Immanuel Presbyterian Church of Albuquerque v. Church Mut. Ins. Co., S.I.
| Decision Date | 06 September 2022 |
| Docket Number | 1:20-cv-00878-KWR-KRS |
| Parties | THE IMMANUEL PRESBYTERIAN CHURCH OF ALBUQUERQUE, NEW MEXICO, Plaintiff, v. CHURCH MUTUAL INSURANCE COMPANY, S.I., Defendant. |
| Court | U.S. District Court — District of New Mexico |
Plaintiff Immanuel Presbyterian Church of Albuquerque, New Mexico ("Plaintiff") and Defendant Church Mutual Insurance Company, S.I. ("Defendant") disagree about whether Defendant wrongfully investigated and paid Plaintiff's claim for damages to an insured building ("Church") after a hail and windstorm. Defendant alleges that it paid appropriately under Plaintiff's insurance policy ("Policy") and accordingly, has filed three motions for summary judgment on Plaintiff's claims Defendant's Motion for Partial Summary Judgment on Breach of Contract (Doc. 52) (“Contract Motion”) Defendant's Motion for Partial Summary Judgment on Plaintiff's Claim for Punitive Damages (“Punitive Damages Motion”) (Doc. 53), and Defendant's Motion for Partial Summary Judgment on Plaintiff's Insurance Based Claims (“Insurance Claims Motion”) (Doc. 54). The Motions are fully briefed.[1] After considering the parties' briefing, the records of the case, and the applicable law, the Court will deny the motions.
“[I]n a federal diversity action, the district court applies state substantive law-those rights and remedies that bear upon the outcome of the suit-and federal procedural law-the processes or modes for enforcing those substantive rights and remedies.” Los Lobos Renewable Power, LLC v. Americulture, Inc., 885 F.3d 659, 668 (10th Cir. 2018). This means that when considering a summary judgment motion a federal judge “will look to [state law] to determine what elements the plaintiffs must prove at trial to prevail on their claims” but “exclusively to federal law to determine whether plaintiffs have provided enough evidence on each of those elements to withstand summary judgment.” Milne v. USA Cycling Inc., 575 F.3d 1120, 1129 (10th Cir. 2009) (internal citations omitted). The Complaint alleges breach of an insurance contract and violations under New Mexico laws governing insurance contracts, so New Mexico law applies.
A court may 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). “Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Wolf v. Prudential Ins. Co. of Am., 50 F.3d 793, 796 (10th Cir. 1995) (quotation omitted). When applying this standard, the Court examines the factual record and reasonable inferences in the light most favorable to the party opposing summary judgment. Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir. 1990). “Once the moving party has met its burden, the burden shifts back to the nonmoving party to show that there is a genuine issue of material fact.” Jensen v. Kimble, 1 F.3d 1073, 1077 (10th Cir. 1993) (citing Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991)). Disputes are genuine “if there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way,” and they are material “if under the substantive law it is essential to the proper disposition of the claim.” Becker v. Bateman, 709 F.3d 1019, 1022 (10th Cir. 2013) ().
On July 17, 2020, Plaintiff brought a Complaint against Defendant for Breach of Contract, Bad Faith Insurance Conduct, and Violations of New Mexico Unfair Insurance Practices Act (“Complaint”) in the Second Judicial District of Bernalillo County, New Mexico. On August 28, 2020, Defendant removed the case to federal court based on diversity under 28 U.S.C. § 1332(a). Doc. 1.
The Complaint alleges that Defendant failed to properly compensate Plaintiff under its Policy for damages to the exterior and interior of the Church after a hail and windstorm on July 30, 2018. The Complaint asserts claims for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, and (3) violations of the New Mexico Unfair Insurance Practices Act ("UIPA"). Plaintiff asks for compensatory damages, consequential damages, incidental damages, punitive damages, court costs, attorney fees, and statutory penalties and interests. Defendant's motions seek partial summary judgment on all claims and on Plaintiff's request for punitive damages.
Facts set forth in Defendant's Motions that are not specifically controverted by Plaintiff are deemed undisputed. See D. N.M. LR-CIV 56.1(b). The following facts are undisputed, or where disputed, are presented in the light most favorable to Plaintiff.
Plaintiff owns and operates a Church located at 114 Carlisle Blvd. SE, Albuquerque, N.M. Plaintiff has been operating the Church since the mid 1950's, and the Church is on the registry of historic buildings.
Defendant is an insurance company who insured the Church under Policy No. 014408802-934135, with a policy period of 10/01/2016 to 10/01/2019. Doc. 58 at 5. The Policy had a deductible of $1,000.00 with a policy limit of $5,006,263.00. See Doc. 58-11 at 1. Plaintiff is the owner of the Policy and the named insured. At the time of the event that resulted in this Complaint, Defendant had insured the Church for many years. See Doc. 58 at 5. The parties agree that the Policy is a valid, binding, and enforceable contract between the parties. Id.
At the time of the hail and windstorm, the roof of the Church, which was approximately ten years old, was a coated sprayed polyurethane foam ("SPF") roofing system installed directly over a previously installed built up system with gravel aggregate. Doc. 58 at 5.
Plaintiff regularly inspected the roof and conducted maintenance and minor repairs. Id. at 6.
On July 30, 2018, a hail and windstorm swept through Albuquerque. See Complaint, Doc. 1-1 at 5.
After the storm, water leaked through the roof of the church, requiring buckets and tarps to catch voluminous interior leaking in multiple areas. Doc. 58 at 5.
The Policy covered physical losses to the exterior of the building resulting from hail and/or windstorm events. Doc. 52 at 3-4. The policy excluded interior damages unless the interior damages occurred because of a “Covered Cause of Loss to its roof or walls through which the rain, snow, sleet, ice, sand or dust enters.” Doc. 52 at 4.
Within a week of the storm, Plaintiff made claim (No. 1357962) to Defendant under the Policy for damages to the exterior and interior of the Church. (“Claim”). See Doc. 58-11, Doc. 58-13 at 26:3-6 ().[2]
Initially, the claim was assigned to a third-party claims adjustor ICA, Inc. with reserves set at $150,000.00. See Doc. 58-11 at 1 (claim), Doc. 58-14 at 3,18:13-25 (reserves).
For Defendant, Jim Koontz did the initial roof inspection. See Doc. 58-20 at 2. After that inspection, Defendant determined that hail during the July 30, 2018 storm had damaged the Church's SPF roof, but that the interior damage to the Church was unrelated to the storm. Id. ICA determined that the roof could be repaired by removing the damaged SPF and respraying new SPF. Doc. 58-11.
On October 25, 2018, Defendant sent a letter to Plaintiff estimating the cost for repair at $136,870.15 and offered a settlement of $85,905.06. The latter amount was derived by subtracting recoverable depreciation and the Plaintiff's $1,000 deductible from the total sum. Doc. 58-18 at 1. The letter denied coverage for any interior water damage, stating that any interior damage was “the direct result of wear, tear and deterioration, continuous or repeated seepage of water, maintenance and wind driven rain without a storm created opening, which is specifically excluded under your policy.” Id. at 2.
Subsequently, on January 25, 2019, Defendant appointed Ned Derickson the claims adjuster. At that time, he was a contract employee with Defendant. See Doc. 58-14 at 5, 25:4-9.
At some time after the initial offer from Defendant, Plaintiff retained a licensed public adjusting firm, C3 Group, Inc. (“C3”) to assist it with the claim and to work with Defendant toward a resolution. See Doc. 58-13 at 4, 22:10-17.
Approximately fifteen months later, in October 2019, Defendant replaced Ned Derickson with John Kubant, a senior claims supervisor employed by Defendant. Doc. 58-4 at 2 16:23-35, 17:1-8. That same month Mr. Kubant inspected the Church with representatives from Nelson Engineering ("Nelson"). Id. at 4, 25-28.
On November 15, 2019, Defendant sent a letter to C3 with a new estimate of the cost to repair the damaged roof. The new estimate stated that the replacement cost value of the roof was $496,749.33 minus a depreciation value of $175,708.00 and a deductible of $1,000, yielding a total payment to Defendant of $234,000. Doc. 58-19 at 1.
On November 26, 2019, Nelson issued a report to Defendant. The report found that the damage to the roof was more extensive than previously. The report did not change the previous determination that the wind and hailstorm did not cause the interior damages.
On May 15, 2020, Defendant sent a letter to Plaintiff. This letter indicates that after review, Defendant revised its estimate of the replacement value of loss to $658,154.43. Doc....
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