State Farm Fire & Cas. Co. v. Brechbill

• Decision Date: 17 January 2014
• Docket Number: 1111117.
• Citation: 144 So.3d 248
• Parties: STATE FARM FIRE AND CASUALTY COMPANY v. Shawn BRECHBILL.
• Court: Alabama Supreme Court

144 So.3d 248

STATE FARM FIRE AND CASUALTY COMPANY

v.Shawn BRECHBILL.

1111117.

Supreme Court of Alabama.

Sept. 27, 2013.

Rehearing Denied Jan. 17, 2014.

Bert S. Nettles, C. Dennis Hughes, and Latanishia D. Watters of Haskell Slaughter Young & Rediker, LLC, Birmingham; and Kenneth M. Schuppert, Jr., of Blackburn, Maloney & Schuppert, LLC, Decatur, for appellant.

Shawn Brechbill, pro se.

MOORE, Chief Justice.

State Farm Fire and Casualty Company appeals from an adverse judgment entered on a jury verdict in the Morgan Circuit Court in favor of homeowner and policyholder Shawn Brechbill on his claim of “abnormal” bad-faith failure to investigate an insurance claim. We reverse the trial court's judgment and remand.

I. Facts and Procedural History

On September 7, 2007, Brechbill purchased a 3–story, 30–year–old house in Lacey Springs. One month before closing on the purchase, Brechbill hired Allan McCrispin of McCrispin, Inc., a home-inspection company, to inspect the house. McCrispin did not note any significant cracking around the interior door frames. McCrispin noted some floor squeaking, as is typical for wood floors in older homes, but he saw no evidence of long-term settling of the house.

On September 11, 2007, a State Farm employee inspected Brechbill's house to verify that it met State Farm's underwriting requirements. State Farm's underwriting file on Brechbill's house indicated “yes” to the following question: Does the “applicant dwelling meet all homeowner underwriting guide requirements?” The underwriting file also reported “no unrepaired damage.” At all relevant times, Brechbill's home was insured by State Farm.

In his complaint, Brechbill alleged as follows:

“On January 29, 2008, Brechbill's house suffered damage due to a windstorm. On that date, high winds struck the house. An anemometer on the roof measured wind speed at approximately 59 miles per hour. The winds damaged the roof and racked the structure of the residence causing interior walls to crack and buckle and other damage. Interior damage and damage to the shingle roof were visible after the event.”

Brechbill described the events of the storm as follows. “It was literally shaking the house.... It was shaking the windows ... there was so much banging—there was banging and popping in the house.... The house was shaking so violently—I had a computer on the desk—the screen ... was shaking so bad it was actually walking across the desk.” Brechbill also stated that “the house was rocking.”

State Farm designated the windstorm that occurred on January 29, 2008, as a state-wide catastrophe due to the high number of insurance claims. State Farm's declaration of a “catastrophe” was based on the number of claims, not the severity of the claims. In north Alabama alone about 300 State Farm insurance claims were submitted.

Brechbill alleged that in the days after the windstorm he noticed that the wall between the master bedroom and the dressing room was buckled and displaced, that the floor squeaks had become widespread, that a door frame had become dislodged, and that cracking started to appear in the drywall. Brechbill also alleged that the cracks in the drywall were not present when he purchased the house or at any time before the January 29 windstorm. Brechbill alleged that immediately after the storm his house was noticeably more drafty and that interior blinds would move with the wind.

On March 31, 2008, Brechbill submitted a claim to State Farm for payment based on the wind damage. State Farm insurance adjuster Keith Fry inspected Brechbill's house on April 21, 2008. Fry found exterior damage to the roof shingles and interior damage consisting of cracked drywall and separated door jams. Fry concluded the exterior damage to the roof shingles was covered by Brechbill's insurance policy and issued payment for roof repairs. Fry's inspection included a photograph of drywall cracking above a door casing. Fry suggested that State Farm retain an engineer to determine the cause of the interior damages.

State Farm retained Phillip Chapski of Cerny & Ivey Structural Engineers, Inc., who inspected Brechbill's residence on April 24, 2008. Chapski's report, dated May 5, 2008, described his inspection as an “engineering evaluation ... to assess the structural integrity of the residence.” Brechbill was present during this investigation and provided Chapski with background information, which included floor drawings apparently prepared by Brechbill. Chapski's report states: “A visual inspection was performed only. There were no invasive or destructive materials investigations, or laboratory testing performed at the site. This report is limited in scope and based on investigative information gathered before, during, and after the site investigation.” Chapski evaluated whether “a wind storm affect[ed] the structural integrity of the residence and if not, what caused the damage.” Chapski's report indicates he performed measurements “in the field” as part of his investigation.

From Chapski's visual inspection of the attic, he observed no cracking, misalignment, or apparent settlement or displacement of the wood-framing system supporting the roof structure. From his measurements and review of Brechbill's drawings, Chapski also concluded that the interior load-bearing walls of the residence were not properly aligned with one another, thus creating loading eccentricities and differential stresses and movements within the residence. Chapski observed cracking of the drywall between the master bedroom and dressing room and in the back bedroom, but he concluded that the cracking of the drywall was limited and not widespread.

Chapski's report featured the following conclusions:

“1) The cracking of the [S]heetrock and the squeaking of the floors as noted and identified was caused by long-term movement and settlement of the residence. The long-term movement and settlement would have been considered normal and typically occur[ ] as the residence ages and matures over time and [are] a function of a combination of factors influenced by the normal long-term aging, deterioration, and settlement of the building systems and local weather conditions, such as wind, rain, snow, and the freeze thaw cycle.

“2) Another factor that influenced the long-term movement and settlement and the initial cracking was the design, framing, and construction methods used to construct the residence especially the layout of the floor systems above the first floor level. The tall and exposed exterior walls and the wood framing methods used to construct the interior walls stressed the wood framing and support systems resulting in visible cracking of certain interior [S]heetrock walls.

“3) It is our opinion that the problems with the existing roof covering are considered long-term issues caused from a roof covering that had exceeded its useful life cycle.

“4) It is our opinion that the squeaking floors most probably were an original construction issue.

“5) It is our opinion that the reported moving or ‘racking’ and audible noises heard during the high winds was considered an expected occurrence given the location, size, layout, and construction of the residence. Over time, normal aging and wear will weaken the building systems exacerbating the problem.”

Based on Chapski's findings, State Farm representative Heather Woods determined that the interior damage reported by Brechbill was not covered under Brechbill's homeowner's insurance policy. Woods sent a letter to Brechbill citing two reasons for State Farm's denial:

“We do not insure for any loss to the property ... which ... occurs as a result of any combination of ... wear, tear, ... deterioration, inherent vice, latent defect ... settling, cracking, shrinking, bulging, or expansion of ... walls, floors, roofs, or ceilings.

“We do not insure under any coverage for any loss consisting of ... defect, weakness, inadequacy, fault or unsoundness in: ... siting ... design, specifications, workmanship, construction, grading, compaction; materials used in construction or repair; or maintenance.”

Woods also sent Chapski's report to Brechbill and told him he could get his own engineer to evaluate the interior damage.

Brechbill disagreed with Chapski's conclusions. According to Brechbill, Chapski did not verify any of the dimensions or measurements of the house during his investigation, nor did he directly access the attic, other than performing a visual inspection by sticking his head into the attic-access hole. On May 15, 2008, Brechbill called Chapski to discuss his conclusion that the interior damage was caused by long-term settling. Chapski told Brechbill that this was a typical situation where the damage had been there before the event but had gone unnoticed.

On May 28, 2008, Brechbill called Bert Myers, a State Farm representative, and explained his concern that Chapski had not based his opinion on the specific facts of the case and had ignored facts that the house did not have the issues he was complaining of just a few months before the windstorm. Myers disputed Brechbill's conclusions.

After Chapski's inspection, Brechbill had McCrispin, who had inspected the house at the time Brechbill purchased it, inspect the house to “determine if items have/are changing over time in excess of expected values.” As a result, McCrispin issued a second report in June 2008 in which he noted: “In looking at these areas there does appear to have been changes since the original inspection.” McCrispin's second report identified four areas that had changed since his original inspection four months before the windstorm. On the main floor, the wall separating the living room and kitchen had some “give” in the floor boards “that appears to have increased since the original inspection.” On the main floor, there was a crack at the bottom corner on the driveway-side window that was not present at the original inspection. Also on the main floor, McCrispin noted that “it...