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Charles A. Shadid, L.L.C. v. Aspen Specialty Insurance Co.

United States District Court, W.D. Oklahoma

February 14, 2018

CHARLES A. SHADID, L.L.C., Plaintiff,
v.
ASPEN SPECIALTY INSURANCE COMPANY, Defendant.

          ORDER

          TIMOTHY D. DeGIUSTI, UNITED STATES DISTRICT JUDGE

         Before the Court is Defendant Aspen Specialty Insurance Company's Motion for Summary Judgment [Doc. No. 39], filed pursuant to Fed.R.Civ.P. 56. Defendant seeks a judgment in its favor on all claims asserted in the Second Amended Complaint [Doc. No. 8] and, alternatively, seeks a determination of issues regarding recoverable damages. Plaintiff Charles A. Shadid, L.L.C. has responded in opposition to the Motion, and Defendant has replied. With permission, Plaintiff has also filed a supplemental exhibit of deposition testimony discussed in its brief, for which the transcript was unavailable when the brief was filed.[1] The Motion is fully briefed and ripe for decision.

         Plaintiff brings this diversity action to recover damages for breach of contract and breach of the insurer's duty of good faith and fair dealing related to a commercial insurance policy and an insured loss from a May 31, 2013 tornado allegedly affecting 20 properties. See Second Am. Compl. [Doc. No. 8], ¶ 6. Defendant seeks summary judgment on all claims based on Plaintiff's alleged failure to cooperate in an investigation of the insurance claim, which allegedly prevented Defendant from completing a coverage decision or an adjustment of the claim. Alternatively, Defendant contends it is entitled to summary judgment on Plaintiff's bad faith claim because the undisputed facts show Defendant acted reasonably in its investigation and denial of the insurance claim. Otherwise, Defendant seeks a determination as a matter of law of two issues regarding the amount of damages that Plaintiff can recover under the policy. Plaintiff denies that all relevant facts are undisputed and that summary judgment is proper on any claim or issue.

         Standard of Decision

          Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A material fact is one that “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if the evidence is such that a reasonable jury could return a verdict for either party. Id. at 255. All facts and reasonable inferences must be viewed in the light most favorable to the nonmovant. Id. If a party who would bear the burden of proof at trial lacks sufficient evidence on an essential element of its claim or defense, all other factual issues concerning the claim or defense become immaterial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         The movant bears the burden of demonstrating the absence of a dispute of material fact warranting summary judgment. Celotex, 477 U.S. at 322-23. If the movant carries this burden, the nonmovant must then go beyond the pleadings and “set forth specific facts” that would be admissible in evidence and that show a genuine issue for trial. See Anderson, 477 U.S. at 248; Celotex, 477 U.S. at 324; Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 671 (10th Cir. 1998). “To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein.” Adler, 144 F.3d at 671; see also Fed. R. Civ. P. 56(c)(1)(A). “The court need consider only the cited materials, but may consider other materials in the record.” See Fed. R. Civ. P. 56(c)(3). The Court's inquiry is whether the facts and evidence identified by the parties present “a sufficient disagreement to require submission to a jury or whether it is so onesided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52.

         Statement of Undisputed Facts[2]

         From August 20, 2012, until August 20, 2013, Plaintiff had property insurance coverage for 25 commercial properties under an insurance policy issued by Defendant to Charles A. Shadid, Charles A. Shadid LLC, and Charles A. Shadid Revocable Trust. Defendant received written notice of a property loss dated August 15, 2013; the notice listed the date of loss as May 31, 2013, and described the loss as storm damage to one of the properties, Lakeshore Shopping Center.[3] On August 16, 2013, Defendant assigned the claim to Associated Claims Management, Inc. (“ACM”) for field adjustment. Later in August 2013, Mr. Shadid indicated that he intended to inspect more insured properties and, if warranted, add other properties to the claim. On August 27, 2013, a representative of ACM notified Plaintiff that ACM would be scheduling inspections of all 25 properties and would be requesting information about prior claims, major repairs, and maintenance history for the properties. On August 30, 2013, ACM was notified by a public adjuster, Jerry Renfroe, that Plaintiff had hired him to handle the insurance claim, and a schedule for coordinating the property inspections was discussed.

         ACM sent a letter to Mr. Shadid dated September 4, 2013, asking for information regarding the properties and damages resulting from the loss. The letter listed five items of information requested for each property: 1) specific repairs or repair estimates for the loss; 2) dates the properties were acquired; 3) major exterior repairs to roofs or siding during the past 10 years; 4) other insurance claims filed on the properties while they were under his care or control; and 5) a list of all property insurance policies covering the properties during the past 10 years. As to other claims, ACM directed Mr. Shadid “to include claims #s, policy #s, and names of insurers, estimates, correspondence, and final settlement documentation.” See Def.'s Ex. 8 [Doc. No. 39-8]. As support for these requests, ACM referred to a policy provision regarding an insured's duties in the event of a loss. On September 5, 2013, ACM and Mr. Renfroe agreed on dates for the property inspections to occur. On September 19, 2013, ACM asked Mr. Renfroe to provide documents regarding prior building repairs and insurance claims for Plaintiff's properties.

         From September 23 through 26, 2013, ACM inspected all 25 properties. Plaintiff had previously made an insurance claim against a different insurer for a hailstorm loss in May 2010 involving many of the same properties. The inspections showed that some roofs had been only partially replaced and some roofs appeared to predate the 2010 hailstorm, and that there was preexisting hail damage to some rooftop components and equipment.

         Mr. Shadid responded to ACM's written request for information by letter dated September 23, 2013.[4] Rather than addressing each numbered item in ACM's letter, Mr. Shadid provided a response to each duty listed in the policy provision. Within these responses, Mr. Shaded included a summary of repairs that had been made to each property after the loss, the cost of each repair, and a date and check number for the repair (primarily June 25-27 or August 2, 2013). Regarding an inventory of damaged property, Mr. Shadid stated: “Damages are being assessed at the present time with Insurer's adjuster, Ken Smith and Insured's public adjuster, Jerry Renfroe starting 9/23/2013.” See Def.'s Ex. 15 [Doc. No. 39-15] at 3 (ECF page numbering). Mr. Shadid supplemented this statement in a similar letter dated October 10, 2013 (Def.'s Ex. 16 [Doc. No. 39-16]), by providing an itemized repair estimate (Def.'s Ex. 17 [Doc. No. 39-17) prepared by the public adjuster. In Defendant's view, this estimate failed to account for pre-existing damage or partial repairs and wrongly included full replacement costs of all building roofs, rooftop components, heating and cooling units, and other structural components. In Plaintiff's view, the estimate accounted for non-covered items, such as pre-existing damage or wear and tear, as depreciation.

         This initial volley was followed by a series of letters, first from ACM on November 4 and then from Defendant's counsel on November 22 and December 8, 2013, followed by Mr. Shadid's response on December 13, 2013. The letters concerned Defendant's requests for additional information and documents, and a request for an examination under oath (“EUO”). Defendant took Mr. Shadid's EUO on January 16, 2014. Among other things, Mr. Shadid stated that Plaintiff was involved in litigation regarding its 2010 insurance claim and that Plaintiff had filed other insurance claims regarding some of the properties. After the EUO, Defendant learned that Plaintiff had made another insurance claim related to hail damage in May 2012 that Defendant believed included some or all of the same properties involved in the May 2013 loss.

         Beginning with a letter from Defendant's counsel to Plaintiff's counsel dated February 7, 2014, and a response from Plaintiff's counsel dated March 18, 2014, the parties began a discussion of Defendant's requests for documents and photographs related to the 2010 and 2012 insurance claims and documents regarding any major exterior repairs for the past 10 years. The discussion continued in letters exchanged between ACM and Mr. Shadid in April, May and June of 2014. Defendant generally took the position that this information was needed to evaluate the condition of the roofs before the May 2013 loss and to determine covered property damage. Plaintiff generally took the position that it had provided all relevant information and responsive documents (totaling more than 600 pages) and that Defendant's requests for additional materials were unreasonable and unjustified. Plaintiff also asserted that a confidentiality provision in its settlement agreement regarding the 2010 insurance claim prevented the disclosure of information regarding the amount of the 2010 loss, and Plaintiff made requests of ACM and Defendant for the production of documents generated or reviewed during the inspections and investigation of the May 2013 loss. In July 2014, however, Plaintiff's insurance agent provided a list of completed roof repairs for properties related to the 2010 insurance claim.

         Defendant retained engineers to evaluate the damage to Plaintiff's properties related to the May 2013 loss. The engineers and ACM inspected the properties from May 5 to May 14, 2014. The engineers also researched hail events, and considered the repair information supplied by Plaintiff and its agent. The engineers prepared reports for each ...


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