Brandt et al v. American Bankers Insurance Co of Florida, No. 3:2008cv05760 - Document 100 (W.D. Wash. 2010)
Court Description: ORDER Granting in Part, Denying in Part, and Reserving Ruling in Part Defendants' Motion for Summary Judgment by Judge Benjamin H Settle re 69 MOTION for Summary Judgment Dismissal of Plaintiffs' Contractual Claims filed by American Bankers Insurance Co of Florida. (TG)
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Brandt et al v. American Bankers Insurance Co of Florida Doc. 100 1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 7 8 9 TODD and KAREN BRANDT, Plaintiffs, 10 11 12 CASE NO. C08-5760BHS v. AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA, 13 Defendant. 14 ORDER GRANTING IN PART, DENYING IN PART, AND RESERVING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT 15 16 17 This matter comes before the Court on Defendant’s (“American Bankers”) motion 18 for summary judgment on Plaintiffs’ (the “Brandts”) contractual claims (Dkt. 69). The 19 Court has considered the pleadings filed in support of and in opposition to the motion and 20 the remainder of the file and hereby grants in part, denies in part, and reserves ruling in 21 part on the motion as discussed herein. 22 23 I. PROCEDURAL HISTORY On December 17, 2008, The Brandts filed suit against American Bankers seeking 24 insurance coverage for flood damage to their house. Dkt. 1 (“Complaint”). American 25 Bankers failed to file a notice of appearance or answer the Brandts’ Complaint, and on 26 February 20, 2009, the clerk entered a default. Dkt. 7. On April 22, 2009, the Court 27 entered a default judgment in favor of the Brandts in the amount of $655,489.42. Dkt. 16. 28 ORDER - 1 Dockets.Justia.com 1 On September 16, 2009, the Court conditionally set aside the default judgment on the 2 basis of American Bankers’ excusable neglect. Dkt. 42; see also Dkt. 41 at 15 (imposing 3 conditions on set-aside of default judgment). On December 30, 2009, the Court granted 4 partial summary judgment in favor of American Bankers, which dispensed with the 5 Brandts’ extra contractual claims. Dkt. 58. 6 7 8 On May 6, 2010, American Bankers filed the instant motion for summary judgment on the Brandts’ remaining contractual claims. Dkt. 69. On May 24, 2010, the Brandts responded in opposition. Dkt. 86. On May 28, 2010, American Bankers replied. 9 Dkt. 99. 10 11 12 13 Additionally, American Bankers did not file an answer in this matter until May 24, 2010 (Dkt. 83); this filing occurred after the filing of the instant summary judgment motion. II. FACTUAL BACKGROUND 14 15 16 17 A more complete factual account of this matter can be found in the Court’s order granting American Bankers’ motion to set aside default judgment. Dkt. 41. On December 4, 2007, the Brandts’ Centralia, Washington house was damaged by 18 flooding. Complaint ¶ 7. At the time of the flood, the Brandts carried a flood insurance 19 policy through American Bankers that covered building damage caused by flooding in the 20 amount of $250,000, plus an additional $20,000 for “increased cost of compliance.” Dkt. 21 10, Declaration of Todd Brandt (Brandt Decl.) ¶ 5. 22 23 24 25 26 The insurance plan held by the Brandts is known as a Write Your Own (“WYO”) insurance policy issued as a Standard Flood Insurance Policy (“SFIP”) pursuant to the National Flood Insurance Program. See, e.g., Dkt. 58 at 2. Such policies are issued directly by FEMA and indirectly by FEMA through approved WYO insurers, like American Bankers. See id. at 3. The Court already observed that “[f]ederal law has long 27 28 ORDER - 2 1 recognized that an insured must comply strictly with the terms and conditions of a [SFIP]. 2 See id. (quoting Flick v. Liberty Mut. Fire Ins. Co., 205 F.3d 386, 390 (9th Cir. 2000)). 3 On December 6, 2007, the Brandts provided notice to American Bankers of their 4 flood claim. Dkt. 1 at 2. On January 10, 2008, American Bankers issued payment to the 5 Brandts for flood damage in the amount of $37,715.92. Dkt. 21, Declaration of Patricia 6 7 8 Quint (Quint Decl.) ¶ 7. Following this January 2008 payment, the Brandts presented claims for additional damage to their home. See id. ¶ 8. According to estimates provided by the Brandts, the house required repairs that would cost more than the $232,284.08. 9 Dkt. 41 at 3. The Brandts do not contend that they actually have made any of these repairs 10 11 12 13 14 or replacements to their home; however, they maintain that these costs remain covered under their SFIP. E.g., Dkt. 86 at 3; see also Quint Decl., Ex. H (estimates from Kenneth Kirby, contractor (“Kirby”)). However, American Bankers maintains that the Brandts failed to submit proper proof of loss, have not determined an actual cash value of loss, are 15 seeking damages precluded by their SFIP, and have failed to submit credible evidence 16 regarding their alleged damages. See, e.g., Dkt. 69. III. DISCUSSION 17 18 19 A. Summary Judgment Standard Summary judgment is proper only if the pleadings, the discovery and disclosure 20 materials on file, and any affidavits show that there is no genuine issue as to any material 21 fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). 22 The moving party is entitled to judgment as a matter of law when the nonmoving party 23 fails to make a sufficient showing on an essential element of a claim in the case on which 24 25 26 the nonmoving party has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1985). There is no genuine issue of fact for trial where the record, taken as a whole, could not lead a rational trier of fact to find for the nonmoving party. Matsushita Elec. 27 Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (nonmoving party must 28 ORDER - 3 1 present specific, significant probative evidence, not simply “some metaphysical doubt”). 2 See also Fed. R. Civ. P. 56(e). Conversely, a genuine dispute over a material fact exists if 3 there is sufficient evidence supporting the claimed factual dispute, requiring a judge or 4 jury to resolve the differing versions of the truth. Anderson v. Liberty Lobby, Inc., 477 5 U.S. 242, 253 (1986); T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 6 626, 630 (9th Cir. 1987). 7 8 The determination of the existence of a material fact is often a close question. The Court must consider the substantive evidentiary burden that the nonmoving party must 9 meet at trial – e.g., a preponderance of the evidence in most civil cases. Anderson, 477 10 11 12 13 14 U.S. at 254; T.W. Elec. Serv., Inc., 809 F.2d at 630. The Court must resolve any factual issues of controversy in favor of the nonmoving party only when the facts specifically attested by that party contradict facts specifically attested by the moving party. The nonmoving party may not merely state that it will discredit the moving party’s evidence at 15 trial, in the hopes that evidence can be developed at trial to support the claim. T.W. Elec. 16 Serv., Inc., 809 F.2d at 630 (relying on Anderson, supra). Conclusory, nonspecific 17 statements in affidavits are not sufficient, and missing facts will not be presumed. Lujan 18 v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888-89 (1990). 19 B. 20 The Brandts’ Motion to Deny The Brandts move the Court to deny American Bankers’ motion on the basis that it 21 never filed an answer until after the Brandts filed their response to the instant motion. 22 Dkt. 86 at 2. The Brandts argue that this put American Bankers in default and they filed a 23 motion for default on this basis. Id; see also Dkt. 82 (second motion for default). 24 25 26 However, the Brandts have subsequently withdrawn their motion for default. Dkt. 90. In any event, the fact that the answer was untimely filed does not appear to the Court to have caused the Brandts any prejudice. In fact, the Brandts have been litigating this matter all 27 along and have also filed the proposed pretrial order (Dkts. 80, 81). 28 ORDER - 4 The Brandts also argue that American Bankers raised new defenses for the first 1 2 time that have not previously been presented to the Brandts. Dkt. 86 at 2. However, again, 3 this argument is based on the fact that the answer was only recently filed. On the record 4 currently before the Court, it is unable to determine at this time what prejudice has 5 resulted in disabling the Brandts’ preparation for trial. 6 7 8 Furthermore, a party will not be held in default for failure to file an answer when the party has otherwise defended itself in the lawsuit (e.g., filed a motion for summary judgment). E.g., Rashidi v. Albright, 818 F. Supp. 1354, 1355 (D. Nev. 1993). American 9 Bankers has otherwise defended itself in this lawsuit, which appears to make the timing 10 11 of its answer of little import. Therefore, the Court denies the Brandts’ motion to deny American Bankers 12 13 14 15 16 summary judgment. However, the Court is inclined to entertain a motion for continuance of trial on this basis, if the Brandts can establish unfair prejudice. C. American Bankers’ Summary Judgment Motion American Bankers moves the Court to order summary judgment on the Brandts’ 17 remaining contractual claims. Dkt. 69. American Bankers maintains that the following 18 reasons support its motion for summary judgment: the Brandts (1) did not timely file a 19 proof of loss statement for the additional funds sought; (2) may not recover replacement 20 cost damages until their dwelling is actually repaired or replaced but may recover actual 21 cash value of loss, if established; (3) did not put forth admissible or credible evidence to 22 support their claimed repair/replacement costs; and (4) cannot recover for damages 23 excluded from their policy. Dkt. 69 at 9-25. 24 25 26 1. Proof of Loss American Bankers argues that, because there was no timely submission of a “Proof of Loss for the additional amount of damages requested in this lawsuit as required by 27 SFIP, [the Brandts] are divested of the right to even bring this law suit.” Dkt. 69 at 22 28 ORDER - 5 1 (citing Mancini v. Redland Ins. Co., 248 F.3d 729, 735 (8th Cir. 2001); Rojek v. FEMA, 2 234 F. Supp. 2d 999 (S.D. Iowa, 2002)). While this rule is generally true, the Court’s 3 order setting aside default judgment was conditioned on American Bankers’ open-court 4 assertion that it would negotiate in good faith with FEMA to waive the proof of loss 5 requirement should the Brants prove they are entitled to funds under the policy. Dkt. 41 at 6 7 8 17 (American Bankers’ counsel represented in open court he would seek a proof of loss waiver from FEMA “if [the Brandts’] documentation shows that they are entitled to more funds under their policy”). 9 Because of the conditions imposed on and agreed to by American Bankers, 10 11 12 13 14 whether the Brandts’ failure to file a timely proof of loss statement precludes their recovery in this action is not ripe for consideration by the Court. Dkt. 41 at 17. Therefore, summary judgment on this issue is denied. 2. Actual Cash Value 15 American Bankers argues that the “terms of the [Brandts’] policy preclude 16 recovery for ‘replacement cost coverage’ until the dwelling is actually repaired or 17 replaced.” Dkt. 69 at 9 (citing SFIP, Article V(2)(c)). Even if the repair or replacement 18 has not occurred, the insured may still be able to recover the actual cash value (“ACV”) 19 of any damages. Id.; see also Hess v. North Pacific, Ins. Co., 122 Wn.2d 180, 185 20 (holding that repair/replacement cost may not be sought absent actual repairs or 21 replacement but that ACV may still be recovered).1 22 23 The SFIP part II(B)(2) defines ACV as “the cost to replace an insured item of property at the time of loss, less the value of its physical depreciation.” Section J of the 24 25 1 26 27 28 The Hess court noted the rationale for this provision is that the insured should not be enabled to profit from the difference between actual cash value of loss and the replacement/repair cost when the insured collects insurance proceeds but does not actually use them to fix the dwelling. 122 Wn.2d at 185-56. ORDER - 6 1 SFIP, entitled Requirements in Case of Loss, provides that “In case of a flood loss to 2 insured property, [the insured] must, . . . (3) [p]repare an inventory of damaged property 3 showing the quantity, description, actual cash value, and amount of loss . . . .” (Emphasis 4 added). American Bankers contends that the Brandts are not entitled to such a payment 5 because they “have not determined the actual cash value of any damages for which they 6 7 8 seek recovery . . . .” Dkt. 69 at 10 (citing to the Brandts’ answer to interrogatory No. 6, which supports American Bankers’ position). In opposition, the Brandts contend that the ACV and the replacement/repair cost 9 are the same. Dkt. 86 at 3 (relying on the Quint Decl. (Dkt. 71), Ex. H). The Brandts also 10 11 12 13 14 assert that Todd Brandt will testify to this fact. Id. The Brandts, however, do not contest the fact that the burden of establishing the ACV rests with them or that a failure to establish the ACV is fatal to an SFIP claim. Put otherwise, if the Brandts are unable to establish the ACV, this matter is concluded as a matter of law. On the record before the 15 Court, it is unclear what evidence the Brandts have, to show that the ACV has been 16 established. 17 To begin with, Exhibit H is the estimate for repair/replacement costs provided by 18 Kirby, which did not account for depreciation. Kirby testified in his deposition that he did 19 not account for depreciation in arriving at his estimate. Kirby Dep. (Dkt. 87, Ex. A) at 29 20 (stating that “I had no reason for depreciation. I wasn’t depreciating my costs”). It is also 21 unclear on what basis Todd Brandt could testify that the actual cash value of loss, which 22 necessarily includes depreciation, could equate to the estimate Kirby came up with for the 23 repair/replacement cost, which expressly did not include depreciation. 24 25 26 Further, the Brandts have not sufficiently established how Todd Brandt could be qualified to testify to the claim that the repair/replacement cost is equal to the actual cash value. In fact, the Court cannot find, and it does not appear, that the Brandts have 27 supplied any evidence that would be sufficient to overcome American Bankers’ position 28 ORDER - 7 1 on this issue. In deciding a summary judgment motion, conclusory, nonspecific 2 statements in affidavits are not sufficient, and missing facts will not be presumed. Lujan 3 v. Nat’l Wildlife Fed’n, 497 U.S. at 888-89. 4 5 6 7 8 In short, the Brandts’ failure to adequately demonstrate the actual cash value of loss appears to be fatal to their claim for recovery under their SFIP. However, the Court reserves its ruling on this issue and will hear oral argument regarding the matter at the pretrial conference. 3. Admissibility of Evidence of Repair/Replacement Costs 9 American Bankers argues that the Brandts have supplied no “competent or 10 11 12 13 14 admissible evidence to support [their] replacement cost figure.” Dkt. 69 at 10. American Bankers further argues that the Brandts’ damage calculation is based on an estimate developed by Kirby, which it asserts is based on his reliance on the opinions of Ryan Moore (“Moore”), an engineer hired by the Brandts, and that Moore’s opinion has 15 dramatically changed since Kirby’s reliance. Id. at 10-11. Finally, American Bankers 16 asserts that Kirby, a California contractor, is not qualified to provide an estimate for a 17 structure in Washington. Id. at 11. 18 As an initial matter, the Court finds that Brandt will likely be able to qualify Kirby 19 as competent to testify in this matter as an expert. This is not to say that American 20 Bankers cannot attempt to discredit his opinions or to offer their own expert opinions to 21 contradict the position of Kirby. As such, Kirby’s competency is not a basis for summary 22 judgment. 23 24 25 26 Further, in opposition, the Brandts argue that Kirby has his own opinions on the matter and that they are not simply limited to Moore’s former position. See Dkt. 86 at 6-8; see also Kirby Dep. at 20 (noting that Kirby’s estimate was based on documents from MC Squared Engineering, All-American Home inspection proposal, 3R Construction, and his 27 own visual inspection). This deposition testimony is sufficient to overcome the claims 28 ORDER - 8 1 made by American Bankers on this issue. Indeed, when the parties present different 2 versions of the truth, the Court cannot resolve such an issue in favor of the moving party 3 on summary judgment. T.W. Elec. Serv., Inc., 809 F.2d at 630-31. 4 5 6 7 8 Therefore, viewed in the light most favorable to the Brandts, the Court denies summary judgment on this issue. However, to the extent Kirby would testify to the costs of lifting the house, such testimony would not be permitted because the Brandts are not entitled to recover any costs associated with lifting the house; see the following section. 4. Recovering Damages Excluded by Policy 9 a. Pre-Flood Conditions and Other Recovery Precluded 10 11 12 13 14 American Bankers argues that the Brandts may not recover damages excluded by the SFIP. Dkt. 69 at 13. Specifically, American Bankers contends that the Brandts cannot recover costs unrelated to the 2007 flood (e.g., pre-flood condition, settlement of the foundation, and repairs not directly related to flood damage, or those incurred for code 15 compliance). In opposition, the Brandts concede they cannot recover for matters excluded 16 by the policy but that they are requesting payment for losses sustained directly from the 17 flood. Dkt. 86 at 10. 18 19 Therefore, the Court grants summary judgment in favor of American Bankers to the extent the Brandts seek recovery for damages excluded by their SFIP. 20 21 b. Recovery for Code Compliance Part of the costs sought to be recovered by the Brandts is the cost of raising the 22 house in order to repair the alleged flood-related damage. American Bankers asserts that 23 the Brandts are precluded from recovering such costs. They assert these costs are related 24 25 26 27 to code compliance. Relevant here is article V of the SFIP, entiled Exclusions, which provides in pertinent part as follows: A. We only pay for direct physical loss by or from flood, which means that we do not pay you for: 28 ORDER - 9 3 6. The cost of complying with any ordinance or law requiring or regulating the construction, demolition, remodeling, renovation, or repair of property, including removal of any resulting debris. This exclusion does not apply to any eligible activities we describe in Coverage D--Increased Cost of Compliance . . . . 4 Thus, unless otherwise excepted in the SFIP, the Brandts may not recover damages 5 incurred in bringing their structure up to code. 1 2 6 7 8 American Bankers further asserts that, even if the Brandts could establish that one of the exceptions in the SFIP, part D, applied in their case, they would not be able to survive the exclusions to the exceptions. See SFIP part D(5). Section 5(e) to part D 9 provides in pertinent part as follows: 10 11 12 13 14 15 16 17 Under this Coverage D (Increased Cost of Compliance) we will not pay for: e. Any Increased Cost of Compliance under this Coverage D: (1) Until the building is elevated, floodproofed, demolished, or relocated on the same or to another premises; and (2) Unless the building is elevated, floodproofed, demolished, or relocated as soon as reasonably possible after the loss, not to exceed two years. The parties do not dispute that the Brandts have never repaired their structure, much less elevated the building within two years after the loss was sustained as a result of the flood. Because the Brandts provide no authority for circumventing these exclusions, the Court 18 finds that no material factual dispute remains regarding recovery for damages related to 19 20 21 22 23 24 code compliance. In opposition, the Brandts argue that they are not attempting to recover the costs for raising the structure to comply with the City of Centrailia’s codes; rather, they are attempting to recover these costs because it is necessary to fix the flood damage. Dkt. 86 at 10 (relying on Kirby Dep. At 22:6-9). 25 In fact, Kirby testified as follows regarding the need to elevate the Brandts’ house: 26 [T]he City of Centrailia said there had to be a new foundation put under there. There’s no other way to put a new foundation in there without raising the home, and there’s no way to fix the home the way it was without raising 27 28 ORDER - 10 a goodly portion of it and straightening it out and pulling it back over on to the foundation. 1 2 3 4 5 Kirby Dep. at 21-22 (emphasis added). The disjunctive nature of Kirby’s answer suggests that, when viewed in the light most favorable to the Brandts, while compliance with the City of Centrailia’s codes appears to be a basis on which Kirby determined raising the 6 house was necessary, it also suggests that repairing the flood damage underneath the 7 house would require elevating the house apart from code compliance. The Court is 8 somewhat persuaded that the Brandts’ position presents a material question of fact. Therefore, to the extent the Brandts seek recovery for increased code compliance, 9 10 summary judgment is granted. To the extent the Brandts seek recovery of the cost of 11 elevating the house apart from code compliance, summary judgment is denied. 12 c. 13 14 15 16 17 Recovery for Damages from Earth Movement American Bankers contends that the Brandts are seeking damages for loss sustained as a result of earth movement. Dkt. 69 at 16 (citing section V of the SFIP, which excludes such recovery). However, the Brandts do not claim such losses. Dkt. 86 at 12. Therefore, the Court grants summary judgment in favor of American Bankers on 18 this issue. 19 IV. ORDER 20 21 22 23 24 25 26 27 Therefore, it is hereby ORDERED that, as discussed herein: 1. The Brandts’ motion to deny American Bankers’ summary judgment motion is DENIED; 2. Summary judgment is DENIED on American Bankers’ proof of loss theory; 3. Summary judgment is DENIED on American Bankers’ theory that the Brandts did not supply credible evidence of their loss; 28 ORDER - 11 1 2 3 4 5 4. Summary judgment is RESERVED on American Bankers’ theory that the Brandts’ claims fail because they did not determine the actual cash value of loss; 5. Summary judgment is GRANTED on American Bankers’ theory that the Brandts cannot recovery for damages caused by earth movement; and 6. Summary judgment is GRANTED on American Bankers’ theory that the 6 Brandts cannot recover for costs associated with code compliance, but summary judgment 7 is DENIED to the extent the Brandts are able to establish damages apart from code 8 compliance, as discussed above. 9 DATED this 1st day of June, 2010. 10 11 12 A BENJAMIN H. SETTLE United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER - 12
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