Mag-Dolphus, Inc. v. Ohio Cas. Ins. Co.

• Decision Date: 12 September 2012
• Docket Number: Civil Action No. 4:11–CV–1525.
• Citation: 906 F.Supp.2d 642
• Parties: MAG–DOLPHUS, INC., et al, Plaintiffs, v. OHIO CASUALTY INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Texas

906 F.Supp.2d 642

MAG–DOLPHUS, INC., et al, Plaintiffs,

v.OHIO CASUALTY INSURANCE COMPANY, Defendant.

Civil Action No. 4:11–CV–1525.

United States District Court,

S.D. Texas,

Houston Division.

Sept. 12, 2012.

Mark Alan Junell, Sanders Junell PC, Houston, TX, for Plaintiffs.

Steven O'Neal Grubbs, John Mark Kressenberg, Sheehy Ware Pappas PC, Houston, TX, for Defendant.

OPINION AND ORDER

MELINDA HARMON, District Judge.

Pending before the Court is Defendant Ohio Casualty Insurance Company's ¹ (“Ohio”) motion for summary judgment. Doc. 17. Defendant moves for summary judgment of Plaintiffs', Mag–Dolphus, Inc.'s, and its owners, Gerald and Jan Maggard's, claims on the grounds that Plaintiffs' invocation of the appraisal provision in the insurance contract (“the Policy”) and Defendant's prompt compliance with the appraisal provision preclude Plaintiffs' claims as a matter of law. Doc. 17 at 2.

After considering Defendant's motion for summary judgment, the facts of this case, and the applicable law, the Court finds Plaintiffs' invocation of the appraisal provision precludes Plaintiffs' claims as a matter of law and the uncontested facts in this case fail to support Plaintiffs' claims against Defendant. The Court therefore finds that Defendant's motion for summary judgment should be granted.

Background

Plaintiffs own an office building at 3006 Sawdust Road, The Woodlands, TX. 77380–2607.² Doc. 1–1 at 5. On May 26, 2008, Plaintiffs obtained an insurance policy from Defendant, covering Plaintiffs' business property. Doc. 17–2. On September 13, 2008, Hurricane Ike struck Texas, causing damage to Plaintiffs' building and outdoor sign. Doc. 1–1 at 5. On the same day, Plaintiffs filed an insurance claim for the damages to the property. Doc. 1–1 at 5; Doc. 20 at 2.

On September 29, eleven business days after Defendant received notice of the loss, its independent adjuster inspected the property. Doc. 17 at 2; Doc. 17–1 at 1. In his loss report, Defendant's independent adjustor estimated the total claim value to be $40,331.48. Doc. 17–3 at 2; Doc. 17–4. The total claim value consisted of an initial $23,145.22, which reflected the cash value portion of the repairs to the building and outdoor sign less a $500.00 deductible, and an additional $17,186.26, which Defendant would pay in the event that Plaintiffs made actual repairs or replacements on the building and sign. Doc. 17–3 at 2; Doc. 17–4.

On November 6, twenty-eight business days after Defendant's adjuster inspected Plaintiffs' property, Defendant sent Plaintiffs a claim acceptance letter notifying Plaintiffs of the damage amount and a check for $23,145.22. Doc. 20 at 2; Doc. 17 at 2; Doc. 17–4. In the letter, Defendant explained that for Plaintiffs to collect the remaining balance of $17,186.26, the terms of the Policy required that Plaintiffs first make the actual building and sign repairs or replacements and then submit any pertinent documentation to verify the completion of the repairs. Doc. 17–4; see Doc. 17–3 at 2.

Although Plaintiffs do not state as much, it appears that Plaintiffs disputed Defendant's estimate of the compensation. See Doc. 1–1 at 6–7. On January 29 and February 4, 2009, presumably in response to Plaintiffs' dispute of the amount of covered loss, Defendant re-inspected Plaintiffs' property to determine whether damages to the building were hurricane-related or originated from non-hurricane issues. Doc. 17 at 2; Doc. 17–5; Doc. 17–6. Defendant found both hurricane-related and non-hurricane-related damage. Doc. 17–5. Nothing in the record indicates that Defendant's loss valuation changed. See Doc. 17–5; Doc. 17–6. On June 18, Plaintiffs informed Defendant that they disagreed with Defendant's appraisal, and Plaintiffs invoked the Policy's appraisal provision.³ Doc. 20 at 2; Doc. 17 at 7; Doc. 17–1 at 2; Doc. 17–7; Doc. 17–8.

The parties each selected independent appraisers who submitted estimates of the amount of covered loss. See Doc. 17–1 at 2; Doc. 17–7; Doc. 17–8; Doc. 17–2 at 69. The two appraisers did not agree and they subsequently selected an umpire, as required by the Policy. See Doc. 17–1 at 2; Doc. 17–7; Doc. 17–8; Doc. 17–2 at 69. On January 22, 2010, the umpire awarded Plaintiffs $191,594.16 in replacement costs, less depreciation, previous payments, and deductibles. Doc. 20 at 2; Doc. 17 at 7; Doc. 17–1 at 2; Doc. 17–9. Neither the Policy's appraisal clause nor the umpire award letter specified a deadline by which Defendant must pay the appraisal award. See Doc. 17–2 at 69; Doc. 17–9.

On February 11, 2010, Defendant sent Plaintiffs a notice of payment and a check for $99,547.44, which Defendant stated was the amount due for the property damage claim based on the appraisal, less the amounts already paid and the deductible. Doc. 20 at 2; Doc. 17–1 at 2; Doc. 17–10. On March 25, Defendant sent Plaintiffs a second notice of payment and a check for $52,759.81, which Defendant stated was for “the recoverable depreciation on the repairs to [the] building” due under the Policy's terms. Doc. 20 at 2; Doc. 17–1 at 2; Doc. 17–11.

Nevertheless, on September 13, 2010, Plaintiffs filed their original petition in the 359th District Court for Montgomery County. No. 10–09–09948–CV. See Doc. 1–1. In their petition, Plaintiffs asserted a claim for breach of contract and extra-contractual claims for common law and statutory breach of the duty of good faith and fair dealing, for common law fraud, and for failure to promptly pay claims under the Texas Insurance Code. Doc 1–1 at 9. On April 20, Defendant removed the case to this Court on grounds of the Court's diversity jurisdiction pursuant to 28 U.S.C. § 1332. Doc. 1.

Defendant now has moved for summary judgment of Plaintiffs' claims on the grounds that Plaintiffs' invocation of the appraisal provision and Defendant's prompt compliance therewith preclude Plaintiffs' claims as a matter of law.⁴ Doc. 17.

Standard

A party moving for summary judgment must inform the court of the basis for the motion and identify those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, that 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. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The substantive law governing the suit identifies the essential elements of the claims at issue, and therefore indicates which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The initial burden falls on the movant to identify areas essential to the non-movant's claim in which there is an “absence of a genuine issue of material fact.” Lincoln Gen. Ins. Co. v. Reyna, 401 F.3d 347, 349 (5th Cir.2005). If the moving party fails to meet its initial burden, the motion must be denied, regardless of the adequacy of any response. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) ( en banc ). Moreover, if the party moving for summary judgment bears the burden of proof on an issue, either as a plaintiff or as a defendant asserting an affirmative defense, then that party must establish that no dispute of material fact exists regarding all of the essential elements of the claim or defense to warrant judgment in his favor. Fontenot v. Upjohn, 780 F.2d 1190, 1194 (5th Cir.1986) (the movant with the burden of proof “must establish beyond peradventure all the essential elements of the claim or defense to warrant judgment in his favor”) (emphasis in original).

Once the movant meets its burden, the non-movant must direct the court's attention to evidence in the record sufficient to establish that there is a genuine issue of material fact for trial. Celotex, 477 U.S. at 323–24, 106 S.Ct. 2548. The non-moving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing U.S. v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962)). Instead, the non-moving party must produce evidence upon which a jury could reasonably base a verdict in its favor. Anderson, 477 U.S. at 248, 106 S.Ct. 2505;see also DIRECTV, Inc. v. Robson, 420 F.3d 532, 536 (5th Cir.2005). To do so, the non-movant must “go beyond the pleadings and by its own affidavits or by depositions, answers to interrogatories and admissions on file, designate specific facts that show there is genuine issue for trial.” Webb v. Cardiothoracic Surgery Assoc. of N. Tex., P.A., 139 F.3d 532, 536 (5th Cir.1998).

Unsubstantiated and subjective beliefs and conclusory allegations and opinions of fact are not competent summary judgment evidence. Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998); Grimes v. Tex. Dep't of Mental Health and Mental Retardation, 102 F.3d 137, 139–40 (5th Cir.1996); Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.1994), cert. denied,513 U.S. 871, 115 S.Ct. 195, 130 L.Ed.2d 127 (1994); Topalian v. Ehrman, 954 F.2d 1125, 1131 (1992), cert. denied,

506 U.S. 825, 113 S.Ct. 82, 121 L.Ed.2d 46 (1992). Nor are pleadings summary judgment evidence. Wallace v. Tex. Tech. Univ., 80 F.3d 1042, 1046 (5th Cir.1996) (citing Little, 37 F.3d at 1075.). The non-movant cannot discharge his burden by offering vague allegations and legal conclusions. Salas v. Carpenter, 980 F.2d 299, 305 (5th Cir.1992); Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 889, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990). Nor is the court required by Rule 56 to sift through the record in search of evidence to support a party's opposition to summary judgment. Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir.1998) (citing Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915–16 & n. 7 (5th Cir.1992)).

Nevertheless, all reasonable inferences must be drawn...