Arcement et al v. GeoVera Specialty Insurance Services, Inc.
Filing
64
ORDER AND REASONS denying 58 Motion for Judgment as a Matter of Law and granting motion to amend judgment 56 . The jury's award for damages to the dwelling is amended from $70,000 to $69,448.89.. Signed by Chief Judge Sarah S. Vance on 1/12/15. (jjs)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
TRACEY ARCEMENT, ET AL.
CIVIL ACTION
VERSUS
NO: 13-5436
GEOVERA SPECIALTY INSURANCE
SERVICES, INC.
SECTION: R(4)
ORDER AND REASONS
Before the Court is defendant Geovera Specialty Insurance
Services, Inc.'s renewed motion for judgment as a matter of law or,
in
the
alternative,
motion
to
amend
the
judgment.
For
the
following reasons, the Court denies the motion for judgment as a
matter of law and grants the motion to amend the judgment.
I. Background
This case is a dispute about whether GeoVera paid plaintiffs
Tracey and Lori Arcement the amounts owed under their homeowner's
insurance
policy
for
damages
their
property
suffered
during
Hurricane Isaac.
The Arcements held a homeowner's insurance policy issued by
GeoVera, which provided $299,000 in dwelling coverage, $29,900 in
other
structures
coverage,
and
$149,500
in
personal
property
coverage.
A 3% windstorm/hail deductible of $8970 applied to this
coverage.
The policy provided various exclusions, including an
exclusion for water damage, which is defined in relevant part as
"[f]lood, surface water, waves, tidal water, overflow of a body of
water, or spray from any of these, whether or not driven by
wind...."1
The policy also contains an anti-concurrent causation
("ACC") clause applicable to all exclusions.
It provides: "We do
not insure for loss caused directly or indirectly by any of the
following.
Such loss is excluded regardless of any other cause or
event contributing concurrently or in any sequence to the loss."2
The Arcements held federal flood insurance through a different
carrier from which they received $350,000, the limit of their
coverage, for flood damages: $250,000 for damage to their home and
other structures and $100,000 for damage to the home's contents.
The flood adjustor, Christopher Stratton, inspected the Arcements'
home on September 6, 10, and 14, 2012.
cost
value
estimate
for
the
He provided a replacement
Arcements'
property
as
follows:
$358,883.96 for the structures ($331,360.46 for the home and
$27,523.50 for the garage) and $165,847.93 for the contents of the
home.
To receive these funds, the flood insurer required the
Arcements to sign a proof of loss document in which the Arcements
agreed that flooding caused the covered damages.
The Arcements also made a claim with GeoVera on August 29,
2012 for wind and rain damage.
On September 29, 2012, GeoVera
claim representative, Kiarra Rainey, sent the Arcements a letter
1
Defense Ex. 2 at 130.
2
Id. at 129.
2
outlining GeoVera's evaluation of damages, which specified roof
damages of $11,911.57, less depreciation of $2101.76, less the
applicable deductible of $8970.00, totaling a payment to the
Arcements of $839.81.
The letter stated that GeoVera "determined
that there is no coverage for the damages claimed below the flood
line."3
the
The Arcements requested a reinspection of certain areas of
home
above
the
flood
line.
GeoVera
had
the
property
reinspected and, in a letter dated October 15, 2012, denied
coverage for any additional damages because the "items were either
below the flood line/water line of 11ft 2 in, or not visually
damaged."4
The Arcements hired an "independent adjustor," Don Kotter, who
opined that their property suffered wind- and rain-related damages
separate from flood damages totaling $198,018.13 in replacement
cost value or $178,451.38 in actual cash value.
Specifically,
Kotter identified numerous damages to the home, contents, and other
structures sustained as a result of wind and rain, independently of
any flooding.
The Arcements sued GeoVera, claiming that it wrongfully denied
coverage
for
sustained.
the
wind
and
rain
damage
that
their
property
The Court held a jury trial on July 14-16, 2014.
At
the close of the Arcements' evidence and again at the close of all
3
Plaintiffs' Ex. 10 at 017-100.
4
Id. at 017-095.
3
evidence, the Court denied the majority of GeoVera's motions for
judgment as a matter of law.5
the
seven-person
jury
After a few hours of deliberation,
returned
a
verdict
in
favor
of
the
plaintiffs, awarding them $70,000 for wind and rain damage to their
dwelling, $10,000 for wind and rain damage to the contents of their
dwelling, and $200 for wind and rain damage to other structures on
their property.
In addition, the jury awarded $5000 in penalties
under La. Rev. Stat. § 22:1973(B)(6) based on its finding that
GeoVera relied exclusively on the flood water mark in determining
coverage.
Geovera has renewed its motions for judgment as matter of law
on two issues: (1) it argues that there was no evidentiary basis
for the jury to find that the ACC clause did not apply to exclude
all claims, and (2) it argues that there was no evidentiary basis
for the jury to find that GeoVera used only the flood water mark,
without considering other evidence, in determining coverage.6
In
the event that its motion for judgment as a matter of law is
denied, GeoVera moves in the alternative for the Court to amend the
judgment to reduce the award of the jury under the dwelling portion
of the GeoVera policy from $70,000 to $69,448.89 to reflect a
5
The Court granted GeoVera's motion for judgment as a
matter of law on the issue of whether GeoVera was in bad faith by
not paying the Arcements' claim within 30 days.
6
R. Doc. 58.
4
proper calculation of replacement cost value.7
II. Legal Standard
A. Judgment as a Matter of Law
The Court will grant judgment as a matter of law under Rule 50
only
when
the
facts
and
inferences
point
so
strongly
and
overwhelmingly in favor of one party that reasonable jurors could
not
arrive
at
a
different
verdict.
Arsement
v.
Spinnaker
Exploration Co., L.L.C., 400 F.3d 238, 248-49 (5th Cir. 2005). The
Court
will
consider
all
of
the
evidence,
and
draw
factual
inferences in favor of the verdict. DP Solutions, Inc. v. Rollins,
Inc., 353 F.3d 421, 427 (5th Cir. 2003).
The Court, however,
leaves credibility determinations, the weighing of the evidence,
and the drawing of all legitimate inferences from the facts to the
jury.
Id.
A
mere
scintilla
of
evidence,
however,
“‘is
insufficient to present a question for the jury’" as "‘there must
be a conflict in substantial evidence to create a jury question.’”
Id. (quoting Foreman v. Babcock & Wilcox Co., 117 F.3d 800, 804
(5th Cir. 1997)).
The Fifth Circuit defines substantial evidence
as "evidence of such quality and weight that reasonable and fairminded men in the exercise of impartial judgment might reach
different conclusions." Transoil (Jersey) Ltd. v. Belcher Oil Co.,
950 F.2d 1115, 1118 (5th Cir. 1992).
7
Id.
5
Therefore, a jury verdict
must be upheld unless "the facts and inferences point so strongly
in favor of one party that the Court believes that reasonable men
could not arrive at a contrary verdict."
411 F.2d 365, 374 (5th Cir. 1969).
Boeing Co. v. Shipman,
The Court assumes that the jury
followed its instructions when weighing the evidence.
See United
States v. Webster, 162 F.3d 308, 324 (5th Cir. 1998).
B. Motion to Amend a Judgment
The Court has considerable discretion to grant or to deny a
motion to alter or amend the judgment under Rule 59(e).
See Edward
H. Bohlin Co., Inc. v. Banning Co., Inc., 6 F.3d 350, 355 (5th Cir.
1993). The Court, however, must “strike the proper balance between
the need for finality and the need to render a just decision on the
basis of all the facts.”
Id. at 355.
Courts in this district hold
that a moving party must satisfy at least one of the following
criteria to prevail on a Rule 59(e) motion: (1) the motion is
necessary to correct a manifest error of fact or law; (2) the
movant
presents
newly
discovered
or
previously
unavailable
evidence; (3) the motion is necessary in order to prevent manifest
injustice; or (4) the motion is justified by an intervening change
in the controlling law.
See Scordill v. Louisiana Ladder Group,
L.L.C., NO. CIV. A. 02-2565, 2004 WL 1118302, at *3 (E.D. La. May
18, 2004).
6
III. Discussion
A. Judgment as a Matter of Law
1. Application of the Anti-Concurrent Clause
i. Introduction
The Arcements' policy with GeoVera excludes coverage for water
damage, defined as "[f]lood, surface water, waves, tidal water,
overflow of a body of water, or spray form any of these, whether or
not driven by wind...."8
In contrast, the policy provides coverage
for damage caused by wind and rain.
The policy also contains an
ACC clause, which provides:
We do not insure for loss caused directly or indirectly
by any of the following [exclusions].
Such loss is
excluded regardless of any other cause or event
contributing concurrently or in any sequence to the loss.
These exclusions apply whether or not the loss event
results in widespread damage or affects a substantial
area.9
In other words, the policy excludes coverage for a covered peril
(wind or rain) whenever an excluded peril (flood) contributes
concurrently or in any sequence to the loss.
GeoVera now argues
that the policy's ACC clause operates to exclude coverage for all
claims because any areas or items of the plaintiffs' property that
were damaged by wind or rain were also damaged by flood.
ii. Law Governing ACC Clauses
8
Defense Ex. 2 at 130.
9
Id. at 129.
7
Louisiana law governs this contractual dispute.
See Arctic
Slope Regional Corp. v. Affiliated FM Ins. Co., 564 F.3d 707, 709
(5th Cir. 2009).
Under Louisiana law, "an insurance policy is a
contract that must be construed in accordance with the general
rules of interpretation of contracts set forth in the Louisiana
Civil Code."
Coleman v. Sch. Bd. of Richland Parish, 418 F.3d 511,
516 (5th Cir. 2005) (quoting Am. Int'l Specialty Lines Ins. Co. v.
Canal Indem. Co., 352 F.3d 254, 262 (5th Cir. 2003)).
While the
Louisiana Supreme Court has not provided guidance on the correct
application of an ACC clause to the facts of this case,
both the
Fifth Circuit and at least one Louisiana appellate court have.
The Fifth Circuit, applying Mississippi law, first addressed
the impact of an ACC clause in Leonard v. Nationwide Mut. Ins., 499
F.3d 419 (5th Cir. 2007).
At the time, Mississippi courts had not
addressed the issue, so the Fifth Circuit made an "Erie-guess" as
to how Mississippi courts would decide the issue.
Id. at 431.
There, a home was damaged primarily by storm-surge and by wind to
a lesser extent.
Id. at 426.
The homeowner's insurance policy
covered wind damage, but excluded water damage.
Id. at 424.
The
policy also contained an ACC clause, which excluded damage caused
concurrently or in any sequence by an excluded peril.
Id. at 425.
After a trial, the district court awarded damages only for those
losses caused exclusively by wind.
Leonard v. Nationwide Mut.
Ins., 438 F. Supp. 2d 684 (S.D. Miss. 2006).
8
Specifically, the
district court awarded damages for a hole in a ground-floor window
likely caused by a wind-driven object, as well as for cleaning and
repairing exterior walls damaged exclusively by wind and above the
flood line.
Id. at 696.
In doing so, the district court held that
the ACC clause was ambiguous and unenforceable.
Id. at 693-94. On
appeal, the Fifth Circuit affirmed the district court's judgment,
but clarified the correct interpretation of the ACC clause. First,
the Fifth Circuit held that the ACC clause was unambiguous and
enforceable.
Leonard, 499 F.3d at 430.
Second, the Fifth Circuit
applied the ACC clause to the facts at issue, noting that there
were
three
species
of
damage
at
issue:
"(1)
damage
caused
exclusively by wind; (2) damage caused exclusively by water; and
(3) damage caused by wind 'concurrently or in any sequence' with
water."
Id.
The court instructed that "[t]he only species of
damage covered under the policy is damage caused exclusively by
wind.
But if wind and water synergistically caused the same
damage, such damage is excluded."
Id. at 430.
According to the
court, "[t]he classic example of such a concurrent wind-water peril
is
the
storm-surge
flooding
hurricane's landfall."
Id.
that
follows
on
the
heels
of
a
Clarifying when coverage exists under
the policy, the Fifth Circuit stated:
If, for example, a policyholder's roof is blown off in a
storm, and rain enters through the opening, the damage is
covered.
Only if storm-surge flooding--an excluded
peril--then inundates the same area that the rain damaged
is the ensuing loss excluded because the loss was caused
concurrently or in any sequence by the action of a
9
covered and an excluded peril.
Id. at 431. In other words, the Fifth Circuit instructed that when
a covered peril first causes a loss, and an excluded peril then
damages the same area, coverage is excluded under the ACC clause.
Again
applying
Mississippi
law,
the
Fifth
Circuit
next
addressed the issue in Tuepker v. State Farm Fire & Ins. Co., 507
F.3d
346
(5th
Cir.
2007).
In
Tuepker,
the
Fifth
Circuit,
interpreting the effect of an ACC clause under Mississippi law,
stated:
[A]ny damage caused exclusively by a non-excluded peril
or event such as wind, not concurrently or sequentially
with water damage, is covered by the policy, while all
damage caused by water or by wind acting concurrently or
sequentially with water, is excluded.
Thus, the ACC
Clause in combination with the Water Damage Exclusion
clearly provides that indivisible damage caused by both
excluded perils and covered perils or other causes is not
covered. However, ... if wind blows off the roof of [a]
house, the loss of the roof is not excluded merely
because a subsequent storm surge later completely
destroys the entire remainder of the structure; such roof
loss occur[red] in the absence of [an excluded peril].
507 F.3d at 354.
The ACC Clause in Tuepker, while similar to that
in Leonard, contained the following additional language: "We do not
insure under any coverage for any loss which would not have
occurred in the absence of one or more of the following excluded
events."
Id. at 351.
The court noted this difference, but
specified that this language did not "significantly differentiate
the clause from the ACC Clause at issue in Leonard."
Id. at 354.
The Fifth Circuit's "Erie guess" on Mississippi law was
10
ultimately rejected by the Mississippi Supreme Court. In Corban v.
U.S. Automobile Ass'n, the Mississippi Supreme Court addressed the
effect of ACC Clauses under Mississippi law.
2009).
20 So. 3d 601 (Miss.
There, the ACC clause at issue provided: "We do not insure
for loss caused directly or indirectly by any of the following.
Such loss is excluded regardless of any other cause or event
contributing concurrently or in any sequence to the loss."
612.
Id. at
The court held, as later recognized by the Fifth Circuit,
that
the ACC clause in practice only excludes loss that was
"concurrently" caused by water, not loss that was caused
"in any sequence" by water. In other words, when water
and another cause operate indivisibly to create damage,
the loss is excluded; but when water and another cause
act in sequence, the damage caused by water is excluded
and the damage from the other cause is covered.
Penthouse Owners Ass'n v. Certain Underwriters at Lloyds, 612 F.3d
383, 387 n.1 (5th Cir. 2010) (explaining the holding in Corban).
The
court
in
Corban
reached
this
holding
based
on
its
interpretation of the meaning of "loss" and its rejection of the
ACC clause's "in any sequence" language. The court held "that loss
occurs at that point in time when the insured suffers deprivation
of, physical damage to, or destruction of the property insured."
Corban, 20 So. 3d at 613.
In other words, a covered loss occurs
the moment a covered peril causes damage, regardless of later
damage by an excluded peril.
Because the policy provided a right
to indemnity at the time of loss, the court held that the ACC
11
clause "may not be used to [divest] the insureds of their right to
be indemnified for covered losses" because it would conflict with
the policy's terms that provided that the right to indemnity vests
at the time of loss.
Id. at 615.
As a result, the court held that
the ACC clause's "in any sequence" language was ambiguous and read
it out of the policy.
Despite the Fifth Circuit's recognition of the Mississippi
Supreme Court's different interpretation of ACC clauses in Corban,
the Fifth Circuit's decisions in Leonard and Tuepker, even though
arising
under
Mississippi
law,
live
on
in
the
Circuit's
consideration of ACC clauses arising under Louisiana law.
See,
e.g., Stewart Enterprises, Inc. v. RSUI Indem. Co., 614 F.3d 117
(5th Cir. 2010) (applying Leonard and Tuepker to a case arising
under Louisiana law); Arctic Slope Regional Corp. v. Affiliated FM
Ins. Co., 565 F.3d 707 (5th Cir. 2009) (same).
Still, the
Louisiana Fourth Circuit, in Orleans Parish School Bd. v. Lexington
Ins.,
recently
adopted
the
intepretation of ACC clauses.
28, 2013).
Mississippi
Supreme
Court's
123 So. 3d 787 (La. App. 4 Cir. Aug.
There, the court held that "ACC clauses do not operate
to remove from coverage, damages that would have otherwise been
covered as a result of the initially covered loss."
Id. at 803.
The court, citing the Mississippi Supreme Court's decision in
Corban, further stated:
[I]t cannot be seriously disputed that if a covered peril
causes damages, coverage for that damage "is not changed
12
by any subsequent cause or event." As the Corban court
succinctly stated, "Nor can the loss be excluded after it
has been suffered, as the right to be indemnified for a
loss caused by a covered peril attaches at that point in
time when the insured suffers deprivation of, physical
damage to, or destruction of the property insured." We
agree with that court's conclusion that ACC language such
as "the loss is excluded regardless of any other cause or
event contributing concurrently or in any sequence to the
loss" cannot be used to divest an insured of their right
to be indemnified for covered losses.
Id.
(citations
omitted).
The
court
stated
"that
a
factual
determination must be made regarding whether the damages ultimately
suffered by an insured are attributed to an initially covered loss,
or whether the damages are more properly attributed to" an excluded
peril.
Id.
Because the Louisiana Supreme Court has not squarely addressed
the correct application of ACC clauses under Louisiana law, and
Louisiana appellate courts have not formed a clear consensus on the
issue, the Court instructed the jury under the Fifth Circuit's
precedent.
See F.D.I.C. v. Abraham, 137 F.3d 264, 269 (5th Cir.
1998) (instructing that circuit precedent should not be discarded
on
the
basis
of
a
single
superseding
state
appellate
court
decision). Accordingly, the Court instructed the jury, in relevant
part,
[u]nder Louisiana Law, GeoVera bears the burden of
proving the applicability of any exclusionary clause
contained in its insurance policy by a preponderance of
the evidence. GeoVera must show what damage was caused
by the excluded peril. If you find that GeoVera has met
its burden of proving by a preponderance of the evidence
that the property damage claimed by the Arcements was
cased by an excluded peril, such as flooding, then
13
GeoVera is not liable to the Arcements for damages under
the policy. If you find that GeoVera has met its burden
of proving by a preponderance of the evidence that any
portion of the Arcements' property was damaged by an
excluded peril, such as flooding, even if it was also
damaged by a covered peril such as wind or rain, then
GeoVera is not liable to the Arcements for damage to that
portion of their property.
At trial, neither party objected to this instruction.
iii. Defendant is Not Entitled to Judgment as a Matter of
Law
Under Louisiana law, the insured has the burden to prove that
the
claim
asserted
is
covered
by
the
policy.
Dickerson
v.
Lexington Ins. Co., 556 F.3d 290, 295 (5th Cir. 2009) (citations
omitted).
If the insured meets this burden, the insurer then has
the burden to prove that the damage at issue is excluded from
coverage.
Id.
Here, if the Arcements proved that their property
sustained damage from wind and rain, the burden then shifted to
GeoVera to prove that flooding also caused, concurrently or in any
sequence, the damage at issue.
See id.
As in Leonard, here, there are three species of damage: (1)
damage caused exclusively by wind and wind-driven rain; (2) damage
caused by flood; and (3) damage caused by both wind and wind-driven
rain and flood.
damage
caused
recoverable.
As the Fifth Circuit stated in Leonard, only
exclusively
by
wind
and
wind-driven
rain
is
All other damages are excluded by operation of the
flood exclusion and the ACC clause.
Therefore, the question is
whether there was sufficient evidence for a reasonable jury to find
14
that the Arcements sustained wind and rain damage, independently
and apart from any flood damage, in the amount of $70,000 for the
home, $10,000 for the contents, and $200 for the other structures.
The Court finds that there was sufficient evidence at trial to
permit a reasonable jury to reach the verdict rendered in this
case. First, a reasonable jury could have found that the Arcements
met their burden to show that wind and rain caused damage to their
property. Tracey Arcement's testimony provided the primary support
for the Arcements' claim that their property sustained damage from
wind and wind-driven rain.
Arcement identified numerous areas of
and items in his home that were damaged by wind and rain before the
home
was
inundated
by
flood
waters.
Specifically,
Arcement
testified that wind tore open three holes in the roof from which
rainwater entered.
According to Arcement, rainwater also entered
through the home's chimney and spilled out into the living room
through the fireplace.
Arcement explained that the rainwater
damaged multiple ceilings, including in the master bedroom, walk-in
closet, and master bathroom, and multiple areas of the home,
including
the
master
bedroom,
a
walk-in
closet,
the
master
bathroom, a hallway, his daughter's walk-in closet and bedroom, the
utility room, the kitchen, the bar, and the living room.
Arcement
also testified that all contents listed in Plaintiffs' Exhibit 3,
totaling an estimated replacement cost of $54,652, were soaked by
rainwater and were unsalvageable before any flooding occurred. The
15
items were unsalvageable, Arcement explained, because areas of the
home were not only wet from rainwater, but also covered in sheet
rock, dirt, and, in some instances, insulation from the attic.
Arcement also explained that by the time he decided to evacuate
from his home, the ceiling in the master bedroom and bathroom had
caved in under the weight of rainwater.
Finally, Arcement also explained that wind-blown items damaged
several windows in the front of the house before any flooding.
First, Arcement described observing a wind-driven garbage can break
one of the home's picture windows.
According to Arcement, this
caused several inches of water to collect on the floor in the
home's dining room and bar area.
Second, Arcement testified that
a wind-driven solar-paneled light cracked a different picture
window.
The Arcements' expert, Don Kotter, also testified about the
wind- and rain-related damages the property sustained.
Kotter is
experienced in determining wind versus flood damage, and he was
tendered and accepted at trial as an expert in assessing the type
of
damage
after
a
storm
and
in
construction
costs.
Kotter
explained that he estimated only those damages that occurred from
wind and rain and before any flooding.
Kotter said that the areas
and items that he found damaged before the flooding were already
wet and unsalvageable, and the flooding did no additional damage.
Kotter spent much of his testimony discussing his damages
16
estimate.
First, according to Kotter, wind and wind-driven rain
damaged the home's roof, which caused $18,363.14 in damages.
Second, Kotter estimated that rainwater caused $2783.25 in damages
to the master bathroom.
Kotter based his estimate on the cost to
replace approximately half of the dry wall, and paint a little more
than half of the walls and ceiling.
Third, based on the proximity
of the following areas to the holes in the roof, Kotter estimated
that the following damages resulted from wind and rain: $10,223.95
for the master bedroom, $3429.29 for the master closet, $5153.52
for the laundry room, $1686.83 for a hallway, $19,562.16 for the
kitchen, breakfast area, hallway, and dining area, $7994.85 for the
living room,10 and $3479.58 for the daughter's walk-in closet.
According to Kotter, the attic also sustained $4405.73 in wind and
rain damages, which included $3090.42 to replace the insulation and
$1315.31 to apply anti-microbial agent to the roof decking rafters
and joist.
Kotter also explained that the HVAC system's duct work
sustained rain damage in the amount of $5473.16, and that the
electrical system needed to be tested for water damage, which would
cost $719.60.
Kotter also assessed the damages to other structures on the
property.
Specifically,
Kotter
estimated
that
the
carport
sustained $1,090.21 in wind damage as evidenced by dents left by
10
This figure also includes damage resulting from
rainwater entering through one of the broken windows.
17
wind-driven objects on the roof and siding. The pool, according to
Kotter, needed cleaning and servicing in the amount of $726.32 as
a result of wind-driven debris and power loss.
Kotter further
testified that the fence sustained wind damage in the amount of
$3849.47.
Finally,
Kotter
stated
that
the
garage
sustained
$2459.08 in damage to the roof and $175.45 in damage to a window
caused by wind-drive debris.
As for contents damage, Kotter testified that his estimate for
personal property damaged by wind and rain, $54,652, was based on
the list compiled by the Arcements specifying items damaged by wind
and rain.
With the addition of general construction costs ($11,665.79),
mold remediation ($10,000), tax (roughly $8000), overhead (roughly
$10,700),
and
profit
($10,715.51),
Kotter's
estimate
came
to
$198,018.13 for replacement cost value, or $178,451.38 for actual
cash value for damages caused by wind and rain.
GeoVera's engineering expert, Tony Clark, agreed that the roof
sustained wind damage, which would have allowed the intrusion of
rainwater
before
any
flooding
occurred.
Specifically,
Clark
estimated that up to 100 gallons of rainwater could have entered
the home through the wind-created holes over a three-day period.11
11
From Clark's testimony, it was unclear if his estimate
included rainwater that entered the home only before the
flooding, or both before and after the flooding. Clark
originally indicated that the estimate included the entry of
rainwater both before and after the flooding, but, on cross18
According to Clark, the rainwater would have caused the insulation,
ceilings, walls, and furniture to become wet. Clark further opined
that the following areas were likely impacted by rainwater: the
master bedroom, the master closet, a hallway, the living room, the
kitchen, and the laundry room.
Clark also confirmed that the
broken windows in the home and garage were caused by wind-driven
objects and were unsalvageable prior to the flooding.
Further,
while Clark originally testified that he observed no wind damage to
the fence, on cross-examination he testified that portions of the
fence may have been missing and that the fence had separated joints
likely attributable to wind.
GeoVera had the burden to show that the Arcements' damages
were also caused concurrently or in any sequence by flooding.
It
is true that GeoVera called as witnesses Clark, its engineering
expert,
and
Fred
Renfro
and
Vern
Abram,
its
adjustors,
who
testified that the interior of plaintiffs' home was inundated and
damaged by flood waters.12
But the jury could have accepted the
testimony of Arcement and Kotter regarding pre-flooding wind and
rain damages, especially as the testimony was partially supported
examination, he appeared to concede that the 100 gallons of
rainwater could have entered before the flooding.
12
GeoVera also argues that the proof of loss signed by
the Arcements in relation to their flood insurance claim
constitutes an admission that flooding caused all of their
damages. The flood adjustor, Stratton, however, testified that
the proof of loss indicated only that flooding caused the covered
damages, not all damages.
19
by that of GeoVera's own expert, Clark.
Both Arcement and Kotter
testified that rain and wind damaged the property and rendered
numerous areas and items unsalvageable before any flooding.
For
example, both stated that the ceilings had collapsed in multiple
areas of the home, and that the sheet rock was already wet and
unsalvageable
in
the
affected
areas.
Similarly,
Arcement
identified several windows damaged by wind-driven objects before
the flooding.
GeoVera's expert, Clark, agreed that the windows
were rendered unsalvageable before any flooding. Further, Arcement
testified that the contents in a list, totaling $54,653, were
rendered unsalvageable by rainwater mixed with debris from the
home.
As to the other structures, Kotter testified that the fence
was damaged by wind, independently of any flooding, and that
several other structures, including the garage, were damaged by
wind-driven objects, again, independently of any flooding.
While
GeoVera's witnesses all testified that the property was primarily
damaged by flooding, Clark, GeoVera's engineering expert, stated
that multiple areas of the home would have been damaged by preflooding wind and rain.
Finally, the flood adjustor, Christopher
Stratton, testified that the home could have sustained substantial
pre-flooding wind and rain damage.
A reasonable jury could have found that GeoVera failed to
prove that the flood exclusion and ACC clause applied to exclude
all of the Arcements' damages.
20
At trial, GeoVera introduced
uncontroverted evidence that flood waters inundated almost the
entire property.
But GeoVera's case appeared to rely primarily on
its attempt to show that all damages were caused by flooding and
that none of the wind and rain damages Arcement and Kotter reported
occurred.
As a result, GeoVera presented little evidence on the
issue of whether the later flooding inflicted any damage on areas
and items Arcement and Kotter identified as unsalvageable before
the flooding.
For example, GeoVera did not even present any
evidence showing that the collapsed ceilings, which no longer
functioned as ceilings, were or could have been further damaged by
flood water. Instead, GeoVera sought to show that the ceilings did
not collapse before the flooding, and that the flooding caused the
ceilings to collapse.
Likewise, GeoVera did not present any
evidence showing that the broken windows sustained additional
damage from flooding.
While the jury could have inferred that the
later flooding caused additional damage to those items and areas
Arcement
and
Kotter
identified
as
unsalvageable
before
flooding, the jury was not required to make this inference.
any
As a
result, the jury could have reasonably concluded that the areas and
items identified by Arcement and Kotter as irretrievably damaged by
wind and rain sustained no damage as a result of the flooding.
That the jury awarded much less in damages than the Arcements
sought
also
instructions.
indicates
that
the
jury
followed
the
Court's
The Arcements requested roughly $127,000 for their
21
home, $59,000 for their contents, and $10,000 for their other
structures.
In comparison, the jury only awarded $70,000 for the
home, $10,000 for contents, and $200 for other structures.
shows
that
the
jury
was
able
to
segregate
those
This
damages
it
attributed exclusively to wind or rain and those to which flooding
contributed.
Ultimately, given the evidence presented at trial,
the Court has no reason to assume the jury failed to follow the
instructions.
Accordingly, GeoVera's motion for judgment as a matter of law
on this issue is denied.
2. Award of Damages under La. Rev. Stat. § 22:1973(B)(6)
GeoVera additionally moves for judgment as a matter of law on
the question of penalties.
Louisiana law authorizes the recovery
of bad faith penalties from insurers who fail to pay legitimate
claims.
See La. Rev. Stat. §§ 22:1982, 22:1973.
Under Section
22:1973(B)(6), an insurer is in bad faith for "[f]ailing to pay
claims pursuant to R.S. 22:1983 when such failure is arbitrary,
capricious, or without probable cause."
Section 22:1983(A)(1)
provides: "No insurer shall use the floodwater mark on a covered
structure without considering other evidence, when determining
whether a loss is covered or not covered under a homeowners'
insurance policy."
La. Rev. Stat. § 22:1983(A)(1).
To recover
under Section 22:1973, the plaintiff must demonstrate that the
insurer (1) received a satisfactory proof of loss, (2) that the
22
insurer failed to pay within the designated time period, and (3)
that the failure to pay was arbitrary, capricious or without
probable cause.
See Boudreaux v. State Farm Mutual Automobile
Ins., 896 So. 2d 230, 233 (La. App. 4 Cir. Feb. 2, 2005).
trial,
the
jury
awarded
$5000
in
penalties
under
At
Section
22:1973(B)(6) based on its finding that GeoVera used only the flood
water mark, without considering other evidence, in determining
coverage.
GeoVera now argues that there was insufficient evidence for
the jury to conclude that it relied only on the flood water mark.
While there was evidence at trial suggesting GeoVera looked to
other evidence, such as photographs or its adjustors' overall
examinations of the dwelling, there was also evidence suggesting
that it relied primarily--or exclusively--on the flood water mark
in determining whether to provide coverage.
Tracy
Arcement
testified
that
GeoVera's
first
adjustor,
Renfro, was interested only in examining the flood line. According
to Arcement, Renfro stated that GeoVera would not pay for any
damages below the flood line.
Arcement testified further that
GeoVera's second adjustor, Abram, was not interested in hearing
Arcement's account and that he too was mainly interested in
measuring the flood line.
According to Arcement, GeoVera claimed
it was not responsible for any damage below the flood line as
evidenced by a letter the Arcements received from GeoVera, which
23
stated that there was no coverage for damages below the flood
line.13
Arcement explained that GeoVera gave no other reason for
denying coverage.
Although GeoVera's claims supervisor and its adjustors denied
relying
exclusively
on
the
flood
line
in
assessing
damage,
GeoVera's claim file provided support for the proposition that
GeoVera relied solely on the flood line.
For example, the report
prepared by the adjustor, Abram, states: "No interior damages were
adjusted or estimated due to floodwater being over the ceiling
height."14
Likewise, the report prepared by the other adjustor,
Renfro, states: "Scoped and measured interior rooms; did not
include in estimate; as flood debris was above ceiling joist."15
These records are consistent with the September 29, 2012 letter
from GeoVera, which states that "there is no coverage for the
damages claimed below the flood line."16
Another letter from
GeoVera, dated October 15, 2012, states that coverage was denied on
reinspection
because
the
"items
were
13
either
below
the
flood
The letter, dated September 29, 2012, and signed by
Kiara Rainey, a claims adjustor for GeoVera, states:
"Unfortunately, based on the circumstances of the loss it has
been determined that there is no coverage for the damages claimed
below the flood line." Plaintiffs' Ex. 10 at 017-100.
14
Plaintiffs' Ex. 10 at 017-008.
15
Id. at 017-028.
16
Id. at 017-100.
24
line/water line of 11ft 2 in, or not visually damaged."17
This
language suggests that the presence of an item below the flood line
alone could exclude it from coverage.
The
jury
was
entitled
to
find
Arcement's
testimony
GeoVera's documents more credible than GeoVera's witnesses.
and
This
is not a case where the facts and inferences point so strongly and
overwhelmingly in favor of one party that reasonable jurors could
not arrive at a different verdict.
A jury could have reasonably
found that GeoVera relied exclusively on the flood line in denying
coverage.
The
Court
therefore
finds
that
the
evidence
was
sufficient to support the jury's verdict.
Accordingly, GeoVera's motion for judgment as a matter of law
on this issue is denied.
B. Motion to Amend the Judgment
GeoVera moves in the alternative for the Court to amend the
judgment to reduce the award of the jury for dwelling damages from
$70,000.00 to $69,448.89 to reflect a proper replacement cost value
calculation.
In essence, GeoVera argues that the jury's award
allows the Arcements double recovery in the amount of $551.11.
Under
Louisiana
law,
an
insured
may
"recover
under
all
available coverages provided that there is no double recovery."
Cole v. Celotex, 599 So. 2d 1058, 1080 (La. 1992) (quoting 15A
17
Id. at 017-095.
25
Couch on Insurance § 56:34 (2d ed. 1983)).
Accordingly, "while an
insured may not recover in excess of his actual loss, an insured
may recover under each policy providing coverage until the total
loss sustained is indemnified."
Id. (quoting Appleman, Insurance
Law and Practice § 5192 (1981)).
Actual loss can be "measured by
the cost of repair, replacement, or [actual cash value]--depending
on the circumstances of [the] case." Bradley v. Allstate Ins., 620
F.3d 509, 522 (5th Cir. 2010).
Here, the Court instructed the jury that the Arcements could
recover either replacement cost value--if replacement costs have
been or will be incurred and the Arcements provided notice to
GeoVera within 180 days of the date of loss that they intended to
repair or replace--or, otherwise, actual cash value.
See Bradley,
620 F.3d at 522 (noting that "the proper measure of actual loss" is
a question of fact).
Outside the presence of the jury, the Court
instructed the parties that it would correct any award of damages
in excess of the maximum amount recoverable.
The parties agree that the jury awarded damages based on
replacement cost value, as opposed to actual cash value.18
GeoVera
contends, however, that the jury's award of $70,000 for dwelling
damages exceeds the maximum recoverable replacement cost value, and
that the award should be reduced by $551.11. Specifically, GeoVera
asserts that the maximum recoverable replacement cost value for the
18
See R. Docs. 58-1 at 8 & 63 at 18.
26
dwelling is $69,448.89.
pre-storm
replacement
GeoVera reaches this figure by using the
value
of
the
home
of
$331,360.46,
as
determined by the flood adjustor, Stratton, and deducting $250,000,
the amount the Arcements received for structure damages from their
flood insurer, and $11,911.57, the amount of coverage provided by
GeoVera.
In
contrast,
recoverable
replacement
replacement
cost
of
the
the
cost
Arcements
value
dwelling
arrive
at
a
maximum
by
using
$350,636
as
the
and
other
structures,19
and
deducting the $250,000 flood insurance payment to arrive at a
figure of $100,638.20
To determine the maximum amount the Arcements can recover for
damage to their dwelling and other structures, the Court must
consider: (1) the amount already recovered on flood insurance, (2)
the amount already paid under GeoVera's policy, (3) the amount of
damages attributable to covered wind and/or rain loss, and (4) the
total loss sustained.
If the sum of figures (1) through (3) does
not exceed (4), the award is appropriate.
If the amount recovered
exceeds the total loss, however, the Court will reduce the jury's
19
The figure the Arcements use incorporates damages to
both the dwelling and other structures, but, here, GeoVera
challenges only the jury's award for damages to the dwelling. As
a result, the Arcements' use of this figure is unwarranted.
20
The Arcements' calculation does not include the
$11,911.57 in GeoVera coverage as a deduction. They provide no
explanation for this, and the Court is aware of no reason why the
coverage GeoVera provided should not be deducted in making this
calculation.
27
award to prevent double recovery.
First, as to figure (1)--the amount already recovered on flood
insurance, evidence at trial showed that the Arcements recovered
$250,000 from their flood insurer for damages to their dwelling.21
Second, evidence at trial showed that as to figure (2)--the amount
already
paid
under
GeoVera's
policy,
that
GeoVera
provided
$11,911.57 in coverage. Third, the jury determined that the amount
of damages attributable to covered wind and/or rain loss, figure
(3), was $70,000.22
Together, this totals $331,911.57.
Finally,
evidence at trial showed that the maximum total loss the Arcements
sustained to their dwelling and other structures was $331,360.46,
as shown by Stratton's estimates.
Given these figures, the Court finds that the jury award
exceeds the maximum amount recoverable for the Arcements' dwelling
by $551.11. Accordingly, GeoVera's motion to amend the judgment is
granted.
The jury's award for damages to the dwelling is amended
from $70,000 to $69,448.89.
21
While the flood adjustor, Christopher Stratton,
testified that the flood insurance provided coverage for other
structures under the dwelling coverage, he also testified that
the entire $250,000 payment, the policy's limit, was paid solely
for damages to the dwelling. He explained that damage to the
other structures was not included in his assessment because the
damage to the dwelling alone was sufficient to exhaust the
policy's coverage. As a result, the Court deducts the $250,000
flood insurance payment from the damage to the dwelling alone.
22
R. Doc. 51-1.
28
IV. Conclusion
For the foregoing reasons, the Court DENIES the motion for
judgment as a matter of law, and GRANTS the motion to amend the
judgment.
New Orleans, Louisiana, this 12th day of January, 2015.
__
_________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
29
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