Johnson v. State Farm Fire & Cas. Co.

• Decision Date: 16 November 2021
• Docket Number: 2-20-cv-02504-SHM-atc
• Parties: Christopher T. JOHNSON, Plaintiff, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.
• Court: U.S. District Court — Western District of Tennessee

572 F.Supp.3d 454

Christopher T. JOHNSON, Plaintiff,

v.STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

No. 2-20-cv-02504-SHM-atc

United States District Court, W.D. Tennessee, Western Division.

Signed November 16, 2021

Alexandria Fisher, Morgan & Morgan, Nashville, TN, for Plaintiff.

Christopher L. Vescovo, Lewis Thomason, Memphis, TN, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

SAMUEL H. MAYS, JR., UNITED STATES DISTRICT JUDGE

This is a case about insurance coverage. Before the Court is Defendant State Farm Fire and Casualty Company's ("State Farm") July 23, 2021 Motion for Summary Judgment ("State Farm's Motion"). (D.E. 39). Plaintiff Christopher T. Johnson ("Johnson") responded on August 19, 2021. (D.E. 41.) State Farm replied on September 2, 2021. (D.E. 45.) For the following reasons, State Farm's Motion is GRANTED .

I. Background

Johnson's home is located at 8729 Guyboro Cove, Germantown, Tennessee. (D.E. 42 at ¶ 1.) On the morning of June 7, 2019, that area of Germantown experienced significant rainfall. (D.E. 42 at ¶ 2.) Rainwater accumulated around Johnson's house. (D.E. 42 at ¶ 3; D.E. 45 at ¶ 8.) It entered the house at multiple points, including under and through the doors and from the toilets. (D.E. 42 at ¶ 4.) The water rose approximately two and one-half feet throughout the entire first floor of the house and receded quickly. (D.E. 42 at ¶ 6.)

Johnson made a claim with State Farm for losses caused by water intrusion under Policy No. 42-0139-N16 (the "Policy"). (D.E. 42 at ¶¶ 8, 9). At all applicable times, the Policy was in full force and effect. (D.E. 42 at ¶ 7.) The pertinent provisions of the Policy, including endorsements, are as follows:

SECTION I – LOSSES NOT INSURED

....

2. We do not insure under any coverage for any loss which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to produce the loss; or (d) whether the event occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these:....

....

c. Water, meaning: (1) flood, surface water, waves (including tidal wave, tsunami, and seiche), tides, tidal water, overflow of any body of water, spray or surge from any of these, all whether driven by wind or not .... (the "Water Exclusion Provision")¹

(D.E. 1-1, Page ID 36-37, 17, 24). The Policy does not define "flood" or "surface water." (D.E. 45 at ¶¶ 1, 2.)

State Farm provided $10,000 in coverage for Back-up of Sewer or Drain ("BUSD") under the Policy's BUSD Endorsement, but denied further coverage. (D.E. 42 at ¶ 10.) Johnson filed a Complaint against State Farm in the Circuit Court of Tennessee for the Thirtieth Judicial District. (D.E. 1-1, Page ID 6.) The Complaint alleges Breach of Contract and Bad Faith Refusal to Pay. State Farm filed a notice of removal and now moves for summary judgment on both claims. (D.E. 1; D.E. 39)

II. Jurisdiction and Choice of Law

The Court has diversity jurisdiction under 28 U.S.C. § 1332. A federal district court has original jurisdiction of all civil actions between citizens of different states "where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs." 28 U.S.C. § 1332(a)(1).

Johnson is a resident of Germantown, Tennessee. (D.E. 1.) State Farm is an Illinois corporation with its principal place of business in Bloomington, Illinois. There is complete diversity. 28 U.S.C. § 1332(a)(1) (diversity exists when the parties are citizens of different states).

The removing party bears the burden of demonstrating that the amount in controversy exceeds the amount required by statute. See Shupe v. Asplundh Tree Expert Co., 566 F. App'x 476, 478 (6th Cir. 2014). State Farm has provided evidence that Johnson's claim exceeds $100,000. (D.E. 1-1, Page ID 57.) The amount in controversy is satisfied. See 28 U.S.C. § 1332(a)(1).

Federal courts sitting in diversity apply the choice-of-law rules of the forum state. See Performance Contracting Inc. v. DynaSteel Corp., 750 F.3d 608, 611 (6th Cir. 2014) ; Mountain Laurel Assurance Co. v. Wortham, No. 217CV02660TLPTMP, 2018 WL 5269829, at *3 (W.D. Tenn. Oct. 23, 2018). Where insurance contracts do not have a choice-of-law provision, "Tennessee courts apply the substantive law of the state in which the policy was issued and delivered." See Standard Fire Ins. Co. v. Chester–O'Donley & Assocs., Inc., 972 S.W.2d 1, 5 (Tenn. Ct. App. 1998) ; see also Tenn. Code Ann. § 56–7–102 ("[E]very contract [issued by any insurance company doing business in Tennessee] shall be held as made in [Tennessee] and construed solely according to the laws of [Tennessee]."). The Policy does not have a choice-of-law provision. It was issued and delivered in Tennessee. (D.E. 1-1, Page ID 12.) The Court applies Tennessee substantive law.

III. Standard of Review

Under Federal Rule of Civil Procedure 56(a), a court must grant a party's motion for 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). The moving party must show that the nonmoving party, having had sufficient opportunity for discovery, lacks evidence to support an essential element of its case. See Fed. R. Civ. P. 56(c)(1) ; Peeples v. City of Detroit, 891 F.3d 622, 630 (6th Cir. 2018).

When confronted with a properly supported motion for summary judgment, the nonmoving party must set forth specific facts showing that there is a genuine dispute for trial. See Fed. R. Civ. P. 56(c). "A ‘genuine’ dispute exists when the plaintiff presents ‘significant probative evidence’ ‘on which a reasonable jury could return a verdict for her.’ " EEOC v. Ford Motor Co., 782 F.3d 753, 760 (6th Cir. 2015) (en banc) (quoting Chappell v. City of Cleveland, 585 F.3d 901, 913 (6th Cir. 2009) ). The nonmoving party must do more than simply "show that there is some metaphysical doubt as to the material facts." Lossia v. Flagstar Bancorp, Inc., 895 F.3d 423, 428 (6th Cir. 2018) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ).

Although summary judgment must be used carefully, it "is an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action[,] rather than a disfavored procedural shortcut." FDIC v. Jeff Miller Stables, 573 F.3d 289, 294 (6th Cir. 2009) (quotation marks and citations omitted).

IV. Analysis

This case turns on whether the Water Exclusion Provision applies to Johnson's losses. The Parties dispute whether the losses were caused by "flood" or "surface water," which would exclude coverage, and whether those terms are ambiguous.

A. Breach of Contract

When considering issues of state law, federal courts "must follow the decisions of the state's highest court when that court has addressed the relevant issue." Talley v. State Farm Fire & Cas. Co., 223 F.3d 323, 326 (6th Cir. 2000). If the forum state's highest court has not addressed the issue, federal courts must "anticipate how the relevant state's highest court would rule in the case and are bound by controlling decisions of that court." See In re Dow Corning Corp., 419 F.3d 543, 549 (6th Cir. 2005).

In Tennessee, courts construe insurance policies "using the same tenets that guide the construction of any other contract." See Garrison v. Bickford, 377 S.W.3d 659, 664 (Tenn. 2012). The primary goal is to ascertain and give effect to the parties’ intent. See Martin v. Powers, 505 S.W.3d 512, 517 (Tenn. 2016) (citing Garrison, 377 S.W.3d at 664 ). Courts endeavor to give policy terms their plain and ordinary meaning. See id. The plain and ordinary meaning "is the meaning which the average policy holder and insurer would attach to the policy language." S. Trust Ins. Co. v. Phillips, 474 S.W.3d 660, 667 (Tenn. Ct. App. 2015) (internal quotation marks omitted). "When called upon to interpret a term used in an insurance policy that is not defined therein, courts in Tennessee sometimes refer to dictionary definitions." Am. Just. Ins. Reciprocal v. Hutchison, 15 S.W.3d 811, 815 (Tenn. 2000) (relying on Black's Law Dictionary). The Tennessee Supreme Court has also considered decisions from other state high courts and federal circuit courts that address the meaning of a disputed policy term. See Lammert v. Auto-Owners (Mut.) Ins. Co., 572 S.W.3d 170, 175-78 (Tenn. 2019).

"[C]ontracts of insurance are strictly construed in favor of the insured, and if the disputed provision is susceptible to more than one plausible meaning, the meaning favorable to the insured controls." Garrison, 377 S.W.3d at 664 (citation omitted). "However, a strained construction may not be placed on the language used to find ambiguity where none exists." Id. (internal quotations omitted).

The Tennessee Supreme Court has not defined "surface water" in the insurance context. Black's Law Dictionary defines the term as "water lying on the surface of the earth but not forming part of a watercourse or lake. Surface water most commonly derives from rain, springs, or melting snow." SURFACE WATER, Black's Law Dictionary (11th ed. 2019). State high courts have adopted equivalent definitions. Boazova v. Safety Ins. Co., 462 Mass. 346, 968 N.E.2d 385, 392 (2012) ; Thorell v. Union Ins. Co., 242 Neb. 57, 492 N.W.2d 879, 883 (1992) ; Heller v. Fire Ins. Exch., a Div. of Farmers Ins. Grp., 800 P.2d 1006, 1008–09 (Colo. 1990) ; State Farm Fire & Cas. Co. v. Paulson, 756 P.2d 764, 768 (Wyo. 1988) ; Fenmode, Inc. v. Aetna Cas. & Sur. Co. of Hartford, Conn., 303 Mich. 188, 6 N.W.2d 479, 481 (1942). Federal circuit courts have adopted equivalent definitions. Lucky...