Ginney Motel, Inc. v. Certain Underwriters

• Decision Date: 11 December 2020
• Docket Number: Civil Action No.: 1:19-cv-01243-STA-jay
• Parties: GINNEY MOTEL, INC. d/b/a ECONO LODGE and AFFORDABLE CONSTRUCTION SERVICES, INC., as Assignee, Plaintiffs, v. CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, Subscribing to Policy No. ULL30699, Defendant.
• Court: U.S. District Court — Western District of Tennessee

GINNEY MOTEL, INC. d/b/a ECONO LODGE andAFFORDABLE CONSTRUCTION SERVICES, INC., as Assignee, Plaintiffs, v. CERTAIN UNDERWRITERS AT LLOYD'S, LONDON,Subscribing to Policy No. ULL30699, Defendant.

Civil Action No.: 1:19-cv-01243-STA-jay

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE EASTERN DIVISION

December 11, 2020

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

Before the Court is Defendant Certain Underwriters at Lloyd's, London's Motion for Summary Judgment (ECF No. 46) filed on October 16, 2020. Plaintiffs Ginney Motel, Inc. d/b/a Econo Lodge and Affordable Construction Services, Inc., as assignee, have responded in opposition. For the reasons set forth below, the Motion is GRANTED.

BACKGROUND

This civil action arises from the parties' dispute over insurance coverage for hail damage to Plaintiff's commercial property. Plaintiff Ginney Motel, Inc. d/b/a Econo Lodge ("Ginney Motel") operates a motel in Lexington, Tennessee. Ginney Motel claims that the property's metal roof sustained damage during a hailstorm in 2017. Ginney Motel hired Plaintiff Affordable Construction Services, Inc. ("Affordable Construction") to ascertain the extent of the damage and then made a claim with its property insurer Defendant Certain Underwriters at Lloyd's, London's ("Underwriters"). Underwriters denied Ginney Motel's claim, and Plaintiffs allege Underwriters has breached the terms of the insurance policy. Underwriters now seek judgment as a matter of law, arguing that Affordable Construction lacks standing to sue as the assignee of Ginney Motel and that the statute of limitations on the contract claim has run.

To decide Underwriters' Motion for Summary Judgment, the Court must first consider whether any genuine issue of material fact exists that might preclude judgment as a matter of law. A fact is material if the fact "might affect the outcome of the lawsuit under the governing substantive law." Baynes v. Cleland, 799 F.3d 600, 607 (6th Cir. 2015) (citing Wiley v. United States, 20 F.3d 222, 224 (6th Cir. 1994) and Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. For purposes of summary judgment, a party asserting that a material fact is not genuinely in dispute must cite particular parts of the record and show that the evidence fails to establish a genuine dispute or that the adverse party has failed to produce admissible evidence to support a fact. Fed. R. Civ. P. 56(c)(1). Local Rule 56.1(a) requires a party seeking summary judgment to prepare a statement of facts "to assist the Court in ascertaining whether there are any material facts in dispute." Local R. 56.1(a). In support of its Motion, Underwriters has filed a statement of undisputed facts, and Plaintiffs have responded.

Based on the parties' submissions, the Court finds that the following facts are undisputed for purposes of summary judgment, unless otherwise noted. Ginney Motel owns and operates an Econo Lodge motel located at 732 Church Street, Lexington, Tennessee 38351 ("the Property"). (Def.'s Statement of Undisputed Fact ¶ 1.) On March 27, 2017, a hailstorm allegedly damaged the Property's roof. (Id. ¶ 2.) At the time, Underwriters insured the Property under policy numberULL30699 issued to "Ginny Motel, Inc. DBA Econo Lodge" for the policy period February 27, 2017, through February 27, 2018 ("the Policy"). (Id. ¶ 3.) Underwriters were first notified of the alleged damage on or about April 7, 2017, through a Property Loss Notice filed by Ginny Motel's agent. (Id. ¶ 4.) Just days later, Ginny Motel owner Subhash "Bob" Patel signed a contract with Affordable Construction for repair of the alleged hail damage. (Id. ¶ 5.) Affordable Construction is the roofing company that had previously installed the roof in 2014 in connection with a prior insurance claim. (Id. ¶ 6.) Ginney Motel's contract with Affordable Construction was for "the amount of the Insurance Proceeds" and supposedly covered a full roof replacement. (Id. ¶ 7.) Mr. Patel also believed that the contract allowed Affordable Construction to handle Ginny Motel's insurance claim on his behalf. (Id. ¶ 8.) The parties dispute whether Ginney Motel actually assigned its interest in the insurance proceeds to Affordable Construction. Underwriters claims that there is no evidence of an assignment. (Id. ¶ 9.) Plaintiffs have produced a document that includes an assignment clause and made the document an exhibit to their summary judgment brief. Ex. 1, Pls.' Resp. in Opp'n (ECF No. 53-1).¹

Upon receiving notice of the claim, Underwriters' designated third-party administrator, Promont Advisors, LLC ("Promont"), retained local field adjuster Casey Newport with Team One Adjusting Services to investigate the alleged damage. (Def.'s Statement of Undisputed Fact ¶ 10.) Mr. Newport inspected the Property on April 12, 2017, and concluded that the hail dents had not caused any structural damage to the roof and were only cosmetic. (Id. ¶¶ 11, 12.) Plaintiffs dispute Newport's conclusions and offer their own opinion evidence about the nature of the damage.² OnMay 22, 2017, Underwriters denied coverage for the alleged roof damage in a partial disclaimer letter issued by Promont on their behalf. (Id. ¶ 13.) The May 22, 2017 denial letter was sent via certified mail and signed for by Mr. Patel on May 25, 2017. (Id. ¶ 14.) The letter advised Ginny Motel that there was no coverage for the hail impacts to the roof based on the Policy's "Cosmetic Marring of Roofs and Materials" exclusion, which excludes coverage for cosmetic hail damage. (Id. ¶ 15.)

In response to the May 22, 2017 denial letter, Affordable Construction retained engineer Steve Prosser with Prosser & Associates ("Prosser") to dispute Underwriters' determination that no functional damage had occurred. (Id. ¶ 16.) Prosser inspected the Property on June 13, 2017, and prepared a report on his findings dated June 16, 2017. (Id. ¶ 17.) Affordable Construction then forwarded Prosser's report to Underwriters for consideration. (Id. ¶ 18.) In response, Underwriters retained engineers with EFI Global ("EFI") to conduct a second inspection. (Id. ¶ 19.) EFI confirmed the adjuster's initial findings that no functional damage had occurred, though Plaintiffs continue to dispute those conclusions. (Id. ¶ 20.) Underwriters, by and through Promont, advised Ginny Motel of EFI's findings in a letter dated September 25, 2017, and reaffirmed Underwriters' initial coverage denial based on the Policy's cosmetic marring exclusion. (Id. ¶ 21.) The September 25, 2017 denial letter was sent via certified mail and received by Ginny Motel on September 30, 2017. (Id. ¶ 22.) The September 25, 2017 denial letter was the last activity on the claim, and Promont closed its file on October 24, 2017, after receiving no response to the updateddisclaimer letter. (Id. ¶ 23.) Neither Ginny Motel nor anyone on its behalf ever filed a Proof of Loss in connection with the hail claim. (Id. ¶ 24.)

Plaintiffs initiated this action by filing a Complaint on October 13, 2019, which the Clerk of Court docketed as civil case no. 1:19-cv-01243-STA-jay. Plaintiffs previously filed an action against Underwriters and Promont Advisors, LLC on July 26, 2018, civil case no. 1:18-cv-01137-STA-egb. The parties disagree over whether the earlier action involved the same claims as the case at bar. In any event, Plaintiffs filed a notice of voluntary dismissal in the previous case on December 17, 2018, and the Clerk entered judgment dismissing the action without prejudice.

STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 56(a), a party is entitled to summary judgment if the party "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); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The Supreme Court has stated that "[t]hough determining whether there is a genuine issue of material fact at summary judgment is a question of law, it is a legal question that sits near the law-fact divide." Ashcroft v. Iqbal, 556 U.S. 662, 674 (2009). In reviewing a motion for summary judgment, a court must view the evidence in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A court does not engage in "jury functions" like "credibility determinations and weighing the evidence." Youkhanna v. City of Sterling Heights, 934 F.3d 508, 515 (6th Cir. 2019) (citing Anderson, 477 U.S. at 255). Rather, the question for the Court is whether a reasonable juror could find by a preponderance of the evidence that the nonmoving party is entitled to a verdict. Anderson, 477 U.S. at 252. In other words, the Court should ask "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party mustprevail as a matter of law." Id. at 251-52. Summary judgment must be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322.

In this case the Court has subject-matter jurisdiction by virtue of the parties' diversity of citizenship and the amount in controversy. 28 U.S.C. § 1332. A federal court sitting in diversity applies the law of the forum state, including the forum's choice-of-law rules. Atl. Marine Constr. Co. Inc. v. U.S. Dist. Ct. for W. Dist. of Tex., 134 S. Ct. 568, 582 (2013); Standard Fire Ins. Co. v. Ford Motor Co., 723 F.3d 690, 692 (6th Cir. 2013). In contract cases, Tennessee follows the rule of lex loci contractus, meaning that "a contract is presumed to be governed by the law of the jurisdiction in which it was executed absent a contrary...