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Calvary Baptist Church v. Church Mutual Insurance Co.

United States District Court, W.D. Oklahoma

February 14, 2017

CALVARY BAPTIST CHURCH, Plaintiff,
v.
CHURCH MUTUAL INSURANCE COMPANY, Defendant.

          ORDER

          VICKI MILES-LAGRANGE, UNITED STATES DISTRICT JUDGE

         This matter is on the Court's March 2017 trial docket.

         Before the Court is Defendant's Motion for Summary Judgment with Regards to Plaintiff's Bad Faith Claim and Brief in Support, filed December 30, 2016. On January 6, 2017, plaintiff responded, and on January 13, 2017, defendant replied. Also before the Court is Defendant's, Church Mutual Insurance Company, Motion for Spoliation and Sanctions Against Plaintiff, Calvary Baptist Church, for Willful Destruction of Evidence and Brief in Support, filed January 10, 2017. On January 11, 2017, plaintiff responded, and on January 18, 2017, defendant replied. Based on the parties' submissions, the Court makes its determination.

         I. Introduction

         Plaintiff Calvary Baptist Church (“Calvary”) carried its property insurance with defendant Church Mutual Insurance Company (“CMIC”) for thirty-three (33) years, originally contracting with CMIC in March of 1980. In the late spring of 2013, Calvary contacted CMIC regarding two claims of loss. Initially, in May of 2013, Calvary made a claim to CMIC after its four HVAC units were vandalized. Two different HVAC companies evaluated the vandalized units. Slater Mechanical, a company Calvary alleges was sent by CMIC to evaluate the damage to the HVAC units, submitted a bid for replacement of the four HVAC units at a cost of $12, 000. See Resp. Exhibit 5, Slater Mechanical's bid for replacing four HVAC units. Stevens Refrig. and Heating, Inc. (“Stevens Refrig.”), a company Calvary contacted, submitted a bid with two options: (1) to replace one HVAC unit and repair the remaining three at a cost of $5, 491, which Stevens Refrig. documented it did not recommend; or (2) to replace all four units at a cost of $17, 087.00. See Resp. Exhibit 6, Stevens Refrig.'s bid for replacing or repairing four HVAC units. Based on the Stevens Refrig.'s estimate for replacing one HVAC unit and repairing the remaining three units, CMIC paid Calvary $4, 491.00 on its vandalism claim. However, based on the recommendations of both Slater Mechanical and Stevens Refrig., Calvary used the $4, 491.00, paid by CMIC, as a down payment to have all four HVAC units replaced and paid the remaining $13, 000 for the HVAC units on its own.

         On June 6, 2013, Calvary contacted CMIC after a wind and hail storm allegedly damaged its roof, causing rainwater to leak in the interior building. Calvary alleges that CMIC instructed it to contact Service Master to assist with removing the rainwater from its interior building; however, Service Master declined to do the job since it was too small for them. After Service Master declined the job, CMIC told Calvary to hire a local business to remove the water. As instructed, Calvary hired a local business to remove the rainwater and presented the bill to CMIC.

         On June 20, 2013, CMIC sent independent adjuster, Trey Roberts (“Roberts”), to inspect Calvary's property damages resulting from the storm, including the roof, and on June 24, 2013, CMIC sent Mark Stein (“Stein”), a Building Envelope Expert from the Guardian Group, Inc., to inspect Calvary's roof to determine if any reported damage was associated with high wind or other storm related conditions and subsequent internal damage due to water infiltration. Calvary had several roofing companies come and inspect the roof as well. All roofing companies, sent by Calvary and CMIC to inspect Calvary's roof, concluded that the source of the leaking was due to edge separations on the roof. Based on Roberts' inspection and a report issued by Stein, CMIC determined that the damage was caused by negligent installation of the roofing products and offered Calvary $21, 106.60 for the damage to the roof and denied Calvary's claim as to the interior water damage since the damage was not caused by weather elements.[1] Calvary disputes that the damage was due to negligent installation of the roof and maintains that the roof was damaged from a hail and wind storm that occurred on or around June 4 or 5, 2013.[2]

         Calvary filed this action on November 18, 2015, initially alleging a breach of contract claim against CMIC. On August 22, 2016, Calvary filed its Amended Complaint alleging a bad faith claim as well against CMIC. CMIC now moves this Court for summary judgment, pursuant to Federal Rule of Civil Procedure 56, as to Calvary's bad faith claim. Further, CMIC requests this Court impose sanctions on Calvary for not preserving the vandalized HVAC units after they were replaced with the new units, in anticipation of this litigation.

         II. Motion for Sanctions

         CMIC asserts this Court should enter judgment in favor of it on Calvary's bad faith claim regarding the vandalized HVAC units, since Calvary failed to produce the vandalized HVAC units when requested for examination during this litigation. CMIC specifically contends that Calvary intentionally, willfully, and maliciously destroyed the vandalized HVAC units. Calvary contends that the vandalized HVAC units were not intentionally destroyed but were taken to the dump by the HVAC repairman after they were replaced with new units back in 2013, two years prior to this litigation being filed.

         “A district court has inherent equitable powers to impose the sanction of dismissal with prejudice because of abusive litigation practices during discovery.” Garcia v. Berkshire Life Ins.

         Co. of Am., 569 F.3d 1174, 1179 (10th Cir. 2009). “Because of the harshness of dismissal, however, due process requires that the violation be predicated upon willfulness, bad faith, or [some] fault of petitioner rather than inability to comply.” Id. (citing Archibeque v. Atchison, Topeka & Santa Fe Ry. Co., 70 F.3d 1172, 1174 (10th Cir. 1995)). Further,

While . . . there is no rigid test for determining when such a sanction is appropriate, . . . a district court ought to evaluate five factors before imposing a dismissal sanction: (1) the degree of actual prejudice to the defendant; (2) the amount of interference with the judicial process; (3) the culpability of the litigant; (4) whether the court warned the party in advance that dismissal of the ...

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