Kokak LLC v. Auto-Owners Insurance Company

Filing 82

OPINION AND ORDER DENYING 45 MOTION for Summary Judgment by Defendant Auto-Owners Insurance Company. By separate order, the Court will set a telephonic status conference, at which time it will set further deadlines. Signed by Judge Theresa L Springmann on 7/20/2021. (lhc)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
KOKAK LLC D/B/A PROFESSIONAL
VAULT STORAGE,
Plaintiff,
v.

CAUSE NO.: 2:18-CV-177-TLS

AUTO-OWNERS INSURANCE
COMPANY,
Defendant.
OPINION AND ORDER
The Plaintiff, Kokak LLC d/b/a Professional Vault Storage, brought a declaratory action
against the Defendant, Auto-Owners Insurance Company, seeking to either compel Defendant’s
participation in the mandatory appraisal process or for damages from the Defendant’s breach of
contract and bad faith. The Defendant moved for Summary Judgment. For the reasons below, the
Defendant’s Motion is DENIED.
PROCEDURAL BACKGROUND
The Plaintiff filed suit on April 27, 2018 [ECF No. 1]. On February 28, 2019, the
Plaintiff filed a Motion to Compel Appraisal [ECF No. 16], to which the Defendant responded
[ECF No. 17], and the Plaintiff replied [ECF No. 18]. On May 7, 2019, the Court denied the
Motion without prejudice, ruling that the Court should first address the dispositive coverage
issues, specifically whether the suit was time-barred. See May 7, 2019 Order, ECF No. 25.
After the conclusion of discovery, the Defendant filed its Motion for Summary Judgment
[ECF No. 45], Defendant’s Brief in Support of its Motion for Summary Judgment (“Def.’s Br.”)
[ECF No. 46], and its Statement of Material Facts Upon Which There is No Genuine Issue in

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Support of Its Motion for Summary Judgment (“Def.’s Stmt.”) [ECF No. 45-1] and exhibits
[ECF Nos. 45-2–17]. The Plaintiff responded, filing Plaintiff’s Response Brief in Opposition to
Defendant’s Motion for Summary Judgment (“Pl.’s Resp.”) [ECF No. 48], with its own
Statement of Genuine Disputes (“Pl.’s Stmt.”) [ECF No. 49] and a Designation of Evidence
(“Pl.’s Desig.”) identifying exhibits [ECF No. 50–50-3]. The Defendant replied, filing the
Defendant’s Reply Brief in Support of its Motion for Summary Judgment (“Def.’s Reply”) [ECF
No. 52].
On the same day the Plaintiff responded to the Summary Judgment Motion, it also filed
its first Motion to Strike Exhibits and Purported Undisputed Facts [ECF No. 47]. The Defendant
responded [ECF No. 51], and the Plaintiff replied [ECF No. 56].
The Defendant filed two subsequent motions: first, a Motion for Leave to File a
Supplemental Designation of Evidence [ECF No. 53], to which the Plaintiff responded [ECF No.
57] and the Defendant replied [ECF No. 63]; and second, its own Motion to Strike Certain
Portions of Plaintiff’s Designation of Evidence [ECF No. 54] with an associated brief [ECF No.
55], challenging the Plaintiff’s Designation, to which again the Plaintiff responded [ECF No. 58]
and the Defendant replied [ECF No. 64].
The Plaintiff filed five subsequent motions, to which the Defendant responded, and the
Plaintiff replied: a second Motion to Strike challenging the Defendant’s reply in support of
Summary Judgment [ECF Nos. 59, 67, 73];1 a Motion to Supplement its own Designation of
Evidence [ECF Nos. 61, 65, 71]; a Motion for Leave to File a Sur-Reply to the Motion for
Summary Judgment [ECF Nos. 62, 66, 72], which included within the motion the fourteen-page
proposed Plaintiff’s Sur-Reply in Opposition to the Defendant’s Motion for Summary Judgment

1

The Plaintiff’s Memorandum in Support of this Motion to Strike is filed at ECF No. 60.

2

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(“Pl.’s Sur-Reply”); a third Motion to Strike, challenging the Defendant’s replies to its
subsequent Motions [ECF Nos. 68, 75, 77]2; and finally a Second Motion for Leave to File a SurReply to Defendant’s Reply in Support of Its Motion to Strike the Plaintiff’s Evidence (Doc 64),
designating the “Memorandum in Support of [the Plaintiff’s] Motion to Strike Portions of [the
Defendant’s] Replies (Doc 63 and Doc 64) in Support of [the Defendant’s] Motions to Strike
Evidence and Supplement Evidence” [ECF No. 69] as the second Sur-Reply [ECF Nos. 70, 74,
76].
The Court issued an Order granting both Motions to Supplement and Motions for SurReply and denying all the Motions to Strike without prejudice. See Mar. 31, 2021 Op. & Order,
ECF No. 80. As the Court noted in that Order, “it is the function of a court, with or without a
motion to strike, to review carefully both statements of material facts and statements of genuine
issues . . . and to eliminate from consideration any argument, conclusions, and assertions
unsupported by the documented evidence of record offered in support of the statement.” Op. &
Order at 2 (quoting Mayes v. City of Hammond, 442 F. Supp. 2d 587, 596 (N.D. Ind. 2006)
(collecting cases); accord Potts v. A & A Mfg. Co. Inc., No. 2:07-CV-167, 2010 WL 427762, at
*1 (N.D. Ind. Jan. 29, 2010); see also Vaught v. Quality Corr. Care, LLC, No. 1:15-CV-346,
2018 WL 1900153, at *2 (N.D. Ind. Apr. 19, 2018) (“Because the Court is able to distinguish
which exhibits, affidavits, statements, and commentary may properly be considered when
deciding whether summary judgment is appropriate, the Court declines to strike these statements
from the Plaintiff’s Memorandum.”)). In accordance with this function, any issues raised in the
various ancillary Motions necessary to ruling on the Summary Judgment Motion will be
addressed in this Opinion and Order. As the Court also noted in the March 31, 2021, Opinion and

2

The Plaintiff’s Memorandum in Support of this Motion to Strike is filed at ECF No. 69.

3

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Order, the Court has reviewed all the parties’ extensive briefing on the various issues. To the
extent an argument was raised by the parties but is not addressed in this Opinion and Order,3 it
was not necessary to reach the Court’s conclusion on summary judgment.
SUMMARY JUDGMENT STANDARD
Summary judgment is warranted when “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). The nonmoving party must marshal and present the Court with evidence on which
a reasonable jury could rely to find in his favor. Goodman v. Nat’l Sec. Agency, Inc., 621 F.3d
651, 654 (7th Cir. 2010). A court must deny a motion for summary judgment when the
nonmoving party presents admissible evidence that creates a genuine issue of material fact.
Luster v. Ill. Dep’t of Corr., 652 F.3d 726, 731 (7th Cir. 2011) (citations omitted). A court’s role
in deciding a motion for summary judgment “is not to sift through the evidence, pondering the
nuances and inconsistencies, and decide whom to believe. [A] court has one task and one task
only: to decide, based on the evidence of record, whether there is any material dispute of fact that
requires a trial.” Waldridge v. Am. Heochst Corp., 24 F.3d 918, 920 (7th Cir. 1994). Facts that
are outcome determinative under the applicable law are material for summary judgment
purposes. Smith ex rel. Smith v. Severn, 129 F.3d 419, 427 (7th Cir. 1997). Although a bare
contention that an issue of material fact exists is insufficient to create a factual dispute, a court
must construe all facts in a light most favorable to the nonmoving party, view all reasonable
inferences in that party’s favor, Bellaver v. Quanex Corp., 200 F.3d 485, 491–92 (7th Cir. 2000),

3

For example, the Defendant raised as a fact that it had not engaged in bad faith, see, e.g., Def.’s Stmt. at
¶ H.2; the Plaintiff properly moved to strike the fact as a legal conclusion, see Pl.’s Mot. to Strike Exs.
and Purported Undisputed Facts, ECF No. 47. The Court can evaluate whether such a statement is a legal
conclusion without addressing the extensive briefing on the issue, and did so.

4

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and avoid “the temptation to decide which party’s version of the facts is more likely true.” Payne
v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003).
FACTUAL BACKGROUND
A.

Facts for Purposes of Summary Judgment4
The Plaintiff is a limited liability company, owned by Joshua Milton and Frederick Leaf.

See Suppl. Juris. Statement ¶ 4, ECF No. 33. The Plaintiff owns a commercial storage warehouse
in Portage, Indiana. See Def.’s Ex. A, Compl. ¶ 13; Pl.’s Desig. ¶ 6. In approximately 1996, the
original steel roof was covered with plywood and 3-tab asphalt shingles. See Def.’s Ex. Ex. H-1
at 27; Pl.’s Desig. ¶ 30. The warehouse’s roof has a pitch of less than 2:12. See Def.’s Exs. H-1
at 3,5 I-4 at 3; Pl.’s Desig. ¶¶ 30–31. In February, March, and April 2016, strong winds gusted
through the area. See Def.’s Ex. M-2 at 10; Pl. Desig. ¶ 33.
The Defendant issued a commercial property insurance policy covering the warehouse.
See Def.’s Ex. A, Compl. ¶ 14; Pl.’s Desig. ¶ 6. On February 29, 2016, an underwriting survey
was performed. See Def.’s Ex. H-1; Pl.’s Desig. ¶ 30. The survey notes, “About 1.5 weeks ago
wind damaged some flashing and blew shingles off the north side of the building.” Id. at 2; see
also 27. The surveyor reported, “I was only able to view the roof with a camera pole so the entire

4

While the Defendant filed a Statement of Material Facts [ECF No. 45-1], its Brief [ECF No. 46]
contains additional facts not found in its Statement of Material Facts. Similarly, while the Plaintiff filed a
Statement of Genuine Disputes [ECF No. 49], some of its numbered paragraphs are not supported by
record citations, some are not disputed, and its Response Brief contains additional facts as well. Both
parties heavily relied on affidavits to present their evidence; many paragraphs of several of the affidavits
are the primary subject of several of the Motions to Strike. However, the Plaintiff largely accepted the
exhibits filed by the Defendant. See generally Pl.’s Desig., ECF No. 50. Given this presentation of the
facts by the parties, along with the four Motions to Strike, the Court has cited deposition or documentary
evidence wherever possible, and the Court has often cited both the Defendant’s exhibit and the paragraph
from the Plaintiff’s Designation accepting that exhibit. The facts as the Court must accept them for
Summary Judgment purposes are presented first; disputes of material fact are addressed subsequently.
5
Technically, the underwriting survey cited here provides the roof pitch as “100% Low (2:12 to 6:12
pitch).” Def.’s Ex. H-1 at 3. However, the later report states “Per our follow-up site visit on September
28, 2017 we confirmed the roof pitch to be less than 2:12.” Def.’s Ex. I-4 at 3. Additionally, the pitch of
the roof is not a fact the Plaintiff appears to dispute, so the Court accepts the roof pitch as less than 2:12.

5

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roof could not be adequately assessed but about 5% of the shingles are missing on the north side
of the roof.” Id. The survey also recommends replacing the roof immediately. Id. The survey was
not provided to the Plaintiff during 2016. See Pl.’s Ex. 1 (Leaf Aff.) ¶¶ 5, 10.6
On May 1 or 2, 2016, Leaf, on behalf of the Plaintiff, reported damage to the roof to a
woman at Anton Insurance Agency, his insurance agent; Leaf specified that he did not know
precisely when the damage had occurred. See Def.’s Ex. B 15:15–21, 40:14–16; Pl.’s Resp. to
Mot. to Strike Ex. A-1 41:22–42:4, ECF No. 58-1; Pl.’s Desig. ¶ 7.7 After May 1, 2016,
temporary repairs were made to the roof. See Pl.’s Ex. 1 (Leaf Aff.) ¶ 7; Pl.’s Ex. 2 (Milton Aff.)
¶¶ 9–12.8
On June 6, 2016, the Defendant investigated the loss reported by Leaf and found wind
damage. See Def.’s Ex. K-2; Pl.’s Desig. ¶ 32; Pl.’s Compl. ¶ 20. On June 14, 2016, the
Defendant sent an estimate to the Plaintiff and issued the Plaintiff an actual cash value advance
(“ACV”) of $5,572.80, for damage to the warehouse. See Def.’s Ex. G-4 at 3 and Ex. G-5; Pl.’s
Desig. ¶¶ 12–13. On August 18, 2016, the Plaintiff hired a public adjuster, Wade Tutt. See Pl.’s
Ex. 1 ¶ 9; see also Pl.’s Ex. 3 ¶ 2. On October 5, 2016, Tutt sent a letter rebutting the
Defendant’s estimate and providing one for the Plaintiff. See Def.’s Ex. G-6; Pl.’s Desig. ¶ 14.

6

The Defendant challenges this statement in Leaf’s affidavit, identifying a typographical error and citing
the January 11, 2017, report’s reference to the underwriting inspection as demonstrating that Leaf knew
of the report by some time in 2017. See Def.’s Mot. to Strike 9, ECF No. 55. Neither of these challenges
negate the fact that the Defendant did not provide a copy of the report to the Plaintiff during 2016.
7
When, precisely, the Plaintiff knew of the damage to the roof is the primary disputed issue of material
fact; it is addressed below.
8
The Defendant has moved to strike paragraphs nine through eleven of Milton’s affidavit, as “legal
argument” and “lack[ing] any supporting evidence,” including expert testimony. However, Milton and
Leaf, as the owners of the Plaintiff, would have knowledge of the repairs, and the Defendant does not cite
any evidence contradicting that the repairs were made or any expert testimony of its own that the repairs
were insufficient. Thus, for purposes of summary judgment, the Plaintiff made adequate repairs. See also
Def.’s Ex. G-14 at 1 (noting “[t]emporary roof covering was placed over each of the damaged areas”).

6

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On December 30, 2016, Tutt and a representative of Structurepoint conducted an
investigation into damage on the roof; Structurepoint issued a report on January 11, 2017. See
Def.’s Ex. G-7; Pl.’s Desig. ¶ 15. On March 3, 2017, the Defendant provided a new estimate, and
on March 29, 2017, the Defendant paid an additional $2,535.06. See Def.’s Exs. G-8 and G-9;
Pl.’s Desig. ¶¶ 16–17. On April 6, 2017, Tutt sent an email on behalf of the Plaintiff asserting a
demand for appraisal, as the Plaintiff still disputed the amount covered under the Policy. See
Def.’s Ex. G-10; Pl.’s Desig. ¶ 18.
On June 7, 2017, the Defendant responded by letter. See Def.’s Ex. G-11; Pl.’s Desig.
¶ 19. The letter says, “We are continuing the investigation and handling of your claim under a
full reservation of rights, and are requesting additional information to process your claim. At this
time we are requesting you submit a signed and notarized proof of loss.” Id. at 1. On July 12,
2017, the Plaintiff provided a notarized Proof of Loss. Def.’s Ex. G-12; Pl.’s Desig. ¶ 20. The
Proof of Loss Statement identifies February 24, 2016, as the date the loss occurred. Id. at 14.9 On
August 22, 2017, more than thirty days later, the Defendant sent a Reservation of Rights letter.
See Def.’s Ex. G-13; Pl.’s Desig. ¶ 21.
On September 28, 2017, Structurepoint conducted another inspection of the warehouse.
See Def.’s Ex. G-14.10 On October 4, 2017, the second Structurepoint engineer issued a report,
recommending the shingles and plywood be removed and replaced with an alternate roof system.

9

The Plaintiff, through Leaf, in both deposition and affidavit testimony, has articulated that Leaf was told
by claims handler Aaron Weber that the Defendant would not accept a Proof of Loss with a date of loss of
May 1, 2016. See Pl.’s Ex. 1 (Leaf Aff.) ¶ 10; Def.’s Ex. B 37:7–18. The Plaintiff, however, does not
appear to contest that the warehouse’s roof likely suffered some damage on approximately February 24,
2016; instead, Leaf’s testimony regarding the date on the Proof of Loss is consistent with his other
testimony, and, at the summary judgment stage, establishes that the Plaintiff did not know precisely when
the full loss occurred in 2016.
10
While this is not one of the Defendant’s exhibits accepted in the Plaintiff’s Designation, the same report
is also attached to the Coverage Explanation letter, which is accepted by the Plaintiff.

7

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Id. On October 6, 2017, the Defendant sent an additional Coverage Explanation letter to the
Plaintiff. See Def.’s Ex. G-15; Pl.’s Desig. ¶ 22. The letter explains that the roof is below a 2:12
pitch and, therefore, the asphalt roofing structure cannot be repaired and must be replaced to
meet the current building code for the City of Portage. Id. at 1. The letter also details that, while
the Ordinance and Law Coverage endorsement to the Policy applies, “[i]n order to repair,
reconstruct, or remodel your roofing system to keep it in code, it will require you reconstruct or
remodel the undamaged portions of the building.” Id. at 4. It adds that, “in order for [the
Ordinance and Law Coverage] to be paid, the property must actually be repaired, replaced.” Id.
On November 19, 2017, Tutt sent a response to the October 6, 2017 letter with a new
estimate of the replacement. See Def.’s Ex. G-16; Pl.’s Desig. ¶ 23. The Defendant responded by
letter and with an additional estimate on January 19, 2018. See Def.’s Exs. G-17 and G-18; Pl.’s
Desig. ¶¶ 25, 26. The Defendant also paid an additional $13,554.85 on the claim. See Def.’s Ex.
G-17; Pl.’s Desig. ¶ 25.
On April 20, 2018, the Defendant responded to a second request for appraisal by the
Plaintiff that had been sent on March 27, 2018; specifically, the letter explains that “the concern
presented is regarding the minimum requirement referenced in Ordinance or Law Coverage . . .
and is not related to the value of the loss. This dispute would be related to coverage.” See Def.’s
Ex. G-20; Pl.’s Desig. ¶ 27. On April 27, 2018, the Plaintiff filed the Complaint in this case. See
Compl., ECF No. 1.
B.

Disputed Facts

1.

When the Plaintiff Knew About the Damage to the Roof
The Defendant argues the Plaintiff knew of damage to the roof in February 2016. In

support, the Defendant relies on several pieces of evidence. The Defendant first identifies the

8

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underwriting survey’s note that “[a]bout 1.5 weeks ago wind damaged some flashing and blew
shingles of the north side of the building.” See Def.’s Ex. H-1 at 2. According to the report and
Milton’s own testimony, Milton as one of the two co-owners of the Plaintiff, was present for the
survey. Id.; see also Def.’s Ex. C 70:5–14. Milton also testified that, while he did not recall
making the comment in the underwriting survey note, he did not deny making it either. See
Def.’s Ex. C at 71:12–22. Additionally, Milton testified, while looking at photographs connected
to the underwriting report, that “I must have known that there was some shingles at the bottom.”
Def.’s Suppl. Ex. P 75:16–17, ECF No. 53-1, p. 17. However, neither the survey nor Milton’s
testimony confirms that Milton knew of the damage in February 2016. For example, the survey
also includes a note that the roof could only be viewed with a camera pole; and Milton testified
that “I didn’t know it was that bad on that day, to be honest.” Def.’s Ex. H-1 at 3; Def.’s Suppl.
Ex. P at 75:8–9.
For the first time in its reply,11 the Defendant cited additional evidence, including
Milton’s deposition testimony that he was on the roof before February 29, 2016. See Def.’s
Suppl. Ex. P 75:23–76:9. However, Milton’s testimony about being on the roof does not present
any evidence that he knew of damage in late February 2016: the roof is large12 and Milton does
not testify to when he was on the roof. Also for the first time on reply, the Defendant cited an
“invoice for ‘emergency services’ for damaged shingles,” with a “date entered” of December 22,
2015, as evidence that the Plaintiff knew of the roof damage before February 2016. See Def.’s

11

As the Plaintiff notes, the Defendant should not raise new evidence for the first time in its reply. See
Dr. Robert L. Meinders, D.C., Ltd. v. UnitedHealthcare, Inc., 800 F.3d 853, 858 (7th Cir. 2015) (holding
that a district court dismissing a case on the basis of evidence and theories raised for the first time in reply
without granting leave for a sur-reply had deprived the plaintiff of due process). However, as the evidence
does not affect the outcome on summary judgment and the Court granted the Plaintiff’s Motion for Leave
to File a Sur-Reply and considered the sur-reply, the evidence need not be rejected on that basis.
12
The roof has a surface area of at least 17,550 square feet. See Def.’s Ex. G-15 at 9.

9

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Reply 5 n.1, ECF No. 52 (citing Def.’s Ex. G-12 at 11–12, and Def.’s Suppl. Ex. P 86:17–87:3).
However, Milton testified that the December 22, 2015 date is “completely irrelevant to anything”
and is not necessarily the date the document was created. See Def.’s Suppl. Ex. P 86:21–87:9.
Thus, the Defendant’s evidence does not establish that the Plaintiff knew about the damage in
February 2016.
In contrast, Leaf consistently testified on behalf of the Plaintiff that, after finding a
shingle on the ground on approximately May 1 or 2, 2016, he called his insurance agent to report
the claim. See Def.’s Ex. B 40:10–25; Pl.’s Resp. to Mot. to Strike Ex. A-1 41:1–42:25, ECF No.
58-1. The Plaintiff thus identifies May 1 or 2, 2016, as the date on which the Plaintiff learned of
the damage to the roof and has presented enough evidence to genuinely dispute the Defendant’s
contrary presentation. For purposes of summary judgment, drawing all reasonable inferences in
favor of the nonmoving party, the Court accepts May 1 or 2, 2016, as the date on which the
Plaintiff first realized there was damage to the roof worth reporting.
2.

When the Plaintiff Reported the Damage
As detailed above, Leaf testified that he reported the damage to his insurance agent

immediately after discovering it, on May 1 or 2, 2016. See Def.’s Ex. B 40:10–25; Pl.’s Resp. to
Mot. to Strike Ex. A-1 41:1–42:25, ECF No. 58-1. In contrast, the Defendant presents June 2,
2016, as the date on which Leaf reported the damage, citing Leaf’s deposition testimony. See
Def.’s Br. at 4; Def.’s Stmt. ¶ B.2; see also Def.’s Ex. B at 50:22–51:5. However, that citation
covers only the Defendant’s counsel asking Leaf, “If [claims adjuster] Don Detering’s notes
reflect that he spoke to you on or about June 2 or 3, 2016, and that you told him that you believe
the loss occurred on or about May 1 of 2016, but you weren’t exactly sure, would that be
consistent with what you knew at the time,” and Leaf replying, “yes.” Id. The Defendant also

10

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relies on Milton’s testimony to contradict Leaf’s. See Def.’s Br. in Support of Mot. to Strike 6–7,
ECF No. 55 (citing Milton’s testimony, at Def.’s Ex. C 57:8–58:9). At Milton’s deposition, the
Defendant’s counsel and Milton discussed a voicemail that was apparently left “in the claims
department,” on June 2, 2016, at 8:29 p.m. See Def.’s Br. Ex. C 57:17–58:5. In that testimony,
Milton says, “it would have been for June 2,” as the date of Leaf’s report of the claim, but Milton
gave that testimony relying on the Defendant’s counsel’s representations regarding the date of
the voicemail as June 2 even though Milton had previously identified the date of Leaf’s report as
May 2.13 Finally, even if Leaf did speak to Don Detering on June 2nd or 3rd, such a conversation
does not preclude Leaf from having also reported the damage to his insurance agent on May 1st
or 2nd; the Defendant has not articulated why such a report would not qualify as notifying the
Defendant.
Leaf’s testimony is contradicted by an email presented by the Defendant, which is from
the head of the insurance agency the Plaintiff used. See Def.’s Ex. D to its Mot. to Strike, ECF
No. 55-4. The email is dated June 15, 2017, more than a year after the May or June 2016 time
frame at issue, is addressed again to Don Detering, and states: “the claim was not filed through
our office; rather direct to AO.” Id. However, even assuming the email is properly considered on

13

The Defendant argues that Milton, and not Leaf, was the Fed. R. Civ. P. 30(b)(6) deponent on this
subject; and that therefore, Leaf’s testimony should be stricken, as Milton should have been prepared to
testify as to the Plaintiff’s reporting himself. The Court declines to issue that sanction in this case.
Additionally, neither the voicemail nor testimonial evidence from Don Detering is included in the
summary judgment record. The only evidence supporting the June 2nd date is the Defendant’s counsel’s
presentation of the voicemail at Leaf and Milton’s depositions and an affidavit from the claims handler,
Aaron Weber. See Def.’s Ex. G, Weber Aff. ¶ 12 (“On June 1, 2016 after hours, [Leaf] reported to
adjuster Don Detering that the [warehouse] sustained damage as a result of a wind event on May 1, 2016 .
. . .”). But Weber or Defendant’s counsel presenting what was said to Don Detering by Leaf is hearsay,
and thus would not be admissible at trial and is not properly considered on summary judgment. See Fed.
R. Civ. P. 56(c)(2) and (4). The Defendant argues that the hearsay exception, statement by a party
opponent, applies to Aaron Weber’s affidavit. See Def.’s Mem. in Resp. to [Pl.’s] Mot. to Strike Exhibits
and Purported Undisputed Facts 2–4, ECF No. 51. However, Aaron Weber is presenting Don Detering’s
statements; Don Detering is not a party opponent, and thus Weber’s representations about what was said
to Detering are not covered by that exception.

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summary judgment, at most it creates an issue of fact that cannot be resolved at this stage. For
purposes of summary judgment, Leaf reported the damage on May 1 or 2, 2016, as soon as he
learned of it, to his insurance agent.
3.

Whether the Warehouse’s Roof Was Code-Compliant before the Damage
The Defendant presents, as a fact, that “[t]he asphalt shingle roofing system of the

[warehouse] did not comply with City of Portage Building Code prior to the loss.” Def.’s Stmt.
at ¶ G.11. However, that conclusion requires both factual and legal analysis. The Court addresses
the necessary factual evidence here and the conclusion in the analysis section below.
The facts do not present a clear representation regarding the roof’s compliance with the
relevant code before the loss. The Defendant cites14 a discussion in Structurepoint’s
Supplemental Report from April 1, 2019. See Def.’s Ex. I-4.15 In the report, the engineer states:
It is our understanding the building was constructed in 1986, and the roofing
system comprised of plywood decking and asphalt shingles was installed over the
original metal panel system in 1996. Based on our conversation with the City of
Portage building department, the code adopted by the city was the 1991 Uniform
Building Code (UBC). Our review of the 1991 UBC per “Table No. 32-B-1 –
Asphalt Shingle Application”, the code did not permit asphalt shingles to be
installed on roof slopes less than 2:12. Per our follow-up site visit on September
28, 2017 we confirmed the roof pitch to be less than 2:12. Based on these findings
the roof system, as installed, does not meet current code standards.
Id. at 3. However, the report does not include the code itself, and the engineer does not present
himself as an expert in building code compliance. Nor does the report address whether the detail
that the asphalt shingles were installed over an original metal roof makes a difference to the
analysis.

14

The Defendant also cites several paragraphs of Aaron Weber’s Affidavit, which state this conclusion.
See, e.g., Def.’s Ex. G ¶¶ 34, 39. However, Aaron Weber is not presented as an expert in building codes,
and the paragraphs do not cite documents that support that conclusion.
15
The same report is presented at Def.’s Ex. G-21, which the Defendant sometimes cites in support of its
position.

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Elsewhere in the summary judgment record, the Building Commissioner for the City of
Portage, in an email to Milton in June 2017, stated that “[b]y code, asphalt shingles cannot be
installed on roof pitches less than 2/12. Therefore a permit cannot be issued for repair of the
damages. The entire roof must be replaced with an acceptable covering.” See Def.’s Ex. G-12 at
4 (email from Doug Sweeney).16 While this email clarifies that asphalt shingles cannot be
installed over the damaged portions, it does not by itself establish that the roof was not codecompliant at the time of the damage in 2016.
In addition to these citations, the Defendant highlights that the Plaintiff has not produced
any “building and construction permits, plans, specifications, invoices or other documentation
regarding the application of the asphalt shingle roof in 1996.” Def.’s Suppl. Ex. N ¶ 14, ECF No.
53-1, p. 5. The Plaintiff argues that an inability to locate a permit does not mean one did not exist
at some point in time. See, e.g., Pl.’s Mem. at 13, ECF No. 69. However, summary judgment is
the “put up or shut up” moment in litigation, and the non-moving party must provide not only
evidence but evidence upon which a reasonable jury could rely. Goodman, 621 F.3d at 654. For
purposes of summary judgment, the Plaintiff does not have permits that establish the roof’s
compliance with code when the roof was installed in 1996.
C.

Relevant Policy Provisions
The parties agree that the policy attached to the Defendant’s Motion for Summary

Judgment as Exhibit F is the relevant Policy. See Def.’s Ex. F; Pl.’s Desig. ¶ 9.
In the “Building and Personal Property Coverage Form,” under “E. Loss Conditions,” the
Policy provides:

16

The same email is presented in Def.’s Ex. L at 30, which the Defendant sometimes cites in support of
its position.

13

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3. Duties In The Event Of Loss Or Damage
a. You must see that the following are done in the event of loss or damage to
Covered Property:
***
(2) Give us prompt notice of the loss or damage. Include a description of
the property involved.
(3) As soon as possible, give us a description of how, when and where the
loss or damage occurred.
(4) Take all reasonable steps to protect the Covered Property from further
damage, and keep a record of your expenses necessary to protect the
Covered Property, for consideration in the settlement of the claim.
This will not increase the Limit of Insurance. However, we will not
pay for any subsequent loss or damage resulting from a cause of loss
that is not a Covered Cause of Loss. Also, if feasible, set the damaged
property aside and in the best possible order for examination.
***
(7) Send us a signed, sworn proof of loss containing the information we
request to investigate the claim. You must do this within 60 days after
our request. We will supply you with the necessary forms.
Def.’s Ex. F. at 69. Under “4. Loss Payment,” the Policy indicates “[w]e will give notice of our
intentions within 30 days after we receive the sworn proof of loss.” Id. at 70.
Also in the “Building and Personal Property Coverage Form,” under “G. Optional
Coverages,” the Policy provides:
3. Replacement Cost
a. Replacement Cost (without deduction for depreciation) replaces Actual
Cash Value in the Valuation Loss Condition of this Coverage Form.
***
d. We will not pay on a replacement cost basis for any loss or damage:
(1) Until the lost or damaged property is actually repaired or replaced; and
(2) Unless the repairs or replacement are made as soon as reasonably
possible after the loss or damage.
Id. at 73.
In the “Ordinance or Law Coverage” endorsement, the Policy provides:
E. Coverages
***
3. Coverage C - Increased Cost Of Construction Coverage
a. With respect to a covered building that has sustained covered direct
physical damage, we will pay the increased cost to:
14

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(1) Repair or reconstruct damaged portions of that building; and/or
(2) Reconstruct or remodel undamaged portions of that building, whether
or not demolition is required
when the increased cost is a consequence of enforcement of the
minimum requirements of the ordinance or law.
However:
***
(2) We will not pay for the increased cost of construction if the building is
not repaired, reconstructed or remodeled.
***
F. Loss Payment
***
4. Loss payment under Coverage C - Increased Cost of Construction
Coverage will be determined as follows:
a. We will not pay under Coverage C:
(1) Until the property is actually repaired or replaced, at the same or
another premises; and
(2) Unless the repairs or replacement are made as soon as reasonably
possible after the loss or damage, not to exceed two years. We
may extend this period in writing during the two years.
***
H. Under [the Ordinance and Law Coverage] endorsement we will not pay for
loss due to any ordinance or law that:
(1) You were required to comply with before the loss, even if the building was
undamaged; and
(2) You failed to comply with.
Id. at 94–95.
For the “Commercial Property Conditions” endorsement, the Policy provides:
A. CONCEALMENT, MISREPRESENTATION OR FRAUD
This Coverage Part is void in any case of fraud by you as it relates to this Coverage
Part at any time. It is also void if you or any other insured, at any time, intentionally
conceal or misrepresent a material fact concerning:
1. This Coverage Part;
2. The Covered Property;
3. Your interest in the Covered Property; or
4. A claim under this Coverage Part.
***
D. LEGAL ACTION AGAINST US
No one may bring a legal action against us under this Coverage Part unless:
1. There has been full compliance with all of the terms of this Coverage Part; and
2. The action is brought within 2 years after the date on which the direct physical
loss or damage occurred.
Id. at 96.
15

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ANALYSIS
Indiana law applies.17 See R3 Composites Corp. v. G&S Sales Corp., 960 F.3d 935, 941
(7th Cir. 2020) (“[I]n this case we apply the substantive law of Indiana to the questions of
contract formation and interpretation.” (citing India Breweries, Inc. v. Miller Brewing Co., 612
F.3d 651, 658 (7th Cir. 2010))). Under Indiana law, “[a] contract for insurance is subject to the
same rules of interpretation as are other contracts. If the language in the insurance policy is clear
and unambiguous, then it should be given its plain and ordinary meaning, but if the language is
ambiguous, the insurance contract should be strictly construed against the insurance company.”
Morris v. Econ. Fire & Cas. Co., 848 N.E.2d 663, 666 (Ind. 2006) (internal citations and
quotations omitted).
The Plaintiff raises three claims in its Complaint: (1) a declaratory action seeking to
compel the Defendant to engage in the appraisal process as outlined in the Policy, (2) a breach of
contract claim seeking damages, as the Plaintiff alleges the Defendant has not paid the full
amount owed under the Policy, and (3) a claim of bad faith against the Defendant. See Compl. 4,
6–7. The Defendant argues that summary judgment is warranted for eight reasons: (1) the
Plaintiff failed to timely bring suit; (2) the Plaintiff failed to timely notify the Defendant of the
loss; (3) the Plaintiff failed to protect the warehouse from further damage or make timely
temporary repairs, which (4) precludes coverage for damages resulting from that failure; (5) the
Plaintiff is not entitled to Replacement Cost Coverage because the Plaintiff did not repair the
roof within two years; (6) the Policy does not cover normal wear and tear and deterioration; (7)
the Ordinance or Law Coverage provision excludes coverage because the warehouse was not in

17

Neither party has argued any other law applies; when the parties do not raise the issue, the Court
applies the substantive law of the forum state. See Camp v. TNT Logistics Corp., 553 F.3d 502, 505 (7th
Cir. 2009) (citing Wood v. Mid-Valley Inc., 942 F.2d 425, 426 (7th Cir. 1991)).

16

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compliance with the City of Portage Building Code before the damage; and finally, (8) the bad
faith claim cannot proceed to trial because the Defendant had a reasonable basis upon which to
deny coverage. See Def.’s Br. at 1–2, ECF No. 46.
1.

The Timeliness of the Plaintiff’s Suit
The Policy has a two-year limit on bringing suit against the Defendant, calculated from

the date on which the direct physical loss or damage occurred. See Ex. F. at 96. The facts
establish that some damage occurred around late February 2016; and in any event, all the damage
the parties address had occurred by May 1 or 2, 2016. The Plaintiff filed suit on April 27, 2018.
See Compl., ECF No. 1. “Indiana courts have regularly held that unless a contractual provision
contravenes a statute or public policy, actions . . . that are brought after the expiration of the
limitation period provision will be barred;” and “[f]ailure to discover a loss within the time
provided under the contract for bringing a claim is immaterial.” Popham v. Keystone RV Co., No.
3:15-CV-197-TLS, 2016 WL 4993393, at *5 (N.D. Ind. Sept. 19, 2016) (internal citations and
quotations omitted) (collecting cases). Thus, unless the Defendant has waived reliance on the
limitations period, the Plaintiff’s suit is time-barred.
Applicable case law provides that “whether an insurer has waived reliance on a
limitations provision is usually a question of fact.” Dunaway v. Allstate Ins. Co., 813 N.E.2d
376, 381 (Ind. Ct. App. 2004). In Dunaway, the Indiana Court of Appeals reviewed how several
cases addressed whether a defendant had waived reliance on a limitations provision, including
Wingenroth v. American States Ins. Co., 455 N.E.2d 968, 968–69 (Ind. Ct. App. 1983), and AutoOwners Ins. Co. v. Cox, 731 N.E.2d 465, 468 (Ind. Ct. App. 2000). In both Wingenroth and Cox,
the insurer had paid some amount on the claim and continued to negotiate with the insured; in
both of those cases, the Indiana Court of Appeals determined summary judgment was not

17

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appropriate on the issue of waiver. The facts in Dunaway led to the same conclusion: Allstate
had allowed the Dunaways to file their proof of loss form late; had failed to comply with its
requirement to notify the Dunaways of its decision within thirty days of receiving the form; and
had sent a confusing letter. Dunaway, 813 N.E.2d at 383. The court concluded that,
notwithstanding Allstate’s repeated statement that it was not waiving any rights under the policy,
“Allstate’s actions, which are significant in determining implied waiver, were not entirely
consistent with other time limitations set forth in the policy.” Id. at 384; cf. Summers v. Auto–
Owners Ins. Co., 719 N.E.2d 412, 414–15 (Ind. Ct. App. 1999) (granting summary judgment for
the insurer despite the insured raising waiver, where the insured’s actions—but only the
insured’s actions—delayed the claim beyond the limitations period).
Here, the Defendant’s actions also create a factual issue in determining whether it waived
reliance. The Defendant did not “give notice of its intentions” within thirty days of receiving the
Proof of Loss, as the Policy requires,18 and paid out on an increased estimate as late as January
2018—after engaging in a protracted investigation that included more than one engineering
report. Based on the relevant case law, the fact of waiver is disputed and cannot be determined
on summary judgment.
The Defendant argues in its reply19 that the Plaintiff cannot rely on the equitable remedy
of waiver because the Plaintiff violated the “Concealment, Fraud and Misrepresentation”

18

The Defendant cites an August 3, 2017, email from Don Detering to Tutt as contrary to this conclusion.
See Def.’s Reply at 14 (citing Pl.’s Resp. at 10, which cites Pl.’s Ex. 3, pp. 9–10). However, the email
only states: “The [Proof of Loss] was received and we are in process of review. We are following up with
the engineering firm for additional information.” Pl.’s Ex. 3 at “Tutt 009”, ECF No. 50-3 p. 18. On its
face, the Policy requires “notice of [the Defendant’s] intentions,” which the email does not provide; the
reservation of rights letter, which informs the Plaintiff the Defendant intends to continue investigating,
did not come until August 22, 2017, more than thirty days after receipt of the Proof of Loss.
19
The Plaintiff has moved to strike this argument on the grounds that it is raised for the first time in reply.
See Pl.’s Mem. in Support of its [second] Motion to Strike 1–3, ECF No. 60. The Plaintiff has also moved
for leave to file a sur-reply to address the new argument. See Mot. for Leave to File a Sur-Reply, ECF No.

18

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condition of the Policy. See Def.’s Reply at 3–4. Specifically, the Defendant contends that the
Plaintiff made two material misrepresentations to the Defendant: (i) the date of the damage, and
(ii) that the building was code-compliant before the loss.
The Defendant has not established that the Plaintiff misrepresented either fact. First, as
discussed, Leaf has consistently testified that while he reported the damage on May 1 or 2, 2016,
after discovering a shingle on the ground, he has never been certain when the damage actually
occurred. Nothing in the record shows Leaf actually saying the damage occurred on May 1st or
2nd when he reported it; only that May 1st or 2nd is when he discovered it.20 Second, while Tutt
says in an early letter that the warehouse was code-compliant, as discussed above in the factual
background and below in Section 7, the Defendant has not established that this was untrue, at
least for purposes of summary judgment. As a result, the Court cannot conclude the Plaintiff has
made a misrepresentation such that the Concealment, Fraud and Misrepresentation provision bars
the Plaintiff’s suit.

62. Generally, “replies should be confined to the issues raised in the opening motion or brief;” otherwise,
“it is unfair . . . [to] the non-moving party” because of a lack of opportunity to respond. See Boyer v.
Canterbury Sch., Inc., No. 1:04-CV-367, 2005 WL 2370232, at *3 (N.D. Ind. Sept. 27, 2005) (internal
citations omitted); see also Praigrod v. St. Mary’s Med. Ctr., No. 3:05-CV-166, 2007 WL 178627, at *3
(S.D. Ind. Jan. 19, 2007) (“[T]he court gathers that the Seventh Circuit endorses a requirement that
arguments be raised in an opening brief as opposed to a reply brief on summary judgment.” (citing
Cleveland v. Porca Co., 38 F.3d 289, 297 (7th Cir. 1994)))). However, the unfairness can be “remedied
by allowing a surreply.” Boyer, 2005 WL 2370232 *3. The Court has cured any unfairness by granting
the Plaintiff’s two requests to file a sur-reply. See Mar. 31, 2021 Op. & Order, ECF No. 80.
20
On the other hand, the Plaintiff repeatedly argues that the Defendant misrepresented the date of loss by
using 5/1/2016 in multiple pieces of correspondence. See, e.g., Pl.’s Stmt. ¶ 2; Pl.’s Br. at 23 (“If February
24, 2016 is the correct date, [the Defendant] made a material misrepresentation of fact to its insureds . . .
every time it sent them a letter.”). To say the Defendant misrepresented the date is also inaccurate. It
appears both parties relied on Leaf’s approximate date throughout the investigation process. The Plaintiff
has presented no evidence to suggest the Defendant did so in an attempt to lull the Plaintiff into delaying
filing suit.

19

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Thus, while the Plaintiff did not bring suit within two years of the damage to the
warehouse, a genuine issue of material fact exists regarding the Defendant’s implied waiver,
which precludes summary judgment.
2.

The Timeliness of the Plaintiff’s Notification to the Defendant21
The Defendant argues that the Plaintiff failed to timely notify the Defendant of the loss.

The Policy provides that the Plaintiff was required “as soon as possible” to “give . . . prompt
notice of the loss or damage,” giving a description of “how, when and where the loss or damage
occurred.” Def.’s Ex. F at 69. Under Indiana law, “a notice requirement is material, and of the
essence of the contract.” Askren Hub States Pest Control Servs., Inc. v. Zurich Ins. Co., 721
N.E.2d 270, 277 (Ind. Ct. App. 1999) (citation omitted). “The duty to notify an insurance
company of potential liability is a condition precedent to the company’s liability to its insured.”
Id. (citation omitted). And, “[w]hen the facts of the case are not in dispute, what constitutes
‘reasonable notice’ is a question of law for the Court to decide.” Id. at 278 (citation omitted). But
as set forth above, the facts of this case are in dispute: the Plaintiff maintains that it only learned
of the damage May 1 or 2, 2016, and reported it immediately; the Defendant maintains that the

21

Sometimes, the Defendant appears to frame this argument as relating to the date the Plaintiff submitted
the Proof of Loss. See, e.g., Def.’s Br. at 7 (“[The Plaintiff] did not submit a Sworn Proof of Loss within
the sixty (60) day time period required by the Policy.”). However, the Policy is very clear that the Proof
of Loss only needs to be submitted sixty days after it is requested. See Def.’s Ex. F at 69 (requiring that
the insured “[s]end us a signed sworn proof of loss containing the information we request to investigate
the claim. You must do this within 60 days after our request. We will supply you with the necessary
forms.”). It is also undisputed that the Defendant did not request the Proof of Loss until June 7, 2017. See
Def.’s Ex. G-11. The Plaintiff sent the Proof of Loss on July 12, 2017. See Def.’s Ex. G-12. Thus, the
Plaintiff responded within the sixty-day window. Additionally, the Defendant appears to have abandoned
this argument. See Def.’s Mem. in Resp. to [the Plaintiff’s] Mot. to Strike Exs. and Purported Undisputed
Facts 7 (“[The Defendant] is not relying on [the Plaintiff’s] failure to timely provide the Proof of Loss as
a coverage defense.”).

20

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Plaintiff knew of the damage in late February 2016 and did not report the damage until June 2,
2016. Thus, summary judgment cannot be granted on this basis.22
3.

The Plaintiff’s Repairs
Next, the Defendant argues that the Plaintiff failed to protect the warehouse from further

damage or make timely temporary repairs, which would bar coverage for damages resulting from
that failure. The Defendant relies on Shifrin v. Liberty Mut. Ins., 991 F. Supp. 2d 1022, 1035
(S.D. Ind. 2014), which held that the Shifrins, by refusing to repair the roof, had breached the
“Duties After Loss” provision of the relevant policy. Id. at 1035–36. The court explained:
The Shifrins never took the necessary action to replace the roof, instead arguing
that the tarps were adequate to prevent further damage and that it would be a
waste to replace shingles because the decking needed to be replaced first. Yet the
Shifrins acknowledge that additional water damage has occurred by stating
“[d]uring the rainy spring season additional damage was largely irrelevant, same
wet ceiling, same wet insulation fell on a pre-damaged floor.”
Id. at 1035 (internal citation omitted). As the “Suit[s] Against Us” provision required complying
with the “Duties After Loss,” including preventing further damage, summary judgment was
granted against the Shifrins. Id. at 1035–36.
The same facts are not presented here. The Defendant’s argument that the repairs were
not timely is predicated on their assertion that the Plaintiff knew of the damage in late February
2016 and took no action to repair or preserve the roof until early June 2016. However, as detailed
above for purposes of summary judgment, the Plaintiff made repairs as soon as it knew of the
damage, and so the timeliness of the repairs is not at issue. Additionally, unlike the Shifrins, the

22

Even if the Defendant’s facts were established, the Defendant has not sufficiently established that, as a
matter of Indiana law, the Plaintiff’s notice was unreasonable. The Defendant’s comparable cases are
from other jurisdictions and appear to apply the law of those states. See, e.g., Def.’s Br. at 15 (citing
Myers v. Cigna Prop. & Cas. Ins. Co., 953 F. Supp. 551, 556–57 (S.D.N.Y. 1997) (applying New York
law)).

21

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Plaintiffs made repairs that preserved the warehouse from further damage. Thus, summary
judgment cannot be granted on this basis.
4.

Damages Resulting from the Plaintiff’s Failure to Protect the Warehouse
The Policy excludes damage resulting from the Plaintiff’s failure to protect the

warehouse; however, as discussed above, for purposes of summary judgment the Plaintiff has
completed repairs that sufficiently protected the warehouse from further damage.
5.

Replacement Cost Coverage and Replacement Costs Under the Ordinance and Law
Provision
The Defendant argues that the Plaintiff is not entitled to Replacement Cost Coverage

because the Plaintiff did not repair the roof within two years. The Policy has two provisions
relevant to replacement costs. First, for Replacement Costs generally, the Policy provides that the
Defendant will not pay on a replacement cost basis for any loss or damage “until the lost or
damaged property is actually repaired or replaced” and “unless the repairs or replacement are
made as soon as reasonably possible after the loss or damage.” Def.’s Ex. F at 79.
Similarly, the Ordinance and Law Coverage section provides that, with respect to the
increased cost of construction coverage, “[w]e will not pay for the increased cost of construction
if the building is not repaired, reconstructed or remodeled” and that the relevant loss payment
will not be made “until the property is actually repaired or replaced;” and “unless the repairs or
replacement are made as soon as reasonably possible after the loss or damage, not to exceed two
years.” Def.’s Ex. F at 94–95.
As discussed above, it is undisputed that the Plaintiff made some repairs to the warehouse
in a timely fashion; however, it is also undisputed that the Plaintiff has not replaced the roof. The
Defendant argues that, given the Plaintiff’s failure to replace the roof, the Plaintiff is not entitled
to replacement costs under either provision. The Plaintiff argues in return that the failure to
22

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replace the roof is not a material breach and, thus, does not relieve the Defendant of its
obligations under the Policy, including replacement costs. See Pl.’s Resp. at 18.
As a matter of Indiana law, “[t]he Defendant can only be relieved of its coverage duties
under the Policy if the Plaintiffs breached the contract, and their breach was material.” Foster v.
State Farm Fire & Cas. Co., No. 1:10-CV-20-TLS, 2011 WL 3610425, at *12 (N.D. Ind. Aug.
17, 2011), aff’d 674 F.3d 663 (7th Cir. 2012); see also New Berean Missionary Baptist Church,
Inc. v. State Farm Fire & Cas. Ins. Co., No. 1:08-CV-1584-WTL-JMS, 2010 WL 2010464, at *5
(S.D. Ind. May 18, 2010) (“A material breach is one that goes to the heart of the contract, and
whether a breach is material is generally a question of fact to be decided by the trier of fact.”
(quoting Steve Silveus Ins., Inc. v. Goshert, 873 N.E.2d 165, 175 (Ind. Ct. App. 2007))); Smith v.
State Lottery Comm’n of Ind., 812 N.E.2d 1066, 1073 (Ind. Ct. App. 2004) (“Whether a party is
in material breach of contract is a question of fact . . . .”).
On reply, the Defendant does not address the Plaintiff’s argument that the Plaintiff’s
failure to replace the roof was not a material breach. Instead, the Defendant points to deposition
testimony from Milton, who testified that the roof had not been replaced because the claim has
not been resolved. See Def.’s Reply at 11–12 (citing Def.’s Suppl. Ex. P at 56:18–21). The
Defendant again cites Shifrin, this time for the premise that “[l]ack of resolution of the claim is
not legal justification for [the Plaintiff’s] failure to repair or replace the roof.” Id. (citing Shifrin,
991 F. Supp. 2d at 1035–36). However, in Shifrin, while “the crux of [the] case” was the
Shifrins’ failure to replace their roof, the undisputed facts showed “additional water damage
[had] occurred.” Shifrin, 991 F. Supp. 2d at 1035. In contrast, additional damage is not a fact
present in the record in this case, and, unlike the Plaintiff here, the Shifrins do not appear to have
argued that they had substantially complied with the relevant provisions such that their breach

23

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was not material. Therefore, Shifrin is distinguishable, and the Defendant has not made any
argument regarding the issue of material breach. As it is the Defendant’s burden on summary
judgment to show it is “entitled to judgment as a matter of law,” summary judgment cannot be
granted on this basis. Fed. R. Civ. P. 56(a); see also Keller v. United States, 58 F.3d 1194, 1198–
99 (7th Cir. 1995) (“[I]t is not the responsibility of this court to make arguments for the
litigants.”).
6.

Exclusion from Coverage of Normal Wear and Tear, Deterioration, and/or Faulty,
Inadequate, or Defective Design, Specifications, Workmanship, Materials or
Maintenance
Next, the Defendant argues that the Policy does not cover normal wear and tear and

deterioration. In response, the Plaintiff contends it is not making any claim for wear, tear, and
deterioration. See Pl.’s Resp. at 19. The Defendant’s reply argues that “[t]he faulty, inadequate or
defective design and renovation of the roof in 1996 was the cause of the enforcement of a code
violation necessitating replacement of the entire roof” and concludes that, “[b]ecause the roof of
the building never complied with applicable code from the time it was installed in 1996, there is
no O&L coverage under the Policy.” Def.’s Reply at 13. Thus, it appears the parties agree that
wear and tear, deterioration, and maintenance are not at issue in this suit. Instead, the
Defendant’s sixth argument appears to merge into its seventh.
7.

Whether the Roof was in Compliance with the City of Portage Building Code Before the
Loss
Here, the Defendant argues that the Ordinance or Law Coverage provision excludes

coverage because the warehouse was not in compliance with the City of Portage Building Code
before the damage. The Policy provides that “[u]nder [the Ordinance and Law Provision] we will
not pay for loss due to any ordinance or law that: (1) You were required to comply with before
the loss, even if the building was undamaged; and (2) You failed to comply with.” Def.’s Ex. F at
24

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95. Thus, based on the plain language of the Policy, the relevant question is whether the roof
complied with the code at the time of the loss in 2016, not when it was originally installed.23
The briefing on summary judgment does not establish whether the warehouse’s roof
complied with the relevant code in February 2016. The Defendant cites24 675 Ind. Admin. Code
13-2.2-1 (1996) and Uniform Building Code § 3208(b)(3), Table No. 32-B-1 (1991). The cited
section of the Indiana Administrative Code, from 1996, adopts the 1991 UBC; and the 1991
UBC at the cited section and in the relevant table provides that asphalt shingles may not be
installed on roof pitches below 2:12. However, a current version of the Indiana Administrative
Code shows that provision 13-2.2 as “repealed.” See 675 Ind. Admin. Code 13-2.2 (2021)
(noting the 1993 edition was repeated by Fire Prevention and Building Safety Commission; filed
Mar 31, 1998, 1:45 p.m.: 21 IR 2908). The Structurepoint Report on which the Defendant also
relies similarly addresses whether the roof was code-compliant in 1996, not 2016. While Doug
Sweeney’s email says asphalt shingles cannot be installed, it does not say the roof as it stood
violated the code. As noted above, the Defendant is obligated to establish that it is entitled to
judgment as a matter of law. The Defendant has not done so here.25

23

The Defendant cites case law for the premise that “[t]he purpose of the requirement is to require the
insurer to pay for code-required upgrades required of the insured after a loss only if the building complied
with the applicable code when constructed or renovated.” Def.’s Br. at 22 (emphasis added). However, as
in other sections of its brief, the Defendant cites only case law from states other than Indiana.
24
The Defendant cites the 1996 Indiana Administrative Code for the first time in its reply, and the
Defendant did not comply with Local Rule 7-1(f), which requires an attached copy of any statute or
regulation not available on Westlaw or Lexis. Additionally, the Defendant does not explain the interplay
between the Indiana Administrative Code and the City of Portage’s code. However, the Court will address
the Indiana Administrative Code as that is the law the Defendant presented.
25
The Court notes that neither party has briefed whose burden the issue would be at trial. “Under Indiana
law, an insurer relying on a policy exclusion from coverage has the burden of proof on the issue whether
the exclusion applies.” Thorne v. Member Select Ins. Co., 899 F. Supp. 2d 820, 824 (N.D. Ind. 2012)
(citing PSI Energy, Inc. v. Home Ins. Co., 801 N.E.2d 705, 725 (Ind. Ct. App. 2004)). Given that it would
likely be the Defendant’s burden to establish noncompliance at trial, the Plaintiff’s failure to produce
evidence establishing the warehouse’s code compliance is not fatal at the summary judgment stage. On
the other hand, the Plaintiff argues that, because the Defendant originally represented that the Ordinance
and Law Coverage did apply, it is now estopped from changing its position. See Pl.’s Resp. at 19 (citing

25

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8.

The Plaintiff’s Bad Faith Claim
Last, the Defendant argues that the Plaintiff’s bad faith claim cannot proceed to trial

because the Defendant had a reasonable basis upon which to deny coverage. In Indiana, an
insurer’s obligation of good faith and fair dealing includes not only an unfounded refusal to pay
policy proceeds, but also an unfounded delay in making payment, deceiving the insured, and
exercising any unfair advantage to pressure an insured into a settlement of his claim. See Monroe
Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 976 (Ind. 2005) (citing Erie Ins. Co. v.
Hickman, 622 N.E.2d 515, 519 (Ind. 1993)).
The Defendant focuses only on its denial of the claim, citing Thorne v. Member Select
Ins. Co. for the proposition that “‘[p]roof of bad faith exists when there is ‘clear and convincing
evidence’ which establishes the insurer had knowledge that there was no legitimate basis to deny
liability.’ . . . To ‘succeed on a bad faith claim at trial, a plaintiff must produce evidence
establishing that there was no reasonable basis to deny the claim.’” See Def.’s Br. at 24–25
(quoting Thorne v. Member Select Ins. Co., 899 F. Supp. 2d 820, 826–27 (N.D. Ind. 2012)).
However, the facts in Thorne did not suggest the insurer had engaged in any bad faith other than
disputing the claim. Here, the Plaintiff has put forward evidence not only that the Defendant
disputed the claim but also suggesting the Defendant delayed payment on a claim it knew was
legitimate, for example by failing to provide the February 2016 underwriting report or to conduct
a timely investigation. As in Monroe Guaranty, “the question is whether [the insurance
company’s] conduct leading up to and including the issuance of the denial letter rose to the level

Def.’s Ex. G-15 and G-20). As the Defendant consistently represented that it intended to investigate the
claim, a fact the Plaintiff highlights when addressing whether the Defendant relied on Tutt’s
representation that the roof was code compliant, and as the Plaintiff has not moved for summary judgment
on this issue, the Court declines to find that the Ordinance and Law Coverage applies; the Court
concludes only that the Defendant has not established that the roof was not code compliant such that the
Coverage would not apply.

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USDC IN/ND case 2:18-cv-00177-TLS document 82 filed 07/20/21 page 27 of 27

of bad faith.” 829 N.E.2d at 977. While a bad faith finding does require “evidence of a state of
mind of ‘conscious wrongdoing’ including ‘dishonest purpose, moral obliquity, furtive design, or
ill will,’” Thorne, 899 F. Supp. 2d at 826, the Plaintiff’s evidence could reasonably be interpreted
to support such a finding. Therefore, summary judgment is denied as to the bad faith claim.
CONCLUSION
For these reasons set forth above, the Court DENIES the Defendant’s Motion for
Summary Judgment [ECF No. 45]. By separate order, the Court will set a telephonic status
conference, at which time it will set further deadlines.
SO ORDERED on July 20, 2021.
s/ Theresa L. Springmann
JUDGE THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT

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