Parks v. Safeco Ins Co of Illinois
160 Idaho 556
| Idaho | 2016

Background

  • June 28, 2012 fire destroyed the Parks’ home insured by Safeco (policy limit $464,875). Safeco paid $169,000 as actual cash value (ACV) after appraisal.
  • Policy’s Loss Settlement (Replacement Cost) promised replacement cost subject to the smallest of: policy limit; replacement cost on same premises ($440,195.55, Belfor estimate); amount actually and necessarily incurred to replace the building; or direct financial loss claimed.
  • Belfor (hired by Safeco) estimated $440,195.55 to replace the house. The Parks purchased an existing house for $300,000 (structure $255,000; land $45,000) instead of rebuilding.
  • Parks demanded $440,195.55 (less ACV) as replacement cost; Safeco conditioned further payment on documentation of replacement and paid $86,000 after receiving the purchase docs (total replacement payment = $255,000).
  • Parks sued claiming breach of contract (seeking $440,195.55) and bad faith; district court granted summary judgment to Safeco, denied amendment to add punitive damages, and this decision was appealed.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
1. Breach of contract — entitlement to full Belfor estimate ($440,195.55) Parks: “replace”/replacement cost should be measured by equivalent-construction estimate (Belfor) or direct financial loss, not limited by amount actually incurred Safeco: Policy unambiguously limits replacement cost to the smallest listed amount; amount actually incurred controls when Parks bought a cheaper existing home Court: No breach — policy unambiguous; Parks received the amount actually and necessarily incurred ($255,000) as required.
2. Bad faith claim Parks: withholding remaining replacement funds until replacement was incurred was unreasonable and constituted bad faith Safeco: Paid ACV promptly and paid remainder after proof of replacement; acted consistently with policy and case law Court: No bad faith — no contractual breach, so no basis for bad-faith tort.
3. Motion to amend to add punitive damages Parks: Expert opined Safeco’s conduct was outrageous; should be allowed to plead punitive damages Safeco: No reasonable likelihood Parks can prove punitive damages; conduct lawful under policy Court: Denied — district court did not abuse discretion; Parks failed to show a reasonable likelihood to prove punitive damages.
4. Attorneys’ fees on appeal Parks: Safeco failed to pay amounts justly due within 30 days, so Parks entitled to fees under I.C. §41-1839(1) Safeco: Paid ACV within 30 days of appraisal and remainder within 30 days of receiving proof of replacement; also seeks fees under §41-1839(4) as prevailing party Court: Parks not entitled under §41-1839(1); awarded Safeco fees under §41-1839(4) because Parks’ claims lacked foundation; Safeco awarded costs.

Key Cases Cited

  • Cascade Auto Glass, Inc. v. Idaho Farm Bureau Ins. Co., 141 Idaho 660, 115 P.3d 751 (Idaho 2005) (summary-judgment review and policy-construction principles)
  • Clark v. Prudential Property & Cas. Ins. Co., 138 Idaho 538, 66 P.3d 242 (Idaho 2003) (when policy language is unambiguous, apply plain meaning)
  • McColm-Traska v. Valley View Inc., 138 Idaho 497, 65 P.3d 519 (Idaho 2003) (summary-judgment standard on appeal)
  • Carnell v. Barker Mgmt., Inc., 137 Idaho 322, 48 P.3d 651 (Idaho 2002) (summary-judgment standard)
  • Robinson v. State Farm Mut. Auto. Ins. Co., 137 Idaho 173, 46 P.3d 829 (Idaho 2002) (elements required to prove first-party insurer bad faith)
  • Dave’s Inc. v. Linford, 153 Idaho 744, 291 P.3d 427 (Idaho 2012) (contract duty must be breached to support bad-faith claim)
  • Weinstein v. Prudential Property & Cas. Ins. Co., 149 Idaho 299, 233 P.3d 1221 (Idaho 2010) (standard of review for motions to amend to add punitive damages)
  • Parsons v. Mutual of Enumclaw Ins. Co., 143 Idaho 743, 152 P.3d 614 (Idaho 2007) (requirements for attorneys’ fees under I.C. §41-1839(1))
  • Greenough v. Farm Bureau Mut. Ins. Co. of Idaho, 142 Idaho 589, 130 P.3d 1127 (Idaho 2006) (what constitutes sufficient proof of loss)
  • Boel v. Stewart Title Guar. Co., 137 Idaho 9, 43 P.3d 768 (Idaho 2002) (basis for calculating claimed loss)
  • Associates Discount Corp. of Idaho v. Yosemite Ins. Co., 96 Idaho 249, 526 P.2d 854 (Idaho 1974) (proof of loss must permit tender by stating a specific sum)
  • Marek v. Lawrence, 153 Idaho 50, 278 P.3d 920 (Idaho 2012) (three-part abuse-of-discretion test for punitive-damages amendment)
  • Foremost Ins. Co. v. Putzier, 100 Idaho 883, 606 P.2d 987 (Idaho 1980) (rejection of reasonable-expectations doctrine in favor of contract rules)
  • Casey v. Highlands, 100 Idaho 505, 600 P.2d 1387 (Idaho 1979) (rejection of reasonable-expectations doctrine)
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