Rias v. Safeco Ins. Co. of America, 4:07 CV 38 DDN.
| Decision Date | 15 January 2009 |
| Docket Number | No. 4:07 CV 38 DDN.,4:07 CV 38 DDN. |
| Citation | 594 F.Supp.2d 1090 |
| Court | U.S. District Court — Eastern District of Missouri |
| Parties | Mildred J. RIAS, Plaintiff, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant. |
Melvin L. Raymond, Wilson and Associates, St. Louis, MO, for Plaintiff.
Timothy J. Wolf, Brown and James, P.C., St. Louis, MO, for Defendant.
This action is before the court on the motion of defendant Safeco Insurance Company of America (Safeco) for partial summary judgment (Doc. 54). The parties have consented to the exercise of plenary authority by the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Doc. 9.) A hearing was held on January 9, 2009.
Plaintiff Mildred Rias brought this action in the Circuit Court of the City of St. Louis, after her property suffered fire damage.1 In Count I of her complaint, Rias alleges that Safeco, her insurer, failed to pay the full amount of the loss. (Doc. 1 at 2-5.) In Count II of her complaint, Rias alleges that Safeco failed to pay the full amount of the loss under the Building Ordinance coverage section. (Id. at 5-7.) In Count III of her complaint, Rias includes a claim for vexatious refusal to pay, and for attorney's fees. (Id. at 7-8.)
Safeco removed the action to this court, invoking diversity of citizenship subject matter jurisdiction under 28 U.S.C. §§ 1332 and 1441(a). Safeco alleges that it is incorporated in Washington, with its principal place of business in Washington, and that Rias is a Missouri citizen. (Doc. 1 at ¶¶ 1-3.) Safeco further alleges that Rias's claim exceeds $75,000. (Id. at ¶ 4.)
Summary judgment must be granted when the pleadings and proffer of evidence demonstrate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Devin v. Schwan's Home Serv., Inc., 491 F.3d 778, 785 (8th Cir.2007). The court must view the evidence in the light most favorable to the nonmoving party and accord it the benefit of all reasonable inferences. Devin, 491 F.3d at 785. A fact is "material" if it could affect the ultimate disposition of the case, and a factual dispute is "genuine" if there is substantial evidence to support a reasonable jury verdict in favor of the non-moving party. Die-Cutting Diversified, Inc. v. United Nat'l Ins. Co., 353 F.Supp.2d 1053, 1054-55 (E.D.Mo.2004).
Initially, the moving party must demonstrate the absence of an issue for trial. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Once a motion is properly made and supported, the nonmoving party may not rest upon the allegations in its pleadings but must instead proffer admissible evidence that demonstrates a genuine issue of material fact. Fed.R.Civ.P. 56(e); Howard v. Columbia Pub. Sch. Dist., 363 F.3d 797, 800 (8th Cir.2004); Krein v. DBA Corp., 327 F.3d 723, 726 (8th Cir.2003).
The record before the court indicates that the following facts are not disputed. Mildred Rias lived in a four-family flat with four one-bedroom units, located at 4059-61 Shaw Boulevard, in St. Louis, Missouri. (Doc. 56, Ex. B at 2.) Rias lived on the second floor, in unit 4059A, which was the unit next to 4061A. (Id.) The other two units, 4059 and 4061, were located on the first floor of the property. (Id.) On February 10, 2000, a fire started on the second floor of the property, at 4061A. (Id.)
At the time of the fire, Rias held a fire insurance policy for the property. (Doc. 6 at ¶ 3.) The policy, No. 0Z3094226, was effective from May 2, 1999, to May 2, 2000, and listed the insured as Mildred Rias, Bertha Rias, and Velma Rias, of 4059 Shaw Boulevard. (Doc. 56, Ex. A at 3.) The policy contained the following declarations and coverage limitations:
We do not cover loss caused by any of the following excluded perils, whether occurring alone or in any sequence with a covered peril:
1. Ordinance or Law, meaning enforcement of any ordinance or law regulating the use, construction, repair, or demolition of property unless specifically provided under this policy.
(Id. at 16.)
Despite this exclusion, the policy contained the following endorsement:
GOOD NEWS FOR SAFECO POLICYHOLDERS
Your SAFECO dwelling fire insurance policy now provides you with valuable additional protection. Please read the coverage language below and keep this with your policy. It amends your policy and you should be sure you understand the change.
Building Ordinance or Law coverage has been added to your policy. That means if local building code requires an upgrade to damaged property (such as additional insulation, new wiring, etc.) in connection with repairs to your home resulting from an insured loss, the costs for such upgrades are now included in your coverage.
If you have any questions regarding this change, or any other insurance matter, please contact your SAFECO agent.
Item 1. Ordinance or Law is deleted from GENERAL EXCLUSIONS.
Building Ordinance or Law Coverage.
Damage to building, condominium building items, or personal property we cover caused by a Peril Insured Against will be settled on the basis of any ordinance or law that regulates the construction, repair or demolition of this property.
This coverage does not apply:
1. to loss to any undamaged portion of the building, condominium building items, or personal property we cover;
unless you, and/or your association of property owners if applicable, choose to repair or rebuild your home or condominium unit at its present location.
(Id. at 5.)
On the day of the fire, Rias promptly notified Safeco of the damage, and submitted a claim. (Doc. 6 at ¶ 8). That same day, Safeco inspected the property, and wrote Rias a check, for $16,200, to cover her living expenses. (Doc. 56, Ex. B at 11; Id.) The check represented the complete amount of living expenses covered by the policy. (Doc. 56, Ex. B at 11.) By December 2002, Safeco had also paid Rias the full amount under the Dwelling coverage section—$162,000. (Id. at 12.) Despite some smoke damage to her unit, Rias continued living on the property after the fire. (Id. at 7.)
On November 27, 2006, Rias filed this lawsuit in the Circuit Court of St. Louis County. (Doc. 1 at 1.) In Count II of her complaint, she alleges Safeco failed to pay the full amount of the loss under the Building Ordinance or Law coverage section. (Id. at 5.) As part of Count II, she seeks to recover an additional $165,795.55 from Safeco—the amount it would cost to repair the damage to the insured property in compliance with the building and housing codes. (Id. at 6; Doc. 1, Ex. 1.)
In its motion for partial summary judgment, Safeco argues that there are no genuine issues of material fact as to Count II. In particular, Safeco argues that the Building Ordinance coverage section is included within the Dwelling coverage section, and is not an independent or separate coverage section. Safeco notes that there is no separate limit listed for the Building Ordinance coverage section, and that the company did not charge a separate premium for this coverage. Since the company has already paid the full policy limit for the Dwelling coverage section, Safeco argues Rias cannot recover any additional amount under Count II of her complaint. (Doc. 55.)
At the hearing, Rias responded by pointing out that there was no monetary amount in the space corresponding to the Building or Ordinance law coverage. Rias argues that the absence of a concrete monetary figure in this space creates an ambiguity. Rias argues that this ambiguity must be interpreted against Safeco, and that Safeco is obligated to pay the amount that is necessary to restore the property to code. Rias also argues that the parties' expectations when entering the insurance contractual relationship is reflected in the argued ambiguity of the policy language that favors her.
A federal district court sitting in diversity jurisdiction must apply the rules of decision that would be applied by the courts of the state in which it sits, including the initial choice of the applicable substantive law. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); see also Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941).
Missouri choice of law rules follow the "most significant relationship" test, found in Section 188 of the Restatement (Second) of Conflicts of Laws, for claims concerning the breach of insurance policy provisions. Superior Equip. Co. v. Md. Cas. Co., 986 S.W.2d 477, 480 (Mo.Ct.App. 1998). Under this test, the court balances several factors to determine which state has the most significant relationship to the action. Id. These factors include: (a) the place of...
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