Hale v. State Farm Mutual Fire & Casualty Co. et al
OPINION AND ORDER granting 20 Motion for Summary Judgment. Signed by Senior Judge James P. Jones on 11/18/2022. (lml)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
RAY LEWIS HALE,
STATE FARM FIRE & CASUALTY )
CO., ET AL.,
Case No. 1:21CV00049
OPINION AND ORDER
JUDGE JAMES P. JONES
Michael A. Bragg, BRAGG LAW, Abingdon, Virginia, for Plaintiff; Guy M.
Harbert, III, GENTRY LOCKE, Roanoke, Virginia, for Defendant.
In this diversity case removed from state court, the plaintiff contends that the
defendant insurance company has failed to pay the amounts owed under a fire
insurance policy after his home was destroyed by fire. The insurance company
asserts that it has paid him all that he is entitled to under the policy. Based on the
uncontested facts and the terms of the policy, I find that the insurance company’s
Motion for Summary Judgment must be granted and judgment entered in its favor.
The residence of the plaintiff, Ray Lewis Hale, located near Abingdon,
Virginia, was totally destroyed by fire on November 24, 2018, along with personal
property located there. The defendant, State Farm Fire & Casualty Co. (State Farm),
had in effect a policy of insurance, the State Farm Homeowners Policy No. 46-CJ-
0562-6 (Policy), that insured the premises and its contents as a result of fire loss.
Hale made a prompt claim under the Policy and after an investigation, State Farm
paid Hale a total of $224,024.49 under the various coverages of the Policy. The
payments were as follows:
$171,021.59 on April 17, 2020, to Hale and his mortgagee under
Coverage A of the Policy, for the dwelling and debris removal, after
applying a $2,000 deductible;
$44,055.99 on April 17, 2020, $1,095 on December 18, 2018, and
$1,500 on November 28, 2018, under Coverage B, for personal
$1,081.58 on December 14, 2018, $540.79 on January 15, 2019,
$1,622.37 and $807.06 on February 20, 2019, and $2,297.11 on May 9,
2019, under Coverage C, for additional living expenses incurred by the
Mem. Supp. Summ. J. Ex. B, Buchanan Decl. ¶ 6, ECF No. 21-2.
Hale filed suit against State Farm in the Circuit Court of Washington County,
Virginia, on November 24, 2020, contending that it had breached the Policy by
failing to pay him the replacement value of the dwelling and the total value of the
personal property lost.1 State Farm was served with the Complaint on November
17, 2021, nearly one year after it was filed and almost three years after the fire. After
answering the Complaint, State Farm timely removed the action to this court based
Hale also added as a defendant to his Complaint the mortgagee of the property,
whose correct name is American Advisors Group, but that defendant was later dismissed
from this case because it had assigned its interest to another entity. Order, Feb. 24, 2022,
ECF No. 12.
on diversity of citizenship and amount in controversy. 28 U.S.C. §§ 1332(a),
1441(a). Based on the undisputed allegations of the Notice of Removal, this court
has proper subject-matter jurisdiction. Francis v. Allstate Ins. Co., 709 F.3d 362,
367 (4th Cir. 2013) (noting that “[t]he removability of a case depends upon the state
of the pleadings and the record at the time of the application for removal.”) (internal
quotation marks and citation omitted).
State Farm filed its Motion for Summary Judgment on September 21, 2022,
supported by the declaration of David Lynn “Buck” Buchanan, a claims
representative for State Farm who was responsible for the investigation and
adjustment of Hale’s claim under the Policy. Hale has filed no response to the
Motion for Summary Judgment.2 A hearing on the motion was held on November
9, 2022, and the motion is now ripe for decision. The Buchanan declaration, with
supporting exhibits, is 197 pages long, and is the evidence before the court, along
with the Policy, a transcript of an examination of Hale under oath by State Farm’s
lawyer, and answers by Hale to interrogatories and a request for admissions.
Any response to the Motion for Summary Judgment was due to be filed no later
than 14 days after service of the motion. Scheduling Order ¶ 6, ECF No. 19. However,
even in the absence of a response, “the moving party must still show that the
uncontroverted facts entitle the party to a judgment as matter of law.” Custer v. Pan Am.
Life Ins. Co., 12 F.3d 410, 416 (4th Cir. 1993) (internal quotation marks and citation
Summary judgment is proper “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 fact is deemed “material” if proof of its existence or
nonexistence would affect the disposition of the case under the applicable
law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of
material fact is “genuine” if the evidence offered is such that a reasonable jury might
return a verdict for the non-movant. Id. at 257.
A federal court sitting in diversity is required to apply the substantive law of
the forum state, including its choice-of-law rules. Klaxon Co. v. Stentor Elec. Mfg.
Co., 313 U.S. 487, 496–97 (1941). Virginia courts hold that an insurance policy is
made in the state where the policy is delivered, Grange Mut. Cas. Co. v. Criterion
Ins. Co., 188 S.E.2d 91 (Va. 1972), and the parties do not dispute that Virginia law
governs the proper reading of the Policy. In Virginia, “when the language of the
insurance policy is clear and unambiguous, courts do not employ rules of
construction, rather, they give the language its plain and ordinary meaning and
enforce the policy as written.” P’ship Umbrella, Inc. v. Fed. Ins. Co., 530 S.E.2d
154, 160 (Va. 2000).
In regard to the dwelling, Coverage A of the Policy provided that State Farm
would pay “the cost to repair or replace” the premises. Mem. Supp. Summ. J. Ex.
A, Policy 10, ECF No. 21-1. However, it also provided that “until actual repair or
replacement is completed, we will pay only the actual cash value at the time of the
loss.” Id. The Policy also provided that “[n]o action shall be brought unless there
has been compliance with the policy provisions [and] [t]he action must be started
within two years after the date of loss or damage.” Id. at 13.3 A few days after the
fire, on November 28, State Farm’s claim representative cautioned Hale that “[t]o
make a claim for replacement cost benefits, you must repair or replace the damaged
property by November 24th 2020,” Buchanan Decl., Ex. 3 at 1, ECF No. 21-2, which
was the two-year anniversary of the fire.
Along with his daughter and son-in-law, Hale purchased a home in nearby
Bristol, Tennessee, on December 1, 2020, for $525,000, which Hale contends was a
replacement for his destroyed residence. Mem. Supp. Summ. J. Ex. D, Answers
Interrogs. ¶ 1, ECF No. 21-6. Hale did not advise State Farm of this purchase and
A Virginia statute requires fire policies to contain such a provision. Va. Code
Ann. § 38.2-2105.
his claim that it was a replacement until June of 2022, during discovery in the present
action, and nearly four years after the fire. 4
State Farm contends that because the residence was not replaced (or repaired)
within two years, Hale’s action for replacement cost is barred by the contractual
As to the claim that State Farm has not paid the proper amount for lost
contents under Coverage B, the evidence shows that Hale submitted, with the
assistance of his daughter, inventories in regard to his loss of contents claim, but
without supporting documentation. During the examination of Hale under oath on
April 18, 2019, it was admitted that there were inaccuracies as to prior inventories
provided. Hale was advised that he could supplement an inventory “at a later date.”
Mem. Supp. Summ. J. Ex. C, Tr. Examination under Oath 148, ECF No. 21-5. The
claims representative met with Hale’s counsel on October 9, 2019, on the status of
Hale’s claim but that meeting ended without resolution. Despite multiple letters
thereafter from the claims representative advising that further information was
needed, there was no further response on behalf of Hale. Accordingly, State Farm
Hale admitted during his examination under oath by State Farm that two months
before the fire he had unsuccessfully tried to sell his home for $205,000. Mem. Supp.
Summ. J. Ex. C, Tr. Examination under Oath 21, ECF No. 21-4.
sent checks for Hale based upon its investigation, which were negotiated and paid.
State Farm heard nothing further until this suit was served upon it in 2021. 5
Coverage B provides that until actual repair or replacement is completed, State
Farm will pay “only the cost to repair or replace less depreciation.” Policy 11, ECF
No. 21-1. It is further required that the insured must prepare an inventory of the
lost personal property, together with “all bills, receipts and related documents that
substantial the figures on the inventory.” Id. at 12. State Farm contends that Hale
cannot recover further amounts since he was not in compliance with the terms of the
In oral argument on the Motion for Summary Judgment, counsel for Hale did
not dispute the Policy’s limitation period but asserted two grounds in opposition. It
was argued that there had been “substantial compliance” with the terms of the Policy
within the time limit and that in any event, State Farm’s payment to Hale of the
amounts it had determined were due constituted a waiver by State Farm of the time
limit contained in the Policy.
I cannot accept the plaintiff’s arguments. The plain language of the Policy
required that Hale complete the actual repair or replacement of the damaged property
before he was entitled to replacement value beyond actual cash value. Hale’s ability
Under Virginia law, service of process is timely if within 12 months after the
action is filed. See Va. Code Ann. §§ 8.01-275.1, -277(B); Rules of Va. Sup. Ct. 3:5(e).
to sue for recovery under the Policy hinged on two conditions: (1) that Hale comply
with the policy provisions, which would include the complete replacement condition
precedent, and (2) that Hale bring the action for such recovery within two years of
the loss. It therefore follows that the replacement must have been complete within
two years of the loss, or before timely filing suit, in order to recover any such
amount. Cf. Henretty v. State Farm Fire & Cas. Co., No. 1:16-CV-575, 2016 WL
11668713, at *2 (E.D. Va. July 22, 2016) (strictly applying the two-year contractual
limitations period “in homeowners policies and other fire insurance policies as a
complete bar to an action on the policy in cases where the insured fails to file the
action within the policy’s two year limitations period”); S. Home Ins. Co. of the
Carolinas v. Bowers, 161 S.E. 914, 917–18 (Va. 1932).
As for recovery under Coverage B and C, the record shows that Hale failed to
substantiate further payments with documentation before filing suit, despite State
Farm’s multiple reminders. Thus, because Hale did not fulfill his obligations under
the contract, he has not satisfied a condition precedent to filing suit and State Farm
is excused from payments it might have owed had Hale complied. Cf. Stolz v. Safeco
Ins. Co., 798 F. App’x 52, 54 (9th Cir. 2019) (unpublished).
Furthermore, Hale has the burden of proving waiver, Eden v. Utica Mut. Ins.
Co. 350 F. Supp. 637, 643 (W.D. Va. 1972), and he has not presented any evidence
or cognizable argument that State Farm has waived the assertion of the contractual
provisions at issue. Furthermore, while it is correct that under Virginia law, an
insured is required only “reasonable and substantial compliance” with certain
conditions of a fire policy, Aetna Cas. & Sur. Co. v. Harris, 239 S.E.2d 84, 88 (Va.
1977), I do not find such compliance here.
For the reasons stated, it is ORDERED that Defendant’s Motion for
Summary Judgment, ECF No. 20, is GRANTED.
Judgment in favor of the
defendant will be entered herewith.
ENTER: November 18, 2022
/s/ JAMES P. JONES
Senior United States District Judge
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