The Jesus Church of Vict. Tex. v. Church Mut. Ins. Co.

Decision Date13 September 2022
Docket NumberCivil Action 6:19-CV-00093
PartiesTHE JESUS CHURCH OF VICTORIA TEXAS, INC., Plaintiff, v. CHURCH MUTUAL INSURANCE COMPANY, Defendant.
CourtU.S. District Court — Southern District of Texas
MEMORANDUM OPINION AND ORDER

DREW B. TIPTON UNITED STATES DISTRICT JUDGE

The Jesus Church of Victoria, Texas was damaged when Hurricane Harvey hit Texas in August 2017. The Jesus Church of Victoria Texas, Inc. (the Jesus Church) filed this lawsuit against its insurer, Church Mutual Insurance Company (Church Mutual), arguing that Church Mutual mishandled its claim. Church Mutual moves for partial summary judgment, arguing that regardless of whether its coverage determinations were correct, it did not act in bad faith. The Jesus Church disagrees. For the following reasons, the Court GRANTS IN PART and DENIES IN PART Church Mutual's Motion for Partial Summary Judgment.

I. BACKGROUND

Church Mutual issued a property insurance policy to the Jesus Church covering the main church building and the parsonage (the “Property”). (Dkt. No. 30 at ¶ 2); (Dkt. No 36 at ¶ 9); see also (Dkt. No. 36-1). After the hurricane, the Jesus Church submitted a claim to Church Mutual for damage to the Property. (Dkt. No. 30 at ¶ 3) (Dkt. No. 36 at ¶ 9). Church Mutual acknowledged the claim shortly after and began an investigation. (Dkt. No. 36-2).

In September 2017, Church Mutual assigned an independent adjuster-Sean Odenwald-to inspect the damage to the Property. (Dkt. No. 30 at ¶ 3); (Dkt. No. 36 at ¶ 11). After his inspection, Odenwald recommended that Church Mutual make a payment of $127,502.22 to the Jesus Church. (Dkt. No. 36-6).

On October 1, 2017, Church Mutual sent the Jesus Church a letter requesting 30 additional days to complete its investigation. (Dkt. No. 36-3). Church Mutual requested the extension because of “the heavy claim volume associated with Hurricane Harvey.” (Id. at 2). Four days later, Church Mutual sent the Jesus Church a letter confirming that the Property had sustained damages from Hurricane Harvey and tendered an advance payment of $40,000 to the Jesus Church. (Dkt. No. 36-16). On October 30, 2017, Church Mutual requested a second 30-day extension, again citing the heavy claim volume associated with Hurricane Harvey. (Dkt. No. 36-4).

On December 20, 2017, Church Mutual received an estimate from the Jesus Church's hired public adjuster: John Olle. (Dkt. No. 42-1 at 53); see also (Dkt. No. 42 at 23). Church Mutual claims this estimate was the “only statement of loss” the Jesus Church provided. (Dkt. No. 42 at 3).

On January 12, 2018, another Church Mutual adjuster-Kirk Gresham- completed an additional estimate based on his inspection of the Property sometime in the Fall of 2017.[1] (Dkt. No. 36-20). Gresham determined the replacement cost value of the Jesus Church's claim was $298,568.36-$228,772.92 for the church and $69,795.44 for the parsonage. (Id. at 41, 51). In calculating his estimate, Gresham applied a credit for a prior payment in the amount of $127,502.22-the same amount Odenwald (Church Mutual's first adjuster) recommended. (Id. at 42-43); (Dkt. No. 36-6 at 2).

On January 26, 2018, the Jesus Church's corporate representative-Joel Steinhauer-sent an email to Church Mutual expressing frustration with how Church Mutual had handled the Jesus Church's claim. (Dkt. No. 36-9 at 2-4). Steinhauer cited delays and switching adjusters as the source of his frustration and accused Church Mutual of deliberately avoiding its obligations under the Policy. (Id.)

On February 1, 2018, Church Mutual advised the Jesus Church that it was issuing payment of $216,412.67 for the claim. (Dkt. No. 36-21 at 2). This amount was based on Gresham's estimate, which determined that the replacement cost value of the Property was $298,568.36. (Id.). Church Mutual subtracted $39,655.69 for recoverable depreciation, $2,500 for the deductible, and $40,000 for the previous advance payment. (Id.). Though Gresham's original estimate erroneously applied a credit for a $127,502.22 payment that Church Mutual never issued, Church Mutual seemingly corrected this error when it issued payment; the only credit for prior payment applied was the $40,000 advance payment. (Id.); see also (Dkt. No. 42 at 3). Church Mutual issued this payment on February 8, 2018. (Dkt. No. 36-21 at 3).

On February 28, 2018, Church Mutual had the Property inspected again, this time by Unified Building Services & Engineering, Inc. (“UBSE”). (Dkt. No. 36-7 at 3). After completing its inspection, UBSE issued a report detailing its observations and conclusions (the “Engineer's Report”). (Id. at 3-7). The Engineer's Report attributed some of the damage to preexisting defects as opposed to Hurricane Harvey. (Id. at 6-7)

Nevertheless, on July 12, 2018, Church Mutual issued an additional payment to the Jesus Church of $48,033.20. (Dkt. No. 36-23 at 2). This payment was based on a revised replacement cost value of $355,073.91- which was $56,505.55 higher than Gresham's (Church Mutual's second adjuster) original replacement cost value determination. (Id.); see also (Dkt. No. 36-21). Church Mutual subtracted $48,128.04 for “recoverable withholding,” $2,500 for the deductible, and $256,412.67 for prior payments ($40,000 in October 2017 and $216,412.67 in February 2018). (Dkt. No. 36-23 at 2). This was the final payment Church Mutual made to the Jesus Church. In total, Church Mutual has paid $304,445.87 on the claim. (Id.); (Dkt. No. 36-16); (Dkt. No. 36-21).

The Jesus Church filed suit because it was dissatisfied with how its claim was handled and believed that additional amounts were owed.[2] (Dkt. No. 1). The Jesus Church asserts claims for breach of contract, violations of Chapters 541 and 542 of the Texas Insurance Code, and breach of the common-law duty of good faith and fair dealing. (Id. at 18-22). Church Mutual filed a Motion for Partial Summary Judgment, seeking summary judgment only on the Jesus Church's claims for violations of the common-law duty of good faith and fair dealing and Chapter 541 of the Texas Insurance Code. (Dkt. No. 30 at 2).

II. LEGAL STANDARD

Summary judgment is appropriate when 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). “A material fact is one that might affect the outcome of the suit under governing law,” and “a fact issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Renwick v. PNK Lake Charles, L.L.C., 901 F.3d 605, 611 (5th Cir. 2018) (internal quotation marks omitted). The moving party “always bears the initial responsibility of informing the district court of the basis for its motion,” and identifying the record evidence “which it believes demonstrate[s] the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). “If the moving party fails to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of the nonmovant's response.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam).

If the movant meets this burden, the nonmovant must then come forward with specific facts showing there is a genuine issue for trial. Fed.R.Civ.P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

The nonmovant must “go beyond the pleadings and by [the nonmovant's] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Nola Spice Designs, LLC v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015) (internal quotation marks omitted). “If the evidence is merely colorable, or is not significantly probative,” summary judgment is appropriate. Parrish v. Premier Directional Drilling, L.P., 917 F.3d 369, 378 (5th Cir. 2019) (internal quotation marks omitted). The nonmovant's burden “will not be satisfied by ‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.' Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005) (quoting Little, 37 F.3d at 1075). But the district court must view the evidence in the light most favorable to the nonmovant. Coleman v. Hous. Indep. Sch. Dist., 113 F.3d 528, 533 (5th Cir. 1997).

III. EVIDENTIARY OBJECTIONS

Both Parties object to certain summary-judgment evidence introduced by the other. (Dkt. No. 36 at 10-11); (Dkt. No. 40). The Jesus Church objects to Church Mutual's Exhibits A-I, arguing these exhibits are inadmissible hearsay and otherwise inadmissible. (Dkt. No. 36 at 10-11). Church Mutual objects to the Jesus Church's Exhibits 12, 14, 15, and 21, arguing these exhibits contain improper expert testimony and are not relevant. (Dkt. No. 40). The Court addresses each Party's objections in turn.

A. The Jesus Church'S Evidentiary Objections

In what can only be described as a “head-scratcher,” the Jesus Church objects to some of Church Mutual's evidence only to introduce that same evidence itself. As Church Mutual points out, its Exhibits C-I, which the Jesus Church objects to, are identical to exhibits the Jesus Church introduces. (Dkt. No. 41 at ¶ 4). Church Mutual's Exhibit A, which the Jesus Church also objects to, includes portions of the Policy. (Dkt. No. 30-1). But the Jesus Church includes the entire Policy as its Exhibit 1, which includes everything in Church Mutual's Exhibit A and then some. (Dkt. No. 36-1); see also (Dkt. No. 41 at 34). The only exhibit offered by Church Mutual that the Jesus Church objects to and doesn't...

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