ANDREWS et al v. MERCHANTS MUTUAL INSURANCE COMPANY, No. 1:2014cv05147 - Document 29 (D.N.J. 2016)
Court Description: OPINION. Signed by Judge Joseph H. Rodriguez on 7/12/2016. (dmr)
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ANDREWS et al v. MERCHANTS MUTUAL INSURANCE COMPANY Doc. 29 UNITED STATES DISTRICT COURT DISTRICT OF NEW J ERSEY WARREN and MARYANN ANDREWS, : : Plaintiffs, v. Hon. J oseph H. Rodriguez Civil Action No. 14-5147 : OPINION MERCHANTS MUTUAL INS. CO., : Defendant. : This m atter is before the Court on Defendant Merchants Mutual Insurance Com pany’s m otion for sum m ary judgm ent. [Doc. 21.] The Court heard oral argum ent on the m otion on J uly 7, 20 16, and the record of that proceeding is incorporated here. For the reasons outlined below, the m otion will be granted. Background This is a hom eowners insurance coverage / bad faith dispute that results from the effects of two different storm s, the latter of which was Hurricane Sandy. 1 During the relevant tim e period, Defendant Merchants Mutual Insurance Com pany (“Merchants”), insured the one-story residence of Plaintiffs Warren and MaryAnn Andrews (husband and wife), located in Linwood, New J ersey. 1 The Com plaint asserts two claim s: breach of the insurance contract and bad faith delay in the processing of insurance benefits. This Court’s subject m atter jurisdiction rests on diversity of citizenship, 28 U.S.C. § 1332. 1 Dockets.Justia.com Overnight on J une 29, 20 12 and into J une 30 , 20 12, areas in Southern New J ersey experienced a “derecho” storm , with winds exceeding 8 0 m iles per hour. (W. Andrews 1/13/14 Dep. p. 34) 2 Three or four weeks later, Plaintiffs discovered a water leak in their hom e. Water was running down from the ceiling in the m aster bathroom and in the adjacent wall of the living room . (M. Andrews 1/ 14/ 13 Dep. p. 29; W. Andrews 1/ 14/ 13 Dep. p. 27-28) MaryAnn Andrews testified, “[t]here was [water pouring down] in the m aster bedroom . . . . There was a lot of m oisture and water com ing in that room and in the living room all through the house.” (M. Andrews 9/ 25/ 13 Dep. p. 31) This discovery led Warren Andrews to inspect the roof, where he found m issing and dam aged shingles. (W. Andrews 1/ 14/ 13 Dep. p. 28) On J uly 30 , 20 12 Plaintiffs subm itted a “Property Loss Notice” to Merchants. (MER0 416) Shortly thereafter, Plaintiffs provided to Merchants an invoice for em ergency roof repairs (MER0 289), and an estim ate for replacing the entire roof. (MER0 288) According to Plaintiffs, they concluded that the entire roof should be replaced because the sheathing under the roof shingles had been dam aged in the derecho storm . MaryAnn Andrews testified, the em ergen cy repair was intended to be “tem porary;” it 2 The National Weather Service defines “derecho” as “a widespread, long-lived wind storm that is associated with a band of rapidly m oving showers or thunderstorm s. Although a derecho can produce destruction sim ilar to the strength of tornadoes, the dam age typically is directed in one direction along a relatively straight swath.” http:/ / www.weather.gov/ lm k/ derecho. See also, David Giam busso, “Violent Storm that Slam m ed South J ersey is Known as Derecho,” New J ersey Star Ledger Online, J une 30 , 20 12, available at http:/ / www.nj.com / news/ index.ssf/ 20 12/ 0 6/ violent_ storm _ that_ slam m ed_ sou.htm l. 2 was never m eant to “withstand a hurricane.” (M. Andrews 5/ 29/ 13 Dep. p. 18; see also W. Andrews 1/ 13/ 14 Dep. p. 34; W. Andrews 8/ 31/ 15 Dep. p. 23-24) On August 21, 20 12, Merchants’ Indepen dent Adjuster, Tri-State Adjusters, inspected the property. (MER0 272-80 ) Tri-State advised Merchants that there was, indeed, a leak in the roof, but that replacing the entire roof was “excessive.” (MER0 286) A separate flooring contractor also inspected, on behalf of Merchants, Plaintiffs’ newly refinished hardwood floors that were dam aged by the leakin g water. (MER0 41112) “[A] day or two before Sandy,” Warren Andrews saw exten sive m old on his clothes and shoes in the m aster bath closet. (W. Andrews 1/ 13/ 14 Dep. p. 48, 65) Plaintiffs assum ed the m old cam e from the water that leaked in from the roof. (W. Andrews 1/ 13/ 14 Dep. p. 25) Hurrican e Sandy hit New J ersey on October 29-30 , 20 12. It is undisputed that the crawlspace of the house flooded. Subsurface water cam e up through the ground, resulting in “1-2 feet of standing water” in the crawlspace. (W. Andrews 1/ 13/ 14 Dep. p. 8 4) Plaintiffs testified that after Sandy, they also observed water com ing down from the ceiling in the sam e area where they previously had the roof leak. Specifically, MaryAnn Andrews testified, “we got a big bulge of water;” “a big leak over the vanity [in the m aster bathroom ] . . . where it just like crashed down. The water just cam e barging down right over the m aster bath vanity.” (M. Andrews 5/ 29/ 13 Dep. p. 113-14). Warren Andrews testified, “we found [water] stains on the ceiling” (W. Andrews 1/ 14/ 13 Dep. p. 41-42) an d “sheetrock was caving in from water from rain.” (W. Andrews 8 / 31/ 15 Dep. p. 21) 3 Soon thereafter, Plaintiffs began to suspect that they had a significant m old problem . MaryAnn Andrews testified, “we had m old before [Sandy] but nothing—it wasn’t inside the house, growing in the win dows and every place that we found, it kind of like exploded when Sandy hit.” (W. Andrews 1/ 13/ 14 Dep. p. 25) By check dated Novem ber 3, 20 12, Merchants paid the Andrews $ 6,457.0 6. (MER0 472) Merchants’ file only reflects that the “check reason” was “dam ages.” (Id.) On Novem ber 12, 20 12, Plaintiffs’ m old rem ediation com pany, Quality Air Care, took sam ples throughout the house to send out for lab testing. (MER0 315-35) While obtaining the sam ples, Quality Air’s em ployee, Klod Belegu, showed MaryAnn Andrews m old and water stains com ing down from the ceiling. (M. Andrews 1/ 14/ 13 Dep. p. 7273) Quality Air’s resulting “MoldView” report indicates that Plaintiffs’ house had high levels of cladosporium and aspergillus/ penicillium m old, with highest spore concentrations occurring in the crawlspace. (MER0 315) Two weeks later, on Novem ber 26, 20 12, a second independent adjuster for Merchants inspected Plaintiffs house. (MER0 366-76) Two days later, Merchants’ m old rem ediation specialist, Briggs Associates, perform ed “fungi investigation and m icrobial testing” in the house. (MER0 379-40 3) The resulting report also indicated high levels of cladosporium an d penicillium , with highest spore concentrations occurring in the crawlspace. (MER0 338 -62) The report also observed “dark water staining” and “possible m old” “on [the] ceiling joists throughout” the attic. (MER0 341) 4 In a letter dated Decem ber 5, 20 12 (MER0 40 5), Merchants enclosed a check dated Decem ber 6, 20 12, payable to the Andrews in the am ount of $ 12,158.0 6. (MER0 473) The letter explain ed, [t]aking into consideration the paym ent of $ 6,457.0 6 already issued to you on this claim , you will be receiving under separate cover a supplem ental paym ent in the am ount of $ 12,158.0 6 to conclude the adjustm ent of this claim . . . . [W]e allowed for the replacem ent of dim ensional shingles on the two rear slopes of the roof, refinishin g of the hardwood floors, custom based m olding throughout the first floor, insulation, repair of the cabinet and m ade allowance for three days of additional living expen ses while the floors were being refinished. (MER0 40 8) However, the letter continued, [a]s outlined in the m old report prepared by m old expert Doug Ferry, the elevated interior fungal concentrations arose from the crawl space and not the attic. Based upon this inform ation we regretfully inform you that the m old rem ediation subject to a $ 10 ,0 0 0 lim it under the policy of insurance would not be covered. (Id.) Merchants’ internal records indicate the claim was then closed. (MER0 410 ) Two weeks later, though, on Decem ber 21, 20 12, Merchants issued a third check payable to the Andrews in the am ount of $ 10 ,0 0 0 .0 0 (MER0 471), which undisputedly represents the full m old sublim it paym ent available under the policy. In m id-Septem ber 20 13, Plaintiffs dem olished their house with the intent to rebuild it with all new m aterials. (M. Andrews 9/ 25/ 13 Dep. p. 9) MaryAnn Andrews testified that she and her husband decided to dem olish and rebuild because they concluded that m old rem ediation would be cost-prohibitive and m ight not elim inate all of the m old. (M. Andrews 9/ 25/ 13 Dep. p. 98 -99) Plaintiffs filed this suit in August 20 14. 5 Sum m ary J udgm ent Standard “Sum m ary judgm ent is proper if there is no genuine issue of m aterial fact and if, viewing the facts in the light m ost favorable to the non-m oving party, the m oving party is entitled to judgm ent as a m atter of law.” Pearson v. Com ponent Tech. Corp., 247 F.3d 471, 48 2 n.1 (3d Cir. 20 0 1) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (198 6)); accord Fed. R. Civ. P. 56 (a). The Court will enter sum m ary judgm ent in favor of a m ovant who shows that it is entitled to judgm ent as a m atter of law, and supports the showing that there is no genuine dispute as to any m aterial fact by “citing to particular parts of m aterials in the record, including depositions, docum ents, electronically stored inform ation, affidavits or declarations, stipulations . . . adm issions, interrogatory answers, or other m aterials.” Fed. R. Civ. P. 56 (c)(1)(A). Analysis Breach of Contract Claim The undisputed record indicates that Merchants paid the policy lim it of $ 10 ,0 0 0 .oo for m old dam age, and indeed, m ade two other paym ents. Plaintiffs’ counsel agreed at oral argum ent that the $ 10 ,0 0 0 .oo paym ent fulfills Merchants’ contractual obligation. The undisputed record dem onstrates that Merchants fully perform ed under the policy at issue; therefore, sum m ary judgm ent will be granted to Merchants on the breach of contract claim . 6 Bad Faith Claim The specific contours of Plaintiffs’ bad faith claim are not entirely clear. At oral argum ent, Plaintiffs’ counsel stated that Plaintiffs are claim ing dam ages above and beyond the policy lim its because Merchants delayed the processing of the derechorelated claim . Plaintiffs’ brief in opposition to Merchants’ sum m ary judgm ent m otion 3 states, Plaintiff is prepared to present at trial that the processing of this claim was delayed because [1] the insurer initially put the wrong dates on the paperwork, [2] the insurer initially m istakenly said that the Plaintiff did not have m old coverage when they did, [3] the in surer in itially said the policy had lapsed when in fact it had not, [4] and the insurer m istakenly m arked the case closed when in fact it was still pending. (Opposition Brief, p. 3) Plaintiffs cite no record evidence in support of these factual assertions. Contrast Fed. R. Civ. P. 56(c)(1)(A)(“A party asserting a fact . . . m ust support the assertion by citing to particular parts of m aterials in the record.”). “[A]n insurer acts in bad faith in delaying the processing of a valid claim when (1) the insurer’s conduct is unreasonable, and (2) the insurer knows that the conduct is unreasonable or recklessly disregards the fact that the conduct is unreasonable. . . . N either negligence nor m istake is sufficient to show bad faith.” Pickett v. Lloyd’s, 131 N.J . 457, 474 (1993) (em phasis added). The record evidence viewed in the light m ost favorable to Plaintiffs cannot support inference that Merchants acted in bad faith in processing the claim at issue. Indeed, two of the four pieces of purported eviden ce Plaintiffs rely upon are-- in Plaintiffs’ own words-- m erely “m istakes.” (Opposition Brief, p.3) 3 Plaintiffs’ entire opposition to sum m ary judgm ent is a four-page letter brief. 7 Further, with regard to Merchants “in itially put[ting] the wrong dates on the paperwork,” the Court assum es Plaintiffs are referring to the following notation in Merchants’ internal com puterized claim file: Mrs. Andrews called m e [on Novem ber 20 , 20 12] and we had a long discussion and then I spoke with the [insurance] Agent. The date of loss m ust have been keyed in wrong. We have it as 5/ 7/ 12 but the date on the [Notice of Loss] is 7/ 27/ 12. (MER0 411) Nothing about this statem ent-- to which neither Plaintiffs’ brief, nor the record, gives any further context-- suggests that the erroneous date was anything other than a m istake. Cf. Pickett, 131 N.J . at 474 (explaining that there is no bad faith “when a claim is lost in the com puter.”). Moreover, the undisputed record dem onstrates that once the error was discovered, it was corrected. Lastly, with regard to Merchants “in itially saying” that Plaintiffs’ policy had lapsed, the Court assum es Plaintiffs rely upon the following deposition testim ony of MaryAnn Andrews: A: You had asked the question who told us that we did not have insurance coverage an d that was Debbie Spallone from Merchants, an d she was the inside [sic] house adjuster. . . . And at that point is when I e-m ailed [our insurance agent] and called Wells Fargo, who was our m ortgage, because I know they paid the prem ium , and she had no record of us having insurance . . . . Q: And you didn’t have insurance because? A: [Debbie Spallone] told m e it lapsed. Q: . . . Did it actually lapse? A: No. . . . But . . . I think, it was due . . . [the insurance contract] term inated for that year before October 23 rd and then the new one started October 24 th , so . . . . ... 8 Q: So the confluence of events was that Sandy happens right at the sam e tim e . . . and that’s when it lapsed? Was just about the sam e tim e? I’m just guessing. A: It was that week, probably, like a week before Sandy, it lapsed because you have to see the policy term s, you know, the effective date and the end date. Q: Yeah. A: I think it was like a week before Sandy. Q: Okay. So, but in the end, it turns out that your policy did not lapse? A: No. (M. Andrews 8 / 31/ 15 Dep. p. 11-13) This evidence is insufficient to support an inference of bad faith. Sum m ary judgm ent will be granted to Merchants as to the bad faith claim . 4 Conclusion For the reasons stated above, and in keeping with the discussion held on the record during oral argum ent, Defendant’s m otion for sum m ary judgm ent will be granted. An Order will accom pany this Opinion. Dated: J uly 12, 20 16 _ _ s/ J oseph H. Rodriguez_ _ J oseph H. Rodriguez, USDJ 4 In light of the disposition of the claim s on the m erits, Merchants’ spoliation argum ent (Moving Brief p. 8-14) is m oot. 9
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