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Ridge v. State Farm Fire & Casualty Insurance Co.

United States District Court, S.D. Indiana, Indianapolis Division

March 29, 2019

VILLAS AT WINDING RIDGE, Plaintiff,
v.
STATE FARM FIRE & CASUALTY INSURANCE COMPANY, Defendant.

          ENTRY ON THE PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT

          TANYA WALTON PRATT, JUDGE

         This matter is before the Court on cross-motions for summary judgment. On March 16, 2018 Defendant State Farm Fire And Casualty Company (“State Farm”) filed a Motion for Summary Judgment (Filing No. 83). Thereafter, Plaintiff Villas At Winding Ridge filed Cross-Motion for Partial Summary Judgment and Response in Opposition to State Farm's Motion for Summary Judgment (Filing No. 107.) The dispute is this action surrounds Winding Ridge's allegations of breach of contract and bad faith relating to State Farm's handling of its insurance claim for storm damage to Villas at Winding Ridge, a golf course-adjacent condominium complex on the northeast side of Indianapolis, Indiana owned by “Winding Ridge”[1]. State Farm contends the relevant facts are undisputed and this Court should affirm an appraiser's award and grant it summary judgment as a matter of law. (Filing No. 84.) Winding Ridge moves for partial summary judgment, asking the Court to find that the appraiser's award is not binding. (Filing No. 107.) Also, before the Court is State Farm's Motion to Preclude or Limit Expert Testimony (Filing No. 128). For the reasons that follow, Winding Ridge's cross-motion for partial summary judgment is granted in part and denied in part. However, the action is dismissed because the Court grants summary judgment on behalf of State Farm and State Farm's Motion to Preclude or Limit Expert Testimony is denied as moot.

         I. BACKGROUND

         Villas at Winding Ridge is a golf course-adjacent 33-building condominium complex on the northeast side of Indianapolis, Indiana. (Filing No. 86-2.) State Farm issued a Residential Community Association Policy to Villas at Winding Ridge for the period July 1, 2012, to July 1, 2013 (the “Policy”). (Filing No. 86-1.) The Policy provides first-party property coverage for “accidental direct physical loss to Covered Property” (Id. at 43) but does not cover any property loss caused by “wear and tear.” (Id. at 47.) The Policy also contains the following provision regarding the time for bringing an action.

Legal Action Against Us. No one may bring legal action against us under this insurance unless:
(a) There has been full compliance with all of the terms of this insurance; and
(b)The action is brought within 2 years after the date on which the accidental direct physical loss occurred. But if the law of the state in which this policy is issued allows more than two years to bring legal action against us, that longer time period will apply.

(Filing No. 86-1 at 99.)

         The roofs of the buildings of Villas at Winding Ridge were installed between 1998 and 2000, except for the roofs on five buildings which were completed in March 2005. (Filing No. 86-3 at 9-10.) On June 13, 2013, a hail and wind storm passed over the complex. (Filing No. 109-3.) In early 2014, Winding Ridge began seeking bids from various roofing contractors to replace the roofs of buildings at Villas at Winding Ridge. Rocklane Company (“Rocklane”) presented to Winding Ridge, and based on their observations and how they intend to replace the roofs, provided a “ballpark estimate of between $32-$40k per building.” (Filing No. 86-4.) Rocklane reported the hail damage that could have affected “7-8 buildings.” Id. On April 18, 2014, Winding Ridge submitted a hail damage claim to State Farm, based on information provided by Rocklane. (Filing No. 86-5 at 1.)

         On May 6, 7, 20 and 21, 2014, State Farm's claims specialist Eric Meador (“Meador”) inspected all 33 buildings at Villas at Winding Ridge. (Filing No. 86-5 at 2.) Meador's inspection revealed soft metal damage, hail damage to the soft metal condenser of some air conditioning units, some unrelated wind damage that took place following the cancellation of Winding Ridge's policy, mechanical damage from ice removal, damage to screens, prior mismatched shingle repairs and golf ball dents on the golf course side of the complex. Id. Meador determined that if hail fell on the complex, it would have been pea to marble-sized based on the hits seen on soft metals. Id. He prepared a replacement cost estimate totaling $65, 713.54, which included repairs to soft metals, some combing of air conditioner condensers, replacement of some screens and repairs to gutter downspouts. Id. After subtracting $17, 075.76 in depreciation and the $25, 000.00 deductible, the actual cash value estimate totaled $23, 637.78, and State Farm issued a check for that amount on May 29, 2014. (Filing No. 86-7.)

         Shortly after tendering its claim to State Farm, Winding Ridge retained public adjuster Matt Latham (“Latham”) of Crossroads Claims Consulting (“Crossroads”) to represent it. (Filing No. 86-8.) Crossroads hired engineering firm Keeler-Webb Associates to inspect the property and give an estimate of the loss sustained in the June 13 hailstorm. (Filing No. 86-9.) On February 23, 2015, Winding Ridge through Latham at Crossroads sent a letter to State Farm declaring that it had sustained $1, 975, 264.25 “as a result of a hail storm that occurred on or around June 13, 2013” and offering to settle any dispute for that amount. (Filing No. 86-1.) Additionally, in recognition that the two-year limitations period from the date of loss under the Policy was approaching, Latham requested that State Farm extend the period by 180 days. (Filing No. 34.) State Farm agreed to the extension. Id.

         After receiving Winding Ridge's February 23, 2015 letter, State Farm inspected the property again and hired engineer Doug Brown (“Brown”) of American Structurepoint to do the same. (Filing No. 86-5 at 3.) Brown determined there was no functional damage to the shingles on any units at Villas at Winding Ridge, and that any hail that fell was too small to damage the shingles. (Filing No. 86-13 at 7.) After State Farm presented Brown's report to Winding Ridge, Winding Ridge invoked the appraisal provision of the Policy. The appraisal provision provides the following:

b. Appraisal
If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. Each party will notify the other of the selected appraiser's identity within 20 days after receipt of the written demand for an appraisal. The two appraisers will select an umpire. If the appraisers cannot agree upon an umpire within 15 days, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their difference to the umpire. A decision agreed to by any two will be binding. Each party will:
(1) Pay its chosen appraiser; and
(2) Bear the other expenses of the appraisal and umpire equally.
If there is an appraisal, we will still retain our right to deny the claim.

(Filing No. 86-1 at 57.)

         State Farm acknowledged and accepted Winding Ridge's written demand for Appraisal on September 28, 2015. (Filing No. 86-16.) State Farm selected Michael Scott (“Scott”) from York Risk Services as its appraiser. (Filing No. 86-23.) Scott had worked for State Farm on only one prior claim before being selected as the appraiser for the Winding Ridge claim. (Filing No. 86-17 at 9-11.) Winding Ridge selected appraiser Garrett Kurtt (“Kurtt”) of Ecoblast Claims Services. (Filing No. 86-18.) On or about December 12, 2015, Scott provided his initial estimate of covered damages totaling $79, 921.80, which accounted for minor hail-related repairs to all 33 buildings, including replacement of some shingles, but did not provide for the full replacement of any roof. (Filing No. 86-21.) On December 22, 2015, Kurtt issued his estimate, totaling $676, 824.07, which contemplated replacement of 13 roofs in the complex and repairs to other buildings. (Filing No. 86-22.)

         The appraisers could not agree on the total loss. Pursuant to the Appraisal provision of the Policy, they agreed to select an umpire (Filing No. 86-19.) Each of the appraisers suggested three potential umpires and then narrowed the list of potential umpires to two persons: Al Kalemba (“Kalemba”) with Illiana Claims Service (Scott's choice) and Mike Deszi with Complete Property Restoration (Kurtt's choice). (Filing No. 86-19; Filing No. 86-23.) After vetting and evaluating both candidates, Kurtt eventually agreed to Kalemba, who had never worked with State Farm prior to the Winding Ridge matter. (Filing No. 86-25.) Upon his selection, Kalemba certified under oath, the following:

I, the undersigned hereby accept the appointment of umpire, as provided in the foregoing agreement, and solemnly swear that I will act with strict impartiality in all matters of difference that shall be submitted to in in connection with this appointment, and I will make a true, just and conscientious award recording to the best of my knowledge, skill and judgments. I am not related to any of the parties to this memorandum, not interested as a creditor or otherwise in said property of the insurance thereon.

Id. On April 13, 2016, Kalemba heard presentations from both appraisers. (Filing No. 86-26.) Then, with both appraisers present, he inspected the 13 roofs in dispute. Id.; Filing No. 109-10 at 7.

         On April 30, 2016, Kalemba issued his decision providing for an adjusted claim worth $154, 391.77. (Filing No. 86-28.) Kalemba's accompanying report noted “light collateral damage to the soft metals” and “minimal hits to some of the vent caps” but “very little to no hail damage to the roof shingles.” (Filing No. 86-26.) The umpire's decision did not call for the full replacement of any roofs but did “allow for the replacement of shingles around the replaced turtle vents.” Id. On May 2, 2016, Kurtt wrote a letter contesting Kalemba's decision for three main reasons: (1) during the on-site inspection Kalemba revealed that a State Farm manager uninvolved in the Winding Ridge case was a personal acquaintance, and he had not revealed this fact during the selection process, (2) during the on-site inspection Kalemba stated that he was inspecting shingles to determine whether they suffered functional or merely cosmetic damage, which went beyond the scope of his duties, and (3) he demonstrated a cozy relationship with Scott at the on-site inspection, including an instance in which Kurtt asked Kalemba a question and Scott jumped in to answer on Kalemba's behalf. (Filing No. 86-29.) On May 20, 2016 Kurtt emailed Kalemba and Scott that the umpire's ruling requiring State Farm to cover replacement of some shingles “around the replaced turtle vents” should be modified to a full replacement of those roofs because the company that provided the current shingles no longer made those shingles and it would be impossible to get shingles that matched the rest of the shingles on the roof. (Filing No. 86-30.)

         On or about June 8, 2016, Kalemba affirmed his opinion and resubmitted the award of $154, 391.77, which Scott signed on June 8, 2016. (Filing No. 86-31; Filing No. 86-32.) Based on Kalemba's award and after deducting depreciation, the deductible, and prior payments, State Farm owed its insured $80, 678.80. State Farm issued that payment to Winding Ridge on June 13, 2016. (Filing No. 86-33.)

         Winding Ridge brought this suit on October 4, 2016, in the Hamilton County (Indiana) Superior Court, and State Farm removed it to federal court. (Filing No. 1.) Winding Ridge asserts claims for (1) breach of contract, (2) bad faith, and (3) promissory estoppel. (Filing No. 1-1.) State farm moved for summary judgment (Filing No. 83) and Winding Ridge moved for partial summary judgment (Filing No. 107).

         II. LEGAL STANDARD

         The purpose of summary judgment is to “pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate if “the pleadings, depositions, answers to interrogatories, and admissions of 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 a judgment as a matter of law.” Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 489-90 (7th Cir. 2007). In ruling on a motion for summary judgment, the court reviews “the record in the light most favorable to the non-moving party and draw[s] all reasonable inferences in that party's favor.” Zerante, 555 F.3d at 584 (citation omitted). “However, inferences that are supported by only speculation or conjecture will not defeat a summary judgment motion.” Dorsey v. Morgan Stanley, 507 F.3d 624, 627 (7th Cir. 2007) (citation and quotation marks omitted). Additionally, “[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial.” Hemsworth, 476 F.3d at 490 (citation omitted). “The opposing party cannot meet this burden with conclusory statements or speculation but only with appropriate citations to relevant admissible evidence.” Sink v. Knox Cnty. Hosp., 900 F.Supp. 1065, 1072 (S.D. Ind. 1995) (citations omitted).

         “In much the same way that a court is not required to scour the record in search of evidence to defeat a motion for summary judgment, nor is it permitted to conduct a paper trial on the merits of the claim.” Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001) (citations and quotation marks omitted). “[N]either the mere existence of some alleged factual dispute between the parties nor the existence of some metaphysical doubt as to the material facts is sufficient to defeat a motion for summary judgment.” Chiaramonte v. Fashion Bed Grp., Inc., 129 F.3d 391, 395 (7th Cir. 1997) (citations and quotation marks omitted).

         These same standards apply even when each side files a motion for summary judgment. The existence of cross-motions for summary judgment does not imply that there are no genuine issues of material fact. R.J. Corman Derailment Serv., LLC v. Int'l Union of Operating Eng'rs., 335 F.3d 643, 647 (7th Cir. 2003). The process of taking the facts in the light most favorable to the non-moving party, first for one side and then for the other, may reveal that neither side has enough to prevail without a trial. Id. at 648. “With cross-motions, [the Court's] review of the record requires that [the Court] construe all inferences in favor of the party against whom the motion under consideration is made.” O'Regan v. Arbitration Forums, Inc., 246 F.3d 975, 983 (7th Cir. 2001) (citation and quotation marks omitted).

         III. DISCUSSION

         Under Indiana law, the interpretation of an insurance policy presents a question of law for the court to decide. See Cincinnati Ins. Co. v. Flanders Elec. Motor Serv., Inc., 40 F.3d 146, 151 (7th Cir. 1994) (citing Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind. 1992)); Jim Barna Log Sys. Midwest, Inc. v. Gen. Cas. Ins. Co., 791 N.E.2d 816, 823 (Ind.Ct.App. 2003) (“The construction of an insurance contract is a question of law for which summary judgment is particularly appropriate.”). A finder of fact is only required to determine the facts serving as the basis of an insurance policy when the policy at issue “is ambiguous and its interpretation requires extrinsic evidence.” Tate, 587 N.E.2d at 668.

         “Clear and unambiguous policy language is given its ordinary meaning” to determine the parties' intent at the time the policy was made. Holiday Hosp. Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574, 577-78 (Ind. 2013) (citation omitted). When the language of a policy is ambiguous, the court will generally resolve such ambiguities in favor of the insured “but will not do so if such an interpretation fails to harmonize the provisions of the contract as a whole.” Id. at 578 (citations omitted). “[A]n ambiguity exists where the provision is susceptible to more than one reasonable interpretation”; a failure to define a policy term or a disagreement about a term's meaning “does not necessarily make that term ambiguous.” Id. (citations and quotation marks omitted).

         State Farm seeks summary judgment on each of Winding Ridge's three claims: (1) breach of contract, (2) bad faith, and (3) promissory estoppel. Winding Ridge seeks partial summary judgment on the following language of the Policy: (1) the Policy provides coverage for cosmetic damage to shingles, (2) State Farm breached the Policy by only adjusting functional shingle damage, (3) the Policy provides coverage for matching shingles, (4) State Farm's two-year defense to sue is unenforceable as a matter of law, (5) the Umpire Award is not binding against Winding Ridge as a matter of law, and (6) State Farm breached its obligations by not adjusting the wind damage. The Court will first address State Farm's primary argument that all three claims are time-barred by the terms of the Policy, before considering each claim separately.

         A. The State Farm Policy's Two-Year Limitations Period

         State Farm contends Winding Ridge lawsuit should be dismissed because Winding Ridge failed to bring suit within the two-year limitations period provided for in the Policy. As note earlier, The Policy states:

Legal Action Against Us.
No one may bring legal action against us under this insurance unless:
(1) There has been full compliance with all of the terms of this insurance; and
(2) The action is brought within 2 years after the date on which the accidental direct physical loss occurred. But if the law of the state in which this policy is issued allows more than two years to bring legal action against us, that longer time period will apply.

(Filing No. 86-1 at 99.) State Farm argues this provision is valid and enforceable because it does not contravene any statute or public policy. (Filing No. 84 at 13.) The date of loss in this action was June 13, 2013, when the hailstorm struck Villas at Winding Ridge-meaning Winding Ridge was required to file its suit by June 13, 2015. Id. However, when Winding Ridge recognized the two-year limitations period was nearing its end, its public adjuster requested State Farm extend the period by an additional 180 days, which State Farm agreed to do. (Filing No. 86-34.) State Farm admits this extension changed Winding Ridge's filing deadline to December 10, 2015. But instead of filing suit on or before that date, Winding Ridge invoked the Appraisal provision of the contract, which started a lengthy appraisal process. The umpire issued his decision in April 2016. Although Winding Ridge began contesting that decision in May 2016, it waited until October 4, 2016, to file its lawsuit. (Filing No. 1-1.) State Farm argues that it expressly allowed one 180-day extension but did not agree or imply that it intended to waive the limitation period altogether, thus State Farm did not waive the limitation period in the Policy. Because Winding Ridge did not file this suit until after the extended limitation period had passed, State Farm argues this lawsuit was untimely filed, and should be dismissed.

         Winding Ridge makes three arguments in opposition. First, it argues that Indiana statute and public policy creates a ten-year statute of limitations for breach of contract actions, including insurance policies, and that period must be enforced as recognized by the language of the Policy. (Filing No. 108 at 13.) Second, Winding Ridge argues State Farm waived the two-year period by agreeing to the 180-day extension. Id. at 14. And third, Winding Ridge argues State Farm impliedly waived the two-year period, or at least there are factual questions which could reveal that State Farm impliedly waived the two-year period, by agreeing to toll the period during the appraisal process. Id. at 14-17.

         The Court need not address Winding Ridge's waiver arguments because the clause on its own terms allows an action against State Farm for up to ten years after the date of loss. Under Indiana law, “[a]n action upon contracts in writing other than those for the payment of money…must be commenced within ten (10) years after the cause of action accrues.” Ind. Code § 34-11-2-11. Indiana law allows an action under this contract for up to ten years after the date of loss. The ...


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