ORDER
Now before the Court for consideration is Defendant’s Motion for Summary Judgment [8-1]. After considering the arguments of the parties and the entire record, the Court enters the following Order.
I. Evidentiary Objections
Defendant objected to several items presented by Plaintiff in her Response to Defendant’s Motion for Summary Judgment as inadmissible hearsay. As a preliminary matter the Court will first address these objections. Defendant objects to four items: (1) a letter by Dr. Viktor Bouquette; (2) a Mold Lab Report prepared by Envirocure; (3) an Indoor Air Quality Report prepared by Walter H. Carter, Inc.; and (4) a Bio-Remediation estimate prepared by Environmental Investigations, Inc.
In ruling on a motion for summary judgment, a court may consider only evidence that would be admissible at trial.
White v. Wells Fargo Guard Servs.,
First, Defendant objects to a letter dated, January 18, 2002, by Dr. Viktor Bou-quette as inadmissible hearsay. The letter is addressed “To whom it may concern” and states that Dr. Bouquette told Plaintiff that because of the reports of toxic mold in her home, she should leave the house because it is uninhabitable. He further states that he advised her to wear hazardous materials protection equipment when she returns to the home. It does appear that the letter is being presented for the truth of the matter asserted, to show that there is mold in the home and establish that Plaintiffs health related problems were caused by the mold. The letter is not only hearsay but appears to present hearsay within hearsay to the extent that it discusses air quality reports that found
Second, Defendant objects to a- Mold Lab Report prepared by Envirocure. Plaintiff contacted Envirocure to test her house for mold following Dr. Bouquette’s suggestion. (Burgess Dep. at 58.) Envi-rocure tested Plaintiffs house on October 15, 2001, and returned results around October 29, 2001. The Mold Lab Report purports to show various types of mold in each room of Plaintiffs house. The report appears to be presented for the truth of the matter asserted, to demonstrate the presence of mold in the house. Since Plaintiff has presented no other grounds for the admissibility of the report, the Court will exclude it from consideration.
Third, Defendant objects to an Indoor Air Quality Report prepared by Walter H. Carter, Inc. Plaintiff requested the inspection as a second opinion after the report by Envirocure. (Burgess Dep. at 58.) The inspection took place November 13, 2001, and the report is dated the same. The report states that there is mold inside the house, identifies the types of mold present, and gives recommendations for cleaning the areas in the house. Like the Enviro-cure report, the Indoor Air Quality Report appears to be presented for the truth of the matter asserted, to show the presence of mold in the house. Plaintiff has presented no other grounds for its admissibility so it will also be excluded from consideration by the Court.
Finally, Defendant objects to a Bio-Remediation- estimate prepared by Environmental Investigations, Inc. The estimate is based on the Indoor Air Quality report above, and on a site visit to Plaintiffs house. The estimate itemizes specific remediation procedures and gives a total cost estimate for the project. The Indoor Air Quality report has already been excluded. Moreover, Plaintiff offers no grounds for the admissibility of the estimate. It is inadmissible as presented for the truth of the matter asserted, to show the presence of mold.
It is true that evidence produced for summary judgment need not be in admissible form if it could be reduced to admissible form for trial.
Macuba,
II. Factual Background
This suit is a dispute over a claim under a homeowners insurance policy. The facts are undisputed unless noted. Plaintiff, Patricia A. Burgess, purchased a homeowners insurance policy from Defendant Allstate Insurance Company.. (“Allstate”) through its agent Bill House. Allstate’s “Deluxe Plus Homeowners Policy,” policy number 0-21-421879-11/19, was issued on
Around September 6, 2001, Plaintiff returned home from a weekend trip and noticed water damage on her foyer roof. (Burgess Dep. at 38.) While she was not sure whether she was gone for a weekend, or a long weekend, she stated that the water damage must have happened while she was gone because it was there when she returned, but not when she left. (Id. at 39.) She called a contractor who repaired the roof exterior, but did not repair the interior damage. (Id. at 41.) The interior damage included damage to the ceiling, the wall, the foyer tiles and carpet. There was also some damage to the garage. (Id. at 60.)
Plaintiff also experienced water damage to her downstairs basement. On October 15, 2001, she noticed a ceiling tile that had caved in, large water marks on the walls and ceiling, and water stains. (Id. at 44.) The next day, a plumber determined that the problem was related to the dishwasher. The dishwasher was repaired around November 22, 2001. (Id. at 45.) Plaintiff did not use the dishwasher from the time she noticed the problem through the time it was repaired. (Id.)
In late November 2001, Plaintiff contacted her Allstate agent, Bill House, to report the water damage to her house. (Id. at 34.) Plaintiff was concerned about mold and water damage. (Id. at 35.) On November 29, 2001, Allstate claims adjuster Jocelyn Phillips came to Plaintiffs house. Phillips conducted a visual investigation of the damaged areas. It was beyond the scope of her job to determine the source of water, or otherwise touch or investigate the damage. (Phillips Dep. at 53.)
Primarily, Plaintiff was concerned about the water damage in two areas, the foyer and the downstairs basement. (Burgess Dep. at 37.) As to the downstairs basement area, Phillips concluded that water had seeped from the dishwasher and down the wall below. (Phillips Dep. at 53.) She based this determination on statements by Plaintiff that the dishwasher had been leaking, and on multiple water rings she observed which she believed indicated that the area had been wet several times. (Id. at 68.) Plaintiff contests that the water damage was from seepage, but instead believes that the pipe burst. (Burgess Dep. at 45.)
In the garage, Phillips observed a hole in the drywall, dark water stains where the drywall had been cut out and insulation hanging down. (Id. at 54.) Regarding the foyer area, Phillips observed that a single shingle had been replaced on the roof in that area and determined that there had been wind damage to the roof. (Id. at 56.) Plaintiff also showed Phillips a patio door where there may have been water coming in. (Burgess Dep. at 47.) There, Phillips observed mold on the carpet at the doorway. (Phillips Dep. at 58.)
Based on her observations of the downstairs basement area under the dishwasher, Phillips determined that the damage was not covered because it fell under policy exclusions.
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(Phillips Dep. at 64.) Plaintiff contends that at the time of the inspection, Phillips told her that the water damage in the basement would have been covered but that Plaintiff had simply waited too long to make the claim. (Burgess Dep. at 67.) Phillips discussed with Plaintiff her conclusions that the claim was a result of “time element damages and not sudden or accidental in nature.” (Phillips Dep. at 69.) Likewise, Phillips determined the garage leak was also excluded as re
In response to Plaintiffs complaints about mold, Phillips stated that mold was not covered under the policy. Additionally, Phillips concluded that there was no mold coming from the foyer area and noted that there was a light water stain but nothing black on the ceiling. (Id.' at 77.) Furthermore, Phillips did not consider additional testing because mold was not covered under the policy. While acknowledging that mold resulting from a sudden and accidental physical loss might warrant a hygienist and remediation- if the customer has attempted to mitigate the loss, Phillips found that Plaintiff had not attempted to mitigate her loss. (Id. at 78.)
On December 2, 2001, Plaintiff received a letter from Defendant denying coverage and signed by Jocelyn Phillips. Around November 80, 2001, Plaintiff contacted William Cook, a Georgia-licensed public adjuster, regarding the water damage and mold in her house. (Pl.’s Opp’n to Def.’s Motion for Summ. J. [12] Ex. F [hereinafter “Cook Aff.”].) On December 17, 2001, Cook inspected Plaintiffs house for water damage. Cook concluded that there was water damage in several areas including the foyer, the basement, and the garage. He stated that the damage from the dishwasher was a sudden and accidental direct physical loss. (Cook Aff. ¶ 5.) .Furthermore, he found a significant amount of harmful mold which he attributed to the water intrusion; he stated that it was not the result of ordinary wear and tear, -aging, gradual deterioration, insects, vermin or inherent vice. (Id. ¶ 6.) Cook concluded that based on his inspection and review of the policy, Plaintiffs losses were covered. Cook unsuccessfully attempted to contact Allstate by phone on behalf of Plaintiff. On January 14, 2002, he sent a letter to Chris Smith of Allstate requesting payment for the loss and . advancement of Plaintiffs living expenses. 3 Smith responded by a letter dated January 23, 2002.
Plaintiff filed suit in the State Court of Fulton County, Georgia. Defendant removed the case to this Court pursuant to 28 U.S.C. § 1441(a). Plaintiff brings claims for: (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) unfair claims settlement practice.;. (4) declaratory relief; (5) attorneys fees and expenses of litigation; and (6) bad faith refusal to provide coverage under an insurance policy. Deféndant moves for summary judgment as to all claims.
III. Relevant Policy Terms
Section I-Your Property
Losses We Do Not Cover Under Coverages A and B:
We do not cover loss to the property described in Coverage A — Dwelling Protection or Coverage B — Other Structures Protection consisting of or caused by: '
4. Water or any .other substance on or below the surface .of the ground, regardless of its source. This includes water or any other substance which exerts pressure on, flows, seeps, or leaksthrough any part of the residence premises.
In addition we do not cover loss consisting of or caused by any of the following:
15. a) wear and tear, aging, marring, scratching, deterioration, inherent vice, or latent defect;
b) mechanical breakdown;
c) growth of trees, shrubs, plants or lawns whether or not such growth is above or below the surface of the ground;
d) rust or other corrosion, mold, wet or dry rot;
18. Seepage, meaning continuous or repeated seepage or leakage over a period of weeks, months, or years, of water, steam or fuel:
a) from a plumbing, heating, air conditioning or automatic fire protection system or from within a domestic appliance; or
b) from, within or around any plumbing fixtures, including, but not limited to shower stalls, shower baths, tub installations, sinks or other fixtures designed for the use of water or steam.
Section I Conditions
3. What You Must Do After A Loss
b) protect the property from further loss. Make any reasonable repairs necessary to protect it. Keep an accurate record of any repair expenses.
(Pl.’s Opp’n to Def.’s Mot. for Summ. J. [12] Ex. A “Allstate’s Deluxe Homeowners Policy”.)
Discussion
I. Jurisdiction and Choice of Law
This Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332. Plaintiff is a resident of the State of Georgia. Defendant Allstate Insurance Company is a foreign corporation incorporated in Illinois. Plaintiff seeks to recover damages in an amount that exceeds $75,000. In diversity cases, a federal court applies the law of the forum in which it sits.
LaTorre v. Conn. Mut. Life Ins. Co.,
II. Motion for Summary Judgment
Federal Rule of Civil Procedure 56(c) provides that a district court shall grant 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 judgment as a matter of law.” Fed.R.Civ.P. 56(c). The applicable substantive law identifies which facts are material, and a fact is not material if a dispute over that fact will not affect the outcome of the suit under the governing law.
Anderson v. Liberty Lobby, Inc.,
When the non-moving party has the burden of proof at trial, the movant may carry its burden at summary judgment by demonstrating the absence of an essential ele
If the movant meets this burden, the non-moving party then has the burden of showing that summary judgment is not appropriate by setting forth “specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e). An issue is genuine when the evidence is such-that a reasonable jury could return a verdict for the non-moving party.
Anderson,
III. Contract Interpretation
Defendant asserts that because the Allstate policy specifically excludes coverage for loss and damage caused by mold, Plaintiffs claims must fail as a matter of law. Plaintiff contends that the water damage and resulting mold infestation are covered under the policy.
In Georgia, an insurance policy is governed by the ordinary rules of contract construction.
Park ‘N Go v. U.S. Fidelity & Guar. Co.,
In its motion Defendant solely addresses Plaintiffs claims for loss ' and damage caused by the mold. The crux of Defen
IV. Efficient Proximate Cause Doctrine
The efficient proximate cause doctrine applies when two or more identifiable causes contribute to a single property loss-at least one of them covered under the policy and at least one of them excluded under the policy.
Kelly v. Farmers Ins. Co.,
The doctrine of efficient proximate cause governs situations where a risk specifically insured against sets other causes in motion in an unbroken sequence between the insured risk and the ultimate loss. In such situations, the insured risk is regarded as the proximate cause of the entire loss, even if the last step in the chain of causation was an excepted risk.
TNT Speed & Sport Ctr., Inc. v. Am. States Ins. Co.,
The efficient proximate cause doctrine has found a place in property insurance litigation over coverage for mold claims. In
Shelter v. Maples,
Under an efficient proximate cause analysis, therefore, the question becomes whether the water damage, a covered event, is the efficient proximate cause of the Plaintiffs loss even though the mold, an excluded event, contributed to the loss as well. Before considering the applicability of the efficient proximate cause doctrine, the Court must first determine if the efficient proximate cause doctrine has been adopted in Georgia.
V; Efficient Proximate Cause in Georgia
The Court has found no cases in Georgia applying the efficient proximate cause doctrine to a case of mold infestation. However, after a review of relevant caselaw, the Court concludes that Georgia has adopted the efficient proximate cause doctrine. In fact, efficient proximate cause is well-grounded in Georgia jurisprudence.
See Dunbar v. Davis,
In
Travelers Indemnity Co. v. Wilkes County,
A. Breach of contract
Having established the doctrine of efficient proximate cause applies in Georgia, the Court considers its application to the present case. The application of the efficient proximate cause doctrine requires that at least two causes combine to create the property loss-one covered under the insurance policy and one excluded under the insurance policy.
1. Covered losses for water damage.
Defendant contends that Plaintiff cannot establish that the water damage to her house was covered because: (1) it was not “sudden and accidental” as required by the policy; (2) Plaintiffs losses occurred prior to the water damage; and (3) Plaintiff failed to provide prompt notice to Defendant of her claims. In order to establish a
prima facie
case on a claim under an insurance policy, the insured must show the occurrence was within the risk insured against.
Calabro v. Liberty Mut. Ins. Co.,
First, the policy at issue covers “sudden and accidental direct physical loss[es].”
5
Defendant asserts that the damage to the foyer area was not sudden and accidental because Plaintiffs statement that she “noticed” the damage after returning from a weekend out of town merely established when Plaintiff became aware of the damage and not when it occurred. In fact, Plaintiff further stated that the damage was sudden because she would have noticed it since it was in an area of the house she frequently used. (Burgess Dep. at 40.) She stated that “I know it wasn’t there beforehand because there was also no paint on the banister, which would have been very noticeable going up and down the steps into the kitchen, which is a room I used a lot. So I know it wasn’t there before.”
(Id.)
Since the facts will be viewed in a light most favorable to the non-movant, Plaintiff has presented adequate evidence to create a genuine issue of material fact. Moreover, the Court notes that Defendant has already stated that the foyer area would be a covered claim.
(See
Phillips Dep. at 75; Pi’s Opp’n to Def.’s Mot. for Summ. J. Ex. F,7 [hereinafter “Smith letter”].) As to the damage to the
Also, Defendant asserts that because Plaintiff first began having concerns about mold in August but the water damage occurred in September and October, then Plaintiff cannot prove that the water damage is the proximate cause of her loss. It is true that by Plaintiffs admission, she began experiencing mold-related problems prior to the time she claims to have experienced covered water damage. It is equally true that she claimed mold related problems after the water damage as well. Defendant does not contest that Plaintiff experienced water intrusion into her house, or that there was mold present in the house after the water damage. Nor does Defendant present any evidence that the mold was caused by any other source other than the water damage that may be covered under the policy.
Travelers,
Third, Defendant’s argument that Plaintiff cannot recover because of her failure to provide prompt notice is unavailing. Not only does Defendant acknowledge that notice is generally a question for a jury,
Allstate Insurance v. Walker,
Plaintiff has presented sufficient evidence to create a genuine issue of material fact on coverage under the policy. First, Plaintiff has presented evidence that she experienced at least one instance of water damage that was covered under the policy. Additionally, Defendant, through its claims adjuster, Phillips, visited Plaintiffs house on one occasion, inspected four instances of water damage and agreed that one of the leaks was covered under the policy. (Smith letter at 2; Phillips Dep. at 75.) Finally, Phillips conducted an almost cursory examination. Her inspection was limited to visual observation and Plaintiffs statements. While she stated that she did not notice mold on the foyer ceiling, she did not conduct any further investigation such as determining the source of the leak, looking inside the walls, or anything more than looking at the damage from inside the house and observing the roof from the ground. (Phillips Dep. at 56.) Therefore, the Court finds that Plaintiff has stated a prima facie claim for coverage under the policy.
2. Mold exclusion.
The language of the policy excludes “loss consisting of or caused by ... rust or other corrosion, mold, wet or dry rot.” Defendant asserts that this language alone establishes Plaintiffs losses are not covered under the policy. Under the efficient proximate cause doctrine, however, if the mold exclusion combines with a covered risk that is the proximate cause of the loss, then the Plaintiffs losses may be covered. The Court
B.Breach of implied covenant of good faith and fair dealing
Additionally, Defendant contends that where summary judgment is proper on the underlying breach of contract claim, it is also proper on a claim for breach of the implied covenant of good faith and fair dealing.
It is a well-recognized principle of contract law that both parties are under an implied duty of good faith in carrying out the mutual promises of their contract. A duty of good faith and fair dealing is implied in all contracts in this state. Thus, whenever the cooperation of the promisee is necessary for the performance of the promise, there is a condition implied that the cooperation will be given.
Whisenant v. Fulton Fed. Sav. & Loan Ass’n,
C. Unfair claims settlement practices
Defendant asserts that Plaintiff cannot recover for unfair claims settlement practices because there is no private right of action for such a claim.
See Rodgers v. St. Paul Fire & Marine Ins. Co.,
D. Declaratory relief
Defendant moves for summary judgment on Plaintiffs requests for declaratory relief. Because there are questions of fact whether Plaintiffs losses are covered under the policy, summary judgment is not warranted on Count IV.
Defendant moves for summary judgment on Plaintiffs claims for bad faith penalties and attorney’s fees. Summary judgment is generally inappropriate prior to the resolution of outstanding discovery issues.
Snook v. Trust Co. of Ga. Bank of Savannah, N.A.,
In this Court’s Order entered April 21, 2003, the Court granted Plaintiffs Motion to Compel as to Defendant’s guidelines and manuals and investigatory documents produced prior to December 2, 2001 and permitted Plaintiff to re-depose Jocelyn Phillips and Chris Smith. There, the Court noted that evidence that the insurer failed to follow its own policies and procedures could be relevant as to the insurer’s bad faith. Because of the outstanding discovery issues, a decision on summary judgment as to Count V and Count VI would be premature at this time.
Conclusion
Accordingly, Defendant’s Motion for Summary Judgment is hereby GRANTED in part and DENIED in part. Defendant’s motion is GRANTED as to Count III. Defendant’s motion is DENIED as to Count I, Count II, and Count IV. Defendant’s motion is DENIED with a right to refile as to Count V and Count VI.
Notes
. See infra III. Relevant Policy Terms
. See infra III. Relevant Policy Terms
. Plaintiff moved out of her house on November 14, 2001, citing health problems due to the mold in her house.
. Some jurisdictions that have adopted the efficient proximate cause doctrine permit parties to contract around it.
See TNT Speed & Sport Ctr. Inc. v. Am. States Ins. Co.,
. The policy states:
Losses We Cover Under Coverages A and B:
We will cover sudden and accidental direct physical loss to property described in Coverage A-Dwelling Protection and Coverage B-Other Structures Protection except as limited or excluded in this policy.