Norman v. Liberty Mut. Fire Ins. Co.

• Decision Date: 08 July 2020
• Docket Number: Case No. 4:19-cv-02132-HNJ
• Citation: 471 F.Supp.3d 1225
• Parties: Steve NORMAN and Jimmie Norman, Plaintiffs v. LIBERTY MUTUAL FIRE INSURANCE COMPANY and ProFire, Defendants
• Court: U.S. District Court — Northern District of Alabama

471 F.Supp.3d 1225

Steve NORMAN and Jimmie Norman, Plaintiffs

v.LIBERTY MUTUAL FIRE INSURANCE COMPANY and ProFire, Defendants

Case No. 4:19-cv-02132-HNJ

United States District Court, N.D. Alabama, Middle Division.

Signed July 8, 2020

F. Michael Haney, Robert D. McWhorter, Jr, Inzer Haney McWhorter & Haney PA, Gadsden, AL, for Plaintiffs.

Frederick Todd Weston, Priscilla Katherine Williams, Christian & Small, LLP, Birmingham, AL, for Defendants.

MEMORANDUM OPINION AND ORDER

HERMAN N. JOHNSON, JR., UNITED STATES MAGISTRATE JUDGE

Plaintiffs, Steve Norman and Jimmie Norman, filed a Complaint in the Circuit Court of Etowah County, Alabama, alleging the following claims: (1) breach of contract against Liberty Mutual Insurance Company; (2) negligence and/or wantonness against Liberty Mutual Insurance Company; (3) fraud against Liberty Mutual Insurance Company and ProFire; (4) negligence and/or wantonness against ProFire; and (5) combining and concurring negligence against Liberty Mutual Insurance Company and ProFire. (Doc. 1-1). On December 30, 2019, Liberty Mutual Insurance Company removed the case to this court based upon diversity jurisdiction pursuant to 28 U.S.C. § 1332(a), and ProFire consented to the removal. (Docs. 1, 16).¹ On March 31, 2020, the court substituted Liberty Mutual Fire Insurance Company as the proper Defendant, in place of Liberty Mutual Insurance Company. (Doc. 32). The court will hereafter refer to Liberty Mutual Fire Insurance Company as "Liberty Mutual." This memorandum opinion addresses Liberty Mutual's Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 31).²

As discussed below, Plaintiffs have failed to state viable claims against Liberty Mutual for breach of contract, negligence, or fraud. Accordingly, the court will grant Liberty Mutual's Motion to Dismiss.³

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a complaint if it fails to state a claim for which relief may be granted. In Ashcroft v. Iqbal , 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), the Court revisited the applicable standard governing Rule 12(b)(6) motions to dismiss. First, courts must take note of the elements a plaintiff must plead to state the applicable claims at issue. Id. at 675, 129 S.Ct. 1937.

After establishing the elements of the claim at issue, the court identifies all well-pleaded, non-conclusory factual allegations in the complaint and assumes their veracity. Id. at 679, 129 S.Ct. 1937. Well-pleaded factual allegations do not encompass mere "labels and conclusions," legal conclusions, conclusory statements, or formulaic recitations and threadbare recitals of the elements of a cause of action. Id. at 678, 129 S.Ct. 1937 (citations omitted). In evaluating the sufficiency of a plaintiff's pleadings, the court may draw reasonable inferences in plaintiff's favor.

Aldana v. Del Monte Fresh Produce, N.A., Inc. , 416 F.3d 1242, 1248 (11th Cir. 2005).

Third, a court assesses the complaint's well-pleaded allegations to determine if they state a plausible cause of action based upon the identified claim's elements. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. Plausibility ensues "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged," and the analysis involves a context-specific task requiring a court "to draw on its judicial experience and common sense." Id. at 678, 679, 129 S.Ct. 1937 (citations omitted). The plausibility standard does not equate to a "probability requirement," yet it requires more than a "mere possibility of misconduct" or factual statements that are "merely consistent with a defendant's liability." Id. at 678, 679, 129 S.Ct. 1937 (citations omitted).

ALLEGATIONS OF PLAINTIFFS' COMPLAINT AND OTHER RELEVANT BACKGROUND

Fire destroyed Plaintiffs' home in July 2015. (Doc. 1-1, at 8 (Factual Background), ¶ 1). Liberty Mutual provided coverage for the fire losses through a homeowner's insurance policy. As part of that coverage, Liberty Mutual engaged ProFire to rebuild Plaintiffs' home. (Id. ¶¶ 2-3). ProFire rebuilt the home using the original foundation and other "salvaged" materials, and it issued a three-year express warranty for its work. (Id. ¶¶ 4-5). During the warranty term, Plaintiffs repeatedly notified Liberty Mutual of "problems with their home," and Liberty Mutual represented it would engage a third-party contractor to address those problems. (Id. ¶ 5).

The Complaint does not provide any details regarding the terms of Plaintiffs' policy with Liberty Mutual, the terms of the three-year warranty, the nature or extent of the alleged construction deficiencies, or the status of Liberty Mutual's promise to engage a third-party contractor. However, other documents provide some additional information regarding the policy and the warranty.

Liberty Mutual attached a copy of Plaintiffs' homeowners' policy to the Notice of Removal. The policy provides coverage for dwellings and other structures

at replacement cost without deduction for depreciation, subject to the following:

(1) If, at the time of loss, the amount of insurance in this policy on the damaged building is 80% or more of the full replacement cost of the building immediately before the loss, we will pay the cost to repair or replace, after application of deductible and without deduction for depreciation, but not more than the least of the following amounts:

(a) The limit of liability under this policy that applies to the building;

(b) The replacement cost of that part of the building damaged for like construction and use on the same premises; or

(c) The necessary amount actually spent to repair or replace the damaged building.

(2) If, at the time of loss, the amount of insurance in this policy on the damaged building is less than 80% of the full replacement cost of the building immediately before the loss, we will pay the greater of the following amounts, but not more than the limit of liability under this policy that applies to the building:

(a) The actual cash value of that part of the building damaged; or

(b) That proportion of the cost to repair or replace, after application of deductible and without deduction for depreciation, that part of the building damaged, which the total amount of insurance in this policy on the damaged building bears to 80% of the replacement cost of the building.

(Doc. 1-2, at 24).

Liberty Mutual attached a copy of the document Plaintiffs referred to as the "express warranty" to its Motion to Dismiss. That document, which actually bears the title "Completion Guarantee Certificate," states:

COMPLETION

This is to acknowledge that the insurance damage repairs have been completed in a satisfactory manner at the property stated below: [Plaintiffs' home address redacted].

GUARANTEE

ProFire guarantees the work performed on the above stated property for a period of three (3) years with a material guarantee of three (3) year[s]. Any additional material guarantee will revert back to the manufacturer's warranty. This is in accordance to the work authorization. Any variations from the estimate will be considered a change order and is [sic ] also covered by a three (3) year warranty. This guarantee will take effect from the completion date as stated below. This warranty is non-transferable and for the sole use of the homeowner as signed below.

(Doc. 31-1, at 2). The Certificate stated the Completion Date as December 30, 2015. A representative of ProFire signed the Certificate on December 30, 2015, and Steve Norman signed as the homeowner on January 4, 2016. (Id. ).⁴

Returning to the Complaint itself, Plaintiffs first allege Liberty Mutual breached its contract of insurance with them because it failed to pay for their fire losses and/or failed to repair or replace their home, causing damages "in that their home has not been repaired or replaced." (Doc. 1-1, at 9 (Count One)).

Second, Plaintiffs allege Liberty Mutual negligently and/or wantonly engaged Profire to rebuild their home, causing the home to suffer defects and lose value, and causing Plaintiffs to suffer mental anguish and emotional distress. (Id. (Count Two)).

Third, Plaintiffs allege Liberty Mutual and ProFire misrepresented they would guarantee the work and materials for three years if Plaintiffs agreed to allow ProFire to perform the reconstruction. Plaintiffs allegedly relied on that misrepresentation by allowing ProFire to perform the reconstruction, and they allegedly suffered damages because Defendants failed to properly perform the repairs, or properly correct the construction deficiencies, causing home defects, loss of the home's value, mental anguish, and emotional distress. (Id. at 9-10 (Count Three)).

Fourth, Plaintiffs allege ProFire negligently and/or wantonly failed to perform work on their home, causing defects in the home, mental anguish, and emotional distress. (Id. at 10 (Count Four)).

Fifth, Plaintiffs allege Defendants' negligence and/or wantonness combined and concurred, causing a reduction in their property value, mental anguish, and emotional distress. (Id. (Count Five)).

As relief for their claims, Plaintiffs request an unspecified amount of compensatory and punitive damages. (Id. at 9-11).

DISCUSSION

I. Plaintiffs Do Not Allege a Plausible Breach of Contract Claim Against Liberty Mutual

Pursuant to Alabama statute, "[e]very insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended or modified by any rider, endorsement or application which is a part of the policy." Ala. Code § 27-14-17(a). "Insurance contracts, like other contracts, are construed so as to give effect to the intention of the parties, and, to determine this intent, a court must examine more than an isolated sentence or term; it must read each phrase in the context of all other provisions." Attorneys Ins. Mut. of Alabama, Inc. v. Smith, Blocker &...