American National Property and Casualty Company v. Stutte et al

Filing 20

ANSWER to 1 Complaint and Amended COUNTERCLAIM against American National Property and Casualty Company by Laura Jean Stutte, Carol Ann Stutte. (Attachments: # 1 Exhibit A: ANPAC Policy No. 41-H-V66-965-7, # 2 Exhibit B: Complaint in Stutte, et al. v. Millsaps, # 3 Exhibit C: Formal Demand Letter) (Tucker, Seth) Modified text on 8/11/2011 (AYB).

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE

AMERICAN NATIONAL PROPERTY
AND CASUALTY COMPANY,
Plaintiff, Counter-Defendant,
v.
CAROL ANN STUTTE; LAURA JEAN
STUTTE,
Defendants, Counter-Plaintiffs,
and
CHASE HOME FINANCE, LLC,
Defendant.

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CIVIL ACTION
NO. 3:11-CV-219

ANSWER AND AMENDED
COUNTERCLAIM
JURY TRIAL DEMANDED

Defendants Carol Ann Stutte and Laura Jean Stutte (collectively, the “Stuttes”), by their
attorneys, hereby answer the Complaint for Declaratory Judgment of Plaintiff American National
Property And Casualty Company (“ANPAC”), and assert a counterclaim against ANPAC.
THE STUTTES’ ANSWER TO ANPAC’S COMPLAINT FOR
DECLARATORY JUDGMENT
The Stuttes answer ANPAC’s Complaint for Declaratory Judgment as follows:
1.

Admitted.

2.

The Stuttes lack knowledge or information sufficient to form a belief about the

truth of the allegations in this paragraph.

3.

Admitted.1

3.

The allegations contained in this paragraph constitute conclusions of law to which

no response is required. To the extent a response is required, the Stuttes admit only that ANPAC
is a Missouri corporation with its principal place of business in Springfield, Missouri; the Stuttes
are residents of Knoxville, Tennessee; and the amount in controversy exceeds $75,000.00. The
Stuttes lack knowledge or information sufficient to form a belief about the truth of the remaining
allegations in this paragraph.
4.

The Stuttes deny that the total amount of their insurance claim is $276,275.46.

The Stuttes admit the remaining allegations in this paragraph.
5.

The Stuttes admit that their insurance claim was denied by correspondence from

ANPAC dated May 12, 2011. The remaining allegations contained in this paragraph constitute
conclusions of law to which no response is required. To the extent a response is required, the
Stuttes deny the remaining allegations in this paragraph.
6.

The allegations contained in this paragraph constitute conclusions of law to which

no response is required. To the extent a response is required, the Stuttes deny the allegations in
this paragraph.
7.

The allegations contained in this paragraph constitute conclusions of law to which

no response is required. To the extent a response is required, the Stuttes lack knowledge or
information sufficient to form a belief about the truth of the allegations in this paragraph.
8.

The Stuttes lack knowledge or information sufficient to form a belief about the

truth of the allegations in this paragraph.

1

Because the Complaint inadvertently contains two paragraphs numbered “3,” this Answer also
contains two paragraphs numbered “3.”

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9.

The allegations contained in this paragraph constitute conclusions of law to which

no response is required. To the extent a response is required, the Stuttes deny the allegations in
this paragraph.
10.

This paragraph contains no allegations to which a response is required. To the

extent a response is required, the Stuttes deny that ANPAC is entitled to any of the relief that it
seeks.
The remainder of the Complaint consists of ANPAC’s request for relief, to which no
response is required. To the extent a response is required, the Stuttes deny that ANPAC is
entitled to any of the relief that it seeks.
Each and every allegation of the Complaint not heretofore expressly admitted or denied is
hereby denied.
THE STUTTES’ AFFIRMATIVE DEFENSES
The Stuttes assert the following affirmative defenses pursuant to Fed. R. Civ. P. 8(c):
First Affirmative Defense
ANPAC’s Complaint fails to state a claim upon which relief can be granted.
Second Affirmative Defense
ANPAC cannot assert claims against the Stuttes based on the terms, conditions, and other
provisions of the policy at issue because ANPAC has breached its obligations under that policy.
Third Affirmative Defense
ANPAC’s Complaint is barred under the doctrine of unclean hands.
Fourth Affirmative Defense
ANPAC’s Complaint is barred under the doctrine of laches.
Fifth Affirmative Defense
ANPAC’s Complaint is barred under the doctrines of waiver and estoppel.
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Sixth Affirmative Defense
To the extent that ANPAC relies on ambiguous contractual provisions, those provisions
must be construed against ANPAC, thus requiring denial of ANPAC’s Complaint.
Seventh Affirmative Defense
ANPAC’s Complaint may be barred or limited by the terms and conditions of the policy
at issue, or by ANPAC’s conduct.
Eighth Affirmative Defense
To the extent that ANPAC relies on vague, unidentified, or undefined policy terms,
conditions, or exclusions, the Stuttes reserve the right to supplement their affirmative defenses
and to raise additional defenses.
Prayer for Relief from ANPAC’s Complaint
WHEREFORE, the Stuttes respectfully request that the Court enter judgment:
(a)

Denying ANPAC’s requested relief against the Stuttes, and entering judgment in
favor of the Stuttes and against ANPAC;

(b)

Dismissing ANPAC’s Complaint with prejudice; and

(c)

Granting the Stuttes such other and further relief as the Court may deem just and
proper, including costs and fees incurred in defense of ANPAC’s Complaint.

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THE STUTTES’ AMENDED COUNTERCLAIM AGAINST ANPAC
The Stuttes bring this amended counterclaim against ANPAC pursuant to Fed. R. Civ. P.
13(a) and 13(e), and in support thereof, state as follows:
Nature of Action
1.

This is a civil action for damages and declaratory relief arising from ANPAC’s

refusal to pay the Stuttes’ claim under a homeowners insurance policy for losses and additional
living expenses resulting from the destruction of the Stuttes’ home and its contents by fire at
approximately 8:00 p.m. on September 4, 2010.
The ANPAC Homeowners Policy
2.

The Stuttes purchased Tennessee Special Homeowners Policy No. 41-H-V66-

965-7 (the “Policy”) from ANPAC. The Policy is attached hereto as Exhibit A.
3.

The Policy insures, among other things, the Stuttes’ home, other structures, and

personal property located at 2715 Highway 360, Vonore, Monroe County, Tennessee (“home” or
“home and contents”) for the period from June 10, 2010 to June 10, 2011.
4.

Under the terms of the Policy, ANPAC is obligated to pay for “accidental direct

physical loss” – including loss caused by fire – to the Stuttes’ home and contents, subject to the
applicable coverage limits set forth in the Policy.
5.

Under the terms of the Policy, ANPAC is also obligated to reimburse the Stuttes’

“additional living expenses” for a period of up to 36 months if a covered loss renders their home
uninhabitable, subject to the applicable coverage limits set forth in the Policy.
The Fire and the Stuttes’ Claim
6.

At approximately 3:00 p.m. on September 4, 2010, the Stuttes, their daughter, and

a family friend departed the Stuttes’ home for a planned vacation to Nashville, Tennessee.

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7.

Upon arriving in Nashville that same day, the Stuttes and their travel companions

checked into the Holiday Inn Express Hotel and Suites at 714 Spence Lane in the southeast part
of town.
8.

That same evening, the Stuttes and their travel companions drove into downtown

Nashville, parked their car at the NCB Garage, and went to dinner at the Wildhorse Saloon.
9.

At approximately 8:00 p.m., while at the restaurant, the Stuttes were informed by

telephone that their home was on fire. Carol Ann Stutte then spoke by telephone with a member
of the Monroe County Sheriff’s Office, who confirmed that the Stuttes’ home was fully engulfed
in flames.
10.

The fire completely destroyed the Stuttes’ home and contents and rendered their

home uninhabitable.
11.

The Stuttes timely noticed an insurance claim under the Policy for approximately

$300,000.
12.

The Stuttes provided ANPAC with documentary and testimonial evidence from

multiple sources and witnesses, all of which confirmed that the Stuttes and all other members of
their household were physically present in Nashville, Tennessee, approximately 200 miles away
from their home, at the time of the fire. The evidence provided to ANPAC included a parking
receipt from NCB Garage dated “SEP 4” and time-stamped “19:30” (7:30 p.m.), receipts for
admission to the Wildhorse Saloon dated “9/4/2010” and time-stamped “19:48” (7:48 p.m.) and
“19:49” (7:49 p.m.), and a dinner receipt from the Wildhorse Saloon dated “9/4/2010” and timestamped “20:25” (8:25 p.m.).
13.

The Stuttes also provided ANPAC with a copy of an Incident Report from the

Monroe County Sherriff’s Office dated August 9, 2010. The report describes an incident that

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occurred on August 6, 2010 – approximately one month before the fire – in which the Stuttes’
neighbor, Janice Millsaps, threatened, among other things, to burn down the Stuttes’ home. The
Stuttes have filed a civil lawsuit against Ms. Millsaps in the Chancery Court for Monroe County,
Tennessee, a copy of which is attached hereto as Exhibit B.
14.

The Stuttes also provided ANPAC with documentary evidence showing that, at

the time of the fire, the Stuttes had good credit, they were not suffering any financial distress,
and that they had no motive – financial or otherwise – to cause the destruction of their home and
contents.
15.

Since the fire rendered their home uninhabitable, the Stuttes have incurred, and

continue to incur, additional living expenses as defined by the Policy. The Stuttes have timely
provided, and continue to provide, ANPAC with documentation of these expenses. As of June 1,
2011, the Stuttes’ unreimbursed additional living expenses totaled approximately $5,000.
16.

At ANPAC’s request, the Stuttes have paid, and continue to pay, for electricity

and security lights at the site where their home used to stand.
17.

The Stuttes have timely paid, and continue to pay, all mortgage payments due on

their home to Defendant Chase Home Finance, LLC, and all insurance payments due on their
home and contents to ANPAC.
The Coverage Dispute
18.

ANPAC denied the Stuttes’ insurance claim by letter dated May 12, 2011. That

same day, ANPAC filed its Complaint for Declaratory Judgment in this Court.
19.

ANPAC’s denial letter and Complaint falsely accused the Stuttes of intentionally

causing the fire that destroyed their home and contents, and of committing concealment or fraud

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relating to their insurance claim. ANPAC did not cite any other basis for refusing to honor its
obligations under the Policy.
20.

ANPAC did not cite or plead any specific facts in support of its coverage denial.

The denial letter and Complaint stated only that “[i]t was determined through investigation that
the preponderance of the evidence” supported ANPAC’s allegations. ANPAC therefore failed to
explain how and why it determined that the Stuttes intentionally caused the fire, despite the fact
that ANPAC had evidence in its possession proving that the Stuttes were about 200 miles away
from their home when it burned down, and identifying a suspect who had harassed the Stuttes
and specifically threatened to burn down their home in the months leading up to the fire.
21.

By letter dated May 19, 2011, the Stuttes requested copies of the information on

which ANPAC based its denial of their insurance claim. ANPAC did not respond to the Stuttes’
request.
22.

Instead, on May 20, 2011, the Stuttes received a two-sentence letter from ANPAC

stating that the Policy had been cancelled, effective on September 4, 2010 at 12:01 a.m., which is
approximately 20 hours before the Stuttes’ home and contents were destroyed by fire.
23.

Two weeks earlier, on May 6, 2011, ANPAC had sent the Stuttes a “Notice of

Premium Due” on their destroyed home and contents for the period from June 10, 2011 to June
10, 2012. By this notice, ANPAC had attempted to renew the Policy and increase the Stuttes’
premium by nearly 30 percent due to a recent negative entry on their credit report, which was a
direct result of the financial strain on the Stuttes caused by ANPAC’s failure to pay their claim.
24.

The Stuttes dispute ANPAC’s denial of coverage and cancellation of the Policy.

25.

The Stuttes have timely paid all premiums due and have complied or substantially

complied with all other pertinent terms and conditions of the Policy.

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COUNT ONE
(Breach of Contract)
26.

The Stuttes hereby incorporate paragraphs 1 through 25 of this counterclaim, as if

fully set forth herein.
27.

ANPAC has breached its contractual duties under the Policy to pay for the loss to

the Stuttes’ home and contents, and for the unreimbursed additional living expenses already
incurred by the Stuttes.
28.

As a direct result of this breach of contract, the Stuttes have been and will be

deprived of the benefits of the insurance coverage for which the Stuttes paid premiums.
29.

As a further direct result of this breach of contract, the Stuttes have been forced to

incur and will continue to incur additional consequential damages, including, without limitation,
attorneys’ fees and other expenses in defending this litigation and attempting to obtain coverage
under the Policy, lost earnings on amounts wrongfully withheld by ANPAC, and damage to their
credit due to the financial strain caused by ANPAC’s breach, which damages are not subject to
the Policy’s limits of liability.
COUNT TWO
(Declaratory Judgment)
30.

The Stuttes hereby incorporate paragraphs 1 through 29 of this counterclaim, as if

fully set forth herein.
31.

ANPAC has denied the Stuttes’ insurance claim and cancelled the Policy, thereby

disclaiming ANPAC’s ongoing obligation to reimburse the Stuttes’ additional living expenses as
they accrue for up to 36 months after the date of the loss.
32.

The Stuttes will continue to incur additional living expenses as defined by the

Policy.

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33.

An actual controversy of a justiciable nature presently exists between the Stuttes

and ANPAC concerning the existence of the Policy and the ongoing rights and obligations of the
parties with respect to coverage for additional living expenses. Accordingly, the Stuttes request
a declaratory judgment pursuant to 28 U.S.C. § 2201 et seq. and Rule 57 of the Federal Rules of
Civil Procedure, declaring such rights and obligations. The issuance of declaratory relief by this
Court will terminate some or all of the existing controversy among the parties.
COUNT THREE
(Tennessee Consumer Protection Act, Tenn. Code Ann. § 47-18-101 et seq.)
34.

The Stuttes hereby incorporate paragraphs 1 through 33 of this counterclaim, as if

fully set forth herein.
35.

ANPAC has engaged in unfair or deceptive acts or practices by denying coverage

for the Stuttes’ claim, cancelling the Policy, and filing this coverage action based on allegations
ANPAC knows, or should know, to be false, in an effort to avoid its obligations under the Policy.
36.

Specifically, ANPAC accused the Stuttes of destroying their home and contents,

and of committing concealment or fraud relating to their claim, even though ANPAC knew, or
should have known, that these allegations were false based on evidence in its possession
concerning the Stuttes whereabouts at the time of the fire.
37.

As a direct result of these unfair or deceptive acts or practices, the Stuttes have

suffered and continue to suffer the ascertainable loss of money, property, and/or other things of
value, including, without limitation, insurance proceeds for the loss to their home and contents
and additional living expenses, attorneys’ fees and other expenses in defending this litigation and
attempting to obtain coverage under the Policy, lost earnings on the amounts wrongfully
withheld by ANPAC, and damage to their credit. In addition, the Stuttes are entitled to recover

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treble damages, up to three times the actual damages they have sustained, pursuant to Tenn.
Code Ann. § 47-18-109(a)(3).
COUNT FOUR
(Bad Faith Refusal to Pay, Tenn. Code Ann. § 56-7-105)
38.

The Stuttes hereby incorporate paragraphs 1 through 37 of this Counterclaim, as if

fully set forth herein.
39.

After a fire completely destroyed their home and contents on September 4, 2010,

the Stuttes timely noticed an insurance claim for the loss under ANPAC Special Homeowners
Policy No. 41-H-V66-965-7, at which point the Policy, by its terms, became due and payable.
40.

By letter to ANPAC dated May 19, 2011, the Stuttes made a formal demand for

payment under the Policy and provided notice that, if ANPAC did not pay the Stuttes’ claim for
the loss and their additional living expenses within sixty (60) days, the Stuttes would pursue a
bad faith penalty claim under Tennessee Code Annotated § 56-7-105. This formal demand letter
is attached hereto as Exhibit C.
41.

The Stuttes waited more than sixty (60) days before filing this counterclaim for

bad faith, during which time ANPAC did not respond to the Stuttes’ formal demand or pay the
Stuttes’ claim.
42.

ANPAC’s refusal to pay the Stuttes’ insurance claim was not in good faith. The

only bases for ANPAC’s refusal were its allegations that the Stuttes intentionally caused the fire
and committed concealment or fraud relating to their claim. Upon information and belief,
ANPAC’s investigation and claims handling did not yield sufficient legitimate grounds to
support its conclusory allegations.

To the contrary, ANPAC discovered documentary and

testimonial evidence from multiple sources confirming that the Stuttes were approximately 200
miles away from their home at the time of the fire and, therefore, they could not have set the fire.

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The Stuttes also provided ANPAC with documentary evidence showing that, at the time of the
fire, the Stuttes had good credit, they were not suffering any financial distress, and they had no
motive – financial or otherwise – to cause the destruction of their home and contents.
43.

ANPAC acted in bad faith by, inter alia, delaying for months after discovering

evidence that exonerated the Stuttes, failing to reimburse the Stuttes’ in full for their additional
living expenses, denying the Stuttes’ claim and cancelling the Policy, and by filing the present
litigation—all without sufficient legitimate grounds, and without providing any specific factual
support for these actions. Because ANPAC has failed to provide any specific factual support for
its refusal to pay, the Stuttes reserve their right, based on facts discovered during the course of
this litigation, to assert that additional actions taken by ANPAC constitute bad faith under Tenn.
Code Ann. § 56-5-107.
44.

As a direct result of ANPAC’s bad faith refusal to pay, the Stuttes have suffered

additional expenses, losses, and injuries, including, without limitation, attorneys’ fees and other
expenses in attempting to obtain coverage under the Policy and in defending this litigation, lost
earnings on the amounts wrongfully withheld by ANPAC, damage to their credit, and emotional
distress.
Prayer for Relief
WHEREFORE, the Stuttes respectfully request that the Court enter judgment:
(a)

Awarding the Stuttes actual compensatory and consequential damages sustained
as a result of ANPAC’s breach of contract and ANPAC’s unfair or deceptive acts
or practices;

(b)

Declaring that ANPAC has a continuing obligation under the Policy to provide
coverage for the Stuttes’ additional living expenses as they accrue;

(c)

Awarding the Stuttes treble damages equal to three times the amount of the actual
compensatory and consequential damages suffered as a result of ANPAC’s unfair
or deceptive acts or practices;

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(d)

Awarding the Stuttes a sum not to exceed twenty-five percent (25%) of the
liability for the loss, in accordance with Tenn. Code Ann. § 56-7-105;

(e)

Awarding reasonable attorneys’ fees and other expenses and costs incurred by the
Stuttes in defending and prosecuting this litigation; and

(f)

Such other and further relief as the Court deems just and proper.2
JURY TRIAL DEMANDED

The Stuttes request a trial by jury on all issues so triable.

Dated: August 10, 2011

Respectfully submitted,
/s/ Peter J. Alliman
f
Peter J. Alliman (BPR No. 5984)
WHITE, CARSON & ALLIMAN, P.C.
135 College Street
Madisonville, TN 37354
Tel: [phone]
Fax: [phone]
Email: [e-mail]
Attorney for Defendants Carol Ann Stutte
and Laura Jean Stutte

/s/ Seth A. Tucker
Seth A. Tucker (pro hac vice)
Scott J. Levitt (pro hac vice)
Jonathan G. Hardin (pro hac vice to be filed)
COVINGTON & BURLING LLP
1201 Pennsylvania Avenue NW
Washington, DC 20004-2401
Tel: [phone]
Fax: [phone]

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The Stuttes also reserve their right to bring additional claims, including, without limitation, for
defamation, fraud, and intentional infliction of emotional distress, against ANPAC based on facts
discovered in the course of this litigation.

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Email: [e-mail]
[e-mail]
[e-mail]
Of Counsel for Defendants Carol Ann Stutte
and Laura Jean Stutte

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CERTIFICATE OF SERVICE
I hereby certify that on this 10th day of August, 2011, a copy of the foregoing ANSWER
AND AMENDED COUNTERCLAIM was filed electronically using the Court’s Electronic
Filing System. Notice of this filing will be served through the Electronic Filing System to
parties and counsel who are Filing Users, and by first-class mail to any party or counsel who is
not served through the Electronic Filing System.

/s/ Seth A. Tucker
Seth A. Tucker (pro hac vice)
COVINGTON & BURLING LLP
1201 Pennsylvania Avenue NW
Washington, DC 20004-2401
Tel: [phone]
Fax: [phone]
Email: [e-mail]
Of Counsel for Defendants Carol Ann Stutte
and Laura Jean Stutte