N. Shore Co-Owners' Ass'n v. Nationwide Mut. Ins. Co.
| Decision Date | 30 August 2022 |
| Docket Number | 1:18-cv-03632-SEB-TAB |
| Parties | NORTH SHORE CO-OWNERS' ASSOCIATION, INC., Plaintiff, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Indiana |
BUCHANAN & BRUGGENSCHMIDT PC
Joseph P. Carlasare
SMITHAMUNDSEN LLC
David E. Miller
SAEED & LITTLE LLP
Sulema Medrano Novak
Faegre Drinker Biddle & Reath LLP
ORDER GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT
To sue an insurance company for bad faith in Indiana, an insured must prove that the insurer had knowledge that there was no legitimate basis for denying liability. Here, a condominium complex's roofs were purportedly damaged by hail, and the complex and its insurer could not agree on the repair estimate. The insured, North Shore Co-Owners' Association, Inc. ("North Shore"), bought suit against the insurer, Nationwide Mutual Insurance Co. ("Nationwide"), for breach of contract and bad faith; a declaratory judgment request was later added that mirrors the same issues as in their breach of contract claim. The insurer moved for partial summary judgment on the bad faith and declaratory judgment counts. Because Nationwide has shown a legitimate basis for denying liability, and because the declaratory judgment count is redundant of the breach of contract count that will likely be resolved at trial, we grant the partial motion for summary judgment, dismissing both the bad faith and declaratory judgment claims.
Parties in a civil dispute may move for summary judgment, which is a way of resolving a case short of a trial. See Fed.R.Civ.P. 56(a). However, "[s]ummary judgment is appropriate only if 'the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.'" Tolan v. Cotton, 572 U.S. 650, 656-57 (2014) (quoting Fed.R.Civ.P. 56(a)). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). "Material facts" are those that "might affect the outcome of the suit," and a "genuine dispute" exists when "a reasonable jury could return a verdict for the nonmoving party." Id. at 248.
When reviewing a motion for summary judgment, the court views the record and draws all reasonable inferences from it in the light most favorable to the nonmoving party. Khungar v. Access Cmty. Health Network, 985 F.3d 565, 572-73 (7th Cir. 2021). However, the non-moving party "may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial." Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 490 (2007). We are only required to consider the materials cited by the parties, Fed.R.Civ.P. 56(c)(3), and we are not required to "scour every inch of the record" for evidence that is potentially relevant, Grant v. Tr. of Ind. Univ., 870 F.3d 562, 573-74 (7th Cir. 2017).
North Shore seeks to prove its claims though expert testimony, but for it to defeat a summary judgment motion, "a party may rely only on admissible evidence" and this rule "applies with equal vigor to expert testimony." Lewis v. CITGO Petroleum Corp., 561 F.3d 698, 704 (7th Cir. 2009); see also Porter v. Whitehall Labs., Inc., 9 F.3d 607, 612 (7th Cir. 1993) (). The Magistrate Judge has already evaluated the admissibility of North Shore's experts under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. U.S. 579 (1993), and concluded that only one of North Shore's experts-Martin Shields-is qualified to testify as an expert on hail damage in this case. See Docket No. 157, pp. 8-16. Thus, we consider only his expert evidence in ruling on this summary judgment motion, omitting any inadmissible evidence from our recitation of the facts and evidence.
North Shore is a condominium complex consisting of nine residential buildings located in Indianapolis, Indiana. Nationwide insured North Shore under a property loss policy that was in effect from December 8, 2016, to December 8, 2017. Docket No. 142-1, at 6.[1] The policy covers "direct physical loss or damage" to the covered property unless the loss is subject to a policy exclusion. Id. at 30. Relevant here, the policy excludes "[w]ear and tear," "[r]ust or other corrosion, decay, testing, maintenance, modification or repair deterioration," and "[m]echanical breakdown." Id. at 49, 53. In the event of a covered loss or damage, Nationwide can choose one of the following options: (1) pay the value of lost or damaged property, (2) pay the cost of repairing or replacing the lost or damaged property, (3) take all or any part of the property at an agreed or appraised value; or (4) repair, rebuild or replace the property with other property of like kind and quality. Id. at 57.
On or about May 19, 2017, a hailstorm reportedly damaged the roof shingles and soft metals at North Shore's condominiums, which were insured by Nationwide at that time.[2]Docket No. 122-3, at 113; Docket No. 163-12, at 3. Five days thereafter, on May 24, 2017, Plaintiff retained Matthew Latham of Crossroads Claim Consulting, a public adjusting firm, to assess the condition of its 10-year-old roofs. Docket No. 122-3, at 117. On June 6, 2017, North Shore's claim was received by Nationwide. Docket No. 163-1, at 24. On June 15, 2017, Michael Wildason, a Nationwide claims adjuster, conducted an inspection of North Shore's buildings, id., with the assistance of its retained professional roof inspection company, Ladder Now, in inspecting and evaluating the cause and scope of the claimed property damage. Docket No. 163-5, at 3. Nationwide's agents discovered hail damage to the soft metals on the building but no damage to the asphalt shingles. Id. at 3, 149, 179, 202, 229. However, Wildason did note that one building had "potential" hail damage on six shingles and included this potential hail damage in Nationwide's property damage estimate. Docket No. 163-1, at 30; Docket No. 163-6, at 9. Nationwide agreed to pay for isolated repairs to these six shingles. Docket No. 163-6, at 9.
On July 11, 2017, Nationwide completed its first estimate and sent an itemized estimate to North Shore for $48,612.55 in repairs for the covered damages, including repairs to the soft metal, gutters, downspouts, and the six shingles on the one building. Docket No. 163-6, at 28-29. On July 13, 2017, Nationwide processed the estimate and mailed North Shore a check for $43,612.55-reflecting the $48,612.55 in estimated repairs minus a $5,000 deductible. Docket No. 163-7, at 2. North Shore, however, disagreed with this estimate. North Shore's adjuster, Latham, provided a competing estimate of $537,536.16 to Nationwide on October 11, 2017.[3] Docket No. 122-3, at 113. On November 7, 2017, Nationwide enlisted Nederveld Inc., a forensic engineering firm, to conduct an additional inspection on the North Shore condominiums in order to determine whether any of the shingles had sustained hail damage. Docket No. 163-9, at 4.
On November 20 and 21, 2017, Joshua Trei and Drew Knostman of Nederveld inspected the buildings and found no "hail-caused blemishes on any of the roofing materials throughout the nine units." Id. at 10. "No evidence of a recent hail event was observed on the properties, supported by the absence of hail-generated spatter marks on the oxidized surfaces or algae-stained roof slopes on these structures." Id. "All blemishes observed are aged in presentation and associated with the ongoing granule loss due to age-related deterioration of the shingles." Id. "Isolated mechanical blemishes observed on the roof slopes are also aged in presentation and the result of installation/maintenance activity of the roofing materials." Id. Nederveld also reported finding evidence as follows; an "aged hail event (occurring more than one year prior to our site visit) was observed including hail-caused indentations in the gutters and metal vent caps, absent hail-generated spatter marks on the oxidized surfaces hail-caused indentations," finding these aged hail-caused blemishes "consistent with aged hail event(s) oriented out of the west/northwesterly direction and having produced hail less than 3/4" in width at this locale."[4] Id. at 10, 5.
On January 5, 2018, Wildason sent Latham a copy of Nederveld's report, confirming that Nationwide's estimate included the full scope of damages covered by the Nationwide Policy. Docket No. 163-10, at 2. The letter advised North Shore that if they had information about this claim that may affect Nationwide's current decision, they should forward such information to Nationwide as soon as possible. Id. On May 14, 2018, Professional Engineer Martin Shields of Shields Engineering Group, Inc. inspected North Shore's roofs and was assisted by Latham. Docket No. 163-12, at 3. On June 14, 2018 Shields provided a copy of his report to North Shore, which concluded that there was a "substantial quantity of physical hail damage" on North Shore's roofs and recommended that all roofs be replaced. Docket No. 127-5, at 56. On June 18, 2018, Latham emailed Wildason to request a copy of the Nederveld report. Docket No. 163-11, at 2. On June 19, 2018, Latham mailed a copy of Shields' report to Nationwide's office in Dublin, Ohio. Docket No. 163-15, at 3. Wildason responded via email on...
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