Travelers Indemnity Company of America v. Ambaji, Inc.

Filing 42

MEMORANDUM OPINION OF THE COURT. Signed by Chief Judge William L. Campbell, Jr on 1/6/2025. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(kc)

IN THE UNITED STATES DISTRICT COURT FOR THE
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
TRAVELERS INDEMNITY COMPANY
OF AMERICA,
Plaintiff,
v.
AMBAJI, INC.,
Defendant.

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NO. 3:23-cv-00451
JUDGE CAMPBELL
MAGISTRATE JUDGE NEWBERN

MEMORANDUM
Pending before the Court is Plaintiff Travelers Indemnity Company of America’s
(“Travelers”) Motion For Summary Judgment. (Doc. No. 30). Defendant Ambaji, Inc. (“Ambaji”)
filed a response in opposition (Doc. No. 33), and Travelers filed a reply (Doc. No. 34). For the
reasons discussed below, the Motion (Doc. No. 30) is GRANTED.
I.

BACKGROUND

Ambaji owns a commercial property, which it operates as a hotel, located at 107 Enterprise
Blvd. La Vergne, TN 37086 (the “Insured Premises”). (Doc. No. 33-2 ¶ 1; Doc. No. 30-3 at PageID
# 322). Ambaji insured the Insured Premises with Travelers under Policy No. IH660-7E968115A
(the “Policy”). (Doc. No. 33-2 ¶ 1; Doc. No. 30-3 at PageID # 322). On July 31, 2021, Ambaji
reported that a hailstorm struck the Insured Premises and resulted in damage to the roof and
interior. (Doc. No. 33-2 ¶ 2; Doc. No. 30-3 at PageID # 322). In November 2021, Ambaji provided
Travelers with a repair estimate for the loss from its public adjuster, William Griffin (“Griffin”),
totaling $716,831.31. (Doc. No. 30-2 ¶ 3; Doc. No. 30-3 at PageID # 323). Griffin’s repair estimate
included repair costs for both interior and exterior damage. (Doc. No. 33-2 ¶ 3; Doc. No. 30-3 at
PageID # 323). Travelers investigated the Insured Premises and provided Griffin and Ambaji an

initial repair estimate for the exterior hail damage and stated that the Policy did not afford coverage
for interior damage caused by rain. (Doc. No. 33-2 ¶ 4; Doc. No. 30-2 at PageID # 323).
Ambaji invoked the appraisal provision of the Policy. (Doc. No. 33-2 ¶ 6; Doc. No. 30-3
at PageID # 323; Doc. No. 30-4). Travelers agreed to appraisal subject to the following terms: The
appraisers would be asked to value (1) Costs to repair the exterior of the building to its pre-loss
condition for the damage caused by hail valued at Replacement Cost and Actual Cash Value; (2)
Changes in construction, or the increased cost of construction, necessary to comply with building
codes or ordinances which are enforced for the repair of building damage caused by hail; (3) Costs
to repair the interior of the building to its pre-loss condition for the damage caused by water valued
at Replacement Cost and Actual cash value; (4) Changes in construction, or the increased cost of
construction, necessary to comply with building codes or ordinances which are enforced for the
repair of the interior damage caused by water; and (5) Travelers informed Ambaji that it wished
to attend any inspections of the building by the appraisers or umpire in order to observe and
respond to any questions they may have. (Doc. No. 33-2 13; Doc. No. 30-3 at PageID # 324-325).
Travelers also informed Ambaji that the appraisal could not be used to determine issues of
coverage and that no payments would be issued for the interior water damage because no coverage
was available under the Policy for that portion of the claim. (Id.)
Griffin emailed Travelers in September 2022 and stated that Ambaji “has agreed to
[Travelers] bifurcation methods as long as they comply with the contractual terms of the policy
and the appraisal provision [Travelers] put in the contract” and agreed “to [Travelers] attendance
as long as we are given timely notice and able to attend as well.” (Doc. No. 30-8 at PageID # 338).
Griffin also stated “[w]e did agree to your terms and conditions so the matter could be resolved.”
(Doc. No. 30-8 at PageID # 337).

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In March 2023, Ambaji’s appraiser sought to cancel the appraisal inspection because he
did not feel comfortable with Travelers attendance at the inspection and accused Travelers of
attempting to influence the appraisal panel. (Doc. No. 33-2 at PageID # 372; Doc. No. 30-5 at
PageID # 330). Griffin subsequently informed Travelers that he “never agreed to do anything
outside of the appraisal provision,” which Travelers construes as an indication that there was never
an agreement to allow Travelers and/or Ambaji to attend the panel inspection. (Doc. No. 33-2 ¶
11; Doc. No. 30-3 at PageID # 324).
Travelers filed suit in May 2023 seeking an Order (1) compelling Ambaji to participate in
appraisal pursuant to the Policy; and (2) requiring the appraisal award to be sufficiently itemized
to enable Travelers to identify any costs related to the interior damage that Travelers maintains
there is no coverage for under the Policy.
II.

LEGAL STANDARD

Summary judgment is appropriate “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). The summary judgment movant has the initial burden of informing the Court of the basis
for its motion and identifying portions of the record that demonstrate the absence of a genuine
dispute over material facts. Rodgers v. Banks, 344 F.3d 587, 595 (6th Cir. 2003). The moving party
may satisfy this burden by presenting affirmative evidence that negates an element of the nonmoving party’s claim or by demonstrating an absence of evidence of the non-moving party’s claim
or by demonstrating an absence of evidence to support the nonmoving party’s case. Id.
In evaluating a motion for summary judgment, the court views the facts in the light most
favorable for the nonmoving party and draws all reasonable inferences in favor of the nonmoving
party. Bible Believers v. Wayne Cty., Mich., 805 F.3d 228, 242 (6th Cir. 2015); Wexler v. White’s

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Fine Furniture, Inc., 317 F.3d 564, 570 (6th Cir. 2003). The Court does not weigh the evidence,
judge the credibility of witnesses, or determine the truth of the matter. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249 (1986). Rather, the Court determines whether sufficient evidence has been
presented to make the issue of material fact a proper jury question. Id. The mere scintilla of
evidence in support of the nonmoving party’s position is insufficient to survive summary
judgment; instead, there must be evidence of which the jury could reasonably find for the
nonmoving party. Rodgers v. Banks, 344 F.3d 587, 595 (6th Cir. 2003).
III.

ANALYSIS

“A federal court sitting in diversity applies the substantive law of the state in which it
sits.” Hayes v. Equitable Energy Res. Co., 266 F.3d 560, 566 (6th Cir. 2001). “In Tennessee, absent
a valid choice of law provision, the rights and obligations under an insurance policy are governed
by the law of the state where the insurance policy was ‘made and delivered.’” Charles Hampton's
A-1 Signs, Inc. v. Am. States Ins. Co., 225 S.W.3d 482, 485 n.1 (Tenn. Ct. App. 2006). Because
the Policy was issued and delivered in Tennessee (Doc. No. 1-1 at PageID # 11), the Court will
apply Tennessee substantive law to the interpretation and effect of the Policy.1
Under Tennessee law, “an insurance policy is a contract, and as such, [the court's] analysis
must be grounded in principles of contract law.” Christenberry v. Tipton, 160 S.W.3d 487, 492
(Tenn. 2005). Thus, the terms of an insurance contract “should be given their plain and ordinary
meaning.” Garrison v. Bickford, 377 S.W.3d 659, 663 (Tenn. 2012). Where the language of the
policy is clear and unambiguous, the court must give effect to that meaning. Id. “Language in an
insurance policy is ambiguous if it is susceptible of more than one reasonable interpretation.” Artist
Bldg. Partners v. Auto-Owners Mut. Ins. Co., 435 S.W.3d 202, 216 (Tenn. Ct. App. 2013). “When
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The parties seem to agree, as their legal arguments invoke Tennessee law. (See generally Doc. Nos.
30-1, 33-1).

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a provision that purports to limit insurance is ambiguous, it must be construed against the insurance
company and in favor of the insured.” Id. “The Court's analysis of the applicability of the
appraisal clause begins and ends with the plain language of the policy.” State Farm Fire & Cas.
Co. v. Harper, No. 3:20-cv-00856, 2022 WL 989088, at *4 (M.D. Tenn. Mar. 31, 2022).
In the present case, the appraisal provision in the Policy provides as follows:
2. Appraisal
If we and you disagree on the value of the property or 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. The two appraisers will select an
umpire. If they 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 the
property and 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 still retain our right to deny the claim.
(Doc. No. 1-1 at PageID # 39; Doc. No. 33-2 ¶ 5).
When considering a similar appraisal provision in Kush Enterprises, LLC v. Massachusetts
Bay Ins. Co., No. 3:18-cv-492, 2019 WL 13117568, at *2 (E.D. Tenn. Nov. 7, 2019), which was
decided in the context of a motion to compel appraisal, the Court held that the appraisal provision
“mandates the appraisal process if (1) the parties disagree on the amount of loss and (2) either
party makes a written demand for an appraisal of the loss.” Here, neither party disputes that
Ambaji made a written demand for an appraisal. (Doc. No. 33-2 ¶ 6). Accordingly, as in Kush, the
only issue for the Court to decide is whether the parties disagree on the amount of loss. See Kush,
2019 WL 13117568, at *2.
It is undisputed that the parties in the present case disagree on the amount of loss.
Specifically, Griffin provided a repair estimate to Travelers which included repairs for exterior
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hail damage and interior water damage. (Doc. No. 33-2 ¶ 3; Doc. No. 30-3 at PageID # 323).
Travelers provided its own repair estimate to Ambaji and Griffin for repairs to the exterior hail
damage and advised that no coverage was afforded for the interior damage caused by rain. (Doc.
No. 33-2 ¶ 4; Doc. No. 30-3 at PageID # 323). Ambaji’s representative also advised Travelers that
it “respectfully disagree[s] with the amount of loss that [Travelers] calculated in the above
referenced claim” when it invoked the appraisal provision. (Doc. No. 1-5 at PageID # 167).
Moreover, that Travelers concedes the Policy covers a portion of the claim and excludes
others does not preclude the appraisal process. In Morrow v. State Farm Fire & Casualty Co.,
cited infra, the insurer argued that appraisal was improper because its initial payment represented
the full value of the damage. The Court rejected this argument and held that it “fails to see how
State Farm's argument in this instance that it is denying coverage for certain repairs in Morrow's
estimate is any different than a dispute about the scope of work a repair requires” and that to adopt
such reasoning “would allow insurance agencies to avoid appraisal by claiming there is a coverage
issue, even when the dispute concerns additional amounts of loss.” Id. at *676. Accordingly, the
Court in Morrow recognized that where parties agree that the policy covers some damage but
dispute “the extent and the amount of the loss”, appraisal is appropriate. 592 F. Supp. 3d 672, 676
(E.D. Tenn. 2022).
Here, the Court finds that Travelers has satisfied its burden of showing that no genuine
dispute exists as to the fact that Ambaji made a written demand for appraisal and that the parties
disagree on the amount of loss.2 The Court also agrees with Travelers that an itemized appraisal is

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Both parties are correct that the scope of an appraisal is not unlimited and is to determine disputes
as to the amount of loss, not questions of coverage and liability. Merrimack Mut. Fire Ins. Co. v. Batts, 59
S.W.3d 142, 149 (Tenn. App. 2001); Morrow v. State Farm Fire & Cas. Co., 592 F. Supp. 3d 672, 676
(E.D. Tenn. 2022). But the Court need not address this issue at this stage.

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appropriate and will likely save both parties time and resources as each party will better understand
the other's position. Moreover, while the Court need not now address Traveler’s position that
portions of the claim are not covered under the Policy, itemization of the appraisal award will
likely aid the Court in considering any future coverage issues that may arise. Morrow v. State
Farm Fire & Cas. Co., 592 F. Supp. 3d 672, 677 (E.D. Tenn. 2022) (holding that where insurer
disputed coverage for a portion of the damage alleged by insured but agreed that some of the
claimed damage was covered by the Policy, “the appraisers in this case should take care to ensure
that the appraisal is detailed and itemized.”).
An appropriate Order will enter.
___________________________________
WILLIAM L. CAMPBELL, JR.
CHIEF UNITED STATES DISTRICT JUDGE

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