Tritschler v. Allstate Ins. Co.
| Decision Date | 12 October 2006 |
| Docket Number | No. 2 CA-CV 2005-0136.,2 CA-CV 2005-0136. |
| Citation | 144 P.3d 519,213 Ariz. 505 |
| Parties | Jules TRITSCHLER and Jane Doe Tritschler, husband and wife, Plaintiffs/Appellants, v. ALLSTATE INSURANCE COMPANY, an Illinois corporation, and Better Way Services, Inc., an Arizona corporation, Defendants/Appellees. |
| Court | Arizona Court of Appeals |
Joseph C. Dolan, Phoenix, and M. Jay Felix, Tucson, Attorneys for Plaintiffs/Appellants.
Steptoe & Johnson, LLP By Karl M. Tilleman, Bennett Evan Cooper, and John B. Nickerson, Phoenix, Attorneys for Defendant/Appellee Allstate Insurance Company.
Campbell Yost Clare & Norell By Stephen C. Yost and Felice F. Guerrieri, Phoenix, Attorneys for Defendant/Appellee Better Way Services, Inc.
¶ 1 Appellant Jules Tritschler sued appellee Allstate Insurance Company for breach of contract and bad faith based on its failure to pay a general contractor's overhead and profit when adjusting a loss, and appellee Better Way Services, Inc., for breach of implied contract concerning its workmanship in repairing Tritschler's property. The trial court granted both defendants summary judgment, finding that Allstate was not required to pay overhead and profit and that Tritschler had not been damaged by Better Way's allegedly substandard work. We affirm the summary judgment and award of attorney fees in favor of Better Way, but partially reverse the summary judgment in favor of Allstate, finding that a question of fact remains as to whether Allstate can be required to pay overhead and profit under the insurance policy and whether Allstate acted in bad faith in failing to do so.
¶ 2 In reviewing a ruling on a motion for summary judgment, we view the facts and reasonable inferences from them in the light most favorable to the nonmoving party. Link v. Pima County, 193 Ariz. 336, ¶ 12, 972 P.2d 669, 673 (App.1998). In July 1998, rain entered Tritschler's home, causing damage to portions of his house. At the time of his loss, Tritschler's home was insured by Allstate. Allstate contacted Better Way to perform emergency repairs on the home and told Tritschler that Better Way was in its "Quality Vendor Program" for repair services. Better Way prepared an estimate of the needed repairs that totaled $44,417. Included in this estimate were standard ten percent profit and ten percent overhead charges by Better Way. Tritschler signed a work authorization form allowing Better Way to receive payment of his insurance proceeds from Allstate, and Better Way commenced work on Tritschler's home.
¶ 3 Better Way worked on Tritschler's home until October, when Tritschler became dissatisfied with the quality of the work being done. After Better Way left the job, Tritschler complained to Allstate about Better Way's workmanship and said he intended to complete the remaining repairs himself. Allstate offered to allow Tritschler to "cash out" his repair claim, an offer Tritschler accepted. Allstate paid Better Way $26,210.39, without investigating Tristchler's claims that Better Way's work was substandard, and then paid Tritschler $11,568.45. The amount Allstate paid Tritschler represented the difference between Better Way's estimated cost of repair and the amount Allstate paid Better Way, but excluded the overhead and profit charges included in the estimate. Allstate, however, included with its check a note stating: "If you decide to use a general contractor, please submit signed contract or paid bill and [Allstate] will reimburse the contractor overhead and profit."
¶ 4 In June 1999, an independent adjuster acting on behalf of Tritschler submitted an actual cash value proof of loss and a demand to Allstate for an additional $36,377 for the "warranty claim" that included $7,967 for general contractor's overhead and profit fees. Allstate reimbursed Tritschler $3,757.90, based on a mathematical error in the original calculation, but refused to pay contractor overhead and profit. Allstate apparently also paid an additional $5,320.35 based on Allstate's estimate of remaining repairs. Tritschler subsequently completed the remaining repairs himself, with the help of individual workers.
¶ 5 Tritschler then sued Better Way and Allstate. In his complaint, Tritschler alleged Better Way had made substandard repairs to his house, which breached an implied contract to make adequate and workmanlike repairs as well as the implied covenant of good faith and fair dealing. Tritschler also alleged Allstate had breached its contract by failing to pay him general contractor's overhead and profit. He further alleged Allstate had committed acts of bad faith by recommending an incompetent contractor, collaborating with Better Way to make substandard repairs, failing to provide him the benefits of his policy by refusing to obtain the necessary contractor services or pay sufficient proceeds for Tritschler to hire his own contractor, and refusing to pay Tritschler general contractor's overhead and profit. Tritschler also sought punitive damages against Allstate.
¶ 6 Shortly thereafter, Allstate served an offer of judgment on Tritschler in the amount of $100,000, which Tritschler declined. Tritschler later moved for partial summary judgment on his claim that Allstate had breached the insurance contract by failing to pay him general contractor's overhead and profit. Allstate responded and filed a cross-motion for partial summary judgment on the overhead and profit issue, the bad faith claim, and Tritschler's request for punitive damages. The court granted Allstate's motion on all grounds.
¶ 7 Better Way moved for summary judgment on the claims against it, and the trial court granted that motion. Allstate then moved for clarification, arguing that, because the trial court's grant of summary judgment to Better Way established that Allstate had fully compensated Tritschler for any work Better Way had performed improperly or had not completed, it eliminated any remaining breach of contract claim against Allstate. Allstate asked the court to clarify that its order granting summary judgment to Allstate disposed of all of Tritschler's claims against Allstate. Tritschler likewise moved for reconsideration or clarification on the court's grant of summary judgment to Allstate, pointing out that Allstate's motion had only sought partial summary judgment and arguing that it had not addressed all theories of liability Tritschler had alleged in his complaint. The trial court agreed with Allstate and, finding no genuine issue of material fact to be tried against Allstate, vacated the trial date. In its ensuing judgment, the court awarded attorney fees to Better Way and Allstate. The court also awarded sanctions to Allstate pursuant to Rule 68, Ariz. R. Civ. P., 16 A.R.S., Pt. 2.
¶ 8 Tritschler first argues that the trial court erred by granting Allstate's cross-motion for summary judgment and denying his motion on the issue of Allstate's obligation to include overhead and profit in his insurance reimbursement. We review the trial court's grant of summary judgment, which was based on its interpretation of Tritschler's insurance policy, de novo. See Liristis v. Am. Family Mut. Ins. Co., 204 Ariz. 140, ¶ 6, 61 P.3d 22, 24 (App.2002) (); Ariz. Biltmore Estates Ass'n v. Tezak, 177 Ariz. 447, 448, 868 P.2d 1030, 1031 (App.1993) ().
¶ 9 Tritschler was insured under Allstate's Deluxe Plus Homeowners Policy. This policy provides that, in the event of a loss, Allstate has the option of electing either to repair, rebuild, or replace the property itself or to pay the insured for the damaged property. If Allstate chooses not to repair the property itself, the policy section on payment for a loss states that Allstate will pay for a covered loss by one or more of the following methods: a) special payment, b) actual cash value, and c) building structure reimbursement. The special payment provision under subsection (a) applies to losses that are less than $2,500, which both parties agree is not applicable to the present case. The contract then details the other two 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. This means there may be a deduction for depreciation. Payment will not exceed the limit of liability shown on the Policy Declarations for the coverage that applies to the damaged, destroyed or stolen property, regardless of the number of items involved in the loss.
You may make claim for additional payment as described in paragraph "c" ... if you repair or replace the damaged, destroyed or stolen covered property within 180 days of the actual cash value payment.
c) Building Structure Reimbursement.... [W]e 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. This additional payment includes the reasonable and necessary expense for treatment or removal and disposal of contaminants, toxins or pollutants as required to complete repair or replacement of that part of a building structure(s) damaged by a covered loss.
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 residence premises; or
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...
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