Mattox v. State Farm Fire & Cas. Co., CA 12-0192- KD-C

Decision Date15 August 2012
Docket NumberCA 12-0192- KD-C
PartiesROBERT M. MATTOX, Plaintiff, v. STATE FARM FIRE AND CASUALTY COMPANY and JEFF STAUTER, Defendants.
CourtUnited States District Courts. 11th Circuit. United States District Court of Southern District of Alabama
REPORT AND RECOMMENDATION

This cause is before the Magistrate Judge for issuance of a report and recommendation, pursuant to 28 U.S.C. § 636(b), on the notice of removal (Doc. 1; see also Doc. 3 (Stauter's joinder in notice of removal)), Plaintiff's motion to remand (Doc. 9), Defendant Jeff Stauter's motion to dismiss (Doc. 11; see also Doc. 14 (supplement to motion to dismiss which joins in State Farm's opposition)), State Farm Fire and Casualty Company's opposition to remand (Doc. 13), and Plaintiff's reply to State Farm's response to motion to remand (Doc. 15). Upon consideration of the foregoing pleadings, it is recommended that the Court GRANT plaintiff's motion to remand (Doc. 9) and REMAND this cause to the Circuit Court of Baldwin County, Alabama from whence it came.

FINDINGS OF FACT

State Farm Fire and Casualty Company renewed a rental dwelling policy, Policy Number 93-E1-7930-6, for the Plaintiff, Robert M. Mattox ("Mattox"), on July 9, 2008, covering his rental home and personal property at 10 Rolling Oaks Drive, Fairhope, Alabama, 36532. (Doc. 1, Exhibit A, RENEWAL CERTIFICATE.) The policy had an effective date of July 9, 2008 and provided coverage through July 9, 2009. (Id.) The rental dwelling policy reflects dwelling coverage of $310,900, dwelling extension coverage of $31,090, and personal property coverage of $15,545. (Id.) The policy also covers actual loss resulting from loss of rents. (Id.) Finally, the policy provides additional debris removal coverage and includes such expense in the limit of liability applying to the damaged property. (See id., ADDITIONAL COVERAGES, at ¶ 1.) "When the amount payable for the actual damage to the property plus the expense for debris removal exceeds the limit of liability for the damaged property, an additional 5% of that limit of liability will be available to cover debris removal expense." (Id.)

The policy was in full force and effect on July 2, 2009, when plaintiff's rental home was substantially damaged by fire. (Doc. 1, Exhibit A, COMPLAINT, at ¶¶ 3 & 5.) At the time of the fire, the insured plaintiff was renting the house to his daughter for less than market value. (Doc. 9, Exhibit B, August 31, 2009 Memo., at 2.) Mattox timely notified State Farm of the fire damage. (Doc. 1, Exhibit A, COMPLAINT, at ¶ 6.) It was determined by origin and cause investigator Harold Deese that lightning was the cause of the fire and loss. (Doc. 9, Exhibit B, at 2.)

State Farm Claims Representative Jeff Stauter ("Stauter") was involved in the handling of Mattox's claim.1 (Doc. 1, Exhibit H, Declaration of Jeff Stauter, at ¶ 5.) Stauter inspected the Mattox rental property and prepared an initial estimate to repair the damaged property, as well as a Statement of Loss summarizing the loss amounts. (Doc. 1, Exhibit H, Stauter declar., at ¶¶ 7-8.) The initial detailed estimate to repair or replace the damaged property is dated August 31, 2009 Doc. 13, Exhibit J),2 the same date that Stauter penned an internal loss report stating that the "[l]oss [is] over policy limits per State Farm estimate so not eligible for PSP[]" and the "structure is a constructive total loss because the ACV Xactimate repair estimate exceeded the policylimit."3 (Doc. 9, Exhibit B, Internal Memo, at 3 (emphasis added); see also Doc. 13, Exhibit K, Internal Memo, at 4 (the Team Manager was Tim Wade and it was his recommendation that the "State Farm estimate completed and ACV exceeds coverage A limit . . . TM recommends approval of RFA4 as submitted for $334,368.66[.]" (emphasis in original).)5

A review of State Farm's Activity Log for August 31, 2009 through September 2, 2009 reflects a flurry of activity. (See Doc. 13, Exhibit B, at 5.) On August 31, 2009, Tim Wade noted that Stauter had submitted an RFA review and that it was his request that State Farm pay Coverage A, contents loss, and six months loss of rent at $1,500 per month. (See id.) This entry also reflects Wade's recommendation for approval of RFA for $334,368.66; he also requested "SM review and approval of RFA[,] Future landscape repairs[, and] DMO estimates[.]" (Id.) Approximately five hours later, Alan L. Cox made an entry noting that "SM authority extended to $334,368.66 per RFA." (Id.)6 The following day, September 1, 2009, Tim Wade noted that total file authority was extended and informed Stauter that it was okay for him to move forward but that he was to add a "log" on how he was computing the loss of rents before payment was made. (Id.; see also id. ("Update FACETS for future handling.").)

On September 2, 2009, State Farm, through its Claims Representative, prepared another detailed estimate to repair or replace the damaged property (Doc. 13, Exhibit L, at 2 ("The estimate to repair or replace your damaged property is $309,148.47. The enclosed claim payment to you of $299,447.73 is for the actual cash value of the damaged property at the time of loss, less any deductible that may apply. We determined the actual cash value by deducting depreciation from the estimated repair or replacement cost. Our estimate details the depreciation applied to your loss. Based on our estimate, the additional amount available to you for replacement cost benefits (recoverable depreciation) is $6,591.74. If you cannot have the repairs completed for the repair/replacement cost estimated, please contact your claim representative prior to beginning repairs.")) and issued Mattox a "Statement of Loss" reflecting a dwelling coverage limit of $319,916.00 and a total payable amount of $328,868.66 (compare Doc. 1, Exhibit B to Stauter declar., Statement of Loss with Doc. 1, Exhibit H, Stauter declar., at ¶ 8 ("I provided a copy of the Statement of Loss to Plaintiff in September of 2009.")).7 That same date, September 2, 2099, plaintiff was paid the policy limit of $319,916.00 (id. at ¶ 10), along with the actual cash value for contents totaling $5,561.01 and the Coverage C loss of rents for three months totaling $4,500.00, for a total payment on September 2, 2009 of $328,868.66 (compare Doc. 1, Exhibit B to Stauter declar., Statement of Loss with Doc. 13, Exhibit B, Activity Log at 5 (Stauter's September 2, 2009 notation at 10:33 a.m. that he "ISSUED DRAFT FOR DWG LIMIT PLUS ACV CONTENTS AND 3 MONTHS LOR AT $1500/M.")).

Stauter's final Activity Log entry for September 2, 2009, at 10:33 a.m., also reflects his conversation with Mattox regarding DMO coverage, as follows: "DISCUSSED THE DMO ADDITIONAL COVERAGE, AND ADVISED THE INSD THAT HE WOULD BE ENTITLED TO SOME BENEFIT IF HE INCURRED DMO, BUT THE AMT WOULD DEPEND ON WHAT HE DID AS FAR AS DMO GOES. ADVISED HIM OF 5% DMO LIMIT, AND THAT WOULD BE THE MAXIMUM ADDITIONAL BENEFIT." (Doc. 13, Exhibit B, at 5.) This entry also reflects the following notation: "T: THE ONLY REMAINING ITEMS ARE THE LANDSCAPING, DMO, AND LOR." (Id.) According to Stauter, it was plaintiff's inquiry about the additional 5% debris removal coverage8 which prompted him to prepare a second estimate (Doc. 13, Exhibit I, Stauter supp. declar., at ¶ 11); however, this is curious since this estimate was prepared by Stauter at 10:22 a.m. on September 2, 2009 (see Doc. 13, Exhibit L), that is, before the Activity Log entry reflecting his conversation with Mattox. This second estimate, according to Stauter, was a "Repair Only Estimate" which did not include debris removal ordemolition in the scope of work,9 contained an actual cash value amount of $299,447.73, and was provided to plaintiff. (Doc. 13, Exhibit I, Stauter supp. declar., at ¶ 11.)10

On October 8, 2009, Mattox faxed to Stauter a demolition/removal proposal prepared by Mark Keel Construction, LLC totaling $12,500.00. (Doc. 13, Exhibit M, Demolition Proposal.) State Farm's Activity Log reflects the following entry on October 22, 2009: "C-Discussed file w/ CR.11 N[I]12 has presented DMO bill to tear down entire structure. NI DMO is not consistent w/ our scope and repair estimate. CR completed new est removing our DMO and we still exceed the limits. SF DMO is higher for partial tear down than NI submitted DMO for total teardown. NI DMO plus SF ACV do not exceed our prior payment. No addt payment due from our review." (Doc. 13, Exhibit B, at 4.) On October 23, 2009, Stauter contacted Mattox to discuss the additional debris removal coverage. (Compare Doc. 13, Stauter supp. declar., at ¶ 13 with Doc. 13, Exhibit B, Activity Log Entry for October 23, 2009.) Stauter informed Mattox that he was not entitled to the additional 5% debris removal coverage "because the Repair Only Estimate ($299,447.73), which did not include debris removal coverage, plus the debris removal estimate Plaintiff submitted ($12,500.00), was less than the amount Plaintiff had already been paid ($319,916.00)." (Id.; compare id. with Doc. 13, Exhibit B, Activity Log Entry for October 23, 2009 ("TOLD HIM THAT OUR ACV LOSS WITHOUT DMOPLUS HIS DMO WAS LESS THAN WHAT WE HAVE ALREADY PAID HIM. OUR RC W/O DMO PLUS HIS DMO IS ALSO LESS THAN WHAT WE HAVE PAID HIM, WHICH IS THE DWELLING LIMIT. UNLESS THERE IS SOMETHING WRONG OR MISSING FROM MY ESTIMATE, WE WOULD NOT BE ABLE TO PAY ANYTHING ELSE FOR DMO. HE WILL REVIEW MY ESTIMATE AND CALL ME BACK.").) Mattox disputed State Farm's position on the additional debris removal coverage on October 23, 200913 and on two occasions in January 2010—the 19th and 27th. (Doc. 13, Stauter supp. declar., at ¶ 14.) Indeed, at least a week prior to January 19, 2010, Mattox twice faxed Stauter "RAISING A FEW QUESTIONS" and although Stauter attempted to call Mattox the two were unable to connect. (See Doc. 13, Exhibit B, Activity Log, at 2.)14 Mattox did reach Stauter by telephone on January 19, 2012, State Farm's Activity Log entry reflecting the following: "INSD CALLED. ...

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