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Omni Health Solutions, LLC v. Zurich American Insurance Co.

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

April 18, 2019




         Presently before the Court are Defendant's Motion for Summary Judgment [Doc. 35] and Amended Motion for Summary Judgment [Doc. 74]. For the reasons explained below, these motions are GRANTED, and Plaintiff is ORDERED TO SHOW CAUSE as to why Count III of the Complaint [Doc. 1-2');">2');">2');">2');">2');">2');">2');">2] should not also be dismissed.


         In May of 2');">2');">2');">2');">2');">2');">2');">2010, Plaintiff purchased an insurance policy from Defendant, whereby Defendant agreed to insure Plaintiff's medical office in downtown Macon, Georgia. [Doc. 1, ¶ 4]. On February 15, 2');">2');">2');">2');">2');">2');">2');">2011, Plaintiff reported hail damage to the building's roof. [Doc. 35-8, ¶ 1]. Under the terms of the insurance policy, Defendant was obligated to “give notice of [its] intentions within 30 days” after receiving a sworn proof of loss from Plaintiff. [Doc. 1-2');">2');">2');">2');">2');">2');">2');">2, p. 50]. The parties dispute what happened next.

         Defendant claims that its adjuster, Michael Ferunden, inspected the property on February 16, 2');">2');">2');">2');">2');">2');">2');">2011, two days after the alleged damage occurred. [Doc. 35-8, ¶ 2');">2');">2');">2');">2');">2');">2');">2]. In a claims note prepared on February 17, Ferunden wrote that he inspected the lower level of the roof the previous day but did not attempt to inspect the upper portion because of its height and condition. [Doc. 35-7, p. 1');">p. 1]. Ferunden further noted that he advised Dr. Clyde Green, Plaintiff's managing partner, that he “did not see anything that appeared to be a storm created opening or any other storm damage.” [Id. at p. 2');">2');">2');">2');">2');">2');">2');">2]. Ferunden also told Dr. Green that he would “be happy to meet with [Plaintiff's] roofer to discuss and that [he] would schedule a time” to do so. [Id.].

         Plaintiff, on the other hand, claims that, although Ferunden did visit the property within two days of when Dr. Green reported the damage, Ferunden was unable to gain access to the roof and did not actually inspect it until over a month later. [Doc. 38-3, ¶ 4]. Also, Dr. Green testified in his deposition that Ferunden did not visit the property within two days of the report of damage but instead made his initial visit “probably about twenty, thirty days after the initial call.” [Doc. 35-5, pp. 1');">p. 18:12');">2');">2');">2');">2');">2');">2');">2-19:7].

         Although the parties disagree about when Defendant first denied coverage for Plaintiff's claim for roof damage, Defendant clocks the first denial of coverage on February 16, when Ferunden allegedly told Dr. Green that he saw no hail damage. Nonetheless, Plaintiff claims that a coverage decision did not occur until September 2');">2');">2');">2');">2');">2');">2');">2011, after months of indecision and after Defendant denied Plaintiff's demand for an appraisal in July 2');">2');">2');">2');">2');">2');">2');">2011 because a coverage decision had not yet been made. [Doc. 38-3, ¶¶ 6, 7]. However, it is undisputed that Defendant informed Plaintiff of its position on March 2');">2');">2');">2');">2');">2');">2');">28, 2');">2');">2');">2');">2');">2');">2');">2011. [Doc. 35-8, ¶ 8].[1]

         In September 2');">2');">2');">2');">2');">2');">2');">2011, after months of dialogue and contention over the damage to the roof and property, Ferunden re-inspected the property and determined that there was covered damage to the roof. [Id. at ¶¶ 12');">2');">2');">2');">2');">2');">2');">2, 13]. The parties then entered negotiations regarding the amount of the damage, a process that was also rife with disagreement. See [id. at ¶¶ 15-18, 2');">2');">2');">2');">2');">2');">2');">21]. Dissatisfied with Defendant's assessment of the damage, Plaintiff ultimately demanded an appraisal of the loss under Section IV(B) of the policy, which states:

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:
1. Pay its chosen appraiser; and
2');">2');">2');">2');">2');">2');">2');">2. Bear the other expenses of the appraisal and umpire equally. If there is an appraisal, we will still retain our right to deny the claim.

[Doc. 1-2');">2');">2');">2');">2');">2');">2');">2, 48');">p. 48]; [Doc. 2');">2');">2');">2');">2');">2');">2');">25-11].

         After a controversial appraisal process, the appraisal panel-consisting of the umpire Michael Wasden, Defendant's chosen appraiser R. William Corley, and Plaintiff's chosen appraiser Chris Cole-issued a structural damage award in the amount of $886, 795.57 in replacement cost value (“RCV”) and $804, 2');">2');">2');">2');">2');">2');">2');">295.98 in actual cash value (“ACV”).[2');">2');">2');">2');">2');">2');">2');">2" name="FN2');">2');">2');">2');">2');">2');">2');">2" id="FN2');">2');">2');">2');">2');">2');">2');">2">2');">2');">2');">2');">2');">2');">2');">2] [Doc. 2');">2');">2');">2');">2');">2');">2');">25-4');">14, p. 1]; [Doc. 38-4, 6');">p. 6]. The award was ultimately signed by all three appraisers and upheld by the Georgia Court of Appeals. [Id.]; [Doc. 38-8, pp. 5-6]. The panel made an accounting of the amount awarded for code improvements ($115, 116.43) and listed it separately at the bottom of the total award. [Doc. 2');">2');">2');">2');">2');">2');">2');">25-4');">14, p. 1');">p. 1]. The panel also made a separate accounting of mold remediation ($2');">2');">2');">2');">2');">2');">2');">22');">2');">2');">2');">2');">2');">2');">22');">2');">2');">2');">2');">2');">2');">2, 307.92');">2');">2');">2');">2');">2');">2');">2) at the bottom of the total award. [Id.]. Corley specifically requested that the amounts for code upgrades and mold remediation be listed separately on the face of the award but later explained that the awards were included in the RCV and ACV totals and stated separately only for convenience. [Doc. 39-2');">2');">2');">2');">2');">2');">2');">2, pp. 90:6-92');">2');">2');">2');">2');">2');">2');">2:2');">2');">2');">2');">2');">2');">2');">2]. Wasden agreed that the code upgrade and mold remediation amounts were not intended to be added to the total RCV and ACV awards and confirmed that they were listed separately for clarification. [Doc. 41-1, ¶ 5]. Contrary to Corley and Wasden's understanding, Plaintiff's chosen appraiser, Chris Cole, testified that the code improvement and mold remediation amounts were additional awards to be made in excess of the RCV and ACV. [Doc. 35-6, p6');">p. 69:19-70:2');">2');">2');">2');">2');">2');">2');">20, 73:7-11].

         Prior to the panel issuing the appraisal award, Defendant paid $398, 936.56 in partial satisfaction of its obligations under the policy. [Doc. 35-8, ¶ 46]. After the panel issued the award, Defendant paid an additional $519, 948.2');">2');">2');">2');">2');">2');">2');">20 to satisfy the remainder owed under the award plus excess expenses. [Id. at ¶¶ 51, 53]. Under the terms of the insurance policy, Defendant agreed to insure the replacement cost of the building up to $2');">2');">2');">2');">2');">2');">2');">2.7 million and the cost of “building ordinance[s] or law[s]” up to $50, 000. [Doc. 1-2');">2');">2');">2');">2');">2');">2');">2, p. 30]. Accordingly, Defendant deducted $65, 116.43 from the $115, 116.43 code upgrade portion of the award as exceeding the $50, 000 policy limit for code improvements. [Id. at ¶ 50]. On October 19, 2');">2');">2');">2');">2');">2');">2');">2016, Defendant informed Plaintiff that it had satisfied its obligations under the policy and closed Plaintiff's claim. [Id. at ¶ 43].

         Thereafter, Plaintiff filed this lawsuit, claiming that Defendant breached the insurance policy by (1) failing to make a coverage decision within 30 days of receiving Plaintiff's proof of loss; (2');">2');">2');">2');">2');">2');">2');">2) failing to pay to total amount owed to Plaintiff under the policy and the appraisal award; and (3) failing to assess the property's diminution in value. [Doc. 1-2');">2');">2');">2');">2');">2');">2');">2, Counts I and II]; [Doc. 18]. Plaintiff also claims that Defendant acted in bad faith in failing to comply with the terms of the policy. [Doc. 1-2');">2');">2');">2');">2');">2');">2');">2, Count III]. The Court bifurcated Plaintiff's breach of contract claims from its bad faith claim, [Doc. 2');">2');">2');">2');">2');">2');">2');">29], and Defendant now moves for summary judgment on the breach of contract claims. For the reasons that follow, the Court GRANTS summary judgment to Defendant.


         A. Standard of Review

         A party 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 and that the moving party is entitled to a judgment as a matter of law.” 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 its case.” Landolfi v. City of Melbourne, 2');">2');">2');">2');">2');">2');">2');">2');">515 Fed.Appx. 832');">2');">2');">2');">2');">2');">2');">2, 834 (11th Cir. 2');">2');">2');">2');">2');">2');">2');">2013) (citing Fitzpatrick v. City of Atlanta, 2');">2');">2');">2');">2');">2');">2');">2 F.3d 1112');">2');">2');">2');">2');">2');">2');">2');">2');">2');">2');">2');">2');">2');">2');">2 F.3d 1112');">2');">2');">2');">2');">2');">2');">2, 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');">2');">2');">2');">2');">2');">2');">2) provide “affirmative evidence demonstrating that the [non-movant] will be unable to prove its case at trial.” United States v. Four Parcels of Real Prop. in Greene & Tuscaloosa Ctys., 41 F.2');">2');">2');">2');">2');">2');">2');">2d 4');">142');">2');">2');">2');">2');">2');">2');">28');">941 F.2');">2');">2');">2');">2');">2');">2');">2d 4');">142');">2');">2');">2');">2');">2');">2');">28, 4');">1438 (11th Cir. 1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317');">477 U.S. 317, 32');">2');">2');">2');">2');">2');">2');">25 (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');">461 F.3d 1315, 132');">2');">2');">2');">2');">2');">2');">20 (11th Cir. 2');">2');">2');">2');">2');">2');">2');">2006) (citing Fitzpatrick, 2');">2');">2');">2');">2');">2');">2');">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 nonmoving party.'” Four Parcels, 941 F.2');">2');">2');">2');">2');">2');">2');">2d at 4');">1437 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 2');">2');">2');">2');">2');">2');">2');">242');">2');">2');">2');">2');">2');">2');">2');">477 U.S. 2');">2');">2');">2');">2');">2');">2');">242');">2');">2');">2');">2');">2');">2');">2, 2');">2');">2');">2');">2');">2');">2');">248, (1986)).

         B. Count I: Failure to Make a Coverage Decision within 30 Days

          In Count I, Plaintiff charges Defendant with breaching the insurance policy by failing to make a coverage decision within 30 days of Plaintiff reporting the damage to the roof. Although Defendant initially addressed this claim on the merits in its brief in support of its original motion for summary judgment, it raised the argument that all of Plaintiff's claims are barred by the two-year limitations period contained in the policy for the first time at the hearing on its motion. The clause states:

Legal Action against Us - No. one may bring a legal action against us under this Coverage Part unless:
1. There has been full compliance with all of the terms of this Coverage Part; and
2');">2');">2');">2');">2');">2');">2');">2. The action is brought within 2');">2');">2');">2');">2');">2');">2');">2 years after the date on which the direct physical loss or damage occurred.

[Doc. 1-2');">2');">2');">2');">2');">2');">2');">2, p. 53].

         The Court ordered the parties to brief the issue, and Plaintiff raised two arguments in response to Defendant's reliance on the policy limitations period. First, Plaintiff argues that Defendant waived this defense by failing to plead the statute of limitations as a defense in its answer as required by Federal Rule of Civil Procedure 8(c). Second, Plaintiff contends that its invocation of the appraisal process tolled the limitations period, making its claims timely. Having reviewed the parties' supplemental briefs, the Court now concludes that Count I is time-barred.

         1. Defendant's Failure to Plead a Statute of Limitations Defense

         Georgia courts recognize that filing suit within the time allotted by the terms of an insurance policy is a condition precedent to recovery on the policy rather than an issue resolved with reference to statute of limitations jurisprudence. See Willis v. Allstate Ins., 779 S.E.2');">2');">2');">2');">2');">2');">2');">2d 744');">779 S.E.2');">2');">2');">2');">2');">2');">2');">2d 744, 746 (Ga.Ct.App. 2');">2');">2');">2');">2');">2');">2');">2015); see also Suggs v. Brotherhood of Locomotive Firemen and Enginemen, 2');">2');">2');">2');">2');">2');">2');">21 S.E.2');">2');">2');">2');">2');">2');">2');">2d 661');">12');">2');">2');">2');">2');">2');">2');">21 S.E.2');">2');">2');">2');">2');">2');">2');">2d 661, 665 (Ga.Ct.App. 1961) (“A defense based upon a contractual limitation as to the time in which an action may be filed differs from a defense based upon a statutory limitation of actions, in that the former may be raised by a general demurrer whenever the petition affirmatively shows the action to have been brought after the expiration of the time stated in the contractual limitation, while in the latter case a general demurrer must specify the statute of limitations as a ground.”), overruled in part on other grounds by Benefield v. Malone, 2');">2');">2');">2');">2');">2');">2');">2d 500');">139 S.E.2');">2');">2');">2');">2');">2');">2');">2d 500 (Ga.Ct.App. 1');">p. 1964). As such, Federal Rule of Civil Procedure 8(c), which requires that an affirmative defense relating to a plaintiff's noncompliance with a statute of limitations be pled in an answer, is not applicable here.

         On the contrary, the pleading requirements for failure to comply with conditions precedent to suit-including failure to sue within a contractual limitations period-are found in Rule 9(c). Rule 9(c) requires that plaintiffs plead compliance with conditions precedent to suit and allows them to do so generally. Fed.R.Civ.P. 9(c). But where a defendant denies that a plaintiff complied with the conditions precedent to suit, he must plead that denial with particularity. Id. Nevertheless, a defendant who fails to properly comply with Rule 9(c) in his answer can still raise a specific denial of the performance of conditions precedent in a motion. See Associated Mech. Contractors, Inc. v. Martin K. Eby Constr. Co., 2');">2');">2');">2');">2');">2');">2');">271 F.3d 1309');">2');">2');">2');">2');">2');">2');">2');">271 F.3d 1309, 1317 (11th Cir. 2');">2');">2');">2');">2');">2');">2');">2001) (holding that ...

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