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Hatcher v. MDOW Insurance Co.

United States District Court, E.D. Arkansas, Eastern Division

May 15, 2017

WILLIAM HATCHER PLAINTIFF
v.
MDOW INSURANCE COMPANY DEFENDANT

          OPINION AND ORDER

          Kristine G. Baker United States District Judge

         Before the Court are a motion for summary judgment filed by defendant MDOW Insurance Company (“MDOW”) and a motion for partial summary judgment filed by plaintiff William Hatcher (Dkt. Nos. 26, 31). Mr. Hatcher has responded to MDOW's motion for summary judgment, and MDOW has replied (Dkt. Nos. 41, 45). Mr. Hatcher then requested leave from the Court to file a sur-reply, and MDOW filed a motion in opposition (Dkt. Nos. 46, 47). The Court allowed Mr. Hatcher to file a sur-reply (Dkt. No. 48).

         MDOW has responded to Mr. Hatcher's motion for partial summary judgment, and Mr. Hatcher has replied (Dkt. Nos. 33, 38). On April 27, 2017, Mr. Hatcher filed a motion to supplement his motion for partial summary judgment (Dkt. No. 49). The Court granted the motion and allowed MDOW to respond to the supplemented motion (Dkt. No. 55). Mr. Hatcher then filed a supplement to his motion for partial summary judgment, and MDOW responded in opposition to the supplemented motion (Dkt. Nos. 59, 60).

         For the following reasons, the Court grants MDOW's motion for summary judgment and denies Mr. Hatcher's motion for partial summary judgment (Dkt. Nos. 26, 31).

         I. Factual And Procedural Background

         Mr. Hatcher owned a home in Forrest City, Arkansas, that was insured by MDOW (Dkt. No. 2, ¶¶ 6, 7). On July 14, 2015, the home caught fire (Dkt. No. 2, ¶ 9). Mr. Hatcher reported the fire to MDOW and requested payment under the policy (Dkt. No. 2, ¶ 11). MDOW states that a dispute arose between the parties regarding the extent and amount of damage caused by the fire (Dkt. No. 4, at 2). Mr. Hatcher alleges that, “[i]nstead of paying the loss, MDOW has procrastinated, delayed, and frustrated [Mr. Hatcher]'s attempts to recover the insurance proceeds rightfully due to him.” (Dkt. No. 2, ¶ 14). Mr. Hatcher contends that MDOW “initially valued the damage to the home at $40, 550.02, ” but that, after he hired a lawyer, the damage estimate “increased by over $23, 000, to $63, 593.32.” (Dkt. No. 43, at 5). Mr. Hatcher argues that defendants have improperly refused to pay the loss under the policy and that he is entitled to $97, 080.00 in repair costs, $40, 000.00 for loss of personal property, $10, 000.00 for living expense since displacement, payment for debris removal and clean-up costs, a 12% statutory penalty, attorneys' fees, and punitive damages (Dkt. No. 2, ¶ 24).

         Specifically, Mr. Hatcher's bad faith claim as set out in his complaint is that MDOW's actions “are so oppressive and malicious that they amount to bad faith. Accordingly, Plaintiff should be compensated for the mental anguish caused by MDOW's oppressive actions.” (Dkt. No. 2, ¶ 28). Mr. Hatcher also seeks punitive damages as a result of MDOW's alleged actions as punishment and to deter MDOW and others from such conduct in the future (Dkt. No. 2, ¶ 29).

         The following facts are taken from MDOW's statement of undisputed facts (Dkt. No. 28) and Mr. Hatcher's statement of undisputed fact (Dkt. No. 30), unless otherwise indicated.

         Brett Ford is an independent adjuster with Central Adjustment Company and the person who prepared the initial damage estimate for MDOW after the July 14, 2015, fire. Mr. Ford inspected the damage to Mr. Hatcher's residence on July 15, 2015, and determined the damage to the home to be $41, 550.02 pursuant to an “actual cash value” assessment. Mr. Hatcher disagreed with Mr. Ford's estimate and provided a repair estimate done by Mr. Hatcher's brother, Robert Hatcher, who is a contractor. Mr. Hatcher adds that, “[p]laintiff obtained a repair estimate from a third party, Robert Hatcher, a licensed and respected general contractor, for $92, 895.00. Plaintiff ALSO obtained an estimate from a Don Qualls of Qualls & Sons Construction Company, a competitor of Robert Hatcher's, for $97, 080.00. Plaintiff had no previous relationship with Don Qualls. Qualls eventually performed the repairs on Plaintiff's home with the money eventually tendered by MDOW, but only after Plaintiff personally performed over $20, 000 worth of repairs to the home.” (Dkt. No. 42, ¶ 2) (emphasis in original).

         MDOW states that, after it received from Mr. Hatcher his third party repair estimate, it then asked Mr. Ford to prepare a revised estimate based on the scope of damage outlined by Robert Hatcher's estimate. MDOW asserts that the actual cash value of the revised estimate was $63, 593.32. Mr. Hatcher states that he is not in a position to admit or deny what MDOW did or did not instruct Mr. Ford to do, but he contends that, “[i]n the affirmative, MDOW's statements of what they did and why they did it are not supported in the exhibits submitted by MDOW, and should not be considered by the Court as an undisputed fact. Plaintiff admits Ford issued a revised estimate of $63, 593.32 ($29, 301.68 less than Robert Hatcher's estimate, and $33, 486.68 less than Don Qualls' estimate).” (Dkt. No. 42, ¶ 3).

         MDOW states that the $63, 593.32 estimate was prepared in an attempt to resolve the claim with Mr. Hatcher, not because MDOW agreed with the validity of scope of work encompassed by the estimates. In response to this alleged fact, Mr. Hatcher states that “[p]laintiff is in no position to either admit or deny why MDOW issued a revised statement of $63, 593.32, $22, 043.30 more than their original estimate. Plaintiff admits MDOW made a subsequent estimate of $63, 593.32 to repair the home. Plaintiff denies MDOW made a revised estimate for any other reason than because Plaintiff hired an attorney. MDOW's statements regarding why they made a revised estimate [are] not a fact that is supported by the evidence submitted in support of its Motion, and should not be considered as admitted by this Court, nor considered by the Court at this stage.” (Dkt. No. 42, ¶ 4).

         On November 23, 2015, MDOW unconditionally tendered two checks to Mr. Hatcher's attorney in the amounts of $63, 593.32 for the actual cash value of the dwelling and $12, 556.77 for the actual cash value of the damages to Mr. Hatcher's personal property. Mr. Hatcher was advised by MDOW that, if these amounts were insufficient to compensate him for the damages owed, then he was free to pursue a claim for those additional damages.

         Carolyn Walker is an independent insurance agent who sold Mr. Hatcher his insurance policy with MDOW. Mr. Hatcher obtained the policy in 2011 and renewed the policy each year thereafter, up to and including 2015. MDOW asserts that it did not change the terms of Mr. Hatcher's insurance policy; it has always provided actual cash value coverage. Mr. Hatcher now disagrees and argues that “MDOW did materially change the policy of insurance by adding an ‘actual cash value' endorsement. Plaintiff DENIES MDOW has always provided actual cash value coverage (the policy, absent the endorsement added after the contract of insurance was signed, provides for replacement coverage). Plaintiff is in no position to either admit or deny what Walker discussed with Plaintiff's ex-wife at the time the policy was originally issued in January 2011. Plaintiff admits the policy was renewed, but DENIES the policy never provided replacement coverage.” (Dkt. No. 42, ¶ 7) (emphasis in original). MDOW states that Ms. Walker discussed the fact that the policy provided for actual cash value coverage with Mr. Hatcher's then-wife, Dottie Hatcher. Mr. Hatcher counters this point by stating that the policy was in Mr. Hatcher's name alone, and that “Dottie Hatcher, Plaintiff's ex-wife, is not a named insured under the policy and is not a party to this case or contract at issue. Any conversations between Carolyn Walker and Dottie Hatcher are irrelevant to the present case.” (Id.).

         In support of his motion for partial summary judgment, Mr. Hatcher asserts that “the original policy of insurance allowed for ‘replacement costs.'” (Dkt. No. 30, at 1). He maintains that when he “obtained the original contract of insurance there was no endorsement which changed the terms from ‘replacement costs' to ‘actual case value' (sic).” (Dkt. No. 30, at 2). Further, he contends that he never expressly agreed to the change, that the change was unilaterally accomplished by MDOW, that he received no consideration in return for the change, and that the change materially alters the contract and the obligations of MDOW in the event of a loss (Dkt. No. 30, at 2).

         In response, MDOW asserts that the document Mr. Hatcher attaches to his motion for summary judgment is not a complete or accurate copy of Policy No. ARPH120161-15 (Dkt. No. 35, at 1). Further, MDOW points out that that document does not match the policy that Mr. Hatcher attached to his complaint and alleged was a complete copy of the policy. It also does not match the document Mr. Hatcher produced in his initial disclosures, according to MDOW. In addition, MDOW submits the affidavits of James Gerzetich and John Todd in support of their contention that every insurance policy ever issued to Mr. Hatcher by MDOW beginning with the policy in 2011 was an actual cash value policy (Dkt. No. 33, Ex. 2; Dkt. No. 60, Ex. A).

         The parties do not dispute that, in total and related to the July 2015 fire, MDOW unconditionally tendered checks to Mr. Hatcher valued at $82, 190.09. MDOW states that Mr. Hatcher's decision to stay in a travel trailer on his own property was his own and that Mr. Hatcher was already staying in a travel trailer owned by his son, Travis Hatcher, at the time Mr. Ford spoke with him about the issue. Mr. Hatcher contends that he initially chose to stay in the travel trailer on his property so that he could protect his property and with the belief that MDOW would quickly help him repair the home, but he admits that he was sleeping in the travel trailer when Mr. Ford came to inspect the premises on July 15, 2015, the day after the fire. MDOW states that Mr. Ford offered to reimburse Mr. Hatcher $40.00 a day for the use of the travel trailer, and Mr. Hatcher agreed. Mr. Hatcher denies this. He affirmatively states that Mr. Ford spoke with Travis Hatcher, Mr. Hatcher's son, regarding reimbursement for living in his travel trailer and that this is not a term about which Mr. Hatcher spoke with Mr. Ford or to which he expressly agreed (Dkt. No. 42, ¶ 9).

         MDOW issued an advance to Mr. Hatcher for $5, 000.00 on July 16, 2015. On August 7, 2015, MDOW issued a second check for $1, 040.00 for additional living expenses. On November 27, 2015, MDOW issued two additional checks, one for $63, 593.32 for the damages to the dwelling and one for $12, 556, 77 for the damages to Mr. Hatcher's personal property. All of the checks were issued unconditionally without any attempt to require Mr. Hatcher to settle his claim.

         II. Standard of Review

         Summary judgment is proper when there is no genuine issue as to any material fact and when the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Holloway v. Lockhart, 813 F.2d 874, 878 (8th Cir. 1987). A factual dispute is genuine if the evidence could cause a reasonable jury to return a verdict for either party. Miner v. Local 373, 513 F.3d 854, 860 (8th Cir. 2008). “The mere existence of a factual dispute is insufficient alone to bar summary judgment; rather, the dispute must be outcome determinative under prevailing law.” Holloway v. Pigman, 884 F.2d 365, 366 (8th Cir. 1989). However, parties opposing a summary judgment motion may not rest merely upon the allegations in their pleadings. Buford v. Tremayne, 747 F.2d 445, 447 (8th Cir. 1984). The initial burden is on the moving party to demonstrate the absence of a genuine issue of material fact. Celotex Corp., 477 U.S. at 323. The burden then shifts to the nonmoving party to establish that there is a genuine issue to be determined at trial. Prudential Ins. Co. v. Hinkel, 121 F.3d 364, 366 (8th Cir. 2008). “The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

         Mr. Hatcher, the plaintiff, has also moved for partial summary judgment (Dkt. No. 31). Because Mr. Hatcher bears the burden of proof on his claims at trial, to prevail on his motion for partial summary judgment, he must first affirmatively show that, on all the essential elements of his claim, no reasonable jury could find for MDOW. Celotex Corp., 477 U.S. 317, 331 (1986) (Brennan, J. dissenting); Leone v. Owsley, 810 F.3d 1149, 1153 (10th Cir. 2015); Smith v. Ozmint, 578 F.3d 246, 250 (4th Cir. 2009); United States v. Four Parcels of Real Prop. in Greene and Tuscaloosa Cnty. 941 F.2d 1428, 1438 (11th Cir. 1991); Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986). “In other words, the evidence in the movant's favor must be so powerful that no reasonable jury would be free to disbelieve it. Anything less should result in the denial of summary judgment.” Leone, 810 F.3d at 1153 (quoting 11 Jeffrey W. Stempel and Steven S. Gensler Moore's Fed. Practice, § 56.40[c][c] (3d Ed. 2015)).

         III. Analysis

         A. MDOW's Motion For Summary Judgment

         MDOW argues in its motion for summary judgment that Mr. Hatcher's bad faith claim should be dismissed because he is no longer entitled to have the allegations in his complaint accepted as true and has not shown any evidence that a reasonable jury would return a verdict in his favor on his claim for bad faith (Dkt. No. 26, ¶ 4). MDOW states that the parties simply disagree as to the amount that should be paid under the policy and that defendants have not refused to pay the claim (Dkt. No. 27, at 4). MDOW maintains that, under Arkansas law, a refusal to pay a claim does not constitute the first party tort of bad faith when a valid controversy exists with respect to liability on the policy, Strandberg v. Country Mut. Ins. Co., 2011 U.S. Dist. LEXIS 146416, 5-6 (D. Minn. Dec. 20, 2011) (citing Cato v. Arkansas Mun. League Mun. Health Ben. Fund, 688 S.W.2d 720, 723 (Ark. 1985)), and that such a dispute is what exists here. MDOW further argues that “the undisputed facts are that MDOW advanced Mr. Hatcher $5, 000 on July 16, 2015. MDOW paid Mr. Hatcher $1, 040 in additional living expenses August 7, 2015. Thereafter, it attempted to engage in discussions with Mr. Hatcher's attorney regarding resolution of the claim and ultimately tender[ed] unconditionally, $63, 593.32 for the alleged damage to the dwelling and $12, 556.77 on the contents claims.” (Dkt. No. 28, ¶¶ 1, 5-6).

         In response, Mr. Hatcher relies upon “the depositions of Mr. Ford (with attachments), MDOW's hired hand, and the Plaintiff, which [he contends] provide the requisite proof to submit the issue of bad faith to the jury.” (Dkt. No. 43, at 2). Mr. Hatcher contends that, “[i]nstead of paying the loss, MDOW has procrastinated, delayed, and frustrated Plaintiff's attempts to recover the insurance proceeds rightfully due to him.” (Dkt. No. 2, ¶ 14). Mr. Hatcher states that, “this case will be submitted to a jury. The facts supporting Plaintiff's claim for breach of contract similarly support the bad faith claim, and there are no distinct facts which would be excluded from the jury's purview in the event the Court finds Defendant's Motion well founded. Accordingly, even if the Court were inclined to grant Defendant's Motion, the appropriate action would be to reserve ruling on Defendant's Motion and submit this case to the jury in ...


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