The Ins. Shoppe of N.C. v. W. Am. Ins. Co.
| Decision Date | 30 March 2022 |
| Docket Number | 5:19-CV-256-FL |
| Parties | THE INSURANCE SHOPPE OF NORTH CAROLINA, INC., Plaintiff, v. WEST AMERICAN INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Eastern District of North Carolina |
This matter is before the court on the parties' cross-motions for summary judgment (DE 46, 58) and respective motions to exclude expert witness testimony (DE 50, 56). The issues raised are ripe for ruling. For the following reasons defendant's motion for summary judgment is granted plaintiff's corresponding motion is denied, and the parties' motions to exclude expert witness testimony are denied as moot.
Plaintiff serving as an insurance agent for its clients, commenced this action June 21, 2019, asserting a breach of contract claim arising out of the alleged failure of defendant, an affiliate of Liberty Mutual Insurance Company, to indemnify plaintiff for certain costs pursuant to a contract between them entitled the “Liberty Mutual Commercial Insurance Producer Agreement” (the “Agreement”). Plaintiff seeks indemnification for all losses, damages costs, and expenses arising from a state court action brought against it by its former client, Harrington Companies, LLC (“Harrington”).
Following a period of discovery, defendant filed its motion for summary judgment with reliance upon: 1) the Agreement; 2) pleadings in the Lee County, North Carolina action, Harrington Companies, LLC v. The Insurance Shoppe of North Carolina, Inc., No. 18-CV-000465; 3) a 2017-2018 insurance policy; 4) deposition testimony of William Jeremy Pearce (“Pearce”), plaintiff's Federal Rule of Civil Procedure 30(b)(6) designee; 5) deposition testimony of Dwight M. Hinton, Jr. (“Hinton”), the now-retired executive general adjuster for defendant; 6) affidavits of Roy Harrington (“Roy”), managing member of Harrington, and Rhonda Harrington (“Rhonda”), his wife; 7) certain email correspondence; and 8) a confidential memorandum of settlement between defendant and Harrington. Plaintiff's arguments in opposition, also grounded upon the Agreement, additionally make reference to: 1) deposition testimony of David L. Grady (“Grady”), plaintiff's owner; and 2) certain email correspondence. As noted, plaintiff also moved for summary judgment in its favor.
Unsurprisingly, the terms of the Agreement are central, too, to plaintiff's motion. Advancing entitlement to judgment in its favor, plaintiff additionally relies upon: 1) excerpts of insurance policies spanning 2013-2018; 2) a summary chart of coverage limits related to those policies; 3) a letter from Hinton to Roy; 4) the aforementioned state court complaint; 5) excerpts of Hinton's deposition testimony; and 6) deposition testimony of Taylor Terrell (“Terrell”), an underwriter for defendant. Defendant's arguments in opposition to plaintiff's motion for summary judgment make reference to materials relied upon in support of its motion as well as deposition testimony of Terrell and the letter from Hinton to Roy.
Additionally, each party moves to exclude testimony of the other side's expert witness. Towards this end, defendant seeks exclusion of the testimony of David Stegall (“Stegall”). Plaintiff, in turn, seeks exclusion of the testimony of Brenda Wells (“Wells”).
Under the Agreement, made effective June 4, 2014, plaintiff had a non-exclusive right to transmit submissions to purchase insurance to defendant for its consideration. Defendant could quote such submissions at its sole discretion. Pursuant to that Agreement, starting by at least 2014, plaintiff began procuring commercial real estate insurance coverage from defendant on behalf of Harrington, plaintiff's client since 2010, for warehouse properties in Sanford, North Carolina. Plaintiff continued to procure yearly policies from defendant on Harrington's behalf for these properties through 2017. All of the relevant policies contained an 80% coinsurance provision which, in effect, allowed defendant to not pay the full amount of any loss if the value of covered property at the time of loss times the coinsurance percentage is greater than the limit of insurance for the property and, instead, pay a reduced amount.[1]
In September 2017, Harrington's covered properties suffered damage as the result of a windstorm. Harrington submitted a claim for this loss under its policy to defendant, which defendant initially adjusted downwards on the basis that some of the properties, calculated by it as worth $13, 851, 741 in total, were underinsured per the 80% coinsurance provision. See, e.g., Dec. 22, 2017, Letter (DE 61-4) at 4 (asserting that a covered building was worth $4, 538, 982, meaning, under the coinsurance provision, it should have been covered in the amount of $3, 631, 186, but that Harrington only had a coverage amount of $1, 513, 527). Harrington and defendant resolved this claim by March 15, 2018, confidential settlement agreement.
On May 24, 2018, Harrington brought suit against plaintiff in the Superior Court of Lee County, North Carolina, (the “Harrington action”), for damages stemming from alleged breaches of fiduciary and contractual duties, and from unfair and deceptive trade practices In particular, Harrington alleges in its complaint that “[a]t the time [plaintiff] procured renewal on behalf of [Harrington], ” in 2017, plaintiff had not “conducted any independent research, investigation, or inquiry to determine what the appropriate amounts of coverage for each building should be under [Harrington's] replacement cost policy with [defendant]”; “made any independent inquiry or investigation as to what the actual replacement cost for each building would be in the event of a complete or partial loss”; “made any independent inquiry or investigation as to what the financial effect of the co-insurance provision contained in the policy with [defendant] would have on [Harrington] in the event of a complete or partial loss if the buildings were underinsured”; nor discussed with, disclosed to, advised, or informed Harrington “the nature and effect of replacement cost insurance and its relationship with a co-insurance penalty clause, ” “what the ‘coverage amount' should be for each building, ” or the fact that the policy was a “co-insurance contract” and its attendant legal and financial effects.
Defendant declined to provide the requested indemnification and continues to deny any responsibility to indemnify plaintiff for the expenses claimed in the pending state court action. The instant suit followed.
Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). On cross-motions for summary judgment, the court “consider[s] each motion separately on its own merits to determine whether [any] of the parties deserves judgment as a matter of law.” Defs. of Wildlife v. N.C. Dep't of Transp., 762 F.3d 374, 392 (4th Cir. 2014).[2] The party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Once the moving party has met its burden, the non-moving party must then “come forward with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Only disputes between the parties over facts that might affect the outcome of the case properly preclude the entry of summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) ().
“[A]t the summary judgment stage the [court's] function is not [itself] to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id. at 249. In determining whether there is a genuine issue for trial, “evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [non-movant's] favor.” Id. at 255; see United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) ().
Nevertheless “permissible inferences must still be within the range of reasonable probability, . . . and it is the duty of the court to withdraw the case from the [factfinder] when the necessary...
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