Wells v. Southern Fidelity Insurance Company, et al
Filing
44
ORDER AND REASONS - IT IS ORDERED that the Motion for Summary Judgment (Rec. Doc. 35 ) is GRANTED, as set forth in document. Plaintiff's claims are DISMISSED with prejudice. Signed by Judge Jane Triche Milazzo on 1/7/2019. (sa)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
LETICIA WELLS
CIVIL ACTION
VERSUS
NO: 18-1696
SOUTHERN FIDELITY
INSURANCE COMPANY, ET AL.
SECTION: “H”
ORDER AND REASONS
Before the Court is Defendant Southern Fidelity Insurance Company’s
(“SFIC”) Motion for Summary Judgment (Doc. 35). For the following reasons,
the Motion is GRANTED.
BACKGROUND
This insurance dispute arose after a tornado ripped through New
Orleans East and damaged Plaintiff Leticia Wells’s home. On February 7,
2017, Plaintiff reported a claim with SFIC, her homeowner’s insurer, for the
damage to her home caused by the tornado. The next day, SFIC sent an
adjuster to Plaintiff’s home. The adjuster advised SFIC that it should hire an
engineer to inspect the damages and estimate the cost of repair. On February
16, 2017, the engineer hired by SFIC inspected Plaintiff’s property. SFIC
received reports from the engineer and the adjuster on March 9, 2017. The
adjuster’s report estimated the cost of repair to Plaintiff’s home at $31,960.28.
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On March 13, 2017, SFIC paid Plaintiff the full amount of the adjuster’s
estimate.
Plaintiff then hired a contractor who estimated that it would cost more
than $270,000 to repair her home. SFIC received notice of this contractor’s
estimate on May 24, 2017. Shortly thereafter, Plaintiff invoked the appraisal
process provided for by her insurance policy (“the Policy”) to resolve the dispute
about the cost of repair. 1 The parties each chose appraisers, the appraisers
inspected Plaintiff’s property, and each appraiser estimated the cost to repair
the property.
On October 3, 2017, SFIC received the appraisal award that resulted
from the appraisal process. About two weeks later, on October 18, 2017, SFIC
paid Plaintiff $13,406.12—the difference between the appraisal award and the
amount SFIC had already paid her minus the policy’s $5,000 deductible.
On January 19, 2018, Plaintiff filed suit against SFIC in the Civil
District Court for the Parish of Orleans. 2 In her Complaint, Plaintiff made
breach of contract and bad faith insurance claims under Louisiana law against
SFIC. 3 SFIC removed Plaintiff’s suit on February 19, 2018. 4 The case initially
was assigned to then-Chief Judge Kurt Engelhardt. On May 14, 2018—several
days before the case was reassigned to this Court—Judge Engelhardt issued a
ruling confirming the parties’ appraisal award and denying Plaintiff’s Motion
to Vacate the appraisal award. 5
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2
3
4
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See Doc. 35-4.
See Doc. 1-4. Other named Defendants included Larry McCorkle, SFIC’s appraiser, and
Raymond Gonzales III, the umpire who refereed the appraisal process between Wells and
SFIC. Id. On April 11, Wells moved voluntarily to dismiss McCorkle and Gonzales from
this suit. Doc. 25. This Court granted her request on April 20, 2018, leaving SFIC as the
only named Defendant in the suit. Doc. 29.
See Doc. 1-4.
Doc. 1.
See Doc. 33.
2
On June 8, 2018, SFIC moved for summary judgment. 6 Plaintiff
opposes. 7
LEGAL STANDARD
“The court shall grant summary judgment if 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.” 8 “As to materiality . . . [o]nly disputes over
facts that might affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment.” 9 Nevertheless, a dispute
about a material fact is “genuine” such that summary judgment is
inappropriate “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” 10
In determining whether the movant is entitled to summary judgment,
the Court views facts in the light most favorable to the non-movant and draws
all reasonable inferences in his favor. 11 “If the moving party meets the initial
burden of showing that there is no genuine issue of material fact, the burden
shifts to the non-moving party to produce evidence or designate specific facts
showing the existence of a genuine issue for trial.” 12 Summary judgment is
appropriate if the non-movant “fails to make a showing sufficient to establish
the existence of an element essential to that party’s case.” 13
“In response to a properly supported motion for summary judgment, the
nonmovant must identify specific evidence in the record and articulate the
See Doc. 35.
See Doc. 38.
8 FED. R. CIV. P. 56.
9 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
10 Id. at 248.
11 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 533 (5th Cir. 1997).
12 Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).
13 Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
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manner in which that evidence supports that party’s claim, and such evidence
must be sufficient to sustain a finding in favor of the nonmovant on all issues
as to which the nonmovant would bear the burden of proof at trial.” 14 The Court
does “not . . . in the absence of any proof, assume that the nonmoving party
could or would prove the necessary facts.” 15 Additionally, “[t]he mere argued
existence of a factual dispute will not defeat an otherwise properly supported
motion.” 16
LAW AND ANALYSIS
The Court will first address Plaintiff’s breach of contract claims before
turning to her bad faith insurance claims.
I.
Breach of Contract
“Under Louisiana law, ‘[a]n insurance policy is a contract between the
parties and should be construed by using the general rules of interpretation of
contracts set forth in the Louisiana Civil Code.’” 17 “Interpretation of a contract
is the determination of the common intent of the parties.” 18 “When the words
of a contract are clear and explicit and lead to no absurd consequences, no
further interpretation may be made in search of the parties’ intent.” 19 “Courts
lack the authority to alter the terms of insurance contracts under the guise of
contractual interpretation when the policy’s provisions are couched in
unambiguous terms.” 20
Johnson v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th Cir.
2004) (internal citations omitted).
15 Badon v. R J R Nabisco, Inc., 224 F.3d 382, 393–94 (5th Cir. 2000) (quoting Little v. Liquid
Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
16 Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).
17 In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir. 2007) (quoting Cadwallader
v. Allstate Ins. Co., 848 So. 2d 577, 580 (La. 2003)).
18 LA. CIV. CODE art. 2045.
19 Id. art. 2046.
20 Cadwallader, 848 So. 2d at 580.
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Plaintiff alleges that SFIC breached the Policy by failing to pay the full
cost of repair necessary to fix her home after the tornado damaged it. SFIC
responds that this Court’s confirmation of the appraisal award that SFIC paid
to Plaintiff for the damage to her home freed SFIC of any further obligations
to pay her under the Policy.
The Policy’s “Appraisal” provision provides:
In case we and you shall fail to agree as to the actual cash value or
the amount of loss, then, on the written demand of either, each
shall select a competent and disinterested appraiser and notify the
other of the appraiser selected within twenty days of such demand.
The appraisers shall first select a competent and disinterested
umpire; and failing for fifteen days to agree upon such umpire,
then on request of you or us such umpire shall be selected by a
judge of a court of record in the state in which the property covered
is located. The appraisers shall then appraise the loss, stating
separately actual cash value and loss to each item, and failing to
agree, shall submit their differences, only, to the umpire. An
award in writing, so itemized, of any two when filed with us shall
determine the amount of actual cash value and loss. Each appraiser
shall be paid by the party selecting him and the expenses of
appraisal and umpire shall be paid by the parties equally. 21
Here, Plaintiff invoked the Policy’s appraisal process to determine the amount
of money SFIC owed her for damage to her property caused by the tornado. A
valid appraisal award resulted from the process. In its Order and Reasons
confirming the appraisal award, this Court stated: “The appraisal award sets
the amount of loss payable to Leticia Wells for the claim that was the subject
of the appraisal.” 22 The subject of the appraisal involved all damage to
Plaintiff’s property caused by the tornado. As such, no dispute exists regarding
the amount of money SFIC owes Plaintiff under its policy for damage to her
property caused by the tornado in February 2017. Because no genuine dispute
21
22
Doc. 35-4 at 27 (emphasis added).
Doc. 33 at 2.
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of material fact exists regarding this amount, SFIC is entitled to summary
judgment on Plaintiff’s breach of contract claim. 23
II.
Bad Faith Insurance
“Louisiana law authorizes the recovery of bad faith penalties from
insurers who fail to pay legitimate claims under two nearly identical
[statutes].” 24 The two statutes prohibit “the failure to timely pay a claim after
receiving satisfactory proof of loss when that failure to pay is arbitrary,
capricious, or without probable cause.” 25 The only difference between the two
statutes is the time period in which payment is required, with one requiring
payment within 30 days and the other within 60 days. 26
“To recover under either statute, the plaintiff must demonstrate that the
insurer (1) received a satisfactory proof of loss; (2) that the insurer failed to pay
within the designated time period, and (3) that the failure to pay was arbitrary,
capricious or without probable cause.” 27 “The phrase ‘arbitrary and capricious’
means ‘vexatious’ or ‘unjustified, without reasonable or probable cause or
excuse.’” 28 “An insurer does not act arbitrarily and capriciously . . . when it
See Island Concepts, LLC v. Certain Underwriters at Lloyd’s, London, No. 13-6725, 2014
WL 5524379, at *10 (E.D. La. Oct. 31, 2014) (granting insurer’s motion for summary
judgment on plaintiff’s claims for damages owed under an insurance policy in excess of a
valid appraisal award); W. Consol. Premium Properties, Inc. v. Westchester Surplus Lines
Ins. Co., No. 06-4845, 2011 WL 6300334, at *2 (E.D. La. Dec. 16, 2011) (granting insurer’s
motion for summary judgment on plaintiff’s breach of contract claims after denying
plaintiff’s motion to vacate a valid appraisal award).
24 Island Concepts, 2014 WL 5524379 at *12 (citing LA. REV. STAT. §§ 22:1892, 22:1973).
25 Korbel v. Lexington Ins. Co., 308 F. App’x 800, 803 (5th Cir. 2009) (quoting Reed v. State
Farm Mut. Auto. Ins. Co., 857 So. 2d 1012, 1020 (La. 2003)).
26 Compare LA. REV. STAT. § 22:1892 (requiring payment within 30 days of satisfactory proof
of loss) with LA. REV. STAT. § 22:1973 (requiring payment within 60 days of satisfactory
proof of loss).
27 Island Concepts, 2014 WL 5524379 at *12 (citing Boudreaux v. State Farm Mutual
Automobile Ins. Co., 896 So. 2d 230, 233 (La. App. 4 Cir. 2005)).
28 Id. at *12 (quoting Dickerson v. Lexington Ins. Co., 556 F.3d 290, 297 (5th Cir. 2009)).
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withholds payment based on a genuine (good faith) dispute about the amount
of a loss or the applicability of coverage.” 29
In Long v. American Security Insurance Co., Louisiana’s Fourth Circuit
Court of Appeal stated that compliance “with a contracted and self-invoked
appraisal process fails to provide evidence or factual proof of vexatious,
arbitrary, [or] capricious [conduct] or conduct without probable cause.” 30 As
such, the court in Long affirmed a trial court’s grant of summary judgment to
an insurer on an insured’s bad faith claim based on the insurer’s tender of
payment of a valid appraisal award within 30 days of the award’s issuance. 31
Other courts have reached the same result on materially identical facts. 32
Here, SFIC timely reimbursed Plaintiff the undisputed costs of repair at
every stage of the claims process. Once the disputed costs were resolved—in
this case, through an appraisal process—it timely paid the updated costs of
repair. SFIC’s failure to pay Plaintiff the amount of the appraisal award before
the award was given does not constitute evidence of bad faith. Nor does any
other evidence cited to by Plaintiff show that SFIC engaged in bad faith. No
genuine dispute of material fact exists regarding whether SFIC engaged in bad
faith. It did not. Therefore, it is entitled to summary judgment on those claims.
Dickerson, 555 F.3d at 297–98 (citing Calogero v. Safeway Ins. Co. of Louisiana, 753 So. 2d
170, 173 (La. 2000)).
30 Long v. Am. Sec. Ins. Co., 52 So. 3d 260, 264 (La. App. 4 Cir. 2010).
31 Id.
32 See, e.g., Island Concepts, 2014 WL 5524379 at *14 (“Like in Long, [the insurer’s]
compliance with the contractual appraisal process does not provide evidence of bad faith.
Because [the insured] has pointed to no evidence indicative of its ability to prove at trial
that [the insurer] acted with bad faith, [the insurer] is entitled to summary judgment with
regard to [the insured’s] bad faith claims.”); Consol. Premium Properties, 2011 WL
6300334, at *3 (“[B]ecause [the insurer] paid plaintiffs the amount due under the appraisal
award well within the statutory period . . . [the insurer] made timely payment of the claim,
and it is therefore entitled to summary judgment.”).
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CONCLUSION
For the foregoing reasons, SFIC’s Motion for Summary Judgment is
GRANTED. Plaintiff’s claims are DISMISSED with prejudice.
New Orleans, Louisiana this 7th day of January, 2019.
____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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