GIACOBBE et al v. QBE SPECIALTY INSURANCE COMPANY
Filing
85
OPINION. Signed by Judge Noel L. Hillman on 5/8/2018. (dmr)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
LORRAINE GIACOBBE and JOANNE
WAKEFIELD,
No. 1:14-cv-6387 (NLH/KMW)
OPINION
Plaintiffs,
v.
QBE SPECIALTY INSURANCE
COMPANY,
Defendant.
APPEARANCES:
RICHARD J. GUSS
ANDREW W. MILLER
DIFRANCESCO BATEMAN COLEY YOSPIN KUNZMAN DAVIS & LEHRER
15 MOUNTAIN BOULEVARD
WARREN, NJ 07059-6327
On behalf of Plaintiffs
CHRISTIAN ANDREW CAVALLO
RONALD D. PUHALA
DAVIS J. KIM
GOLDBERG SEGALLA, LLP
902 CARNEGIE CENTER
SUITE 100
PRINCETON, NJ 08540
On behalf of Defendant
CHRISTOPHER RYAN WEISS
GOLDBERG SEGALLA, LLP
1037 RAYMOND BLVD.
SUITE 1010
NEWARK, NJ 07102
On behalf of Defendant
HILLMAN, District Judge
This is a breach of contract action involving payment under
a homeowner’s insurance policy following damage to Plaintiffs
Lorraine Giacobbe and Joanne Wakefield’s property after
Superstorm Sandy.
Before the Court is Defendant QBE Specialty
Insurance Company’s Motion for Summary Judgment.
For the
reasons that follow, the Court will grant Defendant’s Motion.
I.
Plaintiffs are the owners of property located at 25 Pilot
Road in Toms River, New Jersey.
Defendant issued Plaintiffs a
homeowner’s insurance policy, which provided coverage for wind
damage (“the Policy”).
Following damage to the property from
Superstorm Sandy, Defendant’s adjusting company determined that
the insured loss was $3,893.98.
Plaintiffs filed their Complaint with this Court on October
15, 2014.
Plaintiffs’ Complaint brings four counts against
Defendant: breach of contract (Count I), breach of the implied
covenant of good faith and fair dealing (Count II), bad faith
(Count III), and violation of the New Jersey Consumer Fraud Act
(Count IV).
By way of a Partial Stipulation of Dismissal with
Prejudice, filed with the Court on October 23, 2017, Count II,
Count III, and Count IV were dismissed with prejudice, leaving
only Count I – the breach of contract claim.
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II.
This Court has jurisdiction over this matter pursuant to 28
U.S.C. § 1332.
Plaintiffs are citizens of New Jersey.
Defendant is an Australian corporation with its principal place
of business in New York.
Accordingly, there is diverse
citizenship between the parties.
As it appears the parties
agree that at the time of the filing of the Complaint the amount
in controversy exceeded $75,000, exclusive of interest and
costs, this Court has diversity jurisdiction. 1
III.
Summary judgment is appropriate where the Court is
satisfied that “’the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits if any,’ . . . demonstrate the absence of a genuine
issue of material fact” and that the moving party is entitled to
a judgment as a matter of law.
Celotex Corp. v. Catrett, 477
U.S. 317, 322-23 (1986) (citing Fed. R. Civ. P. 56).
An issue is “genuine” if it is supported by evidence such
that a reasonable jury could return a verdict in the nonmoving
party’s favor.
248 (1986).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
A fact is “material” if, under the governing
substantive law, a dispute about the fact might affect the
1
The Complaint alleges that the Defendant breached the terms
of the Policy by underpaying Plaintiffs in excess of $145,000.
3
outcome of the suit.
Id.
“In considering a motion for summary
judgment, a district court may not make credibility
determinations or engage in any weighing of the evidence;
instead, the non-moving party’s evidence ‘is to be believed and
all justifiable inferences are to be drawn in his favor.’”
Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004)
(citing Anderson, 477 U.S. at 255).
Initially, the moving party bears the burden of
demonstrating the absence of a genuine issue of material fact.
Celotex, 477 U.S. at 323 (“[A] party seeking summary judgment
always bears the initial responsibility of informing the
district court of the basis for its motion, and identifying
those portions of ‘the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any,’ which it believes demonstrate the absence
of a genuine issue of material fact.”); see Singletary v. Pa.
Dep’t of Corr., 266 F.3d 186, 192 n.2 (3d Cir. 2001) (“Although
the initial burden is on the summary judgment movant to show the
absence of a genuine issue of material fact, ‘the burden on the
moving party may be discharged by “showing” – that is, pointing
out to the district court – that there is an absence of evidence
to support the nonmoving party’s case’ when the nonmoving party
bears the ultimate burden of proof.” (citing Celotex, 477 U.S.
at 325)).
4
Once the moving party has met this burden, the nonmoving
party must identify, by affidavits or otherwise, specific facts
showing that there is a genuine issue for trial.
U.S. at 324.
Celotex, 477
A “party opposing summary judgment ‘may not rest
upon the mere allegations or denials of the . . . pleading[s].’”
Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001).
For
“the non-moving party[] to prevail, [that party] must ‘make a
showing sufficient to establish the existence of [every] element
essential to that party’s case, and on which that party will
bear the burden of proof at trial.’”
Cooper v. Sniezek, 418
F. App’x 56, 58 (3d Cir. 2011) (citing Celotex, 477 U.S. at
322).
Thus, to withstand a properly supported motion for
summary judgment, the nonmoving party must identify specific
facts and affirmative evidence that contradict those offered by
the moving party.
Anderson, 477 U.S. at 257.
IV.
“To state a claim for breach of contract under New Jersey
law, the plaintiff must allege facts demonstrating ‘(1) a
contract; (2) a breach of that contract; (3) damages flowing
therefrom; and (4) that the [plaintiff] performed [his] own
contractual duties.’”
Faistl v. Energy Plus Holdings, LLC, No.
12-2879, 2012 WL 3835815, at *7 (D.N.J. Sept. 4, 2012); accord
Sheet Metal Workers Int’l Ass’n Local Union No. 27 v. E.P.
Donnelly, Inc., 737 F.3d 879, 900 (3d Cir. 2013).
5
The main dispute in this motion concerns the method of
calculating an insured loss under the Policy.
More
specifically, the parties dispute whether Plaintiffs are
entitled to replacement value or actual cash value.
The first
prong of Defendant’s summary judgment motion is the argument
that the Policy only allows for recovery of the actual cash
value under the circumstances of this case.
Plaintiffs argue
they are entitled to the replacement value.
A. Whether Plaintiffs are entitled to actual cash value or
replacement value under the Policy.
A court’s interpretation of an insurance policy “is a
question of law.”
Ramara, Inc. v. Westfield Ins. Co., 814 F.3d
660, 674 (3d Cir. 2016).
“Since insurance policies are
considered contracts and contract interpretation is generally a
question of law, [courts] apply ordinary principles of contract
law.”
Dunkerly v. Encompass Ins. Co., No. 16-8439, 2017 WL
4891529, at *2 (D.N.J. Oct. 27, 2017) (quoting Transamerican
Office Furniture v. Travelers Prop. & Cas., 222 F. Supp. 2d 689,
691 (E.D. Pa. 2002)).
While “in a particular case the
interpretation may depend on underlying disputed facts,” id.,
here, as an initial matter, the parties dispute the legal
consequences of the policy language governing the calculation of
loss under the Policy.
Accordingly, the Court may resolve this
issue as a matter of law.
6
Plaintiffs argue: “The Plaintiffs’ measure of damages under
the policy is the replacement cost of the damages to their home,
not Actual Cash Value.”
repair is irrelevant.”
They argue “the issue of their state of
Plaintiffs do not direct the Court’s
attention to any portion of the Policy in making this argument
to the Court. 2
In contrast, Defendant sets forth the relevant
provision of the Policy as set forth below.
More specifically, the Policy provides:
Covered property losses are settled as follows:
. . . .
2.
Buildings covered under Coverage A or B at
replacement cost without deduction for depreciation
subject to the following:
a.
If, at the time of loss, the amount of
insurance in this policy on the damaged
building is 80% or more of the full
replacement
cost
of
the
building
immediately before the loss, we will pay
the cost to repair or replace, after
application of any deductible and without
2
Plaintiffs appear to argue that Defendant concedes this
point in that Defendant’s brief states that “[t]he QBE policy is
a replacement cost policy.” However, Plaintiffs take
Defendant’s statement out of context. Defendant argues, in
full: “While the QBE policy is a replacement cost policy, QBE is
not obligated to pay Replacement Cost Value for a covered loss
until the insured, i.e., Plaintiffs actually repair or replace
the covered property damage. Unless repairs are completed, QBE
is only obligated to pay Actual Cash Value.” As the Court sets
forth below, the plain language of the Policy makes clear that
the Policy covers replacement costs under some circumstances and
only pays actual cost value in other circumstances. Plainly,
characterizing the Policy as one form of policy or another is a
fact specific inquiry.
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deduction for depreciation, but not more
than the least of the following amounts:
(1)
(2)
The replacement cost of that
part of the building damaged
with material of like kind and
quality and for like use; or
(3)
b.
The limit of liability under
this policy that applies to the
building;
The necessary amount actually
spent to repair or replace the
damaged building.
If the
building is rebuilt at a new
premises, the cost described
in (2) above is limited to the
cost which would have been
incurred if the building had
been built at the original
premises.
If, at the time of loss, the amount of
insurance in this policy on the damaged
building is less than 80% of the full
replacement
cost
of
the
building
immediately before the loss, we will pay
the greater of the following amounts, but
not more than the limit of liability
under this policy that applies to the
building:
(1)
The actual cash value of that
part of the building damaged;
or
(2)
That proportion of the cost to
repair
or
replace,
after
application of any deductible
and
without
deduction
for
depreciation, that part of the
building damaged, which the
total amount of insurance in
this policy on the damaged
building bears to 80% of the
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replacement
building.
cost
of
the
. . . .
d.
We will pay no more than the actual cash
value of the damage until actual repair
or replacement is complete. Once actual
repair or replacement is complete, we
will settle the loss as noted in 2.a. and
b. above.
However, if the cost to repair or replace
the damage is both:
(1)
Less than 5% of the amount of
insurance in this policy on the
building; and
(2)
Less than $2,500;
We will settle the loss as noted in 2.a.
and b. above whether or not actual repair
or replacement is complete. 3
(emphasis added).
The Third Circuit has succinctly set forth the analysis
this Court is to apply in interpreting an insurance policy:
Under New Jersey law, an insurance policy “is
simply a contract and its provisions should, of course
be construed as in any other contract.” As is the case
with other types of contracts, an insurance policy “is
to be governed by its own terms without recourse to other
documents unless its own language so requires.” In the
absence of any ambiguity, the terms of an insurance
policy should “be given their plain, ordinary meaning.”
Ambiguity exists “where the phrasing of the policy
is so confusing that the average policyholder cannot
make out the boundaries of coverage.” New Jersey caselaw
“does not require that we credit every conceivable
deconstruction of contractual language,” but rather
3
This provision does not appear to apply since Plaintiffs
seek more than $2,500.
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instructs that “the ‘doctrine of ambiguity’ should be
invoked only to resolve ‘genuine’ ambiguities, not
‘artificial’
ambiguities
created
by
‘semantical
ingenuity.’” Determining whether genuine ambiguity is
present in an insurance policy requires interpreting the
policy “as a whole, by giving a reasonable meaning to
its form and cast.”
Royal Ins. Co. of Am. v. KSI Trading Corp., 563 F.3d 68, 73-74
(3d Cir. 2009) (citations omitted) (first quoting Pennbarr Corp.
v. Ins. Co. of N. Am., 976 F.2d 145, 151 (3d Cir. 1992); then
quoting Herbert L. Farkas Co. v. N.Y. Fire Ins. Co., 76 A.2d
895, 897 (N.J. 1950); then quoting Zacarias v. Allstate Ins.
Co., 775 A.2d 1262, 1264 (N.J. 2001); then quoting Weedo v.
Stone E-Brick, Inc., 405 A.2d 788, 795 (N.J. 1979); then quoting
A & S Fuel Oil Co. v. Royal Indem. Co., 652 A.2d 1236, 1237-38
(N.J. Super. Ct. App. Div. 1995)); and then quoting Arrow Indus.
Carriers, Inc. v. Cont’l Ins. Co. of N.J., 556 A.2d 1310, 1314
(N.J. Super. Ct. App. Div. 1989)).
The Court does not find any ambiguity in the policy
language.
It is clear to the Court based on the language of the
Policy quoted above that Plaintiffs’ insured losses are limited
to actual cash value prior to the completion of any repairs.
Under the plain terms of the Policy, only after repairs are
completed do the replacement cost procedures and coverages
apply.
Plaintiffs have not supplied an alternate interpretation
of this language.
As with the court in Dunkerly, the Court
finds the policy language is “clear and non-technical,” it is
10
“not encumbered by complexities,” and it does “not contradict
the understanding of an average purchaser.”
2017 WL 4891529, at
*3-4.
In Plaintiffs’ Response to Defendant’s Statement of
Undisputed Material Facts, it is asserted that “Plaintiffs have
done work toward repairing their home as exhibited in the photos
of the Cook report.
(See Exhibit S).
The home has not been
fully repaired as QBE failed to fully compensate the Plaintiffs
for all the covered damages under the QBE policy.” 4
Absent the
completion of repairs, a state of affairs the Plaintiffs admit,
the replacement cost procedures do not apply, and Plaintiffs are
only entitled to actual cash value.
B. Plaintiffs’ burden to prove damages as an element of their
breach of contract claim.
The second prong of Defendant’s summary judgment motion is
that Plaintiffs have failed to offer sufficient proof of
damages.
Plaintiffs focus on “Section I – Conditions,” which
includes the insured’s duties after loss.
Among them is to send
to Defendant a “signed, sworn proof of loss” including
“[s]pecifications of damaged buildings and detailed repair
estimates.”
Plaintiffs argue it is “not a duty of the insured
under the terms of the policy” to “make a calculation of the
4
Shannon Cook is an expert retained by Plaintiffs in this
litigation.
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Actual Cost Value of the damages to their home.”
Plaintiffs
argue “[t]he policy clearly does not create a duty on the
Plaintiffs to establish the Actual Cost Value of their claim as
part of their recovery.”
Plaintiffs’ reliance on this portion of the Policy is
misplaced and misapprehends their burden at summary judgment.
The issue is not what requirements the Policy places on an
insured to begin or perfect a claim.
The issue is what a
plaintiff must show in response to a motion for summary judgment
on her breach of contract claim.
A plaintiff bringing a breach
of contract claim under New Jersey law has the burden of proof
for all elements of the claim, including damages.
Murphy v.
Implicito, 920 A.2d 678, 689 (N.J. Super. Ct. App. Div. 2007)
(“To establish a breach of contract claim, a plaintiff has the
burden to show . . . that the plaintiff sustained damages
. . . .”); accord Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349,
359 n.7 (3d Cir. 2013); Peck v. Donovan, 565 F. App’x 66, 69-70
(3d Cir. 2012); Adler Eng’rs, Inc. v. Dranoff Props., No. 140921, 2016 WL 528160, at *5 (D.N.J. Feb. 9, 2016); SantoneGalayda v. Wachovia Mortg., No. 10-1065, 2010 WL 5392743, at *15
(D.N.J. Dec. 22, 2010); Datasphere, Inc. v. Comput. Horizons
Corp., No. 05-2717, 2009 WL 2132431, at *6 (D.N.J. July 13,
2009).
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“It is well settled in New Jersey that the plaintiff bears
the burden of proving beyond uncertainty that he has in fact
been damaged, and once that has been established the plaintiff
bears the burden of proving the amount of such damages with a
reasonable degree of certainty.”
Lightning Lube v. Witco Corp.,
802 F. Supp. 1180, 1194 (D.N.J. 1992); accord Caro Assocs. II,
LLC v. Best Buy Co., No. 09-907, 2012 WL 762304, at *6 (D.N.J.
Mar. 6, 2012) (“Proof of damages is essential to a breach of
contract claim, and [the plaintiff] has the burden of proof as
to that element.” (citation omitted) (first citing Gazarov v.
The Diocese of Erie, 80 F. App’x 202, 206 (3d Cir. 2003); and
then citing Video Pipeline, Inc. v. Buena Vista Home Entm’t,
Inc., 275 F. Supp. 2d 543, 566 (D.N.J. 2003))).
Here, as the Court noted above, the obligation to complete
repairs prior to accruing a claim for replacement costs limits
Plaintiffs, as a matter of contract, to the actual cash value of
the damage to their property.
However, Plaintiffs have offered
no proof of actual damages on that claim.
In the deposition of
Plaintiffs’ proffered expert Shannon Cook on October 13, 2017,
Cook admitted no expert opinion on actual cash value has been
offered. [Ex. T, p. 147].
In its Statement of Undisputed
Material Facts, Defendant states: “The Second Cook Report does
not contain any opinion by Cook concerning the actual cash value
of the damage to the Property allegedly caused by wind from
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Super Storm Sandy.”
Plaintiffs’ response candidly admits:
“[T]he . . . Cook [expert] Report does not contain an opinion by
Cook of the actual cash value of the damage to the property
allegedly caused by the wind from Super Storm Sandy.” 5
The Court finds Plaintiffs have failed to offer sufficient
evidence to create a dispute as to a material fact – i.e., the
amount of actual cash value of damage to the insured property
Defendant has failed to pay.
It is clear to the Court that Cook
has not proffered any calculations of the actual cash value, and
Plaintiffs’ briefing does not indicate any other source of this
information.
Absent such evidence, Plaintiffs have failed to
offer sufficient evidence as to an essential element of its
breach of contract claim – namely that they have been damaged.
Accordingly, the Court will grant Defendant’s Motion for Summary
Judgment. 6
An appropriate Order will be entered.
Date: May 8, 2018
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
5
Cook is one of two experts used by Plaintiffs in this
litigation. Plaintiffs do not argue the other expert, Frank
Bennardo, supplies any evidence as to actual cash value.
6
In light of this disposition of Defendant’s motion, the
Court need not address Defendant’s alternative argument that the
Court should disregard Cook’s report because it relies on
evidence deemed inadmissible by the Magistrate Judge assigned to
this matter.
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