Schauffert v. Certain Underwriters at Lloyd's London et al
Filing
147
REPORT AND RECOMMENDATION that 87 MOTION for Summary Judgment filed by Certain Underwriters at Lloyd's, London be DENIED. Any objections to this Report and Recommendation must be filed with the Clerk of Court within 14 days of service of this notice, and must state with particularity the specific portions of this Report & Recommendation to which objection is made. Signed by Magistrate Judge Juliet E. Griffin on 05/09/2011. (ab)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
ALEX SCHAUFFERT,
Plaintiff/Counter‐Defendant
)
)
)
v.
)
)
CERTAIN UNDERWRITERS AT
)
LLOYDʹS, LONDON; GAB ROBINS
)
NORTH AMERICA, INC.,
)
Defendants
)
)
and
)
)
BRAUN CONSTRUCTION SERVICES, )
INC.,
)
Defendant/Counter‐Plaintiff
)
TO:
No. 3‐09‐0510
The Honorable Todd J. Campbell, Chief Judge
REPORT AND RECOMMENDATION
By order entered October 1, 2010 (Docket Entry No. 91), the motion of defendant
Certain Underwriters at Lloydʹs, London (ʺLloydʹs) for summary judgment (Docket Entry
No. 87) was referred to the Magistrate Judge for a report and recommendation.
I. Background
The plaintiff purchased the ʺShannondale Apartmentsʺ in Madison, Tennessee in
2006. There are two apartment buildings, one with eight units (Building A) and the other
with six units Building B). Early in the morning on January 27, 2009, Building A sustained
damages after the roof failed during a storm. According to the plaintiff, the roof collapsed
because of collected rain and ice and the water intrusion caused extensive damage. Docket
Entry No. 21, at 3. The building was insured by defendant Lloydʹs, which denied coverage
under the policy.
The plaintiff originally brought this action in state court against Lloydʹs, his
insurance carrier, GAB Robins North America, Inc. (ʺGABʺ), the local adjuster, and Braun
Construction Services (ʺBraunʺ), which had done emergency repairs to the building,
seeking damages for the cost of repair and rebuilding of the roof. The defendants removed
the case to this Court. Braun filed a counterclaim against the plaintiff for enforcement of
its materialmanʹs lien and damages for breach of contract and unjust enrichment (Docket
Entry No. 11). Braun also filed crossclaims against Lloydʹs and GAB for negligent
misrepresentation, breach of implied contract, and promissory estoppel. Id. By order
entered December 23, 2009 (Docket Entry No. 48), the motions of defendants Lloydʹs and
GAB to dismiss Braunʹs crossclaims were granted on Braunʹs claims for breach of contract
and promissory estoppel, but denied on Braunʹs claims for negligent misrepresentation.
Upon Braunʹs motion, the remaining crossclaims filed by Braun against Lloydʹs and GAB
were dismissed by order entered May 10, 2010 (Docket Entry No. 58).
Defendant Lloydʹs filed the instant motion for summary judgment, contending that
the loss suffered by the plaintiff is not covered under the insurance policy.
II. Amick DVD and Affidavit
The defendant has filed a motion (Docket Entry No. 121) to exclude DVD and
affidavit of Kenneth Amick (Docket Entry No. 95) from any consideration in the context of
the defendantʹs motion for summary judgment or any trial.
The defendant points out that the discovery deadline was August 27, 2010, and the
DVD was produced as a ʺpartial supplementʺ to plaintiffʹs disclosures, pursuant to
Rule 26(a)(1) of the Federal Rules of Civil Procedure, on August 26, 2010. See Docket Entry
No. 122‐1. The affidavit of Mr. Amick was filed on October 19, 2010, and the DVD was
filed on October 22, 2010, in accord with the order entered October 21, 2010 (Docket Entry
No. 117).
2
Mr. Amick was a tenant in one of the units in Building A. He was at home when the
roof failed on August 27, 2009, and attested in his affidavit to his observations.
The plaintiff listed Mr. Amick and other tenants by name in his initial Rule 26(a)(1)
disclosures, and specifically identified Mr. Amick and other tenants by name in response
to the defendantʹs interrogatories. See Docket Entry No. 122‐2, at 2‐3 and 122‐6, at 3. The
defendant points out that Mr. Amick has been ʺaccessible to Plaintiff and/or his agents
through this litigation.ʺ Docket Entry No. 122, at 6. Correlatively, however, there is
nothing to suggest that Mr. Amick has not been just as available to the defendant
throughout the litigation. Securing the affidavit of a witness, identified in the plaintiffʹs
initial disclosures and in the plaintiffʹs responses to written discovery, who was not
deposed by either the plaintiff or the defendant, is not discovery, and there are no grounds
to exclude his affidavit since he was previously disclosed by the plaintiff.
The defendant suggests that it ʺcould also be arguedʺ that the plaintiff is attempting
to ʺsupply additional expert‐type proofʺ because Mr. Amick was employed by a company
doing commercial framing and sheetrock work, and he comments on the condition of the
sheetrock in his affidavit. Id. at 7. His observations of sheetrock do not, however, qualify
as expert opinions. The only remotely possible expert observation might be that he attested
that he could see ʺwhere the plywood failed and was buckled in and down.ʺ Docket Entry
No. 95, at 3, ¶ 15. The Court has not considered that portion of his affidavit.
The Court has not viewed the DVD or considered it in the context of the motion for
summary judgment.
Whether Mr. Amickʹs affidavit, DVD, or his testimony can be used by the plaintiff
at trial is not an issue for the Magistrate Judge in the context of considering the defendantʹs
motion for summary judgment, and the Courtʹs consideration of his affidavit and
declination to access the DVD are not intended to suggest or prejudge whether they would
be admissible at trial.
3
III. Hodge Affidavit
By his motion (Docket Entry No. 98), the plaintiff seeks to strike all or portions of
the affidavit of Matthew W. Hodge (Docket Entry No. 87‐6). On March 5, 2010, defendant
Lloydʹs disclosed Mr. Hodge as its expert and provided a written report dated February 20,
2009. See Docket Entry No. 120‐3. On January 15, 2010, the plaintiff had also identified
Mr. Hodge as his expert and disclosed the same expert report. See Docket Entry No. 120‐2.
In support of its motion for summary judgment, defendant Lloydʹs filed Mr. Hodgeʹs
affidavit, which the plaintiff describes as ʺvastly and improperly expand[ing] his opinions.ʺ
Docket Entry No. 98, at 2. The plaintiff also points out that the defendant has not
supplemented its disclosures in accord with Rule 26(e)(2) of the Federal Rules of Civil
Procedure to include his additional opinions in his affidavit.1
The plaintiff also appears to seek disqualification of Mr. Hodge as an expert because,
inter alia, he did not include in his disclosure his experience with commercial roofing, did
not include a curriculum vitae,2 did not sign his report, and because his February 4, 2009,
and February 9, 2009, draft reports are inconsistent with the February 20, 2009, report. The
issue of whether the defendant should be permitted to use Mr. Hodge as an expert at trial
is before the Court in the context of a motion in limine (Docket Entry No. 130).
Mr. Hodgeʹs affidavit clearly provides additional detail lacking in his February 20,
2009, report. However, Mr. Hodge is not bound to the four corners of his expert disclosure
as he would have been if the Court had invoked Local Rule 37.01(c)(6)(c). Had Mr. Hodge
been deposed, he would have been permitted to add detail and flesh out his opinions in
his February 20, 2009, report. Further, Rule 26(e)(2) of the Federal Rules of Civil Procedure
1
The plaintiff cites Pedigo v. UNUM Life Ins. Co. of Am., 145 F.3d 804 (6th Cir.
1998), as support for his position that Mr. Hodgeʹs affidavit should be excluded. However,
Pedigo is inapposite because the plaintiff himself in that case sought to offer his own expert
testimony when he had never disclosed himself as an expert.
2
The defendant has since provided a CV. See Docket Entry Nos. 127‐2 and 127‐3.
4
provides that a party has a duty to supplement information included in an expertʹs report,
and that such supplementation must be made by the time the Rule 26(a)(3) disclosures are
due. The initial case management order entered July 21, 2009 (Docket Entry No. 21) did
not provide a date by which any expert disclosures were to be supplemented. By order
entered December 6, 2010 (Docket Entry No. 139), Rule 26(a)(3) filings must be made by
June 20, 2011.
While there may be an issue of whether or not Mr. Hodgeʹs affidavit is appropriately
considered a supplementation of his February 20, 2009, report, see Sandata Techs., Inc. v.
Infocrossing, Inc., 2007 WL 4157163, **4‐6 (S.D.N.Y. Nov. 16, 2007), Mr. Hodge did not
contradict his prior expert report but, as the plaintiff notes ʺexpandedʺ on his opinions.
Docket Entry No. 98, at 2. Thus, as the Court of Appeals has indicated in Yanovich v.
Zimmer Austin, Inc., 255 Fed.Appx. 957, 953, 2007 WL 4163860, *6 (6th Cir. Nov. 21, 2007),
it is permissible to consider his affidavit for the purposes of ruling on the motion for
summary judgment.3
IV. Standard of Review
Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment
should be granted if the moving party shows that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a matter of law. See
Pennington v. State Farm Mut. Auto. Ins. Co., 553 F.3d 447, 450 (6th Cir. 2009); Smith v.
Hudson, 600 F.2d 60, 63 (6th Cir. 1979). In considering a motion for summary judgment,
3
The Court in Yanovich did not, as the defendant suggests, find that the expertʹs
opinions were ʺneither new or contradictory and any differences are explained as
semantical.ʺ Docket Entry No. 120, at 7. Instead, the Court quoted the plaintiffsʹ brief in
which they made that statement. The Court found that the apparent contradictions
between the expertʹs deposition testimony and his affidavit filed in opposition to the
defendantʹs motion for summary judgment were not contradictions of his scientific
findings, but only clarifications of his legal interpretation of those findings, and thus the
trial Court should not have excluded his affidavit from its consideration in ruling on the
defendantʹs motion for summary judgment.
5
the Court must view all facts and inferences to be drawn therefrom in the light most
favorable to the non‐moving party. Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp.,
475 U.S. 574, 587‐88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Pennington, 553 F.3d at 450; Van
Gorder v. Grand Truck W. R.R., Inc., 509 F.3d 265, 268 (6th Cir. 2007); Meyers v.
Columbia/HCA Healthcare Corp., 341 F.3d 461, 466 (6th Cir. 2003); Hopson v.
DaimlerChrysler Corp., 306 F.3d 427, 432 (6th Cir. 2002); Securities & Exch. Commʹn v.
Blavin, 760 F.2d 706, 710 (6th Cir. 1985). Although the moving party has the burden of
showing that no genuine issue of material fact exists, the non‐moving party may not merely
rest on conclusory allegations contained in the complaint, but must respond with specific
evidence supporting its claim and establishing the existence of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986);
Hopson, 306 F.3d at 432; Cloverdale Equip. Co. v. Simon Aerials, Inc., 869 F.2d 934, 937 (6th
Cir. 1989). A mere scintilla of evidence is insufficient; there must be evidence upon which
the jury could reasonably find for the non‐movant. Anderson v. Liberty Lobby, 477 U.S.
242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Rodgers v. Banks, 344 F.3d 587, 595 (6th Cir.
2003); Meyers, 341 F.3d at 466.
Not every factual dispute between the parties will prevent summary judgment. The
disputed facts must be material. They must be facts which, under the substantive law
governing the issue, might affect the outcome of the suit. Anderson, 477 U.S. at 248. The
dispute must also be genuine. The facts must be such that, if they were proven at trial, a
reasonable jury could return a verdict for the non‐moving party. Id. The disputed issue
does not have to be resolved conclusively in favor of the non‐moving party, but that party
is required to present some significant probative evidence that makes it necessary to
resolve the partiesʹ differing versions of the dispute at trial. First Natʹl Bank v. Cities Serv.
Co., 391 U.S. 253, 288‐89, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968).
6
V. Motion for Summary Judgment
Defendant Lloydʹs contends that the loss suffered was not a covered loss under the
insurance policy because the water damage was caused by ponding water from flooding
or ponding surface water, because the plaintiff cannot prevail on a claim for damages as
a result of rainwater intrusion since the building must have first suffered damage from a
covered loss such as wind, because the damage incurred is excluded under the policy since
the roof failure resulted from wear and tear and other deterioration, and because the roof
did not collapse as defined by the policy. The defendant further contends that the
plaintiffʹs claim under the Tennessee Consumer Protection Act (ʺTCPAʺ) fails because
Cathy Watry, the plaintiffʹs agent and building manager, was advised that the policy might
not provide coverage and because the denial of coverage under the circumstances of this
case does not support a TCPA claim.
The plaintiff filed a response in opposition (Docket Entry No. 115), and other related
filings (Docket Entry Nos. 95, 97, 100‐104, 106‐107, 109‐110, 112),4 and defendant Lloydʹs
filed a reply (Docket Entry No. 119), and other related filings (Docket Entry Nos. 123‐124,
128).
The plaintiffʹs responsive filings, particularly Docket Entry Nos. 97, 101‐104, 106‐107,
and 109, are confusing. Each of those filings is identically entitled ʺPlaintiffʹs Separate
Statement of Material Facts in Support of Plaintiffʹs Response to Defendant Lloydʹs Motion
for Summary Judgment.ʺ The same ʺfactʺ is listed on each of those filings, i.e., ʺThe roof
of Plaintiffʹs insured building collapsed within the meaning of the Policy and is a covered
loss.ʺ
4
Although the plaintiff described Docket Entry No. 108 on the docket as part of his
response to the pending motion for summary judgment, it appears to the Court that it was
filed, as the document itself indicates, after the evidentiary hearing on September 22, 2010,
and in response to the motion to show cause why the settlement agreement between the
plaintiff and defendants GAB and Braun should be enforced (Docket Entry No. 68), and
was not intended as a filing related to the pending motion for summary judgment.
7
The difference among most of these filings is the attachments to the filings. The first
filing (Docket Entry No. 97) has nothing attached to it. Appended to the next filing (Docket
Entry No. 101) are portions of the depositions of Brad Espey (Docket Entry No. 101‐1) and
Mark Easterwood (Docket Entry No. 101‐2). However, the identical excerpt of
Mr. Easterwoodʹs deposition is also appended to Docket Entry No. 109. The next filing
(Docket Entry No. 102), is an exact duplicate of Docket Entry No. 97, with nothing attached.
Attached to Docket Entry No. 103 are portions of the deposition of Ransom Brent. Docket
Entry No. 104 is an exact duplicate of Docket Entry No. 103.5 Attached to Docket Entry
Nos. 106 and 107 are different portions of Cathy Watryʹs depositions.6
More significantly, the plaintiffʹs response (Docket Entry No. 100) to the defendantʹs
statement of undisputed material facts (Docket Entry No. 87‐4) does not comply with Local
Rule 56.01(c), which provides that the response to a statement of undisputed facts ʺmust
be made on the document provided by the movant or on another document in which the
non‐movant has reproduced the facts and citations verbatim as set forth by the movant.ʺ
The plaintiff did not comply with that requirement. In addition, perhaps analogizing his
obligation to respond to the defendantʹs Rule 56.01(b) statement to responding to
interrogatories or requests for admission, the plaintiff repeatedly lodged objections to the
facts asserted by Lloydʹs. An objection is not a permissible response. In accord with
5
The plaintiff incorrectly entered the description of Docket Entry No. 103 on the
docket as including Exhibit D as an attachment. In his filings, the plaintiff describes
Exhibit D as the plaintiffʹs deposition, which was not attached to Docket Entry No. 103,
whereas the plaintiff describes Exhibit E as Mr. Brentʹs deposition, portions of which are
attached. It may be that the plaintiff intended to attach excerpts of the plaintiffʹs
deposition, described as Exhibit D, to Docket Entry No. 103, and to attach excerpts of the
Brent deposition (described as Exhibit E), to Docket Entry No. 104, but instead, the Brent
deposition excerpts are attached to both Docket Entry Nos. 103 and 104.
6
In responding to the plaintiffʹs motion to strike Mr. Hodgeʹs affidavit, the
defendant also used the same confusing mechanism of filing the exact same document
twice as a means to attach additional exhibits. See Docket Entry Nos. 120 and 127.
Compounding the confusion, the defendant apparently scanned in the first filing, making
it difficult to determine the docket number of the second filing.
8
Rule 56.01(c), the plaintiff had three choices in responding to the defendantʹs assertions of
undisputed material facts: (1) agree that the fact is undisputed; (2) agree that the fact is
undisputed for the purpose of the motion for summary judgment only; or (3) demonstrate
that the fact is disputed with specific citation to the record to support the contention that
the fact is disputed.7
In essence, the plaintiff argues in his response that the damage to the property
resulted from the collapse of the roof and ceiling and that such damage is covered by the
insurance policy, that the decay of the roof was hidden from view and therefore the loss
is not excluded, that the building had been regularly maintained and repaired as needed
and that there were no leaks since April of 2008, and only a few leaks prior thereto, and
that the weight of the rain caused the collapse. The plaintiff maintains that Brad Espey, the
local adjuster for GAB, who investigated the damage to the building on behalf of Lloydʹs,
advised Cathy Watry, the plaintiffʹs property manager, and Mark Easterwood, the
construction supervisor for Braun, that the plaintiff had insurance coverage for the loss
and, in reliance on those representations, the plaintiff allowed Braun to begin emergency
repair work. According to the plaintiff, the defendantʹs shoddy investigation of the claim,
and assurances of coverage and later denial of coverage, coupled with Lloydʹs demand that
Mr. Espey lie and his perjured deposition testimony, support a TCPA claim.
VI. The Policy
The insurance policy at issue provides the following relevant exclusions, limitations
and definitions:
B.
Exclusions
1.
We will not pay for loss or damage caused
directly or indirectly by any of the following.
7
It is also not clear whether the plaintiff intended to cite an additional disputed
material fact, as contemplated by Local Rule 56.01.
9
Such loss or damage is excluded regardless of
any other cause or event that contributes
concurrently or in any sequence to the loss.
***
g.
Water
(1)
Flood, surface water, waves, tides,
tidal waves, overflow of any body
of water, or their spray, all
whether driven by wind or not;
(2)
Mudslide or mudflow;
(3)
Water that backs up or overflows
from a sewer, drain or sump; or
(4)
Water under the ground surface
pressing on, or flowing or seeping
through:
(a)
(b)
(c)
2.
Foundations, walls, floors
or paved surfaces;
Basements, whether paved
or not; or
Doors, windows or other
openings.
We will not pay for loss or damage caused by or
resulting from any of the following:
***
d.
(1)
Wear and tear;
(2)
Rust, corrosion, fungus, decay,
deterioration, hidden or latent
defect or any quality in property
that causes it to damage or destroy
itself;
***
(4)
Settling, cracking, shrinking or
expansion;
***
But if an excluded cause of loss that is
listed in 2.d.(1) through (7) results in a
ʺspecified cause of lossʺ . . . we will pay
10
for the loss or damage caused by that
ʺspecified cause of lossʺ . . . .
k.
***
Collapse, except as provided below in the
Additional Coverage for Collapse. But if
the collapse results in a Covered Cause of
Loss at the described premises, we will
pay for the loss or damage caused by that
Covered Cause of Loss.
Docket Entry No. 87‐5, at 31‐33.
A ʺspecified cause of lossʺ is defined as:
Fire; lightning; explosion; windstorm or hail; smoke, aircraft or vehicles; riot
or civil commotion; vandalism; leakage from fire extinguishing equipment;
sinkhole collapse; volcanic action; falling objects; weight of snow, ice of sleet;
water damage.
***
ʺWater damageʺ is defined as:
accidental discharge or leakage of water or steam as the direct result of the
breaking apart or cracking of a plumbing, heating air conditioning or other
system or appliance (other than a sump system including its related
equipment and parts), that is located on the described premises and contains
water or steam.
Docket Entry No. 87‐5, at 37.
ʺCollapseʺ is described and limited as follows:
1.
With respect to buildings:
a.
Collapse means an abrupt falling down or caving
in of a building or any part of building with the
result that the building or part of the building
cannot be occupied for its intended purpose;
***
2.
We will pay for direct physical loss or damage to Covered
Property, caused by collapse of a building or any part of a
building . . . if the collapse is caused by one or more of the
following:
***
b.
Decay that is hidden from view, unless the presence of
such decay is known to any insured prior to collapse;
11
***
e.
Weight of rain that collects on a roof . . . .
Docket Entry No. 87‐5, at 36.
C.
Limitations
The following limitations apply . . . unless otherwise stated.
1.
We will not pay for loss of or damages to the
property, as described and limited [below] . . . .
***
c.
The interior of any building or structure,
or to personal property in the building or
structure, caused by or resulting from
rain, snow, sleet, ice, sand or dust,
whether driven by wind or not, unless:
(1)
The building or structure first
sustains damage by a Covered
Cause of Loss to its roof or walls
through which the rain, snow,
sleet, ice, sand or dust enters, or
(2)
The loss or damage is caused by or
results from thawing of snow, sleet
or ice on the building or structure.
Docket Entry No. 87‐5, at 34‐35.
A. Collapse
Lloydʹs argues that there is no proof of an ʺabrupt falling down or caving inʺ as
defined under the policy. Lloydʹs cites to the plaintiffʹs deposition, in which he testified
that he did not know whether there was a collapse because he never saw the damage, to
the deposition of the plaintiffʹs property manager, Cathy Watry, who testified that she did
not see any collapse, and the plaintiffʹs maintenance man, James Watry, who admitted that
there was no collapse.
Ms. Watry testified that she arrived at the building after the storm and she did not
see an ʺabrupt falling inʺ of any part of the roof or the building but she explained that the
12
ʺroof had to have collapsed for that much water to be coming through the ceiling.ʺ Docket
Entry No. 123‐1, at 167‐68. Mr. Watry testified that he did not notice any holes or see where
the roof had collapsed. Docket Entry No. 124‐3, at 86‐87. The plaintiff did not view the
building until after Braun had performed repairs and had no first hand knowledge of what
happened. The Court cannot find that the deposition testimony of Ms. Watry, Mr. Watry,
and the plaintiff serve as admissions that the roof did not collapse.
Lloydʹs maintains that, even if there were a collapse, the collapse would have had
to have made the building uninhabitable and there is no coverage, since the building was
not habitable ʺdue to the history of leaks and other code violations,ʺ citing the deposition
of Mattie Jones, a Metro property inspector. Docket Entry No. 87‐1, at 14; Docket Entry
No. 87‐11, at 59. The defendant appears to be arguing that any collapse did not make the
building uninhabitable because it was already uninhabitable. Ms. Jones testified that the
water damage to the building caused her to ask all the tenants to leave and to ʺpost the
building as uninhabitable.ʺ Docket Entry No. 124‐11, at 63. Although she testified that she
believed that the building had received at least 11 code violations prior to January 27, 2009,8
she did not testify that the building was uninhabitable ʺdue to the history of leaks and
other code violationsʺ prior to January 27, 2009. See Docket Entry No. 124‐11, at 63, 86‐87.
In response, the plaintiff contends that the evidence of a ʺcollapseʺ is
ʺoverwhelming.ʺ Docket Entry No. 115, at 3. He cites the deposition testimony of
Ms. Jones who described the ceiling in one of the apartments as having ʺcollapsed in.ʺ Id.
at 54. Specifically, she related that not only had the ceiling collapsed, the actual sheetrock
had also ʺcollapsed down,ʺ that roof sheathing had collapsed, and that decking ʺhad been
rotted outʺ and ʺwas gone.ʺ Id. at 67‐68.
8
She also testified that the violations related to inoperable vehicles, ʺjunk trash and
debris,ʺ and a sign. Docket Entry No. 124‐11, at 23.
13
The plaintiff also cites to the deposition of Mr. Brent, a former tenant, who had
mopped the roof with asphalt liquid twice before the plaintiff purchased the property and
one time thereafter in April of 2008, and who performed other handyman tasks at the
apartment complex under Mr. or Ms. Watryʹs direction. Docket Entry No. 124‐13, at 14‐16,
32, and 36. Mr. Brent testified that he had been on the roof on two occasions since the
plaintiff purchased the property, specifically, in April of 2008, and on another occasion to
retrieve a ball. He reported that he had seen ʺminute cracksʺ in the roof that did not look
as if they would allow water to go through them and he did not notice any holes in the
roof. Docket Entry Nos. 124‐13, at 38‐39, and 124‐14.
In addition, the plaintiff relies on the affidavit of Kenneth Amick, a tenant, who
attested that on January 26, 2009, there were no observable ʺdrips, leaks, water stains or any
other problems with the ceiling or wallsʺ of his apartment until about 3:30 a.m. on January
27, 2009, when he heard a ʺloud and sudden crashing soundʺ followed by water gushing
into his apartment, and that he saw a ʺlarge piece of sheetrockʺ and other material on the
living room floor with water ʺstreaming from the ceiling directly above the ceilingʺ and
sheetrock and insulation hanging down from the ceiling around a large hole in the ceiling
from which water ʺcontinued to rush inʺ like a ʺwaterfall that would not stopʺ as opposed
to a leak. He described the occurrence as ʺ[t]he ceiling and roof collapse.ʺ Mr. Amick also
attested that the ʺarea of the collapseʺ was not the same area where there had previously
been ʺa small leak,ʺ and that, to the best of his recollection there had been no other leaks
in 2008 or 2009. According to Mr. Amick, he looked into the apartment next to his and saw
that ʺit was actually raining inside this other apartment.ʺ Docket Entry No. 95, at 3‐4,
¶¶ 11‐16, and 22‐23.
The defendant describes Mr. Amickʹs affidavit as ʺself‐servingʺ and ʺsimply not
believable.ʺ Docket Entry No. 119, at 2. The defendant does not explain why the affidavit
is ʺself‐servingʺ or what interest Mr. Amick might have in making the attestations in his
14
affidavit. The defendant maintains that it is not credible that Mr. Amick, who saw the
ʺentire alleged ʹcollapseʹʺ is the same witness who sustained the ʺone leak in the whole
building that was plugged up until the alleged ʹcollapse.ʹʺ Id. There is nothing so
incredible about Mr. Amickʹs affidavit that would warrant declining to consider it in the
context of the issue of whether there had been a collapse of the roof.
Finally, the plaintiff cites to Mr. Hodgeʹs February 4, 2009, and February 20, 2009,
reports, arguing that his first report of February 4, 2009, ʺlargely supports a covered
ʹCollapseʹ as does his second Report of February 20, 2009.ʺ Docket Entry No. 115, at 3.
However, the plaintiff decries Mr. Hodgeʹs affidavit (Docket Entry No. 87‐6) submitted by
the defendant in support of its motion for summary judgment as indicative of the
defendantʹs ʺclear manipulation.ʺ Id.
Based on the record before the Court, the Court finds that there is a disputed issue
of material fact on whether there was a collapse of the roof under the terms of the policy.
B. Hidden Decay
The defendant argues that the record is ʺrife with testimony from roofing experts,
the Plaintiff and his agents that the roof was in abysmal condition, leaking continuously,
had a ponding problem, had been repaired poorly and improperly prior to the failure, and
needed immediate replacement.ʺ Docket Entry No. 87‐1, at 14. Lloydʹs cites to the
plaintiffʹs deposition testimony and the deposition testimony of Cathy Watry, Jim Watry,
and Mattie Jones, and the affidavit of Matthew Hodge, the defendantʹs engineering expert,
also designated as the plaintiffʹs non‐retained expert, who observed soft roofing cement,
indicating ʺvery recent repairs or repairs over a wet surface,ʺ and opined that roofing repair
cement should not be applied to a wet surface since it will not dry properly and will not
15
be able to withstand pressure from ponding water.ʺ See Docket Entry No. 87‐6, at 4, ¶ 15.9
In addition, the defendant points out that, when the plaintiff purchased the building in
December of 2005, he was advised that there were tears in the roofing material and several
roof leaks in the second story units. Docket Entry No. 87‐1, at 15. Also in December of
2005, Carl Cotten, a roofing specialist, advised the plaintiff or his agents to replace the roof.
See Docket Entry No. 87‐17.10
It is the defendantʹs position that the plaintiff and Mr. Watry made ʺunprofessional,
cheap, slapdash ʹrepairsʹ by mopping over‐the‐counter cement on the already deteriorating
roof,ʺ which not only did not solve the problem of leaking and water damage to the roof
but also exacerbated the problem. Thus, the defendant argues that the exclusion from
coverage is designed to protect an insurer from this ʺexact situation‐‐rewarding an insured
who refuses to be a responsible property owner.ʺ Docket Entry No. 87‐1, at 15‐16.
In his response, the plaintiff appears not to contest that there was decay,11 but rather
maintains that the decay was ʺhidden from viewʺ and concealed by sheetrock, paint, joints
and insulation on the bottom and tar paper with several layers of roofing tar on the top,
and that the building was regularly maintained and repaired as needed, with the ʺpossible
9
However, Mr. Watry appeared to testify that he had applied the roofing cement
that Mr. Hodge had observed after the storm. See Docket Entry No. 124‐3, at 81.
10
The defendant also cites the deposition of Ms. Jones in which she testified that
Mr. Watry was aware of the leaks in the roof, but that the plaintiff did not have the money
to replace the roof. Docket Entry No. 87‐11, at 7. The plaintiff objected to this statement
of material fact, see Docket Entry No. 100, at 9, ¶ 34, on the basis of hearsay and counselʹs
leading the witness, and denied that Mr. Watry admitted that there were problems with
the roof prior to the storm, patched it and did not replace the roof because there was not
enough money, citing in general to Mr. Watryʹs testimony, without citing to any specific
portion of his testimony. The Court has reviewed the excerpts of Mr. Watryʹs deposition
transcript, attached to Docket Entry No. 110, and could not find any mention of what he
had or had not told Ms. Jones.
11
In fact, the plaintiff admits that ʺunseen ʹsheathing deteriorationʹ contributed to
the roof and ceiling sudden collapse.ʺ Docket Entry No. 100, at 6, ¶ 18.
16
exception of one small leak,ʺ and there were no leaks since April of 2008, and only a few
leaks prior to that time that were repaired. Docket Entry No. 115, at 4.
The defendant argues that Mr. Watry has ʺflatly contradictedʺ his deposition
testimony in his affidavit. Docket Entry No. 119, at 2. Specifically, the defendant maintains
that Mr. Watry testified in his deposition that he regularly saw water ponding on the roof,
in some places up to 4 inches,ʺ that there had been leaks in three of the units that he
indicated were ʺagain leaking profuselyʺ on January 27, 2009, and that he observed the
plywood sheathing from the roof to be ʺmuch deterioratedʺ on January 27, 2009. Docket
Entry No. 119, at 2‐3. However, Mr. Watry did not testify in his deposition that he
regularly saw water ponding on the roof ʺin some places up to 4 inchesʺ prior to
January 27, 2009. Instead, as a ʺrough guess,ʺ he testified that there were some areas of the
roof in which there were three to four inches of water after the storm. Docket Entry
No. 124‐3, at 83. Although he testified in his deposition that he observed the plywood
sheathing from the roof to be ʺmuch deterioratedʺ after January 27, 2009, he did not testify
that he had observed it to be deteriorated before the storm. Id. at 102.
In his affidavit, Mr. Watry attested that, prior to January 27, 2009, he did not have
notice of knowledge that the roofing plywood was ʺitself deteriorated in any wayʺ nor did
he notice any ʺrotten, deteriorated, cracked, moldy or otherwise structurally unsound
plywood sheathing.ʺ Docket Entry No. 112‐2, at 2‐3, ¶ 10. He also attested that the
building had ʺa small number of leaks over the years,ʺ but that they were ʺnot serious or
out of the norm for this type of structure,ʺ and each leak was timely repaired. Id. at 2,
¶¶ 5‐6. According to Mr. Watry, other than a few ʺsmall leaks,ʺ leaving ʺsmall water marks
on the ceilings of some of the units,ʺ he had never observed any problem with the ceiling
of any unit, and he was aware of no leaks after April of 2008, until January 27, 2009. Id.
at 2, ¶¶ 7‐8. He described the building as ʺwell maintainedʺ with ʺregular upkeep and
maintenance performed.ʺ Id. at 2, ¶ 9.
17
While the defendant can certainly attack Mr. Watryʹs credibility in conceding that
the sheathing was deteriorated after the storm but professing to have no knowledge of such
deterioration before the storm, his affidavit does not ʺflatly contradictʺ his deposition
testimony. The evidence before the Court shows that the roof had problems and needed
to be replaced. However, the issue is not whether the roof was imperfect, which it clearly
was, or whether the plaintiff was as responsible a landlord as he should have been, but
rather whether the decay was known to the plaintiff or his agents prior to January 27, 2009.
Based on the record before the Court, the Court finds that there are genuine issues of
material fact about the plaintiffʹs knowledge of the decay prior to January 27, 2009, and
whether the decay was ʺhidden from view.ʺ
C. Weight of Rain
The defendant argues that the affidavit of its engineering expert, Matthew Hodge,
clearly supports its assertion that the weight of the rain did not cause any collapse. In his
affidavit, Mr. Hodge attested, inter alia, as follows:
The roof failure was not caused by windstorm, hail, sinkhole collapse, falling
objects, weight of snow, or water damage (defined by the Policy to mean
accidental discharge or leakage of water or steam as the direct result of the
breaking apart or cracking of a plumbing, heating, air conditioning or other
system or appliance (other than a sump system including its related
equipment and parts), that is located on the premises and contains water or
steam.) . . . For the reasons set forth above, the sheathing was compromised
long before the storm. That is why it is important for his roof to have been
replaced long before this storm. A normally maintained roof should have
been able to withstand this event. . . . If the roof had been properly
maintained, or replaced, the water and/or ice should have had no adverse
effects on the roof.
Docket Entry No. 87‐6, at 6‐7, ¶¶ 29 and 31.
Mr. Hodge opined that the failure of the roof sheathing ʺallow[ed] a large amount
of water into the apartments,ʺ that the rotten plywood failed ʺunder the long term pressure
of the ponding water and any ice . . . as well as the additional water from the Stormʺ
ʺloaded the deteriorated roof sheathing beyond its capacity, which was inhibited due to the
18
long‐term moisture intrusion,ʺ and that ʺ[n]o part of the roof rafters collapsed, abruptly fell
down, or caved in during or after the Storm.ʺ Id. at 87‐6, at 6, ¶¶ 24‐26.
In a cursory manner, the plaintiff contends that there is ʺample evidence of ʹweight
of rainʹ causing the collapse,ʺ given the testimony of the ʺheavy rain storm that lasted for
days on a flat roof with four ʹscuppers,ʹʺ along with Mr. Amickʹs description of the ʺsudden
collapse resulting in a ʹwaterfall.ʹʺ Docket Entry No. 115, at 4.
Whether the weight of the rain caused the failure of the roof is really an extension
of the defendantʹs contention that the poor condition of the roof was the cause of its failure.
That contention has already been addressed above in the context of whether there was
hidden decay.
VII. Tennessee Consumer Protection Act Claim12
In his complaint, the plaintiff alleges that:
Lloydʹs, through its agents, deceived Schauffert into believing he had
coverage under the policy. Schauffert relied on the representations of
coverage to his detriment, causing Schauffert to incur damages, delays, and
expenses he would not otherwise have experienced or incurred. These
include, but are not limited to, the delay in beginning construction, the
unnecessary damage caused by Braun, loss of income from rents, storage
costs, additional construction costs to meet applicable Metro Code
requirements in rebuilding the portions of the building destroyed by Braun,
and fees and costs associated with Metro Code Requirements.
Docket Entry No. 1‐1, at 7, ¶ 19. The plaintiff asserts that those acts constitute violations
of the Tennessee Consumer Protection Act (ʺTCPAʺ), Tenn. Code Ann. § 47‐18‐104(b)(2),
(3), (5), and (27). Id. at 8. The defendant maintains that the plaintiffʹs TCPA claim, based
on Lloydʹs deceiving the plaintiff into believing that he had coverage under the policy,
should be dismissed because the plaintiffʹs agent, Cathy Watry, admitted she was advised
12
The defendant also seeks summary judgment on the plaintiffʹs business
income/loss of rents claim for the same reason it seeks summary judgment on the plaintiffʹs
other damages claims. Since the analysis is the same as the coverage analysis, see Docket
Entry No. 87‐4, at 22, ¶ 64, the Court has not separately addressed this issue.
19
by the plaintiffʹs insurance agent that the policy might not provide coverage for the roof,
and because the claim was denied based on valid policy provisions and the opinion of its
expert.
The TCPA prohibits various unfair and deceptive practices and ʺany other act or
practice which is deceptive to the consumer or to any other persons.ʺ Tenn. Code Ann.
§ 47‐18‐104(b)(27). The Tennessee Supreme Court has held that this ʺcatch‐allʺ provision
may apply to the denial of an insurance claim. Myint v. Allstate Ins. Co., 970 S.W.2d 920,
925 (Tenn. 1998).13 However, mere denial, even a mistaken or erroneous denial, of a claim
is not a violation of the TCPA, absent any deceptive misleading or unfair act. See
Williamson v. Aetna Life Ins. Co., 481 F.3d 369, 378 (6th Cir. 2007); Parkway Assocs., LLC
v. Harleysville Mut. Ins. Co., 129 Fed.Appx. 955, 960‐61 (6th Cir. May 4, 2005); Hardy &
Kelly LLC v. QBE Ins. Corp., 2011 WL 1539888 (M.D. Tenn. Apr. 22, 2011) (Campbell, C.J.);
Fulton Bellows, LLC v. Federal Ins. Co., 662 F.Supp.2d 976, 997 (E.D. Tenn. 2009). See also
Chad Youth Enhancement Ctr., Inc. v. Colony Natʹl Ins. Co., 2010 WL 455252, *5 (M.D.
Tenn. Feb. 2, 2010) (Echols, J.).
The plaintiff maintains that the defendant did ʺmuch more than simply deny
Plaintiffʹs legitimate claims.ʺ Docket Entry No. 115, at 6. Specifically, the plaintiff argues
that the defendant disregarded its own expertʹs report supporting a finding that the roof
had collapsed and refused to properly investigate the loss or provide its expert with
statements from Ms. Jones, Ms. Watry, Mr. Watry, Mr. Brent, the plaintiff and the prior
owner. In addition, the plaintiff contends that the defendantʹs ʺauthorized representative
adjuster also ran around assuring everyone the loss was covered,ʺ and that the defendant
13
Although subsequent courts have implied that section (b)(27) is the only section
of the TCPA under which a claim against an insurance company can be brought, see, e.g.,
Fulton Bellow, 662 F.Supp.2d at 997, it does not appear that the Tennessee Supreme Court
was quite as limiting in Myint. Regardless, however, the parties have not addressed any
particular section of the TCPA in their memoranda in support of or opposition to the
defendantʹs motion for summary judgment.
20
ʺdemanded their adjuster, Mr. Espey, lie in his dealings with Lloydʹs insureds‐‐which he
testified he was willing to do.ʺ Id. at 6 (emphasis in original). The defendant did not
address the TCPA in its reply (Docket Entry No. 119) or otherwise contend that, if proven,
the conduct described by the plaintiff does not fall within the ambit of T.C.A. § 47‐18‐
104(b)(27).
The plaintiff offers no explanation for why the defendantʹs investigation was
improper or why failure to provide its expert with statements supports a violation of the
TCPA. The plaintiff maintains that Mr. Espey was willing to lie for Lloydʹs, citing
Mr. Espeyʹs ʺdeposition testimony where this is explicitly stated.ʺ Docket Entry No. 115,
at 6. The plaintiff did not cite to any specific pages of Mr. Espeyʹs 122 page deposition
transcript. Although there is no obligation to do so, the Court scoured the transcript in an
attempt to locate any testimony in which Mr. Espey made such a representation. The Court
assumes that the plaintiff was referring to his testimony that, after he had been notified that
the plaintiffʹs claim was denied, he was directed by the third‐party administrator to advise
the plaintiff or his agent that he was still awaiting a response on whether the claim would
be covered if the insured asked about coverage before receiving the notice of denial.
Docket Entry No. 124‐7, at 84‐86. Such testimony does not support any contention that
Mr. Espey lied in this dealings with the plaintiff.
The real gravamen of the plaintiffʹs TCPA claim appears to be his contention that
Brad Espey, the insurance adjuster for GAB, which had been contacted by the third party
administrator for defendant Lloydʹs,14 had told Ms. Watry that there would be insurance
coverage.
The plaintiff did not specifically dispute the defendantʹs citations to the deposition
of Cathy Watry in support of its contention that Mr. Espey had advised Ms. Watry that
14
Mr. Espey explained that it was his understanding that CJW, the third party
administrator for defendant Lloydʹs, issued an assignment to GAB. Docket Entry No. 124‐
7, at 12‐13.
21
there might not be coverage. However, the portions of Ms. Watryʹs deposition testimony
cited by the defendant only confirmed that Mr. Espey advised her that the ʺroofʺ might not
be covered, but she also testified that Mr. Espey told her ʺeverything else is covered.ʺ
Docket Entry No. 123‐1, at 141; Docket Entry No. 128, at 11‐12.
In his deposition, Mr. Espey denied having made any representations to anyone
about whether any repairs would be covered under the policy. See Docket Entry No. 124‐7,
at 23, 25, 38‐40, 43‐44, and 46‐48. On the other hand, Mark Easterwood, Braunʹs project
manager, attested in his affidavit that Mr. Espey advised him and Jim and Cathy Watry
that the temporary roof and emergency services and repairs would be covered under the
policy and that the ʺonly part of the Property possibly not covered by the Policy was the
permanent roof.ʺ Docket Entry No. 36, at 2, ¶¶ 7 and 10. However, in his deposition,
Mr. Easterwood repudiated and/or testified that he did not remember the basis for some
of his prior statements in his affidavit, but he did confirm that Mr. Espey had told him that
the ʺtemporary roof was covered,ʺ and that coverage for ʺemergency services,ʺ specifically
the temporary roof, was ʺnot in question.ʺ Docket Entry No. 124‐9, at 42, and 44‐45.
Based on Mr. Easterwoodʹs affidavit, Mr. Espyʹs deposition, and Ms. Watryʹs
deposition, there are genuine issues of material fact about whether or not Mr. Espey made
representations to Mr. Easterwood and the Watrys that all or part of the repairs would be
covered under the defendantʹs insurance policy. Therefore, dismissal of the plaintiffʹs
TCPA claim is not warranted.
VIII. Conclusion
While the defendant may ultimately prevail in this case, the Court must consider the
affidavits and deposition testimony in the light most favorable to the plaintiff, without
making the credibility judgments the defendant urges. Matsushita, 475 U.S. at 587‐88;
Pennington, 553 F.3d at 450; Van Groder, 509 F.3d at 268; Myers, 341 F.3d at 466; Hopson,
22
306 F.3d at 432. Following that mandate, the Court finds that there are genuine issues of
material fact that preclude granting summary judgment to defendant Lloydʹs.
RECOMMENDATION
For the reasons provided above, it is recommended that the motion for summary
judgment filed by defendant Certain Underwriters at Lloydʹs, London (Docket Entry
No. 87) be DENIED.
Any objections to this Report and Recommendation must be filed with the Clerk of
Court within fourteen (14) days of service of this notice, and must state with particularity
the specific portions of this Report & Recommendation to which objection is made. Failure
to file written objections within the specified time can be deemed a waiver of the right to
appeal the District Courtʹs order. See Thomas v. Arn, 474 U.S. 140 (1985); United States v.
Walters, 638 F.2d 947 (6th Cir. 1981).
Respectfully Submitted,
JULIET GRIFFIN
United States Magistrate Judge
23
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