Versai Mgmt. Corp.Ora v. Clarendon Am. Ins.

• Decision Date: 19 February 2010
• Docket Number: No. 08-30874.,08-30874.
• Citation: 597 F.3d 729
• Parties: VERSAI MANAGEMENT CORPORATION, doing business as Versailles Arms Apartments, Plaintiff-Appellant, v. CLARENDON AMERICA INSURANCE COMPANY; Employers Fire Insurance Company; OneBeacon Insurance Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

597 F.3d 729

VERSAI MANAGEMENT CORPORATION, doing business as Versailles Arms Apartments, Plaintiff-Appellant, v. CLARENDON AMERICA INSURANCE COMPANY; Employers Fire Insurance Company; OneBeacon Insurance Company, Defendants-Appellees.

No. 08-30874.

United States Court of Appeals, Fifth Circuit.

Feb. 19, 2010.

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Debra J. Fischman (argued), Joshua Simon Force, James M. Garner, Sher, Garner, Cahill, Richter, Klein & Hilbert L.L.C., New Orleans, LA, for PlaintiffAppellant.

Robert Sartain Emmett (argued), Evan T. Caffrey, James H. Daigle, Baker, Donelson, Bearman, Caldwell & Berkowitz P.C., New Orleans, LA, for Clarendon America Ins. Co.

Patrick Dominic DeRouen (argued) DeRouen Law Firm, New Orleans, LA, for Employers Fire Ins Co. and OneBeacon Ins. Co.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before WIENER, GARZA, and ELROD, Circuit Judges.

PER CURIAM:

Appellant Versai Management Corporation (Versai) appeals the district court's grant of summary judgment in favor of Appellees Clarendon America Insurance Company (Clarendon) and Employers Fire Insurance Co. (EFIC) on (1) Versai's contract claims for unpaid insurance proceeds for property damage, business interruption, replacement costs, and code compliance upgrades; and (2) Versai's claims that EFIC and Clarendon violated Louisiana law by failing to promptly settle claims and by misrepresenting the terms of their policies. Versai also asks this court to find that the district court abused its discretion by denying Versai's motion to extend the deadline for filing expert reports. We affirm in part and reverse in part.

I.

Versai manages the Versailles Arms Apartments in New Orleans. Versailles Arms Apartments are federally subsidized through the Department of Housing and Urban Development. The apartments consist of fifty residential buildings, each consisting of four first-floor apartments and four second-floor apartments. Fortynine of the buildings suffered extensive damage during Hurricane Katrina during August of 2005 and were rendered uninhabitable until the property was repaired. The fiftieth building was destroyed in a natural gas explosion during the storm. Following the disaster, Versai notified its insurers of the hurricane damage to the property and submitted claims with the assistance of its retained private adjusters and contractors.

In February of 2006, Versai retained SCC Ventures, L.L.C., to conduct repairs on the property. That month, SCC Ventures estimated that the repairs would cost $17,878, 326. Lloyds of London, which provided $2.5 million in "all risk" property insurance, paid its policy limits in full in April of 2006. Versai's flood insurance provider, the Standard Fire Insurance Company, was originally party to this suit but settled its claims with Versai for approximately $6 million. The remaining defendants, Clarendon and EFIC, together provided "non-flood" insurance on the apartments in excess of the $2.5 million provided by Lloyds, and this coverage was limited to a maximum recovery of $13,411, 288. The Clarendon and EFIC policies follow the same terms of the underlying Lloyds Policy, but provided ex-cess coverage once the Lloyds insurance limits were met.

Versai promptly notified all of its insurers about the losses and damage sustained to the Versailles Arms Apartments after Hurricane Katrina. Agents and adjusters for the insurers inspected the property throughout 2005 and 2006. Clarendon and EFIC's joint adjuster, Bill Adams of McLarens Young International, submitted a number of reports to EFIC and Clarendon throughout early 2006. On May 26 2006, Adams submitted a report stating that the companies owed Versai an undisputed sum of $2,972, 991.38 each, and an insurer-produced proof of loss for this amount was then submitted. Clarendon issued its check for $2,972, 991.38 on July 27, 2006, and EFIC issued its check for the same amount on August 1, 2006. On August 23, 2006, Versai presented EFIC and Claredon with a sworn statement in proof of loss, which was not prepared by the insurance companies, for the amount of $6,082, 882.69 each. The companies did not submit additional payment.

In September of 2007, the original $17,878, 326 estimate of the cost to repair the premises increased by approximately ten million dollars to include the costs of compliance with updated building codes which would require additional repairs. No payments for code compliance were rendered. In December of 2007, Clarendon and EFIC each issued checks to Mark Carrier, Versai's public adjuster, for $255,498 for additional items of physical damage and business interruption. These checks were made payable to Versai, Versai's mortgage holder, and "Recov." (Recovery Management)—the adjusting business Carrier owned. Versai contends that Carrier forged the requisite endorsements and stole the money. By the end of 2008, the only completed repairs to the Versailles Arms Apartments consisted of de molishing portions of the property, gutting certain areas, re-framing parts of the structure, and repairing some of the roofing. Versai entered into a contract to sell the apartments to Peltier Gardens, L.L.C., but the deal ultimately fell through. Versai has since retained ownership of the apartments.

On August 25, 2006, Versai filed suit against Clarendon and EFIC, alleging that Clarendon and EFIC had not paid the full amount due under the excess non-flood policies for property damage, business interruption loss, replacement costs, and code compliance upgrades. Versai claimed that these failures amounted to breaches of contract, breaches of the duties of good faith and fair dealing, and violations of Louisiana Revised Statutes sections 22:1892 and 22:1973. The trial date was originally set for November 12, 2007, but was reset to September 2, 2008 upon the parties' joint motion for continuance. Versai filed a consent motion to continue on May 30, 2008, but the court denied it. Versai failed to produce expert reports in advance of the May 30 deadline, but approximately one month after the deadline passed, Versai moved the court to extend the deadline. The court denied the extension. In July of 2008, EFIC and Clarendon moved for summary judgment on all claims. Versai opposed the motion with affidavits from various fact witnesses, and later filed a motion to continue based on its discovery of Carrier's alleged theft. The district court granted summary judgment for EFIC and Clarendon on all claims, concluding that Versai had failed to present evidence showing a genuine issue of material fact. Versai has since filed a timely appeal urging the court to reverse the grant of summary judgment on all claims.

II.

We review the district court's grant of summary judgment de novo. See Paul v. Landsafe Flood Determination, Inc., 550 F.3d 511, 513 (5th Cir.2008). Summary judgment will be granted only if " 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Robinson v. Orient Marine Co., 505 F.3d 364, 366 (5th Cir.2007) (quoting Fed. R.Civ.P. 56(c)). In making this determination, we review all facts and inferences in the light most favorable to the non-movant. Id. "[0]nce the moving party meets its initial burden of pointing out the absence of a genuine issue for trial, the burden is on the nonmoving party to come forward with competent summary judgment evidence establishing the existence of a material factual dispute." Clark v. Ameri.ca's Favorite Chicken, 110 F.3d 295, 297 (5th Cir.1997) (citation omitted). After adequate time for discovery, Rule 56(c) "mandates the entry of summary judgment... against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The district court's interpretation of an insurance policy presents an issue of law reviewed de novo. See Finger Furniture Co. v. Commonwealth Ins. Co., 404 F.3d 312, 314 (5th Cir.2005). We review a court's enforcement of a scheduling order under the abuse of discretion standard. See Sturgeon v. Airborne Freight Corp., 778 F.2d 1154, 1157-58 (5th Cir. 1985).

III.

Versai contends it produced evidence showing a genuine issue of material fact on its claims against the insurers for property loss, business interruption loss, housing code compliance costs, and replacement costs. We review these claims individual-

A.

Versai challenges the district court's grant of summary judgment for EFIC and Clarendon with respect to its property loss claims. According to Versai, EFIC and Clarendon owe a total of approximately $12 million for property loss—the amount set out in Versai's August 23, 2006 proofs of loss sent to EFIC and Clarendon. The district court found that Versai had presented "no evidence" to show that it was entitled to additional compensation beyond the approximately $6 million it had already received from EFIC and Clarendon because: (1) Versai failed to support its August 23 proofs of loss with documentation (2) Versai failed to submit timely expert reports to support its claims; and (3) Versai's argument was estopped because a deposition from its company president Melanie Meyer, contradicted its claim for relief.

Versai argues that the district court was not at liberty to grant summary judgment based on its "failure" to support its August 23 proofs of loss with additional documentation where the insurance policy created no such obligation. We agree. Versai's insurance policies with Clarendon and EFIC contained a requirement for submitting a proof of loss to obtain insurance payments. The section of the Excess...