Rice et al v. Allstate Insurance Company
ORDER granting 15 Motion for Summary Judgment. Signed by Judge Donald W. Molloy on 5/18/2012. (dle)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
F. SCOTT RICE and BOBBIE RICE,
ALLSTATE INSURANCE COMPANY, )
a foreign corporation,
F. Scott and Bobbie Rice allege that Allstate Insurance Company
(“Allstate”) failed to promptly and thoroughly investigate claims they brought
under a homeowners’ insurance policy, refused timely payment for certain losses,
and incorrectly denied coverage on others. Allstate moves for partial summary
judgment as to Plaintiffs’ claims regarding payment of additional living expenses
and depreciation, breach of the covenant of good faith and fair dealing, infliction
of emotional distress, loss of consortium, and punitive damages based on actual
fraud. Allstate also moved for partial summary judgment on Plaintiffs’ breach of
contract claim regarding coverage of two ATVs; because Plaintiffs have agreed to
dismiss that claim, Allstate’s motion on that point is denied as moot. For the
reasons stated below, the motion is granted in all other respects.
In August 2008, Plaintiffs entered into an agreement with Ed Negrin under
which he would lease and eventually purchase their home in Rexford, Montana.
On August 22, 2008, Plaintiffs left for Florida with the understanding that Negrin
would take possession of the home on September 1. On September 17, Negrin met
with Plaintiffs’ neighbor—who agreed to aid in the transfer of the home—to gain
access to the home. On September 18, the neighbor discovered that Negrin had
absconded with almost all of the personal property from the home.
Plaintiffs reported the theft to the Lincoln County Sheriff’s Office and filed
a property loss claim with Allstate under their homeowners’ policy on September
24. Plaintiffs claim a total loss of $58,635.00 plus living expenses. To date,
Allstate has paid all uncontested amounts due under the policy, in the amount of
A party is entitled to summary judgment if it can demonstrate “that there is
no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). Summary judgment is warranted where
the documentary evidence produced by the parties permits only one conclusion.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). On a motion for
summary judgment, this Court must determine whether a fair-minded jury could
return a verdict for the non-moving party. Id. at 252. Only disputes over facts that
might affect the outcome of the suit under the governing law will properly
preclude entry of summary judgment; factual disputes which are irrelevant or
unnecessary to the outcome are not considered. Id. at 248.
Plaintiffs concede that Allstate is entitled to summary judgment as to their
claim for depreciation benefits. They also concede that Montana’s Unfair Trade
Practices Act (“UTPA”) bars their claims for breach of the implied covenant of
good faith and fair dealing. Accordingly, summary is granted in favor of Allstate
as to these claims, and Allstate’s remaining arguments are considered below.
Count I (partial): Breach of Contract Claim for Additional Living
Summary judgment is granted in favor of Allstate regarding Plaintiffs’
claims for additional living expenses. Plaintiffs’ policy provides for living
expenses only when a covered loss makes the insured premises uninhabitable.
The theft here did not render Plaintiffs’ home uninhabitable.
The term “uninhabitable” is not defined in the policy. The Oxford
Dictionary defines the term as a place that is “unsuitable for living in.” Black’s
Law Dictionary defines the term as “[t]he condition of a building in which
inhabitants can live free of serious defects that might harm health or safety.”
(Bryan A Garner ed., 9th ed., West 2009). The Montana Supreme Court has not
defined “uninhabitability” in a homeowners’ insurance policy dispute such as this,
but it has defined the term in the context of implied warranties of habitability. As
a general rule, if individuals are unable to live in a house because it lacks
structural integrity or has sustained sufficient structural damage, the premises are
“uninhabitable.” E.g. Degan v. Exec. Homes, Inc., 696 P.2d 431 (Mont. 1985);
Chandler v. Madsen, 642 P.2d 1028, 1030 (Mont. 1982); see also Williams v. Auto
Club Family Ins. Co., 2007 WL 2436680 *3-4 (E.D. La. 2007) (finding that a
house damaged by Hurricane Katrina was not uninhabitable because the house had
no structural damage and the plaintiffs moved back into the house after making
only minor repairs). In Samuelson v. A.A. Quality Construction, the Montana
Supreme Court distinguished between uninhabitable living conditions and those
that are merely inconvenient. 749 P.2d 73, 74–75 (Mont. 1988). It held a home
was inhabitable even though water had seeped into the basement, damaging
furniture and preventing use of that entire portion of the house:
In both Chandler and Degnan, the dwellings were damaged so
substantially as to preclude their use as a residence. That is not the
situation in the present case . . . The evidence [here] demonstrates that
the water problem was an inconvenience but did not render the home
Id. at 75.
Other jurisdictions have adopted a more expansive definition, finding that
structurally sound buildings may be uninhabitable if a condition exists that
threatens the health or safety of the occupants. E.g. W. Fire Ins. Co. v. 1st
Presbyterian Church, 437 P.2d 52 (Col. 1968) (finding the accumulation of
gasoline around and under a church building made it uninhabitable); Gay v.
Cornwall, 494 P.2d 1371, 1373–74 (Wash. App. 1972) (finding that serious leaks,
a lack of vents, a broken sewer pipe, and an overheating furnace were sufficient to
render a house uninhabitable).
Even if this court were to adopt this more expansive approach here,
Plaintiffs’ claim would still fail. Although their house may lack personal property
such as utensils, beds, and other furniture, there is no evidence that any of the
house’s necessary systems, such as heat or water, have failed or that any other
conditions would threaten Plaintiffs’ health or safety should they attempt to live in
the house. Plaintiffs’ need to plow their driveway appears to be a “minor repair”
that could be remedied prior to reoccupation. See Williams, *3-4. To define
“uninhabitable” as broadly as Plaintiffs request would remove the Montana
Supreme Court’s distinction between unlivable conditions and inconvenient ones.
Accordingly, Allstate is entitled to summary judgment as to Plaintiffs’ claim
for additional living expenses.
Counts III and IV
Summary judgment is also granted in favor of Allstate on Plaintiffs’
emotional distress and loss of consortium claims.
Plaintiffs did not address these claims in their response brief. Instead, they
agreed to “conditionally” drop their opposition to Allstate’s request for summary
judgment on these claims if damages for them can be awarded under the UTPA.
Though such damages are available under UTPA if awarded by the jury, the Court
does not take a position on Plaintiffs’ conditional offer.
[Where] a party . . . fails to properly address another party’s assertion of
fact as required . . . the court may . . . grant summary judgment if the
motion and the supporting materials—including the facts considered
undisputed—show that the movant is entitled to it . . . .
Fed. R. Civ. P. 56(e)(3); see also Beard v. Banks, 548 U.S. 521, 529 (2006)
(holding that if the non-moving party has not set forth specific facts showing there
is a genuine issue for trial, “the law requires entry of judgment in the [moving
party]’s favor”); Harney v. Speedway SuperAmerica, LLC, 526 F.3d 1099, 1104
(7th Cir. 2008) (holding that once a motion for summary judgment has been filed
“the opposing party may not simply rest upon the pleadings but must instead
submit evidentiary materials that ‘set forth the specific facts showing there is a
genuine issue for trial’” as required under Rule 56(e)).
The same basic elements are required to prove both negligent infliction of
emotional distress and intentional infliction of emotional distress. Sacco v. High
Country Indep. Press, Inc., 896 P.2d 411, 428 (Mont. 1995). A claim for
emotional distress “will arise under circumstances where serious or severe
emotional distress to the plaintiff was the reasonably foreseeable consequence of
the defendant’s [negligent or] intentional act or omission.” Id. The Montana
Supreme Court has held that “[t]he law intervenes only where the distress inflicted
is so severe that no reasonable [person] could be expected to endure it.” Renville
v. Fredrickson, 101 P.3d 773, 776 (Mont. 2004)(citing Sacco, 896 P.2d at 426).
Sacco’s heightened standard of proof requires “that a plaintiff claiming
intentional or negligent infliction of emotional distress must make a threshold
showing to the court that their emotional distress is ‘serious or severe’ in order to
proceed to trial.” Jacobsen v. Allstate Ins. Co., 215 P.3d 649, 663 (Mont. 2009);
see also Lorang v. Fortis Ins. Co., 192 P.3d 186, 222 (Mont. 2008).
Plaintiffs have not provided any evidence to support their claims for
emotional distress. It is undisputed that Mr. Rice suffers from generalized anxiety
disorder with panic disorder and agoraphobia, which may have heightened the
distress he experienced during this insurance dispute. (See Def.’s SUF, doc. 1711.) However, this court must determine if a reasonable person could be expected
to endure the distress. Plaintiffs have provided no evidence relevant to this claim.
Thus, summary judgment must be granted in favor of Allstate as to Count III of
Loss of Consortium
A claim for “loss of consortium” is an independent cause of action under
Montana law. Bain v. Gleason, 726 P.2d 1153, 1154 (Mont. 1986). However,
Plaintiffs fail to provide any evidence as to how their dispute with Allstate
resulted in such a loss. Therefore, summary judgment must be granted in favor of
Allstate as to Count IV of the Complaint.
Claim for punitive damages based on actual fraud
Summary judgment is also granted in favor of Allstate regarding Plaintiffs’
claims for punitive damages based on actual fraud. Plaintiffs fail to allege with
particularity either the content of the false representation or the identification of
the material facts they allege Allstate concealed.
Federal Rule of Civil Procedure 9(b) provides: “In alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud
or mistake.” A plaintiff who alleges an independent claim of actual fraud must
allege the nine common-law elements of fraud with particularity. In re
Kindsfather, 108 P.3d 487, 490 (Mont. 2005). However, where a plaintiff alleges
fraud as part of a claim for punitive damages, the plaintiff need only allege actual
fraud as it is statutorily defined. Lorang v. Fortis, 192 P.3d 186, 205 (Mont.
2008). Under the statutory definition, “a defendant is guilty of actual fraud if the
defendant: (a) makes a representation with knowledge of its falsity; or (b) conceals
a material fact with the purpose of depriving the plaintiff of property or legal
rights or otherwise causing injury.” Mont. Code Ann. § 27-1-221(3).
Rule 9(b)’s requirement that a plaintiff allege fraud with particularity
applies to both allegations of fraud in support of a claim for punitive damages and
to independent claims of fraud. Jimenez v. Liberty Northwest Ins. Corp., 2007 WL
1378407 *9 (D. Mont. 2007). Lorang is not inconsistent with Jimenez. It does
not preclude a particularity requirement for the two statutory elements of “actual
fraud” or remove the requirement that plaintiffs provide a factual basis for their
Thus, in an allegation of actual fraud for an award of punitive damages “[a]
plaintiff must allege with particularity the content of the false representation or the
identification of the material facts concealed.” Jimenez at *9. Plaintiffs have not
alleged these two elements with particularity, and Allstate is entitled to summary
judgment as to this claim.
For the reasons stated above, IT IS HEREBY ORDERED that Allstate’s
motion for partial summary judgment (doc. 15) is GRANTED as to the following
claims: breach of contract for additional living expenses, depreciation benefits,
and implied covenant of good faith and fair dealing; punitive damages for “actual
fraud”; Count III (emotional distress) in its entirety; and Count IV (loss of
consortium) in its entirety. Allstate’s motion for summary judgment on Plaintiffs’
breach of contract claim concerning the ATVs is DENIED as MOOT.
Dated this 18th day of May 2012.
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