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Brewton v. The First Liberty Insurance Corp.

United States District Court, M.D. Georgia, Macon Division

November 21, 2017




         Defendant, First Liberty Insurance Corporation, has moved for summary judgment. Doc. 51. First Liberty argues that (1) Brewton is judicially estopped from bringing her claims because she failed to disclose her claim during her bankruptcy case, and (2) First Liberty in fact assessed whether the value of Brewton's home was diminished and thus Brewton's “failure to assess” claim fails as a matter of law. Id. at 1. As discussed below, First Liberty's motion (Doc. 51) is GRANTED in part and DENIED in part. Summary judgment is granted for First Liberty on Brewton's failure to assess claim, but Brewton is not judicially estopped from pursuing her “failure to pay” claim.

         I. BACKGROUND

         This case is one of several putative class actions filed in this Court against insurers who, the plaintiffs allege, take the position that their homeowner's insurance policies do not provide coverage for the diminished value of property damaged as the result of a loss that is otherwise covered by their policies. Basically, the plaintiffs, who are all represented by the same lawyers, want their insurers to accept what they contend has been clearly established by the Georgia Supreme Court-when the value of a home has decreased as the result of a covered loss even though the home has been fully repaired, the insurer must compensate the insured for that diminished value.[1]The plaintiffs in these putative class actions claim that insurers have failed to assess their homes for diminished value and have failed to pay for diminished value.

         Diminished value, also called diminution of value or stigma damages, has a very specific meaning. “In [some] cases, notwithstanding remedial measures undertaken by the injured party, there remains a diminution in value of the property, and an award of only the costs of remedying the defects will not fully compensate the injured party.” John Thurmond & Assocs., Inc. v. Kennedy, 284 Ga. 469, 471 n.2, 668 S.E.2d 666, 669 n.2 (2008) (citation omitted). In particular, the underlying cause of a loss can stigmatize a property, resulting in “a negative public perception or fear that damage to property could create future problems.” Doc. 53-7 at 2 (First Liberty's Georgia Diminution in Value Frequently Asked Questions). “Even though the property has been restored to its pre-loss condition in terms of appearance and function, the property carries an intangible taint or ‘stigma' due to the nature of the loss.” Id. Thus, if a policy covers diminished value, adjusters must determine whether the insured property, as a result of stigma, is worth less even though it has been repaired. State Farm Mut. Auto. Ins. Co. v. Mabry, the seminal diminished value case, involved automobile insurance policies, and automobiles provide a well-known example of diminished value as the result of stigma. 274 Ga. 498, 556 S.E.2d 114 (2001). Typically, the repair of a wrecked car fixes it. But there is a common perception that a wrecked car loses value notwithstanding complete repairs. Thus, when a CARFAX report, for example, reveals that a car has been damaged in an accident, the value of the car in the eye of a potential purchaser decreases even though the car has been repaired.

         It is helpful to discuss what has happened in the first of these putative class actions, Thompson v. State Farm Fire and Casualty Insurance Company. In Thompson, the Court granted in part and denied in part the plaintiffs' motion for class certification under Federal Rule of Civil Procedure 23(b)(3) or 23(c)(4). No. 5:14-cv-32, Doc. 78 at 1 (Mar. 9, 2016). Specifically, the Court, applying Mabry, certified a class of State Farm policyholders to assert:

A breach of contract claim against State Farm based on its failure to assess for diminished value.

Id. at 27-28. The plaintiffs also requested certification of a claim for “failure to pay” for diminished value, but the Court found that “the absence of predominance precludes certification of the . . . failure to pay claim . . . .” Id. at 18.

         Subsequently, the Court ruled on several competing motions for summary judgment, finding that, as a matter of law, (1) State Farm's standard form policies covered diminished value, (2) State Farm breached its duty to assess for diminished value, and (3) the plaintiffs were not entitled to recover monetary damages for that breach; rather, the remedy for breach of the duty to assess, pursuant to Mabry, was equitable. Thompson, No. 5:14-cv-32, Doc. 161 at 3-4 (Aug. 31, 2017).[2]

         Here, Brewton's complaint and amended complaints are “cookie cutter” complaints-that is, they are essentially identical to the complaints filed by her lawyers against other insurers that claim their policies do not cover diminished value.[3]Specifically, Brewton alleges that her policy covers diminished value, an allegation First Liberty denied in its answer, and then alleges that First Liberty failed to assess her property to see whether its value had decreased. See generally Docs. 49 ¶¶ 28, 42; 50 ¶¶ 28, 42. Thus, Brewton alleges First Liberty breached the policy. Doc. 49 ¶ 31.

         In its motion for summary judgment, First Liberty argues that Brewton is judicially estopped from bringing this claim because she failed to disclose this claim in her bankruptcy case and thus took inconsistent positions under oath in a manner calculated to make a mockery of the judicial system. Doc. 51-1 at 1. In the alternative, First Liberty argues that partial summary judgment is appropriate on Brewton's failure to assess claim because First Liberty did assess Brewton's property for diminished value. Id.


         A. Summary Judgment Standard

         A court shall grant summary judgment “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 factual dispute is genuine only if ‘a reasonable jury could return a verdict for the nonmoving party.'” Info. Sys. & Networks Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir. 2002) (quoting United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991)); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The burden rests with the moving party to prove that no genuine issue of material fact exists. Id. (citation omitted). The party may support its assertion that a fact is undisputed by “citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials.” Fed.R.Civ.P. 56(c)(1)(A).

         If the moving party makes this showing, “the burden shifts to the non-moving party to rebut that showing by producing . . . relevant and admissible evidence beyond the pleadings.” Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d 1292, 1315 (11th Cir. 2011) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). The non-moving party does not satisfy its burden “if the rebuttal evidence ‘is merely colorable, or is not significantly probative' of a disputed fact.” Id. (quoting Anderson, 477 U.S. at 249-50). Further, where a party fails to address another party's assertion of fact as required by Federal Rule of Civil Procedure 56(c), the Court may consider the fact undisputed for purposes of the motion. Fed.R.Civ.P. 56(e)(2). However, “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate ...

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