Glendale LLC v. Amco Insurance Company
Filing
46
ORDER granting in part and denying in part 28 Motion in Limine, granting in part and denying in part 15 Motion for partial summary judgment. Signed by Chief Judge Robert J. Conrad, Jr on 7/17/2012. (eef)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:11-cv-3-RJC-DCK
GLENDALE LLC d/b/a WESTERN
SIZZLIN,
Plaintiff,
)
)
)
)
v.
)
)
AMCO INSURANCE COMPANY d/b/a )
NATIONWIDE MUTUAL INSURANCE )
COMPANY,
)
Defendant.
)
)
ORDER
THIS MATTER comes before the Court on Defendant Amco Insurance Company d/b/a
Nationwide Mutual Insurance Company’s (“Defendant”) Motion for Partial Summary Judgment,
(Doc. No. 15), and the Plaintiff’s Motion for the Court to Take Judicial Notice, (Doc. No. 36).
The Court granted in part and denied in part Plaintiff Glendale LLC d/b/a Western
Sizzlin’s (“Plaintiff”) Motion for Partial Summary Judgment and denied Defendant’s Motion for
Partial Summary Judgment on April 23, 2012. (Doc. No. 20). But the Court noted that it did
“not reach Defendant’s arguments regarding the general sufficiency of the [Appraisal] award
because it has already found that the building appraisal was invalid and genuine issues of
material fact remain over whether the appraisers improperly injected causation and coverage
issues into the contents valuation [related to two post-fire thefts at Plaintiff’s restaurant].
Likewise, the Court [did] not reach the validity of Plaintiff’s fraud, bias, duress, and impeaching
circumstances defenses to the enforceability of the award.” (Id.). Now, however, the parties
have clarified that losses from post-fire thefts at Plaintiff’s restaurant were covered under the
policy and compensated under a separate claim. Any failure to compensate such losses in the
Appraisal Award would be harmless since Plaintiff has been separately compensated. Thus, no
material issue remains over whether these amounts should have been, or were, included in the
Appraisal Award. See (Doc. No. 20 at 9-10). The Court now proceeds to rule on those portions
of Defendant’s Motion for Partial Summary Judgment which it did not address in its April 23
Order. For the reasons set forth below, the Court finds that the Appraisal Award’s contents
appraisal is binding as a matter of law.
I.
BACKGROUND
Since 1994, Plaintiff has owned and operated a Western Sizzlin restaurant in Gastonia,
North Carolina. (Doc. No. 13-2: Allen Sisler (“Sisler”) Dep. at 6). On September 29, 2008, the
restaurant suffered a fire that damaged the building and its contents. (Doc. Nos. 1-3 at 4; 2 at 2).
Defendant insured the restaurant under Nationwide Premier Businessowner Policy # ACP
2212352296 (“Policy”). (Doc. Nos. 1-3 at 3; 2 at 2). The parties disagreed about what the
policy required Defendant to pay. In March 2009, Plaintiff invoked the Policy’s appraisal
clause. The clause states:
If we and you disagree on the amount of loss, either may make written demand
for an appraisal of the loss. In this event, each party will select a competent and
impartial appraiser after receiving a written request from the other, and will
advise the other party of the name of such appraiser within 20 days. The two
appraisers will select an umpire. If appraisers cannot agree, either may request
that selection be made by a judge of a court having jurisdiction. The appraisers
will state separately the value of property and the amount of loss. If they fail to
agree, they will submit their differences to the umpire. A decision agreed to by
any two will be binding. Each party will:
a.
Pay its chosen appraiser; and
b.
Bear the other expenses of the appraisal and umpire equally.
If there is an appraisal, we will still retain our right to deny the claim.
(Doc. No. 11-3: Policy Excerpt). Pursuant to this clause, Plaintiff named Jim Stewart
(“Stewart”) as its appraiser. (Doc. No. 13-7). After some initial delay, Defendant named
2
Harrison Jones (“Jones”) as its appraiser. (Id.). Stewart and Jones selected Paul Woody
(“Woody”) as the umpire. (Id.).
Woody and Jones found that the replacement cost of the restaurant’s contents was
$49,350, while the actual cash value of repairs to the contents was $27,494. (Doc. No. 11-4).
The Appraisal Award’s findings as to the building and perishable losses are irrelevant because
the Court invalidated those portions of the Award in its April 23, 2012 Order. The Court found
that the award’s valuation of building damage was invalid due to the appraisers’ improper
consideration of causation issues. (Doc. No. 20 at 9); see also High Country Arts and Crafts
Guild v. Hartford Fire Ins., 126 F.3d 629, 634 (4th Cir. 1997) (holding that parties are not bound
by the appraiser’s determinations of coverage issues). The Court found that the perishable loss
was agreed to be $14,838.94 before the umpire needed to be involved. (Doc. No. 20 at 10).
III.
ANALYSIS
A.
Judicial Notice
Plaintiff's Motion for the Court to Take Judicial Notice, (Doc. No. 28), is GRANTED IN
PART AND DENIED IN PART. Plaintiff’s motion is largely granted with the exception of the
following three requests:
Request 3 asks the Court to take judicial notice that Plaintiff conveyed the land upon
which they operated the Western Sizzlin back to the previous owner–and their mortgagee–on
September 15, 2010 in lieu of foreclosure. (Doc No. 28 at 2). The public record confirms that
the conveyance occurred, but does not establish that the conveyance was in lieu of foreclosure.
(Doc No. 28-3). Therefore, the Court cannot treat this fact as judicially admitted but grants
Plaintiff’s motion with respect to the remainder of Request 3.
Request 9 asks the Court to take judicial notice that Beam Construction admitted that its
3
proposed repairs to the Western Sizzlin would not result in a structure sound enough to secure a
Certificate of Occupancy. (Doc No. 28 at 3). Plaintiff’s summary judgment brief made this
assertion, citing Robert Browne’s deposition. However, Plaintiff did not file Browne’s
deposition. Thus, the Court cannot treat this fact as judicially admitted.
Request 15 asks the Court to take judicial notice that “On February 2, 2009, Austin
notified plaintiff by letter that the estimate submitted was beyond the scope of repairs.” (Doc.
No. 28 at 4). Plaintiff cites the Defendant’s admission in its Answer, but Plaintiff’s request
omits the Defendant’s qualification that the estimate submitted was beyond the scope of repairs
“agreed upon at the site meeting.” (Doc. No. 2 at 3). The Court denies Plaintiff’s incomplete
request.
Plaintiff’s Motion for the Court to Take Judicial Notice, (Doc. No. 28), is GRANTED
IN PART AND DENIED IN PART.
B.
Summary Judgment
Summary judgment shall be granted “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.” FED .
R. CIV . P. 56(a).
A factual dispute is genuine “if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). A fact is material only if it might affect the outcome of the suit under governing
law. Id. When ruling on a summary judgment motion, a court must view the evidence and any
inferences from the evidence in the light most favorable to the nonmoving party–the Plaintiff for
purposes of this Order. Anderson, 477 U.S. at 255. “‘Where the record taken as a whole could
not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for
4
trial.’” Ricci v. DeStefano, 129 S. Ct. 2658, 2677 (2009) (quoting Matsushita v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986)).
Defendant moved this Court to declare the Appraisal Award binding as a matter of law.
(Doc. No. 16). Plaintiff filed a response in opposition. (Doc. No. 18). North Carolina law
provides that “[i]f the contractual appraisal provisions are followed, an appraisal award is
presumed valid and is binding absent evidence of fraud, duress, or other impeaching
circumstances.” Enzor v. N.C. Farm Bureau Mut. Ins. Co., 473 S.E. 2d 638, 639 (N.C. Ct. App.
1996). Defendant has succeeded in showing that the appraisal provision was followed with
respect to the appraisers’ contents award. See (Doc. No. 20 at 10-12). The Court previously
found that the appraisers exceeded their authority and made impermissible causation and
coverage determinations with respect to the building damages calculation, but because North
Carolina follows a blue pencil approach to appraisal awards, the appraisers’ independent
contents award is not affected by that error. See High Country Arts and Crafts Guild v. Hartford
Fire Ins., 126 F.3d 629, 634 (4th Cir. 1997). Likewise, any possible failure to include the theft
loses would not invalidate the Award where these loses were separately compensated. Cf. Id.
Plaintiff argues that a genuine issue of material fact exists as to whether fraud, duress, or
other impeaching circumstances invalidate the Appraisal Award. (Doc. No. 18 at 8-16).
Plaintiff argues that: (1) the appraisers failed to disclose an alleged conflict of interest; (2)
Woody and Jones had ex parte communications; and (3) Plaintiff was forced into the appraisal
process under duress. (Id.). Plaintiff contends that these allegations invalidate the Appraisal
Award. (Id.).
Plaintiff has not provided any authority for the proposition that appraisers have an
affirmative duty to disclose their prior dealings with a party’s appraiser. Recognizing this
5
problem, Plaintiff asks the Court to create such a rule today. (Doc. No. 18 at 10). Plaintiff
points to a “pre-existing relationship” between Woody and Jones as evidence of a conflict of
interest. (Id. at 11). But the only contact between the two that Plaintiff cites was another fire
claim where Woody represented the business owner claimant and Jones represented the
insurance company. (Doc. No. 13-14: Woody Dep. at 6). Representing opposing parties in
another insurance claim is hardly the type of “pre-existing relationship” that would lead to the
inference of a conflict of interest. The only other contacts Plaintiff points to were one in which
Jones introduced Woody to parties involved in a fire claim and another where Jones asked
Woody to draw up a set of plans and elevations from a series of photographs for a claim related
to a house fire in Georgia in the summer of 2009. (Id.). Plaintiff has not shown what kind of
compensation Woody was paid for his involvement in the Georgia house fire claim or where
such compensation came from. Moreover, Plaintiff’s proposed rule would only require wouldbe appraisers to disclose “prior dealings” with other appraisers. Woody’s prior dealings could
not lead any reasonable juror to believe that he had a conflict of interest in serving as the umpire
for this claim. Plaintiff has not presented any evidence that Woody’s later work with Jones
affected his neutrality in this case.
Plaintiff has also failed to show that the award should be invalidated based on an alleged
ex parte communication. Plaintiff cites 1940 decisions from North Carolina and Pennsylvania
courts for the proposition that any ex parte communication invalidates the Award. In Grimes v.
Home Ins. Co. of N.Y., the court held that where plaintiff had neither notice nor opportunity to
argue his position before the appraisers, the appraisal was invalid. 7 S.E. 2d 557, 558 (N.C.
1940). In Zoni v. Importers & Exporters Ins. Co., the court invalidated an award where two of
three appraisers met “secretly and without notice to or knowledge of the plaintiff or her
6
representative and for the purpose of unlawfully and fraudulently reaching a figure for the loss
lower than the actual amount.” 12 A.2d 575, 577 (P.A. 1940). Here, Plaintiff had notice and an
opportunity to be heard by the appraisers and Plaintiff has not produced any evidence of
fraudulent intent. Stewart represented Plaintiff’s position before Jones and Woody, but
ultimately Jones and Woody rejected Stewart’s and Plaintiff’s position in favor of Defendant.
While Woody and Jones did meet without Stewart to actually sign the Award, Plaintiff concedes
that Stewart previously had the opportunity–and did–submit Plaintiff’s position to Jones and
Woody. Woody testified that he fully considered all submissions before coming to his
conclusion. Woody and Jones’ alleged ex parte communication does not invalidate the Award.
Finally, Plaintiff argues that the Award should be invalidated because Plaintiff was
forced into the appraisal process under duress. Plaintiff does not cite any caselaw in its
argument on this issue. (Doc No. 18 at 15-16). Also, Plaintiff cannot point to an instance in
which Defendant even suggested that Plaintiff invoke the parties’ appraisal clause. Instead,
Plaintiff shows a situation in which the parties merely “disagree[d] on the amount of loss.”
(Doc. No. 11-3: Policy Excerpt). In which case, the policy directs either party to invoke the
appraisal clause to break the stalemate. Plaintiff has failed to show that it invoked the clause
under duress.
Plaintiff has failed to present “evidence of fraud, duress, or other impeaching
circumstances” which would serve to invalidate the Award. N.C. Farm Bureau Mut. Ins. Co.,
473 S.E. 2d at 639. The appraisers’ finding as to damages to the building’s contents is binding
as a matter of law.
7
IV.
CONCLUSION
IT IS, THEREFORE, ORDERED that:
1.
Plaintiff's Motion for the Court to Take Judicial Notice, (Doc. No. 28), is
GRANTED IN PART AND DENIED IN PART; and
2.
Defendant’s Motion for Partial Summary Judgment, (Doc. No. 15), is
GRANTED IN PART AND DENIED IN PART.
Signed: July 17, 2012
8
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?