, Ex. C, Loree Letter.
On the eve of the scheduled trial date, the parties had not filed dispositive motions in this case and, as evidenced by their Joint Pretrial Order, doc. 76, and other recently submitted briefing, docs. 71; 73, still parted ways on significant questions of law that were integral to a clear disposition of the case. Accordingly, the Court vacated the established trial date and ordered the parties to file cross motions for summary judgment on certain outstanding issues contained in their pre-trial briefing. These cross motions are now ripe for review.
Federal Rule of Civil Procedure 56(a) provides that 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). The substantive law governing a matter determines which facts are material to a case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The summary judgment movant bears the burden of proving that no genuine issue ofmaterial fact exists. Latimer v. Smithkline & French Labs, 919 F.2d...
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