AMANDA LABRIER, Rеspondent/Plaintiff-Appellee v. STATE FARM FIRE AND CASUALTY COMPANY, Petitioner/Defendant-Appellant
No. 16-3185, No. 16-3562
United States Court of Appeals, Eighth Circuit
September 25, 2017
Rehearing Denied October 31, 2017
567
Chamber of Commerce of the United States; Liberty Mutual Fire Insurance Company; Safeco Insurance Company of America; Lawyers for Civil Justice; Allstate Insurance Company; American Family Mutual Insurance Company; American Insurance Association; Property Casualty Insurers Association of America; Amici on Behalf of Petitioner/Appellant. United Policy Holders Amicus on Behalf of Respondent/Appellee.
In his affidavit, Thompson asserts that but for his counsel‘s deficiencies, he would not have pleaded guilty and would have insisted on taking his case to trial. Assuming without deciding that counsel‘s advice to plead guilty based on the likelihood of a twelve-year sentence amounts to deficient performance, we conclude Thompson has failed to show the required prejudice. With the benefit of hindsight, Thompson‘s statement that he would have not pleaded guilty under these circumstances has a ring of truth, especially in light of the sentence he received. But we must “look to contemporaneous evidence to substantiate” that statement, and the evidence we find is substantially tо the contrary. At the change of plea hearing, which immediately followed the recess where counsel provided allegedly deficient advice, the district court discussed the terms of the plea agreement with Thompson. The court explicitly told Thompson that the minimum sentence he could receive was twelve years, but that he could still be sentenced to a longer term. Thompson said he understood. When asked, Thompson also agreed that the court did not force him to enter the plea agreement and that he was doing so of his “own free will.” Sеe Thompson, 770 F.3d at 697-98 (recognizing “Thompson told the district court three times he wanted to go to trial,” but also noting Thompson‘s failures to object to the recommended sentencing range in presentence report or his status as a career offender; to move to withdraw his guilty plea; to indicate at sentencing that he anticipated a particular sentence; or to raise at the district court any concerns about possible Rule 11 errors).
Thompson‘s affidavit offers little more than a “post hoc assertion” regarding his decision to plead guilty. See Lee, 137 S.Ct. at 1967. It is void of any actions Thompson took or statements he made, before, during, or after sentencing, that would demonstrate a reasonable probability that he would not have pleaded guilty had his lawyer not given the advice that he did. We again recognize that “Thompson understandably hoped for a sentence of less than life imprisonment after pleading guilty and waiving his right to trial.” Thompson, 770 F.3d at 698. But Thompson has failed to point to sufficient contemporaneous evidence to support his post hoc assertion that he would not have pleaded guilty absent his attorney‘s advice. Without such evidence, his ineffective assistance of counsel claims must fail.
III. Conclusion
For the reasons set forth above, we affirm the district court‘s denial of Thompson‘s
Christopher E. Roberts, David T. Butsch, Butsch & Simeri, Clayton, MO, Daniel E. Gustafson, Gustafson & Gluek, Minneapolis, MN, Joe David Jacobson, Jacobson & Press, Saint Louis, MO, Thomas Joseph Snodgrass, Larson & King, Saint Paul, MN, for Respondent.
Kathryn L. Comerford Todd, Sheldon Gilbert, U.S. Chamber of Commerce, Washington, DC, Robert D. Keeling, Carter G. Phillips, Sidley & Austin, Washington, DC, for Chamber of Commerce of the United States.
John Robert Keena, Hellmuth & Johnson, Edina, MN, for United Policy Holders.
Chris A. Thompson, David T. Moran, Sean Daniel Jordan, Jackson & Walker, Austin, TX, for Liberty Mutual Fire Insurance Company, Safeco Insurance Company of America.
Robert T. Adams, Shook & Hardy, Kansas City, MO, Mark Alan Behrens, Patrick Leo Oot, Jr., Shook & Hardy, Washington, DC, Susan Burnett, Bowman & Brooke, Austin, TX, Wendy F. Lumish, Bowman & Brooke, Coral Gables, FL, Mary T. Novacheck, Bowman & Brooke, Minneapolis, MN, Robert L. Wise, Bowman & Brooke, Richmond, VA, for Lawyers for Civil Justice.
Mark L. Hanover, Leah R. Bruno, Dentons US LLP, Chicago, IL, Elizabeth Ferriсk, Dentons US, LLP, Saint Louis, MO, for Allstate Insurance Company.
Before WOLLMAN, LOKEN, and MURPHY, Circuit Judges.
LOKEN, Circuit Judge.
State Farm‘s adjuster inspected LaBrier‘s home, determined the dwelling had suffered covered property damage, and estimated replacement cost by inputting each damaged part into a computer program called Xactimate. The Xactimate estimate of total cost to repair LaBrier‘s home was $8,088.07. Consistent with State Farm‘s practice in Missouri at that time, Xactimate also estimated depreciation at $2,009.79 by multiplying each damaged item‘s replacement cost by a depreciation factor that varied with the item‘s age. State Farm subtracted this estimated depreciation and LaBrier‘s deductible ($1,421) from the estimated replacement cost and paid LaBrier $4,657.28 for the actual cash value of the damaged property. In a statement attached to the payment, State Farm explained, “[b]ased on our estimate, the additional amount available to you for replacement cost bеnefits (recoverable depreciation) is $2,009.79.”
Rather than seek an additional replacement cost benefit under the policy, or challenge State Farm‘s estimated actual cash value payment by an appraisal proceeding or by an action in court—remedies the policy expressly authorizes—LaBrier paid a family friend $5,975 to repair her home and brought this putative class action in Missouri state court, alleging that State Farm‘s practice of deducting “labor depreciation” from estimated replacement cost in determining actual cash value breached the insurance contract. State Farm removed the case to federal court and moved to dismiss. The district court denied the motion, concluding that “actual cash value” and “depreciation” are ambiguous terms that must be construed in favor of insureds under Missouri law and therefore State Farm breached the insurance contract when it depreciated labor in estimating actual cash value. LaBrier v. State Farm Fire & Cas. Co., 147 F.Supp.3d 839, 846-47, 849-51 (W.D. Mo. 2015) (LaBrier I).
Based upon its decision denying State Farm‘s motion to dismiss, the district court ordered full discovery before a class wаs certified and appointed a special master to supervise discovery disputes. After much wrangling over access to State Farm‘s claims-adjusting database and other issues, the special master in Special Master Order No. 4 ordered State Farm to answer interrogatories asking it to identify for all 144,900 putative class members (i) “labor depreciation that was actually withheld,” (ii) the date labor depreciation was withheld, (iii) any labor depreciation State Farm subsequently paid as replacement cost benefits, and (iv) any facts that support Stаte Farm‘s affirmative defenses.
The district court overruled State Farm‘s objections to Order No. 4, concluding that State Farm failed to establish that the Order caused an undue burden in light of the discovery‘s relevance and State Farm‘s refusal to provide another method to discover the information. LaBrier v. State Farm Fire & Cas. Co., 314 F.R.D. 637, 641-43 (W.D. Mo. 2016) (LaBrier II). State Farm petitioned for a writ of mandamus, asking this Court to vacate what it alleges are overly-burdensome discovery orders. On the day State Farm filed its mandamus petition, the district court certified a class consisting of:
All State Farm Fire and Casualty Company ... property insurance policyholders who submitted a claim for structural damage to a property in Missouri, and whose actual cash value ... payment was reduced by the withholding of labor depreciation, during the time period from March 20, 2005 to the date of trial, inclusive.
I.
No class action may be certified unless the party seeking certification “affirmatively demonstrate[s] his compliance with Rule 23.” Comcast Corp. v. Behrend, 569 U.S. 27, 133 S.Ct. 1426, 1432, 185 L.Ed.2d 515 (2013) (quotation omitted). “Here, the district court certified the class[ ] under Rule 23(b)(3), which requires finding ‘that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.‘” Powers v. Credit Mgmt. Servs., Inc., 776 F.3d 567, 569 (8th Cir. 2015).
“An individual question is one where members of a proposed class will need to present evidence that varies from member to member, while a common question is one where the same evidence will suffice for each member to make a prima facie showing or the issue is susceptible to generalized, class-wide proof.” Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 136 S.Ct. 1036, 1045, 194 L.Ed.2d 124 (2016) (quotation omitted). “What matters to class certification ... is not the raising of common ‘questions‘—even in droves—but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011) (quotation omitted). This “preliminary inquiry ... may require the court to resolve disputes going to the factual setting of the case, and such disputes may overlap the merits of the case.” Powers, 776 F.3d at 569 (quotation omitted); see Comcast, 133 S.Ct. at 1432. To prove a breach of contract, LaBrier must show: (1) the existence of a contract; (2) the rights and obligations of the parties; (3) State Farm‘s breach; and (4) the damages she suffered. See Kieffer v. Icaza, 376 S.W.3d 653, 657 (Mo. 2012). The preliminary predominance inquiry requires “rigorous analysis” of whether “the same evidence will suffice for each member to make a prima facie showing” that the insurance contract was breached, causing injury. Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1029 (8th Cir. 2010) (quotation omitted); see Comcast, 133 S.Ct. at 1433; Ebert v. Gen. Mills, Inc., 823 F.3d 472, 479-80 (8th Cir. 2016).
On appeal, State Farm challenges the district court‘s determination that common issues predominate. In certifying the class, the district court noted (i) “the overarching, undisputed, and common fact of State Farm‘s practice of withholding payment from all its insureds for the depreciated labor component,” and (ii) the court‘s prior resolution of “a central legal question ... that the terms ‘actual cash value’ and ‘depreciation’ as used in State Farm‘s policy are ambiguous and must be construed in favor of the insureds.” LaBrier III, 315 F.R.D. at 513. Therefore, the court concluded, сommon questions predominate: “At a minimum, LaBrier has presented facts and law that establish a prima facie claim for breach of contract for herself and the class.... [T]he theory of breach is the same for each class member—State Farm wrongfully deducted labor depreciation from each [actual cash value] payment.” Id. at 517. If we were to
II.
The basic premise of traditional property insurance is the concept of indemnity. The insured who suffers a covered loss is entitled to receive full, but not more than full, value for the loss suffered, to be made whole but not be put in a better position than before the loss. Policies that provide this level of coverage are universally known as actual cash value poliсies. See, e.g., Travelers Indem. Co. v. Armstrong, 442 N.E.2d 349, 352 (Ind. 1982); 12 Couch on Insurance § 175.5 (3d ed. 2005 & 2017 Supp.). The limitation of property loss coverage to the insured‘s actual loss serves the public policy of preventing over-insurance, which can be an “inducement to destroy property in order to procure the insurance upon it.” Daggs v. Orient Ins. Co. of Hartford, 136 Mo. 382, 38 S.W. 85, 87 (1896), aff‘d, 172 U.S. 557 (1899).
In a standard property insurance policy, “damages are to be measured by the difference between the reasonable values of the property immediately before and immediately after the casualty.” Wells v. Mo. Prop. Ins. Placement Facility, 653 S.W.2d 207, 210 (Mo. 1983). “The value of the property ... immediately before the loss is, of course, equivalent to the actual value of the property at the time of the loss.” Id. at 214. “Thus, the insured bears the share of the loss resulting from deterioration, obsolescence, and similar depreciation of the property‘s value at the time of the loss.” Dollard v. Depositors Ins. Co., 96 S.W.3d 885, 889 (Mo. App. 2002). Under Missouri law, “[a]ctual cash value means a depreciated sum, i.e., the difference between the reasonable value of the property immediately before and immediately after the loss.” Porter v. Shelter Mut. Ins. Co., 242 S.W.3d 385, 390 (Mo. App. 2007), citing Wells and Dollard. The district court erred in concluding that Missouri law does not define “actual cash value” and therеfore the term is ambiguous absent a definition in the policy. LaBrier I, 147 F.Supp.3d at 846.2
“Depreciation” is a concept with a well understood meaning—“decline in an asset‘s value because of use, wear, obsolescence, or age.” Depreciation, Black‘s Law Dictionary (9th ed. 2004). Therefore, in Bluewood, we concluded that a policy defining “actual cash value” as “replacement cost less a deduction that reflects depreciation, age, condition and obsolescence” was unambiguous. 560 F.3d at 802. As a means of estimating an asset‘s value, the concept of depreciation is unambiguous, the district court‘s contrary conclusion notwithstanding. But the method of calculating a depreciation deduction is subject to conflicting opinion as to the reasonableness of the resulting estimate.
Black‘s Law Dictionary lists no fewer than ten different depreciation methods to estimate the decline in an asset‘s value over time. All deduct depreciation from the initial full cost of the damaged asset, because that was the insured‘s investment. For example, if thе insured purchased a new roof at a fully-installed cost of $25,000 fifteen years before it was demolished by fire or other covered risk, and an expert opined that the roof had a twenty-five-year useful life when installed, the estimated actual cash value of the roof immediately before the loss would be $10,000, using the annual straight-line depreciation method. But unless the parties agreed to this estimate (or this method of estimating), a jury could reject that estimate based on other valuation evidence it found more probative. See, e.g., Sharaga v. Auto Owners Mut. Ins. Co., 831 S.W.2d 248, 252-53 (Mo. App. 1992) (insured‘s testimony as to the value of real property before and after a covered loss can be sufficient evidence supporting the jury‘s damage award). As one commentator posed the issue:
Insurance law is not concerned with the estimated depreciation charged off on the books of business establishment but rather with the actual deterioration of a structure by reason of age and physical wear and tear, computed at the time of the loss.
Note, Valuation & Measure of Recovery Under Fire Insurance Policies, 49 Colum. L. Rev. 818, 823 (1949).
By adhering to the core principle of indemnity, which limits the insured‘s covered loss to the value of the damaged asset at the time of the loss, actual cash value policies work a hardship, particularly when the insured suffers a partial loss and needs to repair or replace the damaged component with a more valuable new item in order to restore use of the entire dwelling. As one court described this dilemma:
Since fire is an unwanted and unplanned for occurrence, why can‘t the owner of an older home buy insurance to cover the full cost of repair even if those reрairs make it a better or more valuable building? ... Instead of apportioning the cost of repair after a fire between the actual cash value, to be paid by the insurer, and the betterment to be paid by the insured, why can‘t the policyholder simply pay a higher premium each year but not have to pay anything more to have his home fully repaired in the event of fire?
Travelers v. Armstrong, 442 N.E.2d at 353. Spurred by post-World War II housing shortages and inflation, the legislatures of many States authorized, and major property insurers issued, policies that responded to this dilemma with replacement cost coverage. Missouri did not enact legislation, but its courts enforced replacement cost coverage provisions, with an important caveat reflecting the indemnity principle:
The purpose of the replacement cost coverage was to make funds available that would enable plaintiffs to replace their destroyed or damaged premises ... notwithstanding that the value of those premises before the loss had been lessened by depreciation. Plaintiffs were not, however, entitled to more than the actual cash value of the destroyed or damaged premises until repair, restoration or replacement of those premises was completed.
Miller v. Farm Bureau Town & Country Ins. Co., 6 S.W.3d 432, 438 (Mo. App. 2000); see Federated Mut. Ins. Co. v. Moody Station & Grocery, 821 F.3d 973, 977-78 (8th Cir. 2016).
These judicial precedents establish that State Farm was obligated by Missouri law to include an actual cash value payment option in its replacement cost coverage policy, because actual cash value—a true indemnity payment—is all the law allows an insurer to pay if the insured elects not to repair, even though she has paid an increased premium for the additional benefit of replacement cost coverage—a repaired asset worth more than at the time of loss. Unless it contests coverage, State Farm also has a contractual duty to efficiently determine and pay the estimated actual cash value, in part to help the insured finance repair and replacement if she elects to do so, since payment of the additional replacement cost coverage may not be made until repairs are completed. To make the claims process work effectively fоr both parties, the insurer‘s claims adjuster needs to expeditiously estimate both the actual cash value it will initially pay and the replacement cost benefit it may ultimately pay, and disclose those estimates to the insured. Again, unless the parties have agreed otherwise, these estimates are not binding on the insured, even though State Farm has agreed in the policy to make timely payments in accordance with its estimates.
Replacement cost insurance covers “the share of the loss resulting from deterioration, obsolescence, and similаr deprecia-
In coming to this conclusion, the district court ignоred what State Farm was estimating—the depreciated value of the damaged property at the time of loss. As previously explained, a more precise estimate of that value would depreciate the full original cost of the asset to account for its decline in value over time. State Farm‘s depreciation method reasonably substitutes replacement cost for original cost because that value is more readily available and to the insured‘s advantage. But to avoid further distorting the value estimate, State Farm depreciates the full replacement cost of the asset, typically, the amount a contractor will charge to replace the roof and other damaged parts, which includes the cost to install as well as the cost of materials. In evaluating a depreciation method in this context, it matters not whether “labor” is customarily depreciated in other business accounting contexts. The question is whether depreciating what a contractor will charge to replace the partial loss is a reasonable method of estimating “the difference in value of the property immediately before and immediately after the loss.” Wells, 653 S.W.2d at 214. As the district court never addressed this question, its decision in LaBrier I must be reversed.
An equally significant error was to ignore the fact that, while the policy‘s replacement cost coverage obligated State Farm to estimate actual cash value and replacement cost and make an initial actual cash value payment, these estimates were not agreed to by LaBrier and were therefore subject to review by a jury in a lawsuit to determine the amount of her loss. As the Supreme Court of Minnesota observed in responding to a labor-сost-depreciation question certified by a federal district court, when the insurance policy does not define the term “actual cash value,”
embedded-labor-cost depreciation is one factor that the trier of fact may consider and weigh among other factors to determine the actual cash value of the damaged property.... We are not persuaded that depreciation of embedded labor
costs is so illogical that it may never be considered. But whether embedded-labor-cost depreciation is logicаl or helpful to the trier of fact is ultimately a question of fact, not law.... Thus, arguments about whether labor-cost depreciation is “logical” according to accepted methods of appraisal in a given case are best presented to an appraisal panel or via expert testimony before a jury.
Wilcox v. State Farm Fire & Cas. Co., 874 N.W.2d 780, 785 (Minn. 2016) (emphasis in original). We agree with this analysis. More importantly, we conclude that the Supreme Court of Missouri—which will not accept certified questions of Missouri law from a federal court—would likewise conclude that this way of resolving the issue is consistent with Missouri law as reflected in Wells and Missouri Court of Appeals decisions applying Wells. Accordingly, although we do not rule out the possibility that State Farm‘s use of the Xactimate estimating methodology would produce an unreasonable estimate of the actual cash value of some partial losses, this issue may only be determined based on all the facts surrounding a particular insured‘s partial loss. Thus, there are no predominant common facts at issue, and the decision certifying a class in LaBrier III must be reversed. See Halvorson v. Auto-Owners Ins. Co., 718 F.3d 773, 779-80 (8th Cir. 2013). Likewise, the district court‘s orders upholding premature class-wide discovery in LaBrier II must be vacated.
IV.
The orders of the district court denying State Farm‘s motion to dismiss and certifying a class under