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Javits v. State Farm Fire and Casualty Co.

United States District Court, N.D. Georgia, Lanta Division

August 26, 2014

SHOSHANA JAVITS and HAIM JAVITS, Plaintiffs,
v.
STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

OPINION AND ORDER

WILLIAM S. DUFFEY, Jr., District Judge.

This matter is before the Court on Defendant State Farm Fire and Casualty Company's ("Defendant" or "State Farm") Motion for Partial Summary Judgment [25] and Motion to Strike [34]. Also before the Court are Plaintiffs Shoshana Javits ("Mrs. Javits") and Haim Javits ("Mr. Javits") (together, "Plaintiffs") Motion for Oral Argument [32], Motion to Appoint Expert [39], and Motion to Remand [45].

I. BACKGROUND

This is an insurance coverage dispute in which Plaintiffs seek coverage, under a homeowners' insurance policy issued by State Farm, for damage caused to their home by a fire in their kitchen. It is undisputed that damage caused by the fire is covered under the policy. The parties, however, dispute the extent of the damage and how to remedy it. State Farm asserts that it is entitled to partial summary judgment because their refusal to pay the entire amount of Plaintiffs' claimed lost was not in bad faith, and because most of the claims in their Complaint are precluded, as a matter of law, in an action based on an alleged breach of contract.

A. Facts

State Farm issued to Plaintiffs a homeowners' insurance policy, number 11-PC-2781-0 (the "Policy"), covering damage, including as a result of fire, for Plaintiffs' home in Marietta, Georgia. The Policy states that Defendant "will pay the cost to repair or replace with similar construction... the damaged part of the property...." (Policy [1.1 at 23-49] at 11).

On April 11, 2012, Mrs. Javits put two pots of oil on the stove in her kitchen, turned on the heat, and left the kitchen. (DSMF [25.4] ¶ 2). When she returned, the oil had ignited. (Id. ¶ 3). Mrs. Javits opened the kitchen window, sprayed the fire with water from a garden hose, re-entered the house and threw the pots outside. (Id. ¶¶ 4-5). Mrs. Javits reported the fire to her State Farm insurance agent that night. (S. Javits Aff. [31.4] ¶ 7).

On April 19, 2012, Andrew Morris ("Morris"), a State Farm claim representative, inspected the damage to Plaintiffs' home. (DSMF ¶ 7). Mrs. Javits showed Morris the damaged areas in her kitchen and living room, and told him that smoke had filled the home. (S. Javits Aff. ¶ 8).

On April 20, 2012, Morris prepared an estimate of the cost to repair the damage to Plaintiffs' home. (DSMF ¶ 9). Morris's estimate included the cost to replace the cabinets damaged by the fire, the tile countertop, the range and stovetop, to clean the refrigerator, double oven and kitchen floor, and to paint all of the cabinets in the kitchen, including those that were not damaged by the fire, to ensure uniformity of color. (First Morris Aff. [25.3] at Ex. A; Second Morris Aff. [35.1] ¶¶ 11-12). Morris's estimate included cleaning or repairs in the breakfast area, office and hallway, but did not include repairs or cleaning to other areas of the home. (First Morris Aff. at Ex. A). Morris estimated the total cost to repair the damage caused by the April 11, 2012, fire would be $10, 783.29. (Id.).

Based on Morris's estimate, State Farm issued payment to Plaintiffs in the amount of $5, 870.43. (DSMF ¶ 10). The remaining $3, 912.86 was to be paid to Plaintiffs after the repairs were completed. (Id.).[1]

On April 26, 2012, Plaintiffs sent to Defendant an estimate they had received from Imperial Design to replace all of their cabinets and install granite countertops. (DSMF ¶ 11). The estimate includes upgrades to the materials used in Plaintiffs' existing kitchen[2] and totaled $32, 000.00. (Id.).

In response to the estimate it received from Plaintiffs, State Farm retained Georgia Water and Fire Restoration, a third-party contractor, to conduct a second inspection of the damage to Plaintiffs' home. (DSMF ¶ 12). On May 1, 2012, Georgia Water and Fire Restoration inspected Plaintiffs' home and prepared an estimate, totaling $11, 708.41, which indicated a scope of damage and repairs to be performed similar to the damage and repair scope in Morris's estimate. (Id. ¶ 13; First Morris Aff. at Ex. C).

Plaintiffs replied by submitting to State Farm an estimate for kitchen repairs from another contractor. This new estimate totaled approximately $17, 000.00, about half of the estimate Plaintiffs submitted previously. (DSMF ¶ 14). This estimate also included replacement of all of the cabinets, and also included upgrades to the kitchen, including an island, crown molding, soft close cabinets and wine storage. (Id.). Because the estimates Plaintiffs submitted provided for upgrades and replacement of all the cabinetry, State Farm rejected both estimates that Plaintiffs submitted.

At some point, Plaintiffs hired Bruce Fredrics ("Fredrics"), a "public adjuster, "[3] to inspect the damage to Plaintiffs' home. Fredrics conducted his inspection on May 7, 2012, and he prepared an estimate in the amount of $70, 347.20 for the repair and replacement of "structural damage" to Plaintiffs' home, and $12, 720.84 for cleaning of the entire house and its contents. (DSMF ¶¶ 15, 17). Fredrics's estimate included, among others, replacing all the cabinets, countertop, appliances and flooring in the kitchen, but did not include any upgrades. (PSMF [31.2] ¶ 14). Fredrics included replacement of all the cabinetry because, he claims, "any repairs would not match the existing cabinets." (Fredrics Aff. [31.3] ¶ 36). On May 30, 2012, Plaintiffs submitted Fredrics's estimate to State Farm. (DSMF ¶ 18).

On June 5, 2012, Plaintiffs executed an Appraisal Appointment Form, seeking to invoke the appraisal provision in the Policy, which states that if Plaintiffs and Defendant "fail to agree on the amount of loss, either one can demand that the amount of the loss be set by appraisal. If either makes a written demand for appraisal, each shall select a competent, disinterested appraiser...." (Id. ¶ 19; Policy at 14).

On June 20, 2012, State Farm sent to Fredrics, who was acting as Plaintiffs' representative, a letter stating that the appraisal provision in the Policy did not apply because the scope of repairs had not yet been determined. (DSMF ¶ 20). The letter also states:

Unfortunately, at this time, the disagreement has to do primarily with scope of repairs. Per our conversation on May 31, 2012, I am willing to meet with you and a fire mitigation and restoration company at the loss location to review and determine if there is anything additional I need to consider in my scope.

(Id. ¶ 21; June 20, 2012, Letter [1.1 at 51-52]).

Morris and Fredrics did not meet to discuss the scope of repairs. On July 24, 2012, Defendant sent a letter to Fredrics demanding, pursuant to the terms of the Policy, to re-inspect the damage to Plaintiffs' home caused by the April 11, 2012, fire.[4] (Fredrics Aff. ¶ 27; July 24, 2012, Letter [31.3 at 21-22]). The letter states that State Farm considers Plaintiffs' appraisal request improper because

[a]ppraisal may be invoked only if [Plaintiffs] and State Farm disagree on the cost to repair the covered damage.
Additionally, State Farm hereby demands that [Fredrics] and [Plaintiffs] meet with Mr. Morris and a representative from a fire mitigation and restoration company to conduct an inspection of the damage. Mr. Morris will review the damage and determine whether he needs to reconsider the scope of the damage.

(July 24, 2012, Letter at 1).

Plaintiffs did not comply with State Farm's request for re-inspection, including because they had already demolished the kitchen. (DSMF ¶ 22; S. Javits Aff. ¶ 20).

On August 13, 2012, Defendant sent a letter to Plaintiffs requesting that they comply with the terms of the Policy and allow Defendant to re-inspect the damage to their home. (S. Javits Aff. at Ex. A [33.1] 17-18). The letter states that "Morris will bring an expert in fire damage mitigation and restoration and jointly inspect [Plaintiffs'] property with [Plaintiffs] and Ms. Javits' repair contractor of choice. Mr. Morris will review the damage and determine whether he needs to reconsider the scope of the damage." (Id.).

On August 14, 2012, Plaintiffs sent to Defendant a "Demand for Payment Pursuant to O.C.G.A. § 33-4-6" ("Demand Letter"), demanding that Defendant pay to Plaintiffs $83, 068.04, the total amount of Fredrics's estimate, for the damage to Plaintiffs' home as a result of the April 11, 2012, fire. (DSMF ¶ 23; Demand Letter [1.1 at 53-55]). Plaintiffs' Demand Letter also states that Plaintiffs' "position is that Mr. Morris already had the opportunity to inspect the damage and failed to reasonably include all damages in his calculations in breach of the [Policy] and in violation of Georgia insurance law." (Demand Letter at 2). Plaintiffs' Demand Letter provides further that Plaintiffs "consider the refusal to participate in Appraisal to be a material breach of the [Policy] and said refusal has been made in bad faith...." (Id.).

On September 7, 2012, Defendant sent to Plaintiffs another letter requesting that Plaintiffs, and their contractor of choice, meet with Morris and an independent expert in fire damage mitigation and restoration to re-inspect the damage. (S. Javits Aff. at Ex. A [33.1] 9-11). The letter states that, on several occasions, Morris explained to Plaintiffs and Fredrics that the three (3) repair estimates they provided "cannot be reconciled with State Farm's estimate because [Plaintiffs'] estimates are not for the same scope and materials similar to those in the house, " including because "the estimates are not for the same type and quality of materials damaged by the fire, " they call for "replac[ing] more of the structure than sustained damage and Mr. Fredrics' estimate includes cleaning and painting portions of the interior structure and cleaning contents that did not appear to sustain smoke or water damage." (Id. at 10). The letter states further that

Mr. Morris offered to meet [Plaintiffs] or Mr. Fredrics with a smoke damage restoration expert to inspect the premises together. That way they can discuss [Plaintiffs'] repair estimates and resolve any confusion about the type [of] materials in the house and the extent to which the structure needs to be cleaned and painted and the extent to which the contents need to be cleaned. [Plaintiffs'] estimates are to replace all kitchen cabinets and countertops with custom cabinets and granite countertops. This is more work than is needed to repair the damage and constitutes a considerable material ...

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