Legend's Creek Homeowners Ass'n, Inc. v. Travelers Indem. Co. of Am.

Citation493 F.Supp.3d 681
Decision Date06 October 2020
Docket NumberCase No. 1:18-cv-02782-TWP-MPB
Parties LEGEND'S CREEK HOMEOWNERS ASSOCIATION, INC., Plaintiff, v. The TRAVELERS INDEMNITY COMPANY OF AMERICA, Defendant.
CourtUnited States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)

493 F.Supp.3d 681

LEGEND'S CREEK HOMEOWNERS ASSOCIATION, INC., Plaintiff,
v.
The TRAVELERS INDEMNITY COMPANY OF AMERICA, Defendant.

Case No. 1:18-cv-02782-TWP-MPB

United States District Court, S.D. Indiana, Indianapolis Division.

Signed October 6, 2020


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David E. Miller, Saeed & Little LLP, Indianapolis, IN, William David Beyers, Buchanan & Bruggenschmidt, P.C., Zionsville, IN, for Plaintiff.

Eric C. McNamar, John Carl Trimble, Lewis Wagner LLP, Indianapolis, IN, Matthew P. Fortin, Matthew S. Ponzi, Pro Hac Vice, Foran Glennon Palandech Ponzi & Rudloff PC, Chicago, IL, for Defendant.

ENTRY ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND APPEAL OF THE MAGISTRATE JUDGE'S DECISION

TANYA WALTON PRATT, JUDGE

This matter is before the Court on Defendant The Travelers Indemnity Company of America's ("Travelers") Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56. (Filing No. 71.) After Travelers denied a hail and windstorm claim submitted under a condominium insurance policy, Plaintiff Legend's Creek Homeowners Association, Inc. ("Legend's Creek") brought this action alleging Travelers breached their insurance contract and acted in bad faith. (Filing No. 11.) Also pending is Travelers' Appeal of the Magistrate Judge Order ordering an appraisal. (Filing No. 83.) Because the

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Court grants Travelers' Motion for Summary Judgment, there is no need for an appraisal. Therefore, the Court denies Travelers' Appeal of the Magistrate Judge's Decision because that issue is moot.

I. BACKGROUND

The following facts are not necessarily objectively true, but as required by Federal Rule of Civil Procedure 56, they are presented in the light most favorable to Legend's Creek as the non-moving party. See Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009) ; Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Legend's Creek is an Indiana Corporation that operates a condominium association consisting of five residential buildings, a series of detached garages, and a clubhouse located in Indianapolis, Indiana (the "Property"). (Filing No. 73-2 at 13-15.) Travelers is a Connecticut corporation that, among other things, provides insurance to residential properties. (Filing No. 73-1.) Travelers issued a condominium insurance policy (the "Policy") to Legend's Creek for coverage for the period September 1, 2015 to September 1, 2016. (Filing No. 73-3.) The Policy insured Legend's Creek against the risk of direct physical loss or damage to the Property subject to certain terms and conditions. Id. The Policy contained the following provision:

No one may bring a legal action against us under this Coverage Form unless:

a. There has been full compliance with all of the terms of this Coverage Form; and

b. The Action is brought within 2 years after the date on which direct physical loss or damage occurred.

Id. at 44.

The Policy also contains the following limitation of liability on a replacement cost basis:

(c) We will not pay more for loss or damage on a replacement cost basis than the least of Paragraphs (i), (ii) or (iii) subject to Paragraph (d) below:

(i) The Limit of Insurance applicable to the lost or damaged property;

(ii) The cost to replace the lost or damaged property with other property:

a) of comparable material and quality; and

b) used for the same purpose; or

(iii) The amount actually spent that is necessary to repair or replace the lost or damaged property.

Id. at 40.

On or about May 1, 2016, the Property was damaged by hail and wind during a storm. (Filing No. 73-2 at 12-13.) The storm damage encompassed the roofs, gutters, and north elevations of siding on four residential buildings and four detached garages. (Filing No. 73-4 at 16-18.) At the time of loss there were two different types of siding installed at the Property. Id. at 24. Buildings 1 and 2 and Garages 1 and 2 were clad with a fiber cement siding product manufactured by James Hardie known as "HardiePlank – Select Cedarmill." (Filing No. 73-5 at 34.) There is conflicting evidence in the record as to whether the siding was pre-finished, meaning it was painted in the factory and then installed, or whether it was field-finished, meaning it was primed in the factory and painted after installation. Id. at 53; Filing No. 73-6. For purposes of this Entry, the Court accepts Legend's Creek's position that the HardiePlank was pre-finished. At the time of the replacement, James Hardie no longer manufactured this specific siding. (Filing No. 73-10 at 1.) Buildings 3 and 4 and

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Garages 3 and 4 were clad with a pre-finished hardboard siding product manufactured by Masonite. (Filing No. 73-5 at 19-21; 26-27.) The Masonite siding was also discontinued. (Filing No. 80-1 at 9.)

On September 22, 2016, Legend's Creek retained a public adjuster, Kris Kassen ("Kassen") of Spartan Claims, to assist with its claim for the loss and damage caused by the May 1, 2016 storm. (Filing No. 73-4 at 14.) That same day, Kassen notified Travelers of the loss to the Property. Id. Spartan Claims' contract with Legend's Creek entitled it to ten percent of the insurance proceeds paid by Travelers. (Filing No. 73-9 at 1.)

On October 6, 2016, Kassen learned from a representative of James Hardie that the James Hardie siding installed on Buildings 1 and 2 and their corresponding garages was no longer in production. Id. at 19. On November 3, 2016, Travelers issued payment to Legend's Creek in the amount of $644,674.87, which represented the estimated cost to replace the roofs and gutters as well as to repair the damaged north elevations of siding, less the deductible and recoverable depreciation. (Filing No. 73-11; Filing No. 73-4 at 22.) This amount reflected the idea that the north facing siding would undergo spot repairs rather than complete replacement. (Filing No. 73-4 at 36.) Upon receipt of this initial payment, Kassen emailed Steven Knopp ("Knopp"), the adjuster handling the claim for Travelers, to tell him that his estimate "is one of the most well written and respectable estimates I've ever seen come out of Travelers, or any other carrier for that matter." (Filing No. 73-12.)

But Kassen soon changed his mind. January 20, 2017, Kassen informed Knopp that the proposed spot repairs to the damaged siding were no longer acceptable to Legend's Creek—it wanted complete replacement of the north-facing siding. (Filing No. 73-4 at 23-24.) On February 24, 2017, Travelers issued a supplemental payment of $238,766.88 for increased work on roof replacement, which would alleviate the need to replace the siding. Id. at 26; Filing No. 73-11 at 2. Travelers later issued another supplemental payment of $28,438.02 for increased scope of repair to the siding. (Filing No. 73-4 at 30-31; Filing No. 73-11 at 2.)

On September 28, 2017, Kassen emailed Knopp to notify him of Legend's Creek's position that the north-facing siding needed to be replaced and spot repairs were insufficient. (Filing No. 73-13.) Travelers prepared an estimate that included replacement of the north-facing siding and sent it to Kassen. (Filing No. 73-14.) The following day, Knopp replied with his own estimate, which also called for replacement of only the north-facing siding. (Filing No. 73-15.) After discussing the difference in these estimates with Travelers' siding consultant, Kassen sent Knopp an estimate that resolved the differences. (Filing No. 73-16.) On February 7, 2018, Knopp sent Kassen a final estimate of an additional payment of $44,007.01, that reflected those revisions and provided for replacement of all north-facing siding. (Filing No. 73-17.) In his email, Knopp apologized for the delay and requested that Kassen inform him if this last estimate was "good to settle" the matter between the two parties. Id. at 1.

The February 7, 2018 estimate provided for replacement of the north-facing siding on Buildings 1 and 2 with primed but unfinished fiber cement product and replacement of the north-facing siding on Buildings 3 and 4 with primed and pre-finished hardboard product, and an allowance of approximately $10,000.00 to paint the unfinished siding. (Filing No. 73-11 at 2; Filing No. 73-17 at 19-24.) On February 13, 2018, Kassen sent an e-mail to Legend's

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Creek's property manager, board of directors, and contractor stating:

I am writing this email to act as directions to all parties regarding the future progress of this claim and the series of events that shall take place....

At this point, I have finalized with Travelers the estimate that includes all previous items as well as the approved north elevations of siding for replacement.... I have gotten the carrier to agree to replacement of the north elevations, with the expectation that the north elevation siding at Legend's Creek will be replaced with a like kind/quality product; the closest match available. The four large buildings along with the four garages will have their north elevations of siding replaced with PreFinished, Primed James Hardie HardiePlan[k] – Select Cedarmill 8.25".... This siding will NOT be painted thereafter as it was not painted prior to the loss. Amos will be installing the
...

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