JCKP, LLC v. Berkley Regional Specialty Insurance Company et al

Filing 154

ORDER granting Defendant Berkley Regional Specialty Insurance Company's 131 Motion for Partial Summary Judgment. Plaintiff's claims for punitive and extra-contractual damages are dismissed with prejudice. Specifically, the Court dismiss es Plaintiff's claims of intentional breach of contract, breach of implied covenant of good faith and fair dealing, bad faith, and intentional and gross negligent infliction of damages. Plaintiff's claims of breach of contract, unjust enrichment, negligent infliction of damages, and negligence remain pending. Signed by District Judge Keith Starrett on April 29, 2016 (dsl)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
EASTERN DIVISION
JCKP, LLC

PLAINTIFF

V.

CIVIL ACTION NO. 2:14-CV-117-KS-MTP

BERKLEY REGIONAL SPECIALTY INSURANCE
COMPANY AND JOHN/JANE DOES 1-20

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This matter is before the Court on Defendant Berkley Regional Specialty Insurance Company’s
Motion for Partial Summary Judgment [131]. After reviewing the submissions of the parties, the
record, and the applicable law, the Court finds that the motion is well taken and should be granted.
I. BACKGROUND
This action involves a dispute over the commercial insurance coverage of roof damage to a
commercial building owned by Plaintiff JCKP, LLC (“Plaintiff”), at 215 Broadway Drive in
Hattiesburg, Mississippi (the “Property”). At all relevant times, the Property was insured by Defendant
Berkley Regional Specialty Insurance Company (“Defendant”). In April 2011, Plaintiff submitted a
claim stating that the roof of the Property was damaged by wind. Defendant, though, denied the claim
on the basis that the damage was not done by wind, but rather by the improper installation of the roof
and the poor repairs it subsequently underwent.
Plaintiff filed this action on April 10, 2014 in the Circuit Court of Forrest County, Mississippi,
bringing claims of breach of contract, intentional breach of contract, breach of implied covenant of
good faith and fair dealing, unjust enrichment, bad faith, intentional, gross, and/or negligent infliction
of damages, and negligence. The action was removed to this Court on July 25, 2014.
Defendant now brings its Motion for Partial Summary Judgment [131], asking the Court to
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dismiss with prejudice all of Plaintiff’s “bad faith” claims, including its claims for intentional breach
of contract, breach of implied covenant of good faith and fair dealing, bad faith, and intentional, gross
and/or negligent infliction of damages.
II. DISCUSSION
“To recover punitive damages for bad faith denial of [its] insurance claim, [Plaintiff] must show
that the insurer denied the claim (1) without an arguable or legitimate basis, either in fact or law, and
(2) with malice or gross negligence in disregard of the insured’s rights.” Broussard v. State Farm Fire
and Cas. Co., 523 F.3d 618, 628 (5th Cir. 2008) (quoting U.S. Fidelity & Guar. Co. v. Wigginton, 964
F.2d 487, 492 (5th Cir. 1992)). This is an issue of law for the Court to decide. Id. To recover extracontractual damages, Plaintiff need only prove that Defendant lacked “a reasonably arguable basis”
for denial. Id. “Arguably-based denials are generally defined as those which were rendered upon
dealing with the disputed claim fairly and in good faith.” Andrew Jackson Life Ins. Co. v. Williams,
566 So.2d 1172, 1184 (Miss. 1990). Where there is credible evidence to support the denial, there is
an arguable reason, even if there exists evidence to the contrary. Blue Cross & Blue Shield of Miss.,
Inc. v. Campbell, 466 So.2d 833, 851 (Miss. 1984).
Defendant claims that its reasonable basis for denying Plaintiff’s claim was that the damage
to the roof was caused by poor installation and repair jobs, not by wind as Plaintiff contended.1 The
record clearly reflects that an investigation was conducted as to Plaintiff’s claim. (See Investigation
Report [132-4].) Inspections done by two independent engineering firms concluded that the damage
to the roof was not caused by wind damage, but rather by poor installation and improper repairs.
(Donan Report [132-5] at p. 3; TRC Report [133-1] at p. 5.) In Broussard, the Fifth Circuit held that
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Neither party disputes that damage caused solely by improper installation and poor repair jobs
is not covered under the Policy. As the only covered cause asserted by Plaintiff is wind damage,
the Court considers only whether Defendant had an arguably reasonable basis for denying
coverage on the basis that the damage was not caused by wind.
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the defendant insurance company’s reasonable basis could be found in its own adjuster’s investigation.
523 F.3d at 628. Because credible evidence that damage to Plaintiff’s roof was not caused by wind
damage existed when Defendant denied the claim, the Court finds that Defendant had an arguably
reasonable basis for its denial. Therefore, the Court will grant the Motion for Partial Summary
Judgment [131] and Plaintiff’s claims for punitive and extra-contractual damages will be dismissed
with prejudice. Specifically, the Court dismisses Plaintiff’s claims of intentional breach of contract,
breach of implied covenant of good faith and fair dealing, bad faith, and intentional and gross negligent
infliction of damages. The Court will, however, allow Plaintiff’s claim of negligent infliction of
damages to go forward, as punitive damages are not available for this claim under Mississippi law.
See MISS. CODE ANN. § 11-1-65(1)(a) (requiring actual malice, gross negligence, or actual fraud for
punitive damages).
III. CONCLUSION
IT IS THEREFORE ORDERED AND ADJUDGED that Defendant’s Motion for Partial
Summary Judgment [131] is granted. Plaintiff’s claims for punitive and extra-contractual damages
are dismissed with prejudice. Specifically, the Court dismisses Plaintiff’s claims of intentional
breach of contract, breach of implied covenant of good faith and fair dealing, bad faith, and
intentional and gross negligent infliction of damages.
Plaintiff’s claims of breach of contract, unjust enrichment, negligent infliction of damages,
and negligence remain pending before the Court.
SO ORDERED AND ADJUDGED this the 29th day of April, 2016.
s/Keith Starrett
UNITED STATES DISTRICT JUDGE

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