Hamm et al v. American Bankers Insurance Company of Florida
Filing
40
MEMORANDUM OPINION & ORDER, granting 35 MOTION for Summary Judgment by American Bankers Insurance Company of Florida. Signed by Judge Henry R. Wilhoit, Jr on 9/7/16.(SMT)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION
at ASHLAND
CIVIL ACTION NO. 14-39-HRW
BILLIE W. HAMM, et al.,
v.
PLAINTIFFS,
MEMORANDUM OPINION AND ORDER
AMERICAN BANKERS INSURANCE
COMPANY OF FLORIDA,
DEFENDANT.
This matter is before the Court upon Defendant's Motion for Summary Judgment [Docket
No. 35]. The motions have been fully briefed [Docket Nos. 34, 35-1, 36 and 38]. For the
reasons set forth herein, the Court finds that Defendant is entitled to judgment as a matter of law.
I.
This case arises from a fire which resulted in the destruction of the mobile home
belonging to Plaintiffs Billie and Lisa Hamm. The mobile home, located at 60-5 Rose Fork,
Olive Hill, Kentucky served as their personal residence. According Mr. Hamm, when the fire
started, Plaintiff Lisa Hamm and their three children were out shopping while Plaintiff he was at
home cooking the family dinner. [Deposition of Billie Hamm, p. 40]. He describes the fire as a
"grease fire" which ignited while he was cooking. Id., p.69. He tried unsuccessfully to quell the
fire, first with water from the kitchen sink, and then with an exterior water hose. Id., pp. 76-77.
Unable to put out the fire, he rushed to his next door neighbor's house, kicked in their door and
used their phone to call 911 for assistance. kl, pp. 76, 78 and 80. It took an hour for the first fire
department vehicle to arrive and when it did, it ran out of water and could not extinguish the fire.
Id., pp.86-89.
At the time of the fire, Plaintiffs were insured by Defendant American Bankers Insurance
Company of Florida ("ABIC"). Specifically, ABIC issued a Homeowners Plus Program Policy
No. HPL0139078 ("the Policy"O to Billie Hamm, with a policy period from May 13, 2012 to
May 13, 2013. [Docket No. 35-2). The Policy provides coverage for up to $111, 509.00 for the
dwelling and $56,000.00 for personal property. The Policy defines "limits ofliability" as:
the maximum amount we are required to pay in the event of a
covered loss. Although amounts paid for a loss may be less than
the limit of liability, in no event will the payment exceed such limit
of liability, unless specifically stated within the policy.
Id., at 2.
The Policy also described the insureds' duties in the event of a loss:
Your Duties After Loss.
In case of a loss to which this insurance may apply, you shall see
that the following duties are performed:
c. prepare an inventory of damaged personal property
showing in detail, the quantity, description, actual
cash value and amount ofloss. Attach to the invento1y all bills,
receipts and related documents that
substantiate the figures in the inventory.
d. as often as we reasonably require:
(I) exhibit the damaged property;
(2) provide us with records and documents we
request and permit us to make copies; and
(3) submit to examination under oath.
e. submit to us, within 60 days after we request, your
signed, sworn proof of loss which sets forth, to the
best of your knowledge and belief:
(6) an inventory of damaged personal property
described in 2c;
Id
Sho1tly after the fire, Mr. Hamm met with an adjuster for ABIC. [Deposition of Billie
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Hamm, pp. 220 and 231 ]. ABIC then began its investigation of Plaintiffs' claim and concluded
that the mobile home unit could not be repaired and, accordingly, paid plaintiffs the Policy limits
for the dwelling. [ABIC insurance payment checks, Docket No. 35-4]. ABIC also paid plaintiffs
$1,600.00 to reimburse them for additional living expenses they incurred as a result of the fire.
Id.
Although the Policy for personal property limit was $56,000.00, Plaintiffs' claimed
approximately $77,316.00. Pursuant to the policy's requirements, ABIC requested that they "[l]ist
each damaged item along with the original date and place of purchase, and proof of ownership."
Plaintiffs submitted what purported to be an inventory of their losses in mid-May of2013 (Docket
No. 35-6]. However, Defendant states that the Plaintiffs did not provide any information about
where the allegedly damaged items were purchased, when they were purchased and the payment
method for the items, even through AB IC's plainly requested that they do so and the Personal
Property Inventory form ABIC provided included clearly labeled fields for plaintiffs to provide such
information.
ABIC again requested that Plaintiffs provide additional information to show proof of
ownership, including through the submission of receipts or documents showing dates of purchase,
and ABIC also issued a letter reserving its rights under the Policy [Docket No. 35-8]. Plaintiffs did
not comply with this request for documents and records and, instead, notified ABIC that they had
retained counsel who also did not provide the requested information to ABIC [Docket No. 35-9].
Over the next few months, AB!C continued to investigate the personal property claim, again
requesting specific information from Plaintiffs, to-wit:
All documentation of cost of purchase, receipts, cancelled checks,
photographs, invoices, credit card statements, replacement cost, or
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estimates of value or any other documentation, of whatever nature
showing ownership, value of purchase price of any of the items lost in
the fire.
Transaction and balance records from all banking, checking or other
accounts and all charge card accounts maintained by [plaintiffs] from
January 2012 through April 2013
Completed and signed personal property inventory forms for all
personal property lost or damaged in the fire loss.
[Docket No. 35-10].
In response to this request, Plaintiffs provided a handful of photographs and receipts for
only a few of the hundreds of items that they claimed were lost in the fire.
Pursuant to the Policy, Plaintiffs provided sworn testimony pe1iaining to the claim.
Their testimony revealed several discrepancies; for example, in their Bankruptcy Petition,
Plaintiffs testified that the value of their personal property, including their living room suite,
bedroom suite, TV and computer was only $400. Yet, for what was apparently the same bedroom
suite, they assigned a value of$6,350.00 in connection with their claim to ABJC. Even more
confusing is Ms. Hamm 's unambiguous testimony that the bedroom suite had been in their
possession for twelve years.
Further, although a good potion of the purchases made by Plaintiffs were made online,
through vendors such as Ebay and Fingerhut, which, presumably, retain records which should have
been readily accessible to Plaintiffs. However, they failed to provide ABIC with documentation
from eBay, Fingerhut, or their banks and credit card companies. Indeed, ABIC had to issue nonpatiy subpoenas to receive such documentation in the course of this lawsuit.
Notably, it was revealed that not only had Plaintiffs failed to provide ABIC with the records
ABIC had requested, they had not attempted to do so. Mr. Hamm testified:
Q: Did you try and get your Capital One statements?
A: No, I didn't. And they said something about it and I still had
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forgotten about it.
Q: I'm sorry.
A: I can still call them. I need to do that.
Q: But you haven't taken any step to call them?
A:No.
Q: You believe that you could have gotten the statements, you
just haven't done that yet?
A: Correct.
Q: Okay. Moving on to paragraph six, transaction and balance records
from all banking, checking or other accounts, and all charge card
accounts maintained by your clients. That's you and Ms. Hamm,
correct?
A: Correct.
Q: From January 2012 through April 2013. What steps did you
take to comply with this request?
A: We didn't get them.
Q: You didn't get them?
A:No.
Q: You didn't try to get them?
A:No
[Docket No. 35-7, pp. 116, 117, 199 and 200](emphasis added).
Without plaintiffs' substantiation, ABIC argues that it lacked information to properly
evaluate and consider Plaintiffs' claim for damages in excess of the policy limits.
Subsequently, Plaintiffs filed this lawsuit against ABIC asse1ting claims for breach of
contract, breach of implied covenant of good faith and fair dealing, violation of the Kentucky
Consumer Protection Act, and statutory and common law "bad faith:''
Thereafter, ABIC issued a Policy limit payment of$56,000.00 to Plaintiffs for their personal
property claim.
ABIC seeks summary judgment, arguing that Plaintiffs cannot prove essential elements of
their breach of contract claim and, therefore, cannot withstand summary judgment; it further asserts
that their remaining extra-contractual claims therefore also fail as a matter of law.
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II.
In 1986, the United States Supreme Cami set forth the standard for summmy judgment
in a trilogy of cases: Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d
202 (1986), Celotex v. Cartett, 477 U.S. 317. 106 S.Ct. 2548, 91L.Ed.2d265 (1986), and
Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89
L.Ed.2d 538 (1986). Following this precedent and Fed.R.Civ.P. 56©, the moving party is
entitled to judgment as a matter of law when "[t]he pleadings, depositions, answers to
interrogatories and admissions on file, together with affidavits, if any, show that there is no
genuine issue of material fact." Summary judgment is mandated against a party who has failed
to establish an essential element of his or her case after adequate time for discove1y. In such a
situation, there is no genuine issue of material fact as the failure to prove an essential fact renders
all other facts irrelevant. Celotex v. Carteff, 477 U.S. at 322-323.
The United States Court of Appeals for the Sixth Circuit has interpreted the United States
Supreme Couti's trilogy as requiring the nonmoving paiiy to produce enough evidence, after
having had a reasonable opportunity to conduct discove1y, so as to withstand a directed verdict
motion. Street v. J.C. Brad.ford & Co., 886 F.2d 1472, 1477 (6th Cir. 1989).
III.
Under Kentucky law, "an insurance policy is a contract, and insofar as it does not contravene
the law any recovery against the insurance company is governed solely by its terms." Great
American Ins. Co. ofNew Yorkv. Brock Const. Co., Inc., No Civ. A. 05-569-KKC, 2007 WL
2844945, at *2 (E.D. Ky. Sept. 28, 2007) (quoting State Farm Mui. Ins. Co. v. Fireman's Fund Am.
Ins. Co., 550 S.W.2d 554, 557 (Ky. 1977).
Therefore, to establish that Policy has been breached by
ABIC, Plaintiffs must provide evidence which establishes: (!)existence of a contract; (2) breach of
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that contract; and (3) damages flowing from the breach of that contract. Barnett v. Mercy Health
Partners-Lourdes, Inc., 233 S.W.3d 723, 727 (Ky. App. 2007).
The existence of a contract, in this case, the Policy, is not in dispute. Nor do the parties
dispute that ABIC has paid Plaintiffs the policy limits for dwelling coverage ($111,509.00) and
personal prope1ty ($56,000.00) as well as additional payments of$1,600.00 for additional living
expenses and $1,800.00 to reimburse them for debris removal.
Defendant argues that it has fully performed its obligations pursuant to the contract and, as
such, there has been no breach. Further, Defendant contends that Plaintiffs have no evidence to
support their claim to $72,000.00 in contract damages.
Although Plaintiffs' do not explicitly deny that they did not provide complete information
regarding their loss to ABIC, they maintain that a jury could still find a breach of contract because
ABIC did not pay the policy limits sooner. In support of their argument, Plaintiffs cite the "Loss
Payment" provision of the Policy, which states that "Loss will be payable in 30 days after we receive
proof ofloss and: a. reach an agreement with you; orb. there is an entry of final judgment, or c. there
is a filing of an appraisal award." [Docket No. 35-1].
Plaintiffs' argument obscures the fact that they tarried, significantly, in providing ABIC
with adequate proof of their losses. There is no Policy term that required ABIC to pay plaintiffs
within thirty days when plaintiffs refused to substantiate the amount of their claim in the first place.
To the contrary, with respect to proving the loss, the Policy plainly and unambiguously sets forth
certain "Duties After Loss" for an insured and clearly describes the requirements for "proof of loss,"
with explicit reference to "related documents that substantiate the figures" claimed.
Plaintiffs offer no plausible explanation for their refusal to prove their claim and, instead,
attempt to shift their burden of proof to ABIC. However, this Court has flatly rejected an attempt to
shift the burden or avoid an insured"s duty to supply documentation to support his or her claim. See
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Brock Constr. Co., 2007 WL 2844945. In Brock, Chief Judge Karen Caldwell noted, "[t]he
purpose of a cooperation clause is to enable the insurer to obtain relevant information concerning the
loss while the information is fresh, to enable it to decide upon its obligations, and to protect itself
from fraudulent and false claims." Id. at 908-909 (quoting COUCH ON INS.§ 199.4). Where an
insured refuses to cooperate with requests for documents, the Court held that an insured cannot shift
the burden of a claim investigation solely to the insurer. Instead, the Coutt emphasized that the
insured is in the best position to provide requested documents:
[The insured] does not dispute that he did not produce all of the
requested documents. He instead argues that Great American
could have used the broad financial release that [the insured]
signed to obtain the records on its own, without [his] assistance.
However, attempting to pass responsibility to Great American to
obtain needed records, as Brock essentially did with this release, is
not cooperation. The policy unquestionably requires the insured to
cooperate with the claim investigation. Great American requested
specific documents, and [the insured] failed to produce them
when he was clearly able to do so. [The insured], not Great
American, is in the better position to obtain these documents;
authorizing a broad release of documents is not sufficient
cooperation where specific documents are requested that are
easily capable of being produced by their holder.
Id. (emphasis added).
The Court concluded that the insured had failed to show that there is a genuine issue for
trial on this matter. Thus, no genuine issue of material fact remained and Great American was
entitled to summary judgment as to the breach of contact claim. Id.
As in Brock, despite ABIC's repeated requests through written correspondence for records
and documents to substantiate this claim (both before and after Plaintiffs filed this lawsuit), Plaintiffs
failed to perform the Policy's conditions precedent that they provide "receipts and related documents
that substantiate the figures in the inventory" and provide ABIC with "records and documents we
request" (which included an explicit request for "documentation, of whatever nature, showing
ownership, value or purchase price of any of the items lost in the fire"). As Judge Caldwell
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concluded in Brock, this scenario warrants summer judgment in favor of the insurer.
Plaintiffs have not established that ABIC breached the contract. The Policy obligates ABIC
to make a payment only when ce1iain conditions are met. As relevant to this case, the Policy
obligated ABIC to pay plaintiffs' personal property claim only if they provided "an inventory of
damaged personal property," with "all bills, receipts and related documents that substantiate the
figures in the inventory" any other "records and documents [ABIC] request[ed]." As set fo1ih above,
it is undisputed that plaintiffs did not provide documents readily available to them. Thus, in the
absence of plaintiffs' cooperation, the Policy does not establish any time period for issuing payment.
Any alleged "delay" in payment by ABIC cannot give rise to a breach of contract claim.
As for Plaintiffs' allegations of bad faith and appurtenant statutory violations, the
Supreme Court of Kentucky has held that "[a]bsent a contractual obligation, there simply is no
bad faith cause of action, either at common law or by statute." Davidson v. Am. Freightways,
Inc., 25 S. W.3d 94, 100 (Ky.2000). As the Court has determined that ABIC did not breach the
terms of the contract, the bad-faith claims fails as a matter of law
IV.
ABIC has paid plaintiffs Policy Limits, despite plaintiffs" refusal to comply with the
conditions precedent under the Policy. Because plaintiffs have failed to produce evidence to suppo1i
a breach of contract or any resulting damages, ABIC is entitled to summary judgment.
Accordingly, IT IS HEREBY ORDERED that Defendant's Motion for Summary Judgment
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This_[_ day of September, 2016.
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Signed By:
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[Docket No. 35) be SUSTAINED.
United States Dlatrlot Judge
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tllinll!.B· Wilhoit. Jr,
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