Herd v. American Sec. Ins. Co.
| Decision Date | 19 February 2008 |
| Docket Number | No. 06-4284-CV-C-NKL.,06-4284-CV-C-NKL. |
| Citation | 556 F.Supp.2d 992 |
| Parties | John HERD and Gloria Herd, Plaintiffs, v. AMERICAN SECURITY INS. CO., Defendant. |
| Court | U.S. District Court — Western District of Missouri |
Thomas H. Hearne, Hearne & Pivac, Springfield, MO, for Plaintiffs.
Joseph L. Van Ackeren, The Session Law Firm, Kansas City, MO, Walter D. Willson, Wells Marble & Hurst, PLLC, Ridgeland, MS, for Defendant.
Plaintiffs John and Gloria Herd (the "Herds") sued Defendant American Security Insurance Co. ("ASIC") for failing to pay their claim under a forced-place insurance policy after fire destroyed their home. ASIC responds that the Herd's already had insurance on their property; thus, there is no coverage under the ASIC policy. The parties have filed cross-motions for summary judgment [Docs. # 110 and # 134], which this Court now grants in favor of ASIC.
Many of these facts have already been stated in this Court's previous summary judgment order and remain undisputed. See Herd v. Am. Sec. Ins. Co., 501 F.Supp.2d 1240, 1241-44 (W.D.Mo.2007). At some point prior to 2006, the Herds refinanced the mortgage on their home with non-party Bear Sterns Mortgage Co. The new loan was then transferred to nonparty EMC Mortgage Co. ("EMC") who believed that the Herds had no insurance coverage on their home as required by the terms of their mortgage. Fearing for its security interest in the house, about $355,200 still owing on the mortgage, EMC notified the Herds of its concern by letter dated April 3, 2006, warning that if the Herds did not provide proof of insurance, EMC would obtain insurance at the Herds' expense. This letter evidently went unanswered, and EMC notified the Herds by a second letter dated May 1, 2006, that it had purchased a 60-day binder of dwelling insurance, or "forced placed coverage," from ASIC and listed the Herds as "additional insureds." The letter also notified the Herds that the forced placed policy could be canceled at any time if the Herds provided proof of their own insurance; but it also warned that if the Herds did not provide such proof before the 60 day period expired, EMC would obtain an annual forced-placed coverage policy, the premiums of which would be added to the Herd's mortgage payments. Again the letter went unanswered and on June 29, EMC sent the Herds a third letter informing them that their house was now insured by ASIC for the following year and that the premiums were being charged to them. EMC noted that the insurance covered only the dwelling and not the Herd's personal property, and that the premiums were likely higher than those the Herds could obtain for themselves because the house had been insured without inspection. Nonetheless, the letter informed the Herds that they could still purchase their own insurance and provide proof thereof to EMC, which would automatically cancel the forced place coverage and eliminate further premiums. The Herds never responded and admit that there is a disputed issue of fact whether EMC's letters were properly addressed to them.
On August 4, 2006, the Herds' house was completely destroyed by fire. At the time, the Herds had two other insurance policies covering their home. The Herds collected on both these policies (totaling approximately $713,300 for the loss of their dwelling), which paid the balance on their mortgage to EMC. EMC did not make a claim on the forced-place policy because its security interest had been covered by the Herds' insurance. When the Herds confirmed the existence of the ASIC policy and that they were named as additional insureds, they notified ASIC that the home was a total loss and demanded payment on the policy.
The ASIC policy contains the following pertinent language. Under the subheading "CONDITIONS," the policy provides:
"2. Other Insurance. If there is any other valid or collectible insurance which would attach if the insurance under this policy had not been effected, this insurance shall apply only as excess and in no event as contributing insurance and then only after all other insurance has been exhausted.
...
The Herds signed an Escrow Waiver Agreement in conjunction with their mortgage, which contains the following language:
We, the undersigned, do in consideration for the waiver of the escrow requirements outlined in our Deed of Trust/Mortgage dated 01/23/06 agree to pay all tax assessments, ground rents, and homeowners associated fees, if any, to avoid items which may be placed on the above referenced property for nonpayment. Also, we will maintain sufficient insurance coverage to protect said property from any casualty loss which may occur to the premises.
within 30 days from the date due.
If proof of payment is not provided, we understand that EMC Mortgage Corporation may establish an escrow account for payment of tax assessments and insurance premiums to protect its security in the referenced mortgaged property in accordance with the Deed of Trust/Mortgage
[Doc. # 39 at 3]. It is undisputed that the Herds did not provide EMC with proof of payment of any homeowners' insurance in the form of premium receipts despite the multiple letters EMC sent to the Herds requesting such proof, all of which went unanswered. There is a dispute about whether the Herds actually received the letters.
On August 31, 2006, the Herds demanded payment on the ASIC policy. ASIC denied the claim on October 3, 2006. EMC's mortgage was paid in full on November 13, 2006, from the proceeds of the Herds' other insurance policies. EMC subsequently released the Deed of Trust to the Herds and the Herds filed the present lawsuit against ASIC.
ASIC contends that the forced place insurance policy was issued as a result of a mistake between it and EMC. ASIC supports its claim with affidavits by Elaine Modrell, a resolution analyst for EMC, and Johanna D'Arpa, claims manager for ASIC. The Herds oppose the use of these affidavits, including motions to strike in both their Suggestions in Opposition to ASIC's summary judgment motion, as well as in the reply brief in support of their own summary judgment motion. The Herds have five objections to Modrell's affidavit: (1) it is not admissible because she was not disclosed as a witness as required by Federal Rules of Civil Procedure 26(a)(1) and 26(e); (2) a sworn or certified copy of the file was not attached to the affidavit as required by Rule 56(e)(1); (3) the affidavit fails to establish Modrell's competency to testify; (4) the affidavit is based upon hearsay; (5) the affidavit contains legal conclusions. The Herds also object to D'Arpa's affidavit because it contains legal conclusions.
As to their first objection, the Herds themselves identified EMC's representative in their Rule 26 disclosures, and on November 28, 2007, ASIC sent the Herds notice of its intent to depose Modrell [Doc. # 124], although that notice was subsequently withdrawn. Thus, the Herds were put on notice that a representative from EMC might have information, and that EMC had designated Modrell as its representative. ASIC rightly notes that it was up to EMC to identify its representative and that Plaintiffs could have requested the information from EMC themselves. As a result, the Herds can show no prejudice because any failure to disclose was harmless. See Trost v. Trek Bicycle Corp., 162 F.3d 1004, 1008 (8th Cir.1998) (citing Fed.R.Civ.P. 37(c)(1)).
Similarly, the Herds complain that Modrell's affidavit states that it is based on her review of the loan file, but the loan file was not attached to the affidavit in violation of Federal Rule of Civil Procedure 56(e)(1). But all of these documents included in the loan file have already been produced in discovery; it is disingenuous for the Herds to now argue they "have no idea what information Modrell relied upon in forming the matters in her affidavit." The Herds do not object to any particular statement by Modrell based on a lack of foundation.
Next, the Herds argue that the affidavit is defective because other than stating she is a "resolution analyst," there is no information showing she is-competent to testify regarding the loan. The Herds note that the affidavit does not explain what a resolution analyst does or what Modrell's specific involvement was in the case. Rule 56(e)(1) requires that an affidavit must "show that the affiant is competent to testify on the matters stated." The affidavit clearly shows that Modrell is competent to testify: She is employed by EMC and personally reviewed the Herds' loan file, which she did in her official capacity. This is more than enough to establish competence absent contradictory evidence.
Fourth, the Herds maintain that because Modrell stated she reviewed the Herds' loan file, her testimony is based on hearsay. Notably, the Herds do not cite which particular statements by Modrell are impermissible hearsay. Plaintiffs also argue that it is the loan documents that "contain the probative evidence as to whether a policy was issued based on mistake, not her filtered testimony as to what is in the documents." This is not true; under Missouri law, parol evidence may be used to contradict the terms of a contract where there is a common mistake. See C.L. Maddox, Inc. v. Benham Group, Inc., 88 F.3d 592, 599 (8th Cir.1996) (citing CIT Group/Sales Fin., Inc. v. Lark, 906 S.W.2d 865, 868 (Mo.App.199...
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