Cotton et al v. Scottsdale Insurance Company

Filing 179

ORDER AND REASONS denying 174 Motion for Judgment as a Matter of Law. Signed by Judge Ivan L.R. Lemelle. (ijg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ALFRED COTTON, ET AL.

CIVIL ACTION

VERSUS

NO. 13-6270

SCOTTSDALE INSURANCE COMPANY

SECTION "B"(2)

ORDER AND REASONS
I.

NATURE OF THE MOTION AND RELIEF SOUGHT
Before the Court is a Fed. R. Civ. P. Rule 50(b) renewed

Motion
Certain

for

Judgment

Underwriters

as

a

Matter

at

of

Lloyd’s

Law
of

filed
London

by

Defendant,

(hereinafter

“Underwriters” or “Defendant”) seeking judgment in its favor and
dismissal of all of Plaintiff’s claims with prejudice. (Rec.
Doc. No. 174 at 1). In the alternative, Underwriters’ Motion
requests a new trial under Fed. R. Civ. P. Rule 59. (Rec. Doc.
No. 174 at 1).
IT IS ORDERED that the Motion is DENIED.
II.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

This case arises out of an insurance dispute stemming from
damage

caused

by

Hurricane

Isaac

in

August

of

2012.

First

American Bank and Trust (hereinafter “First American”) was the
mortgage holder for several properties owned by the Cottons.
(Rec. Doc. No. 164 at 2-3). Because the Cottons failed to secure
flood insurance for their properties, First American obtained
coverage to protect its financial interests through Lloyd’s of
1

London. (Rec. Doc. No. 164 at 2-3). After Plaintiffs’ claims
against

Scottsdale

Insurance

Company

were

dismissed

on

a

12(b)(6) motion (Rec. Doc. No. 86), and all of the Cottons’
remaining claims were dismissed on summary judgment (Rec. Doc.
No. 151), Underwriters and First American proceeded to trial. At
trial the following evidence was presented.
Underwriters contracted with Seattle Specialty, a claims
handler, to manage a number of its insurance policies, including
claims by First American. Bob Quigley was the claims handler at
Seattle

Specialty

claims.

(Trial

responsible

Transcript

for

No.

2

handling
at

American’s

Seattle

59).

First

Speciality

contracted with Simsol, a company that provided adjusters to go
out and assess damaged property. (Trial Transcript No. 2 at 63).
Simsol’s
Quigley

adjuster
testified

working
that

this

Seattle

case

was

Specialty

Robert
paid

filed by First American. (Trial Transcript

out

No.

Ellenberg.
on

claims

2 at 67-68).

However, he testified that he was not aware of additional claims
filed by any other individuals regarding First American’s policy
with Undewriters. ((Trial Transcript No. 2 at 68). Ellenberg
also testified that he did not receive any documentation from
any other individuals. (Trial Transcript No. 2 at 45).
Michael

Michio,

a

public

adjuster,

was

hired

by

Alfred

Cotton to assess the damage to his properties and submit a claim
to

Underwriters.

(Trial

Transcript
2

No.

1

at

55).

Michio

testified that he submitted, via facsimile, a proof of loss with
detailed information to Underwriters. (Trial Transcript No. 2 at
19). Underwriters deny

ever receiving that proof of loss

or

being made aware of it. Michio also testified that he spoke with
Mr. Ellenberg regarding his claim forms. (Trial Transcript No. 2
at 22). Elleneberg allegedly told him that he was no longer
working that case and provided Michio with a fax number to which
he could submit the documentation. (Trial Transcript No. 2 at
28). Michio admitted during his testimony that it was a very
busy

time

insurers

in

the

claimed

insurance
not

to

business

have

and

received

that

claim

often

times

documentation.

(Trial Transcript No. 2 at 19-24). However, he urged that he did
submit the proof of loss and accompanying information via fax,
despite his lack of a fax confirmation sheet. (Trial Transcript
No. 2 at 23).
Following a three-day trial, the jury ruled in favor of
First American, finding Plaintiff entitled to damages for breach
of contract. Twice during trial, Underwriters moved for judgment
as a matter of law under Fed. R. Civ. P. Rule 50(a). Both times,
this

Court

denied

those

motions.

Underwriters

now

renew

the

motion for judgment as a matter of law on the ground that First
American

did

not

set

forth

a

legally

sufficient

evidentiary

basis for a reasonable jury to find a breach of contract.

3

III. THE PARTIES’ CONTENTIONS
It appears that the issues at the heart of Underwriters’
motion are the meaning of “satisfactory proof of loss” under
Louisiana law and whether First American put forth sufficient
evidence

to

support

received

the

satisfactory

jury’s

proof

of

finding
loss.1

that

Under

Underwriters
the

insurance

contract between the parties, First American was required to
submit

to

detailing

Underwriters
specific

a

signed

aspects

of

and
the

sworn
claim

proof
in

of

loss

order

for

Underwriters to accept that claim. (Rec. Doc. No. 121-8 at 4142). In its Motion for Summary Judgment and its objections to
First

American’s

Proposed

Jury

Instructions,

Defendant

repeatedly contended that the alleged proof of loss submitted by
Mr. Michio was insufficient because it did not comport with the
terms of the contract. (Rec. Doc. Nos. 121 at 3-6; 160 at 9).
However,

in

the

instant

motion,

Defendant

appears

to

have

abandoned that argument, instead seemingly conceding that the
term “proof of loss,” as used in the insurance contract, was
meant to be interpreted in accordance with prevailing Louisiana
jurisprudence.

1

On the first question of the jury verdict form, the jury answered “Yes” to
the question: “Did Underwriters receive sufficient information that the
$218,184.61 that it had paid for the seven properties was not sufficient to
repair the properties to their pre-Hurricane Isaac condition?” (Rec. Doc. No.
170-3 at 1). Underwriters seemingly contend that they never received
sufficient information regarding the deficiency of the funds paid because the
standard for satisfactory proof of loss was not met.

4

Underwriters
occurs

when

the

maintain
insurer

that
has

satisfactory

actual

proof

knowledge

of

of
the

loss
facts

underlying the claim, including the extent of the injury. (Rec.
Doc. No. 174-1 at 4-5). While Defendant’s memorandum in support
of the present motion states that no specific form is required,
Underwriters go on to contend that certain documentation must be
submitted. Defendant claims that First American did not carry
its burden of proving satisfactory proof of loss, because the
alleged facsimile sent by Mr. Michael Michio, the adjuster hired
by Mr. Cotton, was never received and there is no evidence of a
confirmation sheet. (Rec. Doc. No. 174-1 at 7-8). Additionally,
Underwriters contend that any phone conversations between Mr.
Michio and their independent adjuster, Mr. Ellenberg, did not
meet the standard for satisfactory proof of loss, and moreover,
that Michio and Ellenberg were not acting representatives for
either party at the time of any alleged conversation. (Rec. Doc.
No. 174-1 at 6-7). Finally, Underwriters claim that even if Mr.
Michio

did

submit

a

proof

of

loss,

it

contained

incorrect

information and was thus invalid. (Rec. Doc. No. 174-1 at 8).
For the same reasons, Defendant also seeks a new trial if this
Court does not grant judgment as a matter of law.
Conversely, First American contends that the jury received
ample evidence regarding the claim submitted by Mr. Michio that
meets

the

standard

of

satisfactory
5

proof

of

loss.

Plaintiff

argues

that

the

standard

for

satisfactory

proof

of

loss

is

whether the insurer is fully apprised of the insured’s claim,
including the extent of the damage. (Rec. Doc. No. 175 at 3).
Between evidence of the facsimile sent by Mr. Michio and his
conversations with the Mr. Ellenberg, First American maintains
that the jury had sufficient evidence to find that Underwriters
received

satisfactory

proof

of

loss,

thus

supporting

the

judgment in favor of Plaintiff. (Rec. Doc. No. 175 at 6-7).
IV.

LAW AND ANLAYSIS

a. Judgment as a Matter of Law
Underwriters move for judgment as a matter of law pursuant
to

Fed

R.

Civ.

P.

Rule

50(b).

There

are

two

preliminary

requirements for a party to file a Rule 50(b) motion: (1) the
party must have moved for judgment as a matter of law at trial
prior to the case’s submission to the jury under rule 50(a); and
(2) if the 50(a) motion is denied, the party must file its
renewed motion for judgment as a matter of law within 28 days of
the judgment. Fed. R. Civ P. Rule 50(b). Underwriters met both
requirements by twice moving for judgment as a matter of law
during

trial

present

(both

Motion

of

exactly

which
28

were
days

judgment.

6

denied)
after

and
this

by

filing

Court

the

entered

1. Standard of Review
Judgment as a matter of law is proper with a respect to a
particular issue when the court “finds that a reasonable jury
would not have a legally sufficient evidentiary basis to find
for the party on that issue.” Fed. R. Civ. P. Rule 50(a)(1).
“This occurs when the facts and inferences point so strongly and
overwhelmingly

in

the

movant’s

favor

that

reasonable

jurors

could not reach a contrary verdict.” Brennan’s Inc. v. Dickie
Brennan & Co. Inc., 376 F.3d 356, 362 (5th Cir. 2004) (citing
Coffel v. Stryker Corp., 284 F.3d 625, 630 (5th Cir. 2002). When
applying this standard, a court “considers all of the evidence,
drawing all reasonable inferences and resolving all credibility
determinations in the light most favorable to the non-moving
party.” Flowers v. S. Reg’l Physician Servs. Inc., 247 F.3d 229,
235 (5th Cir. 2001) (quoting Brown v. Bryan County, OK., 219
F.3d 450, 456 (5th Cir. 2000).
2. Satisfactory Proof of Loss
In Louisiana “[i]t is well settled that a ‘satisfactory
proof

of

loss’

is

only

that

which

is

‘sufficient

to

fully

apprise the insurer of the insured’s claims.’” Louisiana Bag
Co., Inc. v. Audubon Indem. Co., 2008-0453, p. 23 (La. 12/2/08);
999 So.2d 1104, 1119 (quoting McDill, v. Utica Mut. Ins. Co.,
475 So. 2d 1085, 1089 (La. 1985)). The United States Court of
Appeals for the Fifth Circuit has elaborated on that definition:
7

“Louisiana

decisions

demonstrate

that

“proof

of

loss”

is

a

flexible requirement. An insurer of course must receive some
kind of notice of a claim before it can act. So long as it
receives enough information, the manner in which it obtains the
information is immaterial.” Austin v. Parker, 672 F.2d 508, 520
(5th Cir. 1982).
Underwriters attempt to rewrite the definition of proof of
loss under Louisiana law. Even after acknowledging that a proof
of loss under Louisiana law does not have to be writing (Rec.
Doc. No. 174-1 at 5), Underwriters aim to convince this Court
that “documentation” must be submitted to the insurer and that
oral testimony alone is insufficient. (Rec. Doc. No. 174-1 at 7)
(claiming

that

Mr.

Michio’s

conversations

with

Mr.

Ellenburg

were insufficient because of a “lack of documentation” and that
Mr.

Michio’s

testimony

that

he

faxed

documentation

to

the

insurer was insufficient because there was no “cover letter or
commentary in any file.”) This contention directly contradicts
established law as well as concessions made by Defendant earlier
in its supporting memorandum. See Austin, 672 F.2d at 520; Rec
Doc.

No.

174-1

Underwriters’

at

5.

contention

Thus,
that

this

Court

physical

refuses

to

documentation

accept
of

the

proof of loss must be received by the insurer, and instead will
follow

a

long

line

of

precedent

declaring

that

the

insurer

simply must be put on notice of the claim and the basis for it.
8

Here, First American presented two significant pieces of
evidence at trial. First, Mr. Michio testified that he faxed a
full

report

to

Underwriters

containing

a

letter

of

representation, a copy of the sworn statement, a proof of loss,
and a copy of his estimate. (Trial Transcript No. 2 at 19). A
reasonable person could certainly find this evidence sufficient
to put Underwriters on notice of the claim. Mr. Michio lacks a
fax

confirmation

sheet,

and

the

Defendants

claim

they

never

received the fax, but it is not the duty of this Court to weigh
the evidence or determine credibility. (Trial Transcript No. 2
at 23, 45, 68). The jury easily could have found Mr. Michio’s
testimony

more

Ellenberg.

convincing

Simply

because

than

that

Defendants

of

Mr.

allege

Quigley
that

or

they

Mr.

never

received the fax does not mean the jury was unreasonable in
finding

that

Underwriters

received

sufficient

information

concerning the claim. Even if some of the information on the
claim forms was incorrect as Defendants allege, the forms were
still obvious enough to make Underwriters aware of the claim,
which is sufficient under Louisiana law. (Rec. Doc. No. 174-10).
Second, Mr. Michio testified that he relayed information
over the phone to Mr. Ellenberg regarding an additional claim.
(Trial Transcript No. 2 at 24). After trying to get in touch
with numerous individuals at Underwriters, Mr. Michio testified
that he could only get Mr. Ellenberg on the phone, and it was
9

Ellenburg who gave him the fax number for Underwriters. (Trial
Transcript No. 2 at 23-24). Furthermore, as Mr. Ellenburg was a
representative

for

Underwriters

instructed

to

work

with

Mr.

Cotton (though he was allegedly no longer working on the claim
when

Michio

contacted

him),

and

Mr.

Michio

was

an

adjuster

representing Mr. Cotton, the conversation between the two could
be seen as Underwriters’ receipt of information concerning the
proof of loss submitted by Mr. Michio. A reasonable jury could
so find.
To
could

the

not

extent
have

that

Defendants

adequately

contend

informed

this

conversation

Underwriters

due

to

an

alleged lack of principal-agent relationships, such an argument
is irrelevant. The Louisiana standard for proof of loss simply
requires

that

Underwriters

receive

notice,

not

that

it

is

received by or from a particular individual. See Austin, 672
F.2d at 520. Again, Louisiana uses a very flexible definition of
proof of loss. Id. Yet, even if an agency relationship were
required, there is sufficient evidence in the record to support
that finding based on the testimony of Michio, Quigley, and
Ellenberg described above. Between the evidence of Mr. Michio’s
fax and his conversation with Mr. Ellenberg, there is enough
support

in

Defendants

the

record

received

for

a

reasonable

sufficient

10

jury

information

to

find

regarding

that
an

additional claim. Accordingly, Underwriters’ Motion for Judgment
as a Matter of Law lacks merit.
b. Request for a New Trial
Alternatively, however, Underwriters seek a new trial. Rule
59 provides that “[t]he court may . . . grant a new trial on all
or some of the issues . . . after a jury trial, for any reason
for which a new trial has heretofore been granted in an action
at law in federal court.” Fed R. Civ. P. Rule 59(a)(1). Though
“[t]he

rule

does

not

specify

what

grounds

are

necessary

to

support such a decision,” the Fifth Circuit has found that a new
trial is justified if “the district court finds the verdict is
against the weight of the evidence, the damages awarded are
excessive,

the

trial

was

unfair,

or

prejudicial

error

was

committed in its course.” Smith v. Transworld Drilling Co., 773
F.2d

610,

613

(5th

Cir.

1985)(internal

citations

omitted).

Seemingly, the only applicable ground for a new trial here is
that the verdict is against the weight of the evidence.
However, “in an action based on state law but tried in
federal court by reason of diversity of citizenship, a district
court must apply a new trial . . . standard according to the
state’s law.” Fair v. Allen, 669 F.3d 601, 604 (5th Cir. 2012).
Under

Louisiana

law,

a

new

trial

is

appropriate

“when

the

verdict or judgment appears clearly contrary to the law and the
evidence.” Davis v. Wal-Mart Stores, Inc., 2000-0445, p. 9 (La.
11

11/28/00); 774 So.2d 84, 92.

“Louisiana gives the jury high

deference,” Fair, 669 F.3d at 605, and the “verdict should not
be set aside if it is supportable by any fair interpretation of
the evidence.” Davis, 774 So.2d at 92. For the reasons set forth
above in discussing the request for judgment as a matter of law,
the jury’s verdict was supportable by a fair and reasonable
interpretation of the evidence. Therefore, Defendants have not
demonstrated grounds for this Court to order a new trial.
V.

CONCLUSION

In light of the foregoing,
IT IS ORDERED that the Motion is DENIED for lack of factual or
legal support.

New Orleans, Louisiana, this 28th day of October, 2015.

____________________________
UNITED STATES DISTRICT JUDGE

12