Cole v. Owners Ins. Co.
326 F. Supp. 3d 1307
N.D. Ala.2018Background
- On Feb. 10, 2015 the Coles' home suffered a fire; they submitted claims to Owners Insurance for dwelling, contents, debris removal, and additional living expenses (ALE).
- Owners paid partial dwelling amounts, engaged third-party vendors (cause investigator; ServiceMaster), and initially advised Coles to discard some items; Coles later hired The Howarth Group to prepare inventories and valuations.
- The Coles demanded appraisal under the policy to resolve value disputes; Owners repeatedly refused appraisal, citing alleged coverage/scope disputes and deficiencies in proofs of loss, and requested examinations under oath.
- The Coles submitted proofs of loss (slightly late), a large contents inventory, and sat for examinations under oath; Owners still declined appraisal and questioned the accuracy of claimed amounts.
- Litigation followed. The Coles moved for summary judgment on appraisal liability and on several of Owners’ counterclaims; Owners moved for summary judgment on the Coles’ fraud and bad-faith claims and moved to strike portions of an expert’s testimony.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Owners breached policy by refusing appraisal | Coles: they satisfied conditions precedent and demanded appraisal for disputed loss amounts | Owners: appraisal premature because coverage/scope and proof-of-loss obligations were unresolved | Court: Grant Coles; Owners breached and must submit to appraisal (appraisal appropriate for extent/value disputes) |
| Liability for debris removal expenses | Coles: debris removal covered; they provided evidence at exams of amounts paid | Owners: Coles failed to provide receipts; thus no coverage | Court: Denied Owners' SJ; factual dispute on amount but liability not defeated by lack of receipts; partial liability finding contemplated (amount for appraisal or proof) |
| Liability for additional living expenses (ALE) / lost rent | Coles: ALE covers shortest time to repair; Owners paid some but delays and refusal to appraise extend responsibility; Coles substantiated lost rent with tax returns | Owners: Coles failed to provide receipts/proper proofs and Owners already paid four months; repairs would take that long so no further obligation | Court: Denied Owners' SJ; genuine issues on amount and timing; Owner's unilateral cutoff rejected; liability question remains for amount and appraisal may include these losses |
| Owners' counterclaims for fraud/misrepresentation/spoliation | Coles: valuations/opinions are non-fraudulent; they cooperated and did not knowingly misrepresent | Owners: Coles submitted inflated/false valuations and discarded evidence | Court: Grant Coles SJ on Owners' breach/fraud claims and repayment claim; dismiss spoliation as standalone; only actionable misrepresentation claim by Coles (re: adjustor advising disposal) survives on Coles' side |
| Coles' fraud and bad-faith claims against Owners | Coles: Owners unreasonably delayed, refused appraisal, and misled regarding preservation, constituting misrepresentation and bad faith | Owners: had legitimate/arguable reasons (late proofs, missing receipts, possible misrepresentations, spoliation) | Court: Deny Owners' SJ; genuine issues remain for misrepresentation (adjustor instruction to discard) and bad faith (both normal and abnormal theories) |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard and burdens) (1986)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard; view evidence in light most favorable to nonmoving party) (1986)
- Rogers v. State Farm Fire & Cas. Co., 984 So.2d 382 (Ala. 2007) (distinguishes appraisal scope: appraisal resolves extent/value, not causation/coverage)
- State Farm Fire & Cas. Ins. Co. v. Brechbill, 144 So.3d 248 (Ala. 2013) (defines "normal" and "abnormal" bad-faith theories)
- Mutual Serv. Cas. Ins. Co. v. Henderson, 368 F.3d 1309 (11th Cir. 2004) (elements of bad-faith refusal-to-pay claim)
- Hillery v. Allstate Indem. Co., 705 F. Supp. 2d 1343 (S.D. Ala. 2010) (proof-of-loss timeliness can be material; context matters)