Nunez v. Allstate Ins. Co.

• Decision Date: 20 April 2010
• Docket Number: No. 09-30034.,09-30034.
• Citation: 604 F.3d 840
• Parties: Chet NUNEZ; Wendy Nunez, Plaintiffs-Appellants,v.ALLSTATE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

604 F.3d 840

Chet NUNEZ; Wendy Nunez, Plaintiffs-Appellants,v.ALLSTATE INSURANCE COMPANY, Defendant-Appellee.

No. 09-30034.

United States Court of Appeals, Fifth Circuit.

April 20, 2010.

COPYRIGHT MATERIAL OMITTED

George Frazier (argued), New Orleans, LA, for Plaintiffs-Appellants.

Richard L. Fenton (argued), Sonnenschein, Nath & Rosenthal, L.L.P., Chicago, IL, Arthur J. Lentini, Law Offices of Arthur J. Lentini, Metairie, LA, Joe Boyd Henderson, III, Doyle, Restrepo, Harvin & Robbins, L.L.P., Stephen Howard Lee, Porter & Hedges, L.L.P., Houston, TX, for Defendant-Appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before HIGGINBOTHAM and STEWART, Circuit Judges, and FELDMAN, District Judge.^*

CARL E. STEWART, Circuit Judge:

Chet and Wendy Nunez had flood and all-risk homeowner's policies with Allstate Insurance Co. when Hurricane Katrina destroyed their home. They made a claim under the policies and Allstate disbursed a payment. The Nunezes claim that Allstate paid them less than they were entitled to under the policies. The Nunezes were among 28 plaintiffs who filed suit against Allstate in St. Bernard Parish on September 24, 2007, seeking to recover for Hurricane Katrina-related damage to their homes. Allstate removed the case, and the district court ordered the cases severed. The district court later granted Allstate's motion for summary judgment. We AFFIRM.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Background

Prior to Hurricane Katrina, the Nunezes owned and occupied a home at 46 Packenham Avenue in Chalmette, St. Bernard Parish, Louisiana. Allstate insured the Nunezes' property through a flood policy and an all-risk homeowners insurance policy.

The Nunezes evacuated before Hurricane Katrina made landfall in Louisiana on August 29, 2005. Thus, they were not present during the storm and did not witness the damage to their home as it occurred. According to the Nunezes, their home was destroyed by rain, fire, and flood. The Nunezes believe that their home took at least eight feet of floodwater, reaching their ceilings.

The Nunezes received their flood policy limits of $75,000 for structure damage and $30,000 for contents. Under the homeowner's policy, Allstate additionally paid the Nunezes $19,856.08 for wind-related structural damage to the house, $1,135.69 for wind damage to other structures, $3,103.72 for wind damage to personal property, and $4,960 in additional living expenses.¹

After the hurricane, the Nunezes moved to Houston and used the money they received from Allstate to buy a house for $172,000. The Nunezes gutted the Chalmette house and, much later, elevated it and did work to patch the roof. No further repair work has been done on the Chalmette property, but the Nunezes stated in their deposition testimony that they intend to someday repair and return to the property. Additionally, they received funding from the Road Home program and, in their application for that grant, attested that they planned to keep their Chalmette home. On February 9, 2007, the Road Home program explained to the Nunezes that by verifying their intention to “keep the home,” they committed themselves to “keep[ing] the damaged home and property [they] own (rather than selling it)” and “ensuring that the home remains owner-occupied for a specific period of time.” Further, the Nunezes filed a successful appeal resisting the Parish's decision to demolish the home.

B. Procedural History

On September 24, 2007, the Nunezes joined 26 other plaintiffs who filed suit against Allstate in St. Bernard Parish to recover unpaid Hurricane Katrina-related damages to their homes. After the case had been removed and the individual cases severed, the Nunezes filed their First Amended Complaint on March 18, 2008. The First Amended Complaint alleged that Allstate had only made partial payment for the damage caused by wind and wind-driven rain, and therefore still owed additional policy benefits for damage caused by wind. It further claimed that the Nunezes were entitled to additional recovery for the loss of the contents of their home and additional living expenses,² as well as for statutory penalties pursuant to Louisiana Revised Statutes §§ 22:658 and 22:1220.

The Nunezes furnished their expert report, from Mr. Steve Hitchcock, on October 8, 2008. Allstate filed motions to exclude the proposed expert testimony and for summary judgment on November 25, 2008.

In their motion for summary judgment, Allstate argued that the Nunezes had failed to meet their burden of producing evidence of segregable wind damages. Allstate further claimed that because the Nunezes did not repair or replace their property, their recovery was limited to the actual cash value of the property. Assuming an actual cash value of $113,914 (the highest estimate) minus an offset of $94,856.08 for the Nunezes' recovery under the flood policies, Allstate claimed that it could not owe more than $19,057.92 for structural damages-and they had already paid the Nunezes more than that amount.

On December 17, 2008, both Allstate's motions were granted in an order stating in full:

Before the Court is Defendant's Motion for summary Judgment and Motion to Exclude Proposed Expert Testimony of Plaintiffs' Expert, both of which came on for hearing on December 10, 2008, with oral argument. After consideration of the motions, the briefs from both sides and the applicable law, the Court GRANTS both motions. See Bayle v. Allstate (2:08-cv-01319)[³]and Williams v. Allstate(2:08-cv-00062).[⁴]

The Nunezes timely filed a Notice of Appeal.

II. STANDARD OF REVIEW

A summary judgment determination is reviewed de novo, viewing all evidence in the light most favorable to the non-moving party and drawing all reasonable inferences in that party's favor. In re Katrina Canal Breaches Litig., 495 F.3d 191, 205-06 (5th Cir.2007). Summary judgment is appropriate when “the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c).

The district court's determination of the admissibility of expert evidence is reviewed for abuse of discretion. Knight v. Kirby Inland Marine, Inc., 482 F.3d 347, 351 (5th Cir.2007). A district court abuses its discretion when its ruling is based on an erroneous view of the law or a clearly erroneous assessment of the evidence. Id. If the district court abused its discretion, the harmless error doctrine applies, and the ruling will be reversed only if it affected the substantial rights of the complaining party. Id.

III. DISCUSSION

Under Louisiana law, an insurance policy is a contract between the parties and should be interpreted according to the general rules of interpretation of contracts prescribed in the Louisiana Civil Code. Smith v. Am. Family Life Assur. Co. of Columbus, 584 F.3d 212, 215 (5th Cir.2009). An insurance contract must be construed according to the entirety of its terms and conditions as set forth in the policy. Id. (citing La.Rev.Stat. Ann. § 22:881 (2009)). “The words of a contract must be given their generally prevailing meaning.” La. Civ.Code Ann. art. 2047 (2008). When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. La. Civ.Code Ann. art. 2046 (2008).

The Nunezes' homeowners policy provides:

5. How We Pay For A Loss

Under Coverage A-Dwelling Protection, Coverage B-Other Structures Protection and Coverage C-Personal Property Protection, payment for covered loss will be by one or more of the following methods:

...

b) Actual Cash Value. If you do not repair or replace the damaged, destroyed or stolen property, payment will be on an actual cash value basis ... You may make a claim for additional payment ... if you repair or replace the damaged, destroyed or stolen property within 180 days of the actual cash value payment.

c) Building Structure Reimbursement .... we will make additional payment to reimburse you for cost in excess of actual cash value if you repair, rebuild or replace damaged, destroyed or stolen covered property within 180 days of the actual cash value payment ....

Building Structure Reimbursement will not exceed the smallest of the following amounts:

1) the replacement cost of the part(s) of the building structure(s) for equivalent construction for similar use on the same premises;

2) the amount actually and necessarily spent to repair or replace the damaged building structure(s) with equivalent construction for similar use on the same residence premises; or

3) the limit of liability applicable to the building structure(s) as shown on the Policy Declarations for Coverage

A-Dwelling Protection or Coverage

B-Other Structures Protection,

regardless of the number of building structures and structures other than building structures involved in the loss.

If you replace the damaged building structure(s) at an address other than shown on the Policy Declarations through construction of a new structure or purchase of an existing structure, such replacement will not increase the amount payable under Building Structure Reimbursement described above. The amount payable under Building Structure Reimbursement described above does not include the value of any land associated with the replacement structure(s).

A. Cost of Replacement

The Nunezes assert that they are entitled to recover replacement costs under their homeowner's policy because the policy expressly provides for replacing the damaged building through purchase of an existing structure. They claim that their purchase of the Houston home replaced the insured property, and that it is irrelevant that they intend to someday return to their Louisiana house.⁵

Allstate claims that the Nunezes did not replace their Chalmette property because they have gutted it, elevated it, and patched the roof. Although the Nunezes bought...