United States District Court, E.D. Arkansas, Eastern Division
OPINION AND ORDER
Kristine G. Baker United States District Judge
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).
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).
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).
Factual And Procedural Background
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).
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,
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
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).
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).
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).
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
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
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).
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,
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).
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.
Standard of Review
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).
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)).
MDOW's Motion For Summary Judgment
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).
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 ...