Park Reserve, LLC v. Peerless Insurance Company et al

Filing 124

ORDER AND OPINION GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND FINDING AS MOOT DEFENDANT'S MOTION TO EXCLUDE PLAINTIFF'S EXPERT. Signed on 10/19/15 by District Judge Ortrie D. Smith. (Matthes, Renea)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
PARK RESERVE, LLC,
Plaintiff,
vs.
PEERLESS INSURANCE COMPANY
and HAWKEYE-SECURITY
INSURANCE COMPANY,
Defendants.

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Case No. 14-0763-CV-W-ODS

ORDER AND OPINION GRANTING DEFENDANT’S MOTION FOR PARTIAL
SUMMARY JUDGMENT AND FINDING AS MOOT DEFENDANT’S MOTION TO
EXCLUDE PLAINTIFF’S EXPERT
Pending is Defendant Peerless Insurance Company’s (“Defendant”) Motion for
Partial Summary Judgment and Motion to Exclude Plaintiff Park Reserve LLC’s
(“Plaintiff”) Expert. Doc. #113, Doc. #115. For the following reasons, Defendant’s
Motion for Partial Summary Judgment is granted, and Defendant’s Motion to Exclude
Plaintiff’s Expert is deemed moot.
I.

Background

The Court has reviewed the record. The following facts are either uncontroverted
or controverted but construed in Plaintiff’s favor.
Defendant issued a builder’s risk insurance policy to Plaintiff for Plaintiff’s
buildings C, D, E, G, and H (the “Subject Buildings”). Doc. #114-3, page 22. The
applicable policy period was from January 15, 2011, to January 15, 2012. Id. at page
19. The insurance policy has an endorsement, which provides Defendant will:
cover direct physical loss caused by a covered peril to buildings and
structures described on “the schedule of coverages” while in the course of
rehabilitation or renovation including additions, alterations, improvements,
or repairs. This includes materials and supplies which will become a
permanent part of the buildings and structures, attachments, and
permanent fixtures.

Doc. #114-3, page 26. Plaintiff never rehabilitated or renovated the Subject Buildings
during the applicable policy period. Doc. #114-7, pages 3-5.
II.

Summary Judgment Standard

A moving party is entitled to summary judgment on a claim only if there is a
showing that “there is no genuine issue as to any material fact and that the moving party
is entitled to judgment as a matter of law.” See generally Williams v. City of St. Louis,
783 F.2d 114, 115 (8th Cir. 1986). “[W]hile the materiality determination rests on the
substantive law, it is the substantive law’s identification of which facts are critical and
which facts are irrelevant that governs.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). Thus, “[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.”
Wierman v. Casey’s Gen. Stores, 638 F.3d 984, 993 (8th Cir. 2011) (quotation omitted).
In applying this standard, the Court must view the evidence in the light most favorable to
the non-moving party, giving the party the benefit of all inferences that may be
reasonably drawn from the evidence. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 588-89 (1986); Tyler v. Harper, 744 F.2d 653, 655 (8th Cir. 1984),
cert. denied, 470 U.S. 1057 (1985). However, a party opposing a motion for summary
judgment “may not rest upon the mere allegations or denials of the…pleadings, but…by
affidavits or as otherwise provided in [Rule 56], must set forth specific facts showing that
there is a genuine issue for trial.” Fed. R. Civ. P. 56(e).
III.

Discussion

The rules for interpreting contracts “apply to insurance contracts as well.” Todd
v. Missouri United Sch. Ins. Council, 223 S.W.3d 156, 160 (Mo. 2007) (quotations
omitted). The key determination “is whether the contract language is ambiguous or
unambiguous.” Id. “Whether an insurance policy is ambiguous is a question of law.”
Id. “Courts should not interpret policy provisions in isolation but rather evaluate policies
as a whole.” Ritchie v. Allied Prop. & Cas. Ins. Co., 307 S.W.3d 132, 135 (Mo. 2009)
(quotation omitted). A court gives all terms in an insurance contract “their plain and

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ordinary meaning unless it is clear from the policy that the parties intended an alternate
meaning.” Gavan v. Bituminous Cas. Corp., 242 S.W. 3d 718, 720 (Mo. 2008); see also
Farmland Indus., Inc. v. Republic Ins. Co., 941 S.W.2d 505, 508 (Mo. 1997).
An ambiguity “exists when there is duplicity, indistinctness, or uncertainty in the
meaning of the language in the policy. Language is ambiguous if it is reasonably open
to different constructions.” Ritchie, 307 S.W.3d at 135 (quotation omitted); see also
Windsor Ins. Co. v. Lucas, 24 S.W.3d 151, 153 (Mo. Ct. App. 2000). “Courts may not
unreasonably distort the language of a policy or exercise inventive powers for the
purpose of creating an ambiguity when none exists.” Todd, 223 S.W.3d at 163; see
also Windsor Ins. Co., 24 S.W. 3d at 153. “[T]he fact the parties may disagree on the
interpretation of a term or clause in an insurance policy does not create an ambiguity.”
Windsor Ins. Co., 24 S.W. at 153 (citation omitted). If contract language is ambiguous,
the Court construes the language in favor of the insured. Todd, 223 S.W.3d at 160.
When insurance policies are unambiguous, “they will be enforced as written.” Id.
An insurance policy is comprised of several essential provisions. Id. at 163.
“Definitions, exclusions, conditions, and endorsements are necessary provisions in
insurance policies.” Id. If these provisions “are clear and unambiguous within the
context of the policy as a whole, they are enforceable.” Id.
Defendant issued a builder’s risk insurance policy to Plaintiff for Plaintiff’s Subject
Buildings. Doc. #114-3, page 22. The applicable policy period was from January 15,
2011, to January 15, 2012. Id. at page 19. The insurance policy has an endorsement,
which provides Defendant will:
cover direct physical loss caused by a covered peril to buildings and
structures described on “the schedule of coverages” while in the course of
rehabilitation or renovation including additions, alterations, improvements,
or repairs. This includes materials and supplies which will become a
permanent part of the buildings and structures, attachments, and
permanent fixtures.
Doc. #114-3, page 26 (emphasis added).
The Court finds the phrase “in the course of rehabilitation or renovation” is
unambiguous. There is no indistinctness or uncertainty in the meaning of the language,
nor is the language reasonably open to different interpretations. The Court gives the
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language its plain and ordinary meaning. Thus, this phrase means buildings that are
currently undergoing rehabilitation or renovation.
It is undisputed that Plaintiff never rehabilitated or renovated the Subject
Buildings during the applicable policy period. Doc. #114-7, pages 3-5. Because no
construction work was performed on the Subject Buildings during the applicable policy
period, the insurance policy does not cover Plaintiff’s alleged losses to the Subject
Buildings during this time.
Plaintiff makes several arguments to avoid summary judgment, but the Court
does not find any of them persuasive. First, Plaintiff argues that the phrase “in the
course of rehabilitation or renovation” is undefined and ambiguous, and that the phrase
covers buildings purchased for the purpose of construction in which work has not yet
begun. Plaintiff points to Assurance Company of America v. Adbar, L.C. in support of
its position. No. 04-1174, 2005 WL 991660 (8th Cir. Apr. 29, 2005). While the
underlying insurance contract in Assurance was a builder’s risk policy, the Eighth Circuit
did not consider the issue of whether insurance coverage began before actual
construction commenced. Rather, the Eighth Circuit merely interpreted Missouri’s
“valued policy” statute, and whether the insured was entitled to the declared value of its
property or the purchase price of the property. Id. at *1. These issues are not before
this Court.
Plaintiff also relies on Bosecker v. Westfield Insurance Company. 724 N.E.2d
241 (Ind. 2000). As a preliminary matter, Bosecker is not binding authority on this
Court. Furthermore, the Bosecker Court determined the insurance policy at issue was
ambiguous, as it contained two provisions that directly contradicted each other. Id. at
244-45. Here, no such ambiguity exists.
Additionally, Plaintiff’s contention that “in the course of rehabilitation or
renovation” should cover any buildings purchased for the purpose of construction in
which work has not yet begun is too far-reaching. Under this interpretation, a building
could lay vacant indefinitely and still fall within the ambit of insurance coverage. Even if
Plaintiff limited its definition of “in the course of rehabilitation or renovation” to cover only
the time period right before construction begins on a property, i.e. when construction is
imminent; Plaintiff still would not receive coverage under the insurance policy at issue in
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this summary judgment motion. Here, Plaintiff never performed construction on the
Subject Buildings during the applicable policy period. Additionally, it appears no
construction has been performed on the Subject Buildings since the applicable policy
period ended. Doc. #114-2, page 4. Thus, construction on the subject properties can
hardly be considered imminent.
Next, Plaintiff argues the Subject Buildings were “in the course of rehabilitation
and renovation” because they were part of a multi-building construction project. Plaintiff
maintains that while the Subject Buildings were not under construction during the
applicable policy period, another building in the project – Building B – was under
construction. However, Building B being under construction has nothing to do with
whether the Subject Buildings were under construction. Moreover, Building B was not
covered by the insurance policy at issue in this summary judgment motion. See Doc.
#114-3, page 22.
Additionally, Plaintiff maintains Defendant should be estopped from asserting the
“in the course of rehabilitation and renovation” provision. Plaintiff argues Defendant
was aware Plaintiff had not begun construction on the Subject Properties, and yet
Defendant kept the insurance policies in place. Plaintiff does not cite any legal authority
for this position. Further, Defendant’s knowledge one way or the other does not affect
the unambiguous and enforceable terms of the insurance policy.
Finally, Plaintiff claims Defendant should be estopped from asserting the
insurance policy provision because Defendant never inspected the Subject Buildings,
which was in contravention of Defendant’s policy to inspect newly-insured buildings.
Again, Plaintiff cites no legal authority for this position. Regardless, the insurance policy
indicates that Defendant has the right, but is not obligated, to inspect Plaintiff’s property.
Doc. #114-3, page 28; see also Doc. #122-3, page 4-5.
In sum, the insurance policy unambiguously states it provides coverage for
buildings “in the course of rehabilitation and renovation.” No construction work was
performed on the Subject Buildings during the applicable policy period, and thus, the
insurance policy does not cover Plaintiff’s alleged losses during the applicable policy
period. Because this provides sufficient grounds for the Court to grant summary

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judgment in Defendant’s favor, the Court need not address the remainder of
Defendant’s arguments in support of its Motion for Partial Summary Judgment.1

IV.

Motion to Exclude Plaintiff’s Expert Ronnie Cox

In light of the Court granting Defendant’s Motion for Partial Summary Judgment,
the Court deems Defendant’s Motion to Exclude Plaintiff’s Expert Ronnie Cox moot.

V.

Conclusion

For the foregoing reasons, Defendant’s Motion for Partial Summary Judgment is
granted and Defendant’s Motion to Exclude Plaintiff’s Expert is deemed moot.
IT IS SO ORDERED.

/s/ Ortrie D. Smith
ORTRIE D. SMITH, SENIOR JUDGE
UNITED STATES DISTRICT COURT

DATE: October 19, 2015

1

Defendant moved for partial summary judgment on three grounds. As discussed in this opinion,
the Court grants partial summary judgment in Defendant’s favor based on the first ground. In its
Opposition, Plaintiff argues Defendant has waived its policy defenses. However, Plaintiff makes this
argument with respect to Defendant’s third ground for partial summary judgment – Defendant’s fraud
defense. Doc. #118, page 29 (“The waiver of Peerless’ claim of fraud…” ). Thus, Plaintiff’s argument is
not directed at Defendant’s first ground for partial summary judgment.

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