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Hollingsworth v. LM Insurance Corp.

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

March 8, 2019




         Without a doubt, the insurer in this case will pay a claim to cover fire damage to Plaintiff's home. But if her house was “wholly destroyed, ” Plaintiff reaps a windfall of at least $136, 000. Unfortunately, there are patently clear cases of a scorching fire engulfing a home so that only charred wood remains; in those instances, one easily concludes such structures are “wholly destroyed.” This is not one of those cases.

         After a fire and months of back-and-forth between Plaintiff, her insurer Defendant LM Insurance Corporation (“LM”), and various contractors, Plaintiff filed a lawsuit against LM for breach of contract and for bad faith with regard to its duties under the insurance policy.[1] LM moves for summary judgment against Plaintiff on each claim, and after consideration of the parties' briefs, statements of material facts, and accompanying exhibits, the Court rules as follows.


         Many of the disputed facts of this case revolve around minor issues such as who said what to whom, and in what email or letter was something said or left unsaid. But three facts remain absolutely undisputed: (1) only Plaintiff claims that her home was “wholly destroyed” by fire on September 6, 2017; (2) LM provided the insurance policy in effect at the time of the fire; and (3) “[n]ine months after the fire, Plaintiff still had not commenced any repairs” to her home. [Docs. 1 at ¶ 8; 24-2 at ¶ 41; 26-2 at ¶ 41]. However, the following facts, be they undisputed or disputed (and resolved by the record before the Court), illustrate what the parties believe to be the pivotal issues of this case.[2]

         The day after the fire, Plaintiff filed a claim with LM which provides the policy[3] of insurance covering Plaintiff's home located at 988 High Street, Macon, Bibb County, Georgia (the “Property”). [Doc. 1 at ¶¶ 1, 6, 8]; see also [Doc. 26-4 at pp. 31-33]. Field Representative Howard Yancey and another LM representative were assigned to Plaintiff's claim, and about eight days after the fire Yancey took photographs of Plaintiff's damaged home. [Doc. 26-3 at pp. 1, 3-6]. At that time, Yancey and Plaintiff did not discuss whether the damages to her home rendered it a total loss. [Doc. 28-1 at 20:24-21:2]. However, given the nature of the damage to the Property, Plaintiff's claim was reassigned from Yancey to one of LM's “large loss” adjusters five days later. [Doc. 26-1 at ¶ 3]; see also [Doc. 26-4 at p. 27].

         Plaintiff first met with the large loss adjuster-a senior field claims resolution specialist-Keith Kinscherf, on September 21, 2017.[4] [Doc. 26-4 at p. 24]. As with Yancey, Kinscherf also did not discuss with Plaintiff whether her home was a total loss following his initial inspection. [Doc. 28-1 at 22:17-20]. After the inspection, it was Plaintiff's understanding that Kinscherf “was going to write up an estimate.” [Id. at 23:3-4]. Eight days after its inspection, LM provided Plaintiff with its initial written building repair estimate of $190, 299.00. [Docs. 24-2 at ¶ 2; 26-2 at ¶ 2]; see also [Doc. 24-5 at p. 48]. Kinscherf also outlined the general claims process, discussed the overall scope of the repairs and their estimated time for completion, and subsequently advised Plaintiff that her Property was not a total loss. [Docs. 24-2 at ¶¶ 3-4; 26-2 at ¶¶ 3-4].

         Because Plaintiff was required to choose her own contractor for repairs, she began to obtain estimates from three different companies. [Doc. 28-1 at 23:5-24]. First, Plaintiff met with Ralph Burris from Parker Young Construction (“Parker Young”) who also did not discuss with Plaintiff whether “the damages resulted in [her] home being totally destroyed.” [Doc. 26-1 at ¶ 10]; see also [Docs. 24-2 at ¶ 8; 26-2 at ¶ 8; 28-1 at 26:2-6, 26:25- 27:3]. However, that business relationship was short-lived. According to Plaintiff's deposition testimony, Burris was “rude and dismissive, ” and said that Parker Young would make repairs based off of LM's estimate. [Doc. 28-1 at 26:6-8, 26:22-24]. In light of this exchange, Plaintiff states that she “quickly eliminated [Parker Young]” without having received any estimate from them. [Id. at 26:6-10]. Moreover, Burris sent an email to Chuck Butwill (another senior field claims resolution specialist for LM) stating, “After meeting with her[, ] I think I will not get involved.” [Doc. 26-3 at pp. 13-14, 18]. Following “that experience, ” Plaintiff claims that she was “having trouble getting three local reputable companies, ” and it was then that she decided to call LM for contractor recommendations “within [its] network, ” who recommended Plaintiff's second contractor, Paul Davis Restoration of Central Georgia (“PDR”). [Docs. 26-4 at p. 20; 28-1 at 23:25-24:14, 26:9-10].

         During their initial meeting, Doug Blount from PDR provided a verbal ballpark-figure estimate of $325, 500.00[5] to repair the smoke damage to Plaintiff's home. Compare [Doc. 24-4 at pp. 2-3] with [Doc. 28-1 at 28:9-11]; see also [Docs. 24-2 at ¶ 11; 26-2 at ¶ 11]. Before PDR would issue its final written estimate, Blount needed to consult with an electrical sub-contractor from B3 Home Innovations (“B3 Home”) regarding potential rewiring due to code upgrades. [Doc. 28-1 at 27:20-22, 28:12-23]. Even after Blount received B3 Home's $38, 878.55 electrical quote and despite Plaintiff's repeated attempts to receive one, PDR never provided a written estimate. [Id. at 27:12-28:4]. And, contrary to LM's contentions, Plaintiff states that Blount never told her that the Property was not a total loss. Compare [Doc. 24-2 at ¶ 26] with [Doc. 26-2 at ¶ 26].

         Plaintiff's third contractor, Sentry Construction Company (“Sentry”), provided a written estimate of $366, 599.03 to repair the fire damage but “did not, at any point, provide . . . an opinion that the Property was a total loss.” [Docs. 26-8 at pp. 1, 40; 28-1 at 32:7-10]; see also [Docs. 24-2 at ¶¶ 13-14; 26-2 at ¶¶ 13-14]. Three days after Plaintiff received Sentry's written estimate, she informed Blount from PDR of her decision “to go with another firm” because she was “more comfortable with a local contractor with local trades who deliver in a more timely and responsive manner.” [Doc. 26-3 at p. 21]; see also [Docs. 24-2 at ¶¶ 29-30; 26-2 at ¶¶ 29-30]. On November 10, 2017, just before she released PDR, Plaintiff emailed LM, detailing her belief that Georgia's Valued Policy statute, Ga. Code Ann. § 33-32-5(a), applied to her claim. [Doc. 26-3 at pp. 24-25]; Compare [Doc. 24-2 at ¶ 31] with [Doc. 26-2 at ¶ 31].

         At some point after receiving LM's initial repair estimate of $190, 299.00, Plaintiff also reached out to Engineered Solutions of Georgia (“Engineered Solutions”)[6] to conduct an assessment of her home and sought the opinion of the local building inspector.[7] [Docs. 26-3 at pp. 13-14; 28-1 at 24:5-7]. Plaintiff decided to contact Engineered Solutions after becoming concerned-based on her previous remodeling experience and her “diploma in Carpentry”-about the amount of electrical work and the proposed repairs to her house's foundation and crawl space.[8] [Doc. 26 at p. 3]. About a month later, Kinscherf, after reviewing the report and drawings from Engineered Solutions, prepared and sent Plaintiff a revised written estimate increasing its initial cost of repair from $190, 299.00 to $232, 698.27, and LM told Plaintiff she could expect an actual cash value payment[9] in the amount of $163, 427.95 within five business days. [Doc. 26-5 at p. 2]; see also [Docs. 14-1 at p. 4; 24-2 at ¶¶ 34-35; 26-2 at ¶¶ 34-35]. According to Kinscherf, the revised estimate included, among other things, the quote from PDR's electrical sub-contractor and “reflect[ed] an agreed cost of restoration with [PDR]” which was previously set at a ballpark figure of $325, 500.00. [Doc. 26-5 at p. 5]; see also [Doc. 24-4 at pp. 2-3].

         Despite the price difference between LM ($232, 698.27) and Sentry's ($366, 599.03) estimates, Kinscherf and Cole “agreed to work towards reaching an agreed scope of damages” and developed “a mutual plan to inspect certain exterior walls to investigate for any smoke damage.” [Docs. 24-2 at ¶¶ 54-55; 26-2 at ¶¶ 54-55]. However, this inspection never occurred because 38 days after sending her demand letter, Plaintiff filed suit. [Docs. 24-2 at ¶¶ 56-57; 26-2 at ¶¶ 56-57]. During the pendency of this litigation, LM requested Jeff Tarbutton, an engineer with Honest Forensics, LLC, to inspect the Property. [Doc. 24-8 at p. 5]. With the understanding that Plaintiff considered her Property to be “a total loss, ” Tarbutton visited the Property on August 8, 2018, and performed a visual and photographic survey of the house. [Id.]. His report listed detailed findings as well as his conclusion that in his “professional opinion [ ] [the Property] is not damaged to the extent that it should be considered a total loss.” [Id. at pp. 6-7]; see also [Docs. 24-2 at ¶¶ 61-62; 26-2 at ¶¶ 61-62].

         Despite receiving multiple assessments and estimates, Plaintiff concedes that she “has not spoken with any engineer or building consultant who has opined”-any different to LM's own advisement-“that the Property was wholly destroyed by fire.” [Docs. 24-2 at ¶¶ 32, 36; 26-2 at ¶¶ 32, 36]. At the end of the day, we are left with three cost-to-repair estimates, PDR's ballpark estimate of $325, 500.00, Sentry's written estimate of $366, 599.03, and LM's revised estimate of $232, 698.27. Again, many of the disputes between the parties are immaterial to the Court's decision, however, the Court is fully aware of the intricacies surrounding Plaintiff's issues with certain repair recommendations relating to building materials. But as Plaintiff testifies in her deposition, her “ultimate goal” in this case is to retain the policy limits as contemplated by Georgia's Valued Policy statute and to recover damages for bad faith. [Doc. 28-1 at 98:8-15].


         A. Standard of Review

         LM is entitled to summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact.” Fed.R.Civ.P. 56(c). As to issues for which the movant would bear the burden of proof at trial, the “movant must affirmatively show the absence of a genuine issue of material fact and support its motion with credible evidence demonstrating that no reasonable jury could find for the non-moving party on all of the essential elements of [her] case.” Landolfi v. City of Melbourne, 515 Fed.Appx. 832, 834 (11th Cir. 2013) (citing Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993)). As to issues for which the non-movant would bear the burden of proof at trial, the movant may (1) simply point out an absence of evidence to support the non-moving party's case or (2) provide “affirmative evidence demonstrating that the [non-movant] will be unable to prove [her] case at trial.” United States v. Four Parcels of Real Prop. in Greene & Tuscaloosa Ctys., 941 F.2d 1428, 1438 (11th Cir. 1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).

         Once the movant satisfies its burden, the burden shifts to the non-movant, who must “go beyond the pleadings and present affirmative evidence to show that a genuine issue of material fact exists.” Porter v. Ray, 461 F.3d 1315, 1320 (11th Cir. 2006) (citing Fitzpatrick, 2 F.3d at 1115-17) (emphasis added). “A factual dispute is genuine ‘if the evidence is such that a reasonable jury could return a verdict for the [non-moving] party.'” Four Parcels, 941 F.2d at 1437 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, (1986)). However, “[a] court need not permit a case to go to a jury . . . when the inferences that are drawn from the evidence, and upon which the non-movant relies, are implausible.” Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 743 (11th Cir. 1996) (internal quotations omitted). With the foregoing standard in mind, and with careful consideration of the facts as outlined above and the applicable law, the Court rules as follows.

         B. Plaintiff's Breach of Contract Claim Against LM

         Plaintiff claims that LM's failure to pay the replacement costs of her Property (in other words, build her a brand new house) gives rise to a breach of contract claim. [Doc. 1 at ¶ 11]. In response to this claim, LM moves for summary judgment arguing that Plaintiff's home is not “wholly destroyed” under Georgia law. If LM is entitled to summary judgment on the issue of whether Plaintiff's home was “wholly destroyed, ” then it has complied with the portion of the insurance policy requiring it to issue a check for the actual cash value of the damage so that Plaintiff's breach of contract claim fails as a matter of law.

         1. Application of Georgia's Valued Policy Statute When Property Is Wholly Destroyed by Fire

         LM first argues that there is no genuine issue of material fact as to whether Plaintiff's home was “wholly destroyed” so that Georgia's Valued Policy statute does not apply to her insurance claim. [Doc. 24-1 at pp. 8-11]. This statute provides in relevant part:

Whenever any policy of insurance is issued to a natural person or persons or to any legal entity wholly owned by a natural person or persons insuring a specifically described one or two family residential building or structure located in this state against loss by fire and the building or structure is wholly destroyed by fire without fraudulent or criminal fault on the part of the insured or one acting in his or her behalf, the amount of insurance set forth in the policy relative to the building or structure shall be taken conclusively to be the value of the property . . . .

Ga. Code Ann. § 33-32-5(a). Stated differently, under Georgia law, when a party proves that a dwelling is “wholly destroyed, ” she is entitled to the full policy limits, which in this case is $502, 600.00.[10] [Doc. 24-1 at p. 9 (citing Ga. Code Ann. § 33-32-5(a))]. The statute is intended to protect property owners from the burden of proving the value of property after it has been “wholly destroyed” by fire, thus entitling a property owner to recover the policy limit. Marchman v. Grange Mut. Ins. Co., 500 S.E.2d 659, 661 (Ga.Ct.App. 1998) (“[The statute] protects property owners from the overwhelming burden of proving the value of property after it has been totally destroyed by fire by ‘conclusively' establishing that the value of the property equals the face value of the policy. In this way, a property owner is entitled to the benefits of the insurance coverage without the difficult and perhaps impossible task of proving actual damages.”) (emphasis omitted). However, the Valued Policy statute does not apply to an insurance claim if the “building or structure is not wholly destroyed by fire[.]” Ga. Code Ann. § 33-32-5(b)(1).

         Both parties agree that Georgia law does not define “wholly destroyed, ” however, two cases from the Georgia Court of Appeals, [11] as well as a case from this Court, provide exceptional guidance. First, in Allstate Insurance Co. v. Baugh, 327 S.E.2d 576, 579 (Ga.Ct.App. 1985), the insurer contended that the trial court erred in charging the jury on Georgia's Valued Policy statute and its effects on recovery, arguing that such a charge was unauthorized by the evidence. In Baugh, the home and its contents owned by appellees were destroyed by fire. 327 S.E.2d at 577. The insurance company argued that the evidence at trial established that appellees' home was not wholly destroyed. Id. at 579. However, “[t]here being at least some evidence of ...

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