Nationwide Mut. v. National Catastrophe Adjusters
| Decision Date | 08 January 2002 |
| Docket Number | No. 99CV1022.,99CV1022. |
| Citation | 185 F.Supp.2d 854 |
| Parties | NATIONWIDE MUTUAL INSURANCE CO. Plaintiff, v. NATIONAL CATASTROPHE ADJUSTERS, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
James Joseph Brundny, Jr., Reminger & Reminger Co., L.P.A., Columbus, OH, Dennis Hearon, George Curran, John Hopkins, Southfield, MI, Phillip Yeager, Hopkins Curran & Smith PLLC, Ada, MI, for Plaintiff.
Richard A. Williams, Williams & Petro Co. LLC, Columbus, OH, Richard Osborn Wuerth, Lane Alton & Horst, Columbus, OH, for Defendants.
This matter is before the Court on the Motion for Partial Summary Judgment filed by Defendant National Catastrophe Adjusters ("NCA") on September 12, 2001, and the Motion to Dismiss filed by Defendants McLarens Toplis of North America, Inc. ("McLarens") and Larry Wood ("Wood") on September 14, 2001. The Defendants seek summary judgment and dismissal on the Plaintiff's claims of (1) negligence; (2) breach of fiduciary duties; and (3) negligent supervision. Jurisdiction is proper pursuant to this Court's diversity jurisdiction under 28 U.S.C. § 1332. For the following reasons, the Defendants' Motions are GRANTED in part and DENIED in part.
In June 1997, Defendant NCA contracted with the Plaintiff, Nationwide Mutual Insurance Company ("Nationwide"), to provide claims adjusting services. The contract specified that NCA acted as an independent contractor in this regard, stating, Nationwide's Guidelines for Independent Adjusters, which were set out in an exhibit to the Contract between NCA and Nationwide, stated, in pertinent part:
1. You have no settlement authority unless specifically directed otherwise by the Enterprise Claims Representative.
2. Independent adjusters/appraisers must secure authorization from the company prior to making any commitments.
3. Do not comment on, or commit to coverage to any party unless specifically directed to do so by the assigning Enterprise Claims Representative. The company will retain the sole right to make any and all coverage determinations.
(Emphasis in original).
In October 1997, NCA entered into a contract with Defendant McLarens whereby each could request the other to provide adjusters and other services to each other's clients. In August 1998, Nationwide called upon NCA for its services to appraise the damage to Nationwide's insureds in the Virginia Beach, Virginia area that resulted from Hurricane Bonnie, which struck the Virginia Beach area on or about August 28, 1998. NCA subsequently called upon McLarens to provide general adjusters from the Virginia Beach area to assist NCA in fulfilling its contract with Nationwide to appraise the claims resulting from Hurricane Bonnie.
One of Nationwide's insureds who had been hit by the hurricane was Professional Hospitality Resources, Inc. ("PHR"), which owned and operated six hotels and time-share facilities in the Virginia Beach area. McLarens assigned Defendant Larry Wood to process the claims of PHR. Nationwide alleges that Wood exceeded the scope of his authority by purporting to make coverage determinations and settle some of PHR's claims before ascertaining the nature and extent of PHR's coverage for its properties. Specifically, Nationwide contends that independent adjusters, including Wood, were to document the source of water intrusion into all of the buildings being examined for damage from Hurricane Bonnie because many of Nationwide's policies, including PHR's policies, imposed limitations on coverage for damages caused by wind-driven rain. Contrary to this obligation, Nationwide claims that Wood, immediately upon meeting with PHR representatives, agreed to replace all of the carpeting in PHR's hotels, without first determining the source of the water intrusion into the properties. Furthermore, Nationwide alleges that, within a few days of being assigned to handle PHR's claim, Wood agreed to refurbish completely four out of five hotels, and agreed that the hotels could remain closed until the refurbishment was finished, and that Nationwide would compensate timeshare holders for the loss of usage of their timeshare units while the refurbishment was taking place.
Nationwide contends, furthermore, that Wood failed to report his activities to Nationwide on a timely basis, and then attempted to cover-up his actions after realizing that he had exceeded his authority, thereby preventing Nationwide from correcting the problem or minimizing the harm done. As a result, Nationwide claims that it did not realize that there was a problem with the way Wood was handling PHR's claims until September 9 and 10, 1998, when its own personnel toured PHR's hotels and determined that a large portion of their damage had been caused by wind-driven rain. Thus, on September 11, 1998, Nationwide requested that Wood be removed from handling PHR's losses. Yet, on that same date, after being removed from the PHR assignment, Wood met with PHR representatives and signed a document entitled "Items Authorized by Nationwide Adjuster," which allegedly set forth all of the agreements Wood had purported to make with PHR. Nationwide asserts that, as a result of Wood's alleged wrongful actions, it was bound to pay out an amount in excess of twenty-one million dollars to PHR. Nationwide alleges that, had Wood not exceeded his contractual authority, it would have only paid approximately $5.3 million to cover PHR's claims.
Based on Wood's alleged wrongful actions, Nationwide filed a Complaint against NCA, McLarens, and Wood,1 alleging breach of contract, negligence, breach of fiduciary duty, and negligent supervision of Wood by NCA and McLarens. This matter is now before the Court on McLarens' and Wood's Motion to Dismiss, and NCA's Motion for Partial Summary Judgment with respect to Nationwide's claims of negligence, breach of fiduciary duty, and negligent supervision.
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). The movant has the burden of establishing that there are no genuine issues of material fact, which may be accomplished by demonstrating that the nonmoving party lacks evidence to support an essential element of its case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Barnhart v. Pickrel, Schaeffer & Ebeling Co., 12 F.3d 1382, 1388-89 (6th Cir.1993). The non-moving party must then present "significant probative evidence" to show that "there is [more than] some metaphysical doubt as to the material facts." Moore v. Philip Morris Cos., 8 F.3d 335, 340 (6th Cir.1993) (citation omitted). "[S]ummary judgment will not lie if the dispute is about a material fact that is `genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ().
In evaluating a motion for summary judgment the evidence must be viewed in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). In responding to a motion for summary judgment, however, the non-moving party "may not rest upon its mere allegations ... but ... must set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e); see Celotex, 477 U.S. at 324, 106 S.Ct. 2548; Searcy v. City of Dayton, 38 F.3d 282, 286 (6th Cir.1994). Furthermore, the existence of a mere scintilla of evidence in support of the non-moving party's position will not be sufficient; there must be evidence on which the jury could reasonably find for the non-moving party. Anderson, 477 U.S. at 251, 106 S.Ct. 2505; see Copeland v. Machulis, 57 F.3d 476, 479 (6th Cir.1995).
In considering a Rule 12(b)(6) motion to dismiss, this Court is limited to evaluating whether a plaintiff's complaint sets forth allegations sufficient to make out the elements of a cause of action. Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir. 1983). A complaint should not be dismissed under Rule 12(b)(6) "unless it appears beyond doubt that the [p]laintiff can prove no set of facts in support of his claim which would entitle him to relief." Lillard v. Shelby County Bd. of Educ., 76 F.3d 716, 724 (6th Cir.1996) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). This Court must "construe the complaint liberally in the plaintiff's favor and accept as true all factual allegations and permissible inferences therein." Conley, 355 U.S. at 45-46, 78 S.Ct. 99. While the complaint need not specify every detail of a plaintiff's claim, it must give the defendant "fair notice of what the plaintiff's claim is and the grounds upon which it rests." Gazette v. City of Pontiac, 41 F.3d 1061, 1064 (6th Cir.1994). While liberal, this standard of review does require more than the bare assertion of legal conclusions. In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993). A complaint must contain either direct or inferential allegations with respect to all the material elements necessary to sustain a recovery under some viable legal theory....
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