Opinion
Civil Action 19-cv-02572-RM-KLM
06-07-2021
JEAN PIERRE MARECHAL, Plaintiff, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant.
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
KRISTEN L. MIX MAGISTRATE JUDGE
This matter is before the Court on Defendant's Motion for Partial Summary Judgment [#42] (the “Motion”). Plaintiff filed a Response [#46] in opposition to the Motion [#42], and Defendant filed a Reply [#47]. The Motion [#42] has been referred to the undersigned for a recommendation pursuant to 28 U.S.C. § 636(b)(1) and D.C.COLO.LCivR 72.1. See [#45]. The Court has reviewed the briefs, the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Court respectfully RECOMMENDS that the Motion [#42] be GRANTED in part and DENIED in part.
“[#42]” is an example of the convention the Court uses to identify the docket number assigned to a specific paper by the Court's case management and electronic case filing system (CM/ECF). This convention is used throughout this Recommendation.
I. Summary of the Case
The factual record and reasonable inferences therefrom are viewed in the light most favorable to Plaintiff as the party opposing summary judgment. Concrete Works, Inc. v. City & County of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994). However, the Court notes that Plaintiff has failed to comply with the District Judge's Civil Practice Standard IV.C.2.d.2., which provides:
Separate statement of undisputed material facts in opposition to motion for summary or partial summary judgment: The separate statement must contain the following in a four-column format. The first two columns shall contain the exact information contained in the moving party's separate statement of undisputed material facts. In the third column, the response must state whether the fact in that row is “disputed” or “undisputed.” An opposing party who contends the fact is disputed must state, in the third column of that row, the nature of the dispute and set forth the evidence that supports the position that the fact is controverted. Also in the third column, the opposing party shall set forth any additional material fact which it contends is undisputed or which the opposing party contends show summary judgment may not be had, along with evidence in support of such fact. Citation to the evidence in support of each material fact must include reference to the exhibit, title, page, and paragraph or line numbers.
Plaintiff has also not explicitly admitted or disputed Defendant's purportedly undisputed facts in some other format, such as in Plaintiff's response brief itself. Thus, in the absence of compliance with the District Judge's Practice Standards, and in the absence of any explicit argument by Plaintiff to the contrary, the Court finds the following facts to be undisputed.
Plaintiff's residence was constructed in 2002. Def.'s Ex. 5, Def.'s Expert Report [#44-5] at 3. When Plaintiff purchased the residence in 2014, there were broken tiles on the roof. Def.'s Ex. 6, Depo. of Pl. [#44-6] at 19:1-12, 21:3-15, 24:17-25. Plaintiff's wife contends that the sales price for the residence was reduced to account for the cost to replace the damaged tiles but cannot confirm whether the repair was ever completed. Def.'s Ex. 2, Depo. of Rashmitaben Marechal [#44-2] at 18:2-8, 19:2-20:12. Plaintiff has had no repairs made to the roof since his purchase of the residence. Def.'s Ex. 6, Depo. of Pl. [#44-6] at 34:12-15. Since the purchase of the residence, Plaintiff has not painted the exterior of the home or made other repairs to the gutters or downspouts. Id. at 34:16-35:5; Def.'s Ex. 2, Depo. of Rashmitaben Marechal [#44-2] at 24:9-25:10.
Plaintiff obtained from Defendant a Homeowner's Policy, No. OY781154, effective June 12, 2018, to June 12, 2019. Def.'s Ex. 1, Policy Excerpts [#44-1]. During this period, on June 19, 2018, Plaintiff's home was damaged by hail. Def.'s Ex. 3, Def.'s Estimate of Repair Costs [#44-3] at 1. Plaintiff's wife filed an insurance claim with Defendant on March 8, 2019. Def.'s Ex. 2, Depo. of Rashmitaben Marechal [#44-2] at 33:15-35:8. Shortly after the claim was made, on March 28, 2019, Defendant inspected the Property. Id. at 38:12-40:16. Defendant's field adjuster, Stephen Luckritz (“Luckritz”), and inspector Justin Jackson from Ladder Now, Plaintiff, and another inspector, Matt Griffith (“Griffith”), attended Defendant's initial inspection of the property. Def.'s Ex. 7, Depo. of Griffith [#44-7] at 31:4-15; Def.'s Ex. 9 [#44-9] at 2. Defendant's adjuster wrote in his claim notes that there was substantial evidence of wear and tear to the exterior of the residence. Def.'s Ex. 8, Def.'s Claim Notes [#44-8] at 3. Ladder Now mapped and photographed Plaintiff's roof and provided Defendant with a 42-page “Inspection Summary” which contained photographs of the roof tiles at the time of the inspection. Def.'s Ex. 9, Ladder Now Maestro Report [#44-9]. Defendant provided Plaintiff with its estimate of the loss and its claim position letter along with payment on March 29, 2019. Def.'s Ex. 10, Def.'s Mar. 29, 2019 Letter [#44-10]; Def.'s Ex. 2, Depo. of Rashmitaben Marechal [#44-2] at 40:18- 41:9. Defendant estimated the extent of the required roof repair to be the replacement of the damaged tiles along with the evident ancillary damage to the soft metal roof vents and jacks. Def.'s Ex. 3, Def.'s Estimate of Repair Costs [#44-3].
Neither Plaintiff nor his contractor were satisfied with Defendant's estimate and as a consequence Plaintiff retained counsel and his own public adjuster company, Premier Claims Consulting (“Premier”). Def.'s Ex. 2, Depo. of Rashmitaben Marechal [#44-2] at 43:19-45:13; Def.'s Ex. 8, Def.'s Claim Notes [#44-8] at 1-2. On or about April 25, 2019, Mr. Griffith visited Plaintiff's property again and took photographs of the roof at the request of Premier; these photographs showed four tiles with half-moon fractures. Def.'s Ex. 7, Depo. of Griffith [#44-7] at 54:10-58:1; Def.'s Ex. 11, Photographs by Griffith [#44-11]. During one of his visits to Plaintiff's property, Mr. Griffith removed a tile, photographed it, and had the photographs submitted to a company named ITEL to identify the manufacturer and the type of the tile. Def.'s Ex. 7, Depo. of Griffith [#44-7] at 39:6-19; Def.'s Ex. 12, Photos by Griffith [#44-12]. The ITEL report obtained by Premier states that “the sample appears to match the specification and characteristics of a Monier Lifetile Saxony Shake concrete tile.” Def.'s Ex. 13, ITEL Tile Roofing Evaluation [#44-13].
Defendant cursorily calls the Tile Roofing Evaluation “inadmissible hearsay” but offers no supporting argument. Motion [#42] at 9. The Court therefore finds this objection waived. See, e.g., Thompson v. State Farm Mut. Automobile Ins. Co., 789 Fed.Appx. 90, 93 n.4 (10th Cir. 2019) (“State Farm states in one perfunctory sentence that Plaintiff's expert relied on inadmissible hearsay. State Farm, however, provides no substantive explanation and cites no legal authority supporting its position. We therefore deem that argument waived.”) (citing Seifert v. Unified Gov't of Wyandotte Cnty./Kan. City, 779 F.3d 1141, 1156 (10th Cir. 2015)).
On May 8, 2019, Defendant was notified that Plaintiff had retained Premier as its public adjuster and McClenny Moseley as its counsel. Defendant's field adjuster, Mr. Luckritz, called Premier the following day and was advised that Premier was completing Plaintiff's estimate of the costs to repair the claimed damages and would give Defendant the estimate shortly. Mr. Luckritz advised Premier that re-inspection of the property would be required once Plaintiff's estimate was received and reviewed. Defendant did not receive Premier's estimate or the photographs taken by Mr. Griffith until after this litigation was initiated. Def.'s Ex. 8, Def.'s Claim Notes [#44-8] at 1-2.
As part of his investigation, Defendant's expert, Mark Burns, P.E. (“Burns”), attempted to determine the type and manufacturer of the tile present on Plaintiff's roof. Def.'s Ex. 14, Decl. of Burns [#44-14]. Since Mr. Burns was not authorized to remove tile from Plaintiff's property, he photographed a loss roof tile during his October 22, 2019 inspection. Id. He showed the photographs to local tile distributors who could not identify the tile from the photographs and was advised that a sample tile would be required for identification. Id. Mr. Burns also confirmed with ITEL that a sample tile would be required for it to positively identify the tile. Id. Mr. Burns ultimately determined that there are no more than sixteen roof tiles potentially damaged by hail. Def.'s Ex. 5, Def.'s Expert Report [#44-5] at 5-8.
At his deposition, Plaintiff's expert Brian Johnson, P.E. (“Johnson”), stated that there are “at least eight [fractured tiles] on the right elevation” plus four from the front elevation, but his report states that “[a]pproximately 70 tiles were damaged.” Def.'s Ex. 4, Depo. of Pl.'s Expert Brian Craig Johnson [#44-4] at 69:1-8; Pl.'s Ex. B [#46-2] at 10. It is unclear from the briefing how to reconcile the discrepancy in the number of damaged tiles reported by Plaintiff's expert.
In the this lawsuit, Plaintiff seeks damages and asserts the following claims: (1) breach of contract, (2) bad faith, and (3) unreasonable delay or denial of benefits. Compl. [#3] ¶¶ 19-33. In the present Motion [#42], Defendant seeks entry of summary judgment in its favor in full on the second and third claims and in part on the first claim, to the extent Plaintiff seeks a complete roof replacement. Motion [#42] at 13.
II. Standard of Review
The purpose of a motion for summary judgment pursuant to Fed.R.Civ.P. 56 is to assess whether trial is necessary. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Under Fed.R.Civ.P. 56(c), summary judgment shall be granted if “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” An issue is genuine if the evidence is such that a reasonable jury could resolve the issue in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 277 U.S. 242, 248 (1986). A fact is material if it might affect the outcome of the case under the governing substantive law. Id.
The burden is on the movant to show the absence of a genuine issue of material fact. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670-71 (10th Cir. 1998) (citing Celotex, 477 U.S. at 323). When the movant does not bear the ultimate burden of persuasion at trial, the “movant may make its prima facie demonstration [of the absence of a genuine issue of material fact] simply by pointing out to the court a lack of evidence for the nonmovant on an essential element of the nonmovant's claim.” Id. at 671. If the movant carries the initial burden of making a prima facie showing of a lack of evidence, the burden shifts to the nonmovant to put forth sufficient evidence for each essential element of his claim such that a reasonable jury could find in his favor. See Anderson, 277 U.S. at 248; Simms v. Okla. ex rel. Dep't of Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir. 1999). The nonmovant must go beyond the allegations and denials of his pleadings and provide admissible evidence, which the Court views in the light most favorable to him. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Panis v. Mission Hills Bank, N.A., 60 F.3d 1486, 1490 (10th Cir. 1995) (citing Celotex, 477 U.S. at 324). Conclusory statements based merely on conjecture, speculation, or subjective belief are not competent summary judgment evidence. Bones v. Honeywell Int'l, Inc., 366 F.3d 869, 875 (10th Cir. 2004). The nonmoving party's evidence must be more than “mere reargument of [his] case or a denial of an opponent's allegation” or it will be disregarded. See 10B Charles Alan Wright et al., Federal Practice and Procedure § 2738 (4th ed. 2017).
When ruling on a motion for summary judgment, a court may consider only admissible evidence. See Johnson v. Weld County, Colo., 594 F.3d 1202, 1209-10 (10th Cir. 2010). The factual record and reasonable inferences therefrom are viewed in the light most favorable to the party opposing summary judgment. Concrete Works, Inc., v. City & County of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994). At the summary judgment stage of litigation, a plaintiff's version of the facts must find support in the record. Thomson v. Salt Lake County, 584 F.3d 1304, 1312 (10th Cir. 2009). “When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment.” Scott v. Harris, 550 U.S. 372, 380 (2007); Thomson, 584 F.3d at 1312.
Only documents that meet the evidentiary requirements of Fed.R.Civ.P. 56 may be considered for purposes of summary judgment. Rule 56(c) provides that:
(1) A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:
(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials[.]
. . .
(3) Materials Not Cited. The court need consider only the cited materials, but it may consider other materials in the record.
(4) Affidavits or Declarations. An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.Fed. R. Civ. P. 56(c)(1)-(4).
II. Analysis
A. Breach of Contract
The elements of a cause of action for breach of an insurance contract are “(1) the existence of a contract, (2) performance by the plaintiff or some justification for nonperformance, (3) failure to perform the contract by the defendant, and (4) resulting damages to the plaintiff.” Williams v. Owners Ins. Co., 621 Fed.Appx. 914, 918 (10th Cir. July 15, 2015) (quoting Western Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo. 1992)). In short, Plaintiff's claim here for breach of the insurance contract requires Plaintiff to establish that Defendant failed to perform its obligations under the contract by refusing to pay for replacement of the entire roof. See Crest Exteriors, LLC v. Am. Family Mut. Ins. Co., No. 19-cv-02065-REB-SKC, 2020 WL 8181824, at *2 (D. Colo. Nov. 25, 2020); see also Western Distrib. Co., 841 P.2d at 1057-58 (“The burden of proving a prima facie case for recovery on a civil claim is on the plaintiff. . . . Once a plaintiff establishes a prima facie case, the defendant may produce evidence to rebut the plaintiff's prima facie case, but the burden of proof or persuasion on the essential elements of the claim remains with the plaintiff.”).
Defendant asserts that “[t]he Court should enter partial summary judgment in favor of Safeco on Plaintiff's breach of contract claim because Plaintiff has failed to produce any evidence that a full roof replacement is required by the local building codes.” Motion [#42] at 7. The pertinent building code, the Arapahoe County (Residential) Re-Roofing Guide, provides in relevant part:
Permitting Application General Requirements
1. Re-roof permits are required for full roof replacement or for repairs/replacements when the total repair area on any roof, or combination of slopes, exceed one hundred (100) square feet of surface area. . . .
5. R104.9.1 Used materials and equipment. . . . Used, harvested or salvaged roofing tiles are not permitted unless the tiles are in an unopened package with the manufacturer's certification of compliance with the applicable Building Code or the tiles have been certified by a licensed professional engineer as meeting the applicable Building Code requirements for such tile.Def.'s Ex. 15, Arapahoe County (Residential) Re-roofing Guide [#44-15].
Defendant argues (with some overlap) that (1) “Plaintiff has failed to provide any evidence that the Arapahoe County Building department would require a full replacement of the roof based upon the limited number of damaged tiles, ” (2) Plaintiff has failed to provide any admissible evidence to support his assertion that “a full roof replacement is required because the roof tiles present on his roof are no longer manufactured, and therefore new replacement tiles cannot be obtained, ” (3) “Plaintiff has failed to . . . establish the type of tile on his roof, and he certainly has not established that new tiles are unavailable or that ‘used' tiles could not be certified by a licensed professional engineer as meeting the applicable Building Code requirements for such tile, ” (4) “Plaintiff has . . . failed to provide any evidence that salvaged or used tiles selected to replace the 16 hail damaged tiles could not be ‘certified by a licensed professional engineer as meeting the applicable Building Code requirements for such tile, '” and (5) “Plaintiff has failed to provide any evidence that the Arapahoe Building Department would consider the replacement of 16 broken tiles a re-roofing project and require the replacement tiles to be new or certified.” Motion [#42] at 9-10.
In response, Plaintiff asserts that “the evidence clearly demonstrates genuine issues of material fact related to the readily apparent need for Plaintiff's roof to be completely replaced.” Response [#46] at 3. Plaintiff relies heavily on the fact that there is a great disparity between, on the one hand, Defendant's original repair estimate of $4, 278.71 and, on the other hand, Plaintiff's public adjuster's estimate of $76, 141.68 and Plaintiff's retained cost expert's estimate of $103, 641.97. Id. Plaintiff argues that the “objective evidence, including [his] estimate prepared by a public adjuster, and engineering report provided by engineering expert, Brian Johnson, and retained cost expert's estimate establishes that a new roof is owed under their policy for insurance.” Id. at 4 (citing Pl.'s Ex. A [#46-1]; Pl.'s Ex. B [#46-2]; Pl's Ex. C [#46-3]).
In reply, Defendant asserts that “evidence of estimates for replacement of the roof is insufficient to establish a breach.” Reply [#47] at 4. Defendant argues that “Plaintiff must actually demonstrate that he was owed coverage that [Defendant] failed to provide, ” and that “[c]onspicuously absent from Plaintiff's Response is any reference to any Policy provision (i.e., the contract), that requires [Defendant] to pay for a full roof replacement when it is undisputed that only 16 roof tiles are damaged by hail.” Id. Defendant states that “[t]he disparity between Defendant's estimate for repair and Plaintiff's estimates for a full roof replacement is immaterial to the issue of breach. The disparity in price only demonstrates the obvious fact that it costs more to replace an entire roof than to repair damaged tiles. The disparity in price does not resolve the issue of whether a full roof replacement is required by the terms of the Policy.” Id. at 4-5.
The Court finds that the first issue which must be addressed is whether there is a genuine issue of material fact with respect to whether Defendant must replace the roof under the terms of the policy. Defendant concedes that it must replace certain tiles, for which it has provided its estimate and payment. Plaintiff argues that the entire roof must be replaced. Thus, to the extent Plaintiff argues that there is a genuine issue of material fact based solely on the differing monetary evaluations, the Court rejects such argument because, as pointed out by Defendant, the parties are evaluating completely different construction projects, i.e., the replacement of a handful of tiles versus the replacement of the entire roof. The issue of what covered work must be done necessarily precedes the issue of whether Defendant has paid Plaintiff enough for the damages suffered.
As noted, Defendant has offered to replace the sixteen damaged tiles, and the Court must determine whether Plaintiff has set forth sufficient evidence to create a genuine issue of material fact that Defendant was required to do more under the terms of the contract. The relevant provision of the policy requires Defendant to: “(1) . . . [p]ay the full cost of repair or replacement, but not exceeding the smallest of the following amounts: . . . (b) the replacement cost of that part of the damaged building for equivalent construction and use on the same premises as determined shortly following the loss . . . .” Def.'s Ex. 1, Policy Excerpts [#44-1] at 16 (emphases added). Thus, in order to prevail, Defendant must show that there is no genuine issue of material fact regarding its assertions that only sixteen tiles need to be replaced, that doing so can be done in a way that constitutes “equivalent construction” pursuant to the policy, and that doing so is possible without violating any pertinent building codes.
Ultimately, the Court finds that Defendant has failed to show that there is no genuine issue of material fact regarding whether only sixteen tiles need to be replaced, and therefore the issues of equivalent construction and building codes are premature. In Corrigan v. Liberty Insurance Corporation, No. 18-cv-03331-WJM-STV, 2020 WL 1939743, at *4 (D. Colo. Apr. 22, 2020), for example, the defendant-insurer filed a motion for summary judgment on the plaintiff-insured's breach of contract claim, where the insurer had only agreed to replace five tiles of a hail-damaged roof while the insured had provided evidence that a full roof replacement was necessary. Although the Corrigan court did not go into a deep analysis, the court did state in denying the motion:
The other [issue]-regarding the availability of matching replacement tiles- informs [the plaintiffs' expert's] opinion that the whole roof must be replaced,
which is part of the [plaintiffs'] breach of contract theory, but it is ultimately a sub-issue. [The defendant] refuses to pay for repairs to the roof beyond five tiles, whereas [the plaintiffs' expert] contends that significantly more is required, including replacing underlayment. Thus, the parties are at a stalemate regardless of whether the entire roof requires replacement on account of non-matching tiles.Corrigan, 2020 WL 1939743, at *4.
Here, similarly, Plaintiff primarily argues (although without offering any evidentiary pin cites) that Defendant “disregard[ed] objective evidence of covered damage” and that Defendant's investigation failed “to locate and document the full extent of the covered hail and wind damage to the Property during the course of its inspections.” Response [#46] at 3-4. While the Court does not weigh Plaintiff's evidence, Plaintiff's statements find some general support in the estimates and report of his adjusters and expert. See Ex. A [#46-1]; Ex. B [#46-2]; Ex. C [#46-3].
In Yale Condominiums Homeowner's Association, Inc. v. American Family Mutual Insurance Company, S.I., No. 19-cv-02477-KMT, 2021 WL 1222518, at *4 (D. Colo. Apr. 1, 2021), the court addressed similar circumstances where the plaintiff-insured asserted a breach of contract claim on the basis that the defendant-insurer “breached the terms of its insurance policy by failing to pay the full value of its claim for damages in connection with a wind and hail storm.” In short, the plaintiff argued that the defendant was required to completely replace the roof rather than merely repair sections of it. In denying the defendant's motion for summary judgment, the Yale court stated:
Clearly there are disputed issues of material fact concerning whether the Plaintiff received the benefit of its contract as intended-in other words, whether American Family correctly evaluated the evidence before it at the time in reaching the conclusion that it was not obligated to repair or replace all or part of the asphalt tiles on the roof (other than those attendant to the
skylight or damaged by wind in April 2018 for which it had already accepted responsibility) or fix damage beyond what it already has paid for. There are significant issues of disputed fact over whether imperfections in Plaintiff's roofs on the three buildings observed by all the inspectors and by the engineer were caused by hail or wind or whether they were caused by uncovered factors such as age. . . . Defendant has obtained two insurance adjuster reports and an engineer's report which all state there was no hail damage to the asphalt shingles on any of the three roofs, while Plaintiff has one independent inspector who claims that there was significant hail damage to the asphalt shingles on all three buildings as a result of “hail, extensive rain, and high winds cumulatively and independently during the summer to fall 2018.” The adjustors and the engineer disagree with Plaintiff's inspector about whether imperfections in the shingles were caused by blistering and age, or whether the divots or holes were caused by hail strikes, and if they were caused by hail strikes, whether those hail strikes happened on or about July 23, 2018 as claimed. . . . The parties' underlying central dispute is, of course, whether sufficient damage to the asphalt shingles occurred on any day in 2018, by either wind or hail, to justify replacing completely the shingles on all three buildings. Based on the contested evidence, summary judgment on the contract claim is inappropriate.Yale Condominiums Homeowner's Association, Inc., 2021 WL 1222518, at *4-5 (internal citation omitted).
Although Plaintiff's explanation in his brief lacks much detail, a comparison of the reports by Plaintiff's expert Brian Johnson and Defendant's expert Mark Burns shows glaring differences in their views of the damage to the roof and, crucially, what work is required to return the roof to its pre-storm condition pursuant to the terms of the insurance policy. Compare Pl.'s Ex. B [#46-2] with Def.'s Ex. 5, Def.'s Expert Report [#44-5]. As in Corrigan, 2020 WL 1939743, at *4, and in Yale, 2021 WL 1222518, at *4-5, these types of competing evaluations are enough on their own to preclude entry of summary judgment at this stage of the proceedings. As noted above, the threshold issue is how much work is required on the roof. Although Defendant urges the Court to find that only sixteen tiles were damaged, the evidence is not so clear-cut. See Def.'s Ex. 4, Depo. of Pl.'s Expert Brian Craig Johnson [#44-4] at 69:1-8 (mentioning about twelve tiles); Def.'s Ex. 5, Def.'s Expert Report [#44-5] at 5-8 (pointing to about sixteen tiles); Pl.'s Ex. B, Johnson's Expert Report [#46-2] at 10 (stating that about seventy tiles are damaged and that typical breakage rates suggest an additional 140-175 tiles would be needed to replace the damaged tiles and tiles damaged during their removal). Ultimately, therefore, the Court finds that there is a genuine issue of material fact underlying Plaintiff's breach of contract claim.
Accordingly, the Court recommends that the Motion [#42] be denied to the extent Defendant seeks entry of summary judgment in its favor on Plaintiff's breach of contract claim.
B. Common Law Bad Faith and Statutory Unreasonable Delay/Denial
Under Colorado common law, every insurance policy includes an implied duty of good faith and fair dealing. Cary v. United of Omaha Life Ins. Co., 68 P.3d 462, 466 (Colo. 2003). Breach of this duty gives rise to an action in tort to recover economic and noneconomic compensatory damages as well as punitive damages, when appropriate. Goodson v. Am. Standard Ins. Co., 89 P.3d 409, 414-15 (Colo. 2004). To succeed on this claim, Plaintiff must present evidence to establish that (1) a reasonable insurer under the circumstances would have paid or otherwise settled the insurance claim, (2) Defendant either knowingly or recklessly disregarded the claim's validity, and (3) Plaintiff suffered a loss as a result of Defendant's conduct. Id. at 415.
Under Colo. Rev. Stat. § 10-3-1115, an insurer who delays or denies payment to an insured without a reasonable basis for its delay or denial breaches its statutory duty of good faith and fair dealing. To succeed on this claim, Plaintiff must provide evidence that (1) Defendant delayed or denied payment of benefits to him, and (2) that delay or denial was without a reasonable basis. Am. Family Mut. Ins. Co. v. Barriga, 418 P.3d 1181, 1185-86 (Colo. 2018).
In the present Motion [#42], Defendant argues that Plaintiff fails to present evidence sufficient to meet the common element of these two claims, i.e., a showing of unreasonable conduct by the insurer. Motion [#42] at 11-13; Reply [#47] at 5-7; see, e.g., Butman Family Invest. Ltd. P'ship v. Owners Ins. Co., No. 19-cv-01638-KLM, 2020 WL 1470801, at *8 (D. Colo. Mar. 25, 2020) (“Both common law and statutory bad faith claims require a showing of unreasonable conduct.”) (citing Trujillo v. State Farm Mut. Auto. Ins. Co., No. 18-cv-0410-WJM-NRN, 2019 WL 3996882, at *8 (D. Colo. Aug. 23, 2019); Goodson, 89 P.3d at 414).
The reasonableness of an insurer's conduct is objectively measured based on industry standards. Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333, 342, 343 (Colo. 2004). An insurer's conduct is reasonable when it challenges insurance claims that are “fairly debatable.” See, e.g., Travelers Ins. Co. v. Savio, 706 P.2d 1258, 1275 (Colo. 1985); Pham v. State Farm Mut. Auto. Ins. Co., 70 P.3d 567, 572 (Colo.App. 2003). This means that an insurer acts in bad faith only if it intentionally denies, fails to process, or fails to pay an insurance claim without a reasonable basis. Savio, 706 P.2d at 1275; Brandon v. Sterling Colo. Beef Co., 827 P.2d 559, 561 (Colo.App. 1991).
Plaintiff asserts that the purportedly unreasonable nature of Defendant's conduct is demonstrated in two ways:
First, Plaintiff's cost estimate provided by Plaintiff's retained cost expert, Fred Lupfer, clearly demonstrates the extensive damage caused by the hail and wind to the Property. See Ex. C. Further, Mr. Lupfer, will testify regarding the amount of damage to the Property and the cost to effectuate proper repairs. The disparity between Defendant's repair estimate and Plaintiff's replacement estimate alone serves to illustrate the unreasonable and improper nature of Defendant's investigation. See Ex. C; Ex. D. Moreover, Plaintiff's engineering report establishes the need for a full removal and replacement of Plaintiff's roofing system, highlighting Defendant's unreasonable position.
[Second], the inability of Defendant's adjuster to document and provide coverage for the full extent of the hail and wind damage to the Property during the course of its inspection illustrates how inadequate and improper Defendant's conduct has been throughout its entire investigation. At the very least, the disparity in each party's estimates presents a glaring fact issue, namely Defendant's unreasonable, knowing, and reckless disregard for the objective evidence indicating severe hail and wind damage to the Property, such that summary judgment would not be an appropriate method for adjudicating Plaintiff's claim. Finally, Defendant's actions were committed knowingly or with reckless disregard for the validity of Plaintiff's claim, as demonstrated by Defendant's astounding inability to recognize the extent of the damages to Plaintiff's roof, which clearly demonstrate the need for a full replacement.Response [#46] at 5-6.
Plaintiff's expert's opinion is certainly supportive of the amount of Plaintiff's loss, but this, on its own, is insufficient to establish that Defendant's conduct was unreasonable. See, e.g., Wak Inc. v. Ohio Sec. Ins. Co., No. 16-cv-01191-MSK-MJW, 2019 WL 859709, at *3 (D. Colo. Feb. 22, 2019). Plaintiff argues that because its expert's evaluation was so much higher than Defendant's adjuster's evaluation, Defendant's determination must be unreasonable. Response [#46] at 5-6. However, the mere fact that Plaintiff's evaluation “was higher-even significantly higher-than [Defendant's adjuster's] determination is probative of the amount of the insurance claim, but it does not establish” on its own that Defendant's conduct was unreasonable. Wak, Inc., 2019 WL 859709, at *6. The Court further notes that Plaintiff does not point out which specific parts of Defendant's adjuster's evaluation are purportedly unreasonable, merely asserting that the entirety must be deemed unreasonable due to the difference in evaluations. Response [#46] at 5-6. Plaintiff has provided no legal authority to support this argument, and the Court has found none.
“The determination of the reasonableness of [the insurer's] actions . . . requires application of an objective standard-what a reasonable insurer would have done under the same or similar circumstances.” Wak, Inc., 2019 WL 859709, at *3. Here, as in Wak, “[the insured] offers no evidence as to what insurance industry standards or practices were or how [the insurer] deviated from them.” Id. Defendant argues that Plaintiff has not provided any evidence regarding an objective industry standard, whether through an expert or otherwise. Motion [#42] at 12; Reply [#47] at 6-7. “There could be circumstances in which non-expert evidence is sufficient to make a prima facie showing- e.g., where the insured presents an engineer's report and insurer refuses to pay the amount in the report and fails to explain why, or when a policy requires a response to the submission of an insurance claim within a time and the insurer fails to do so.” Wak Inc., 2019 WL 859709, at *3. Here, the Court agrees with Defendant that Plaintiff has simply not come forward with any evidence of the standard that should have governed” Defendant's conduct, whether through an expert witness or otherwise. See Id. Plaintiff has not asserted, by way of example only, that his expert witness who served as his appraiser “is qualified to opine as to insurance industry standards or practices, ” or that Defendant violated standards promulgated by the Colorado Insurance Commission. See Id. at *4. In short, Plaintiff has simply failed to present “evidence of what a reasonable insurer would have done if it had been in [Defendant's] position.” See id.
Thus, the Court finds that Plaintiff “has failed to come forward with evidence sufficient to establish the first element of its bad-faith claim-that a reasonable insurer would have paid or otherwise settled the insurance claim under these circumstances.” See Id. Accordingly, the Court recommends that the Motion [#42] be granted to the extent that summary judgment enter in favor of Defendant on Plaintiff's claims of common law bad faith and statutory unreasonable delay/denial of payment.
IV. Conclusion
For the foregoing reasons, IT IS HEREBY RECOMMENDED that the Motion [#42] be GRANTED in part as to Plaintiff's second and third claims for relief and DENIED in part as to Plaintiff's first claim for relief.
IT IS FURTHER ORDERED that pursuant to Fed.R.Civ.P. 72, the parties shall have fourteen (14) days after service of this Recommendation to serve and file any written objections in order to obtain reconsideration by the District Judge to whom this case is assigned. A party's failure to serve and file specific, written objections waives de novo review of the Recommendation by the District Judge, Fed.R.Civ.P. 72(b); Thomas v. Arn, 474 U.S. 140, 147-48 (1985), and also waives appellate review of both factual and legal questions. Makin v. Colo. Dep't of Corr., 183 F.3d 1205, 1210 (10th Cir. 1999); Talley v. Hesse, 91 F.3d 1411, 1412-13 (10th Cir. 1996). A party's objections to this Recommendation must be both timely and specific to preserve an issue for de novo review by the District Court or for appellate review. United States v. One Parcel of Real Prop., 73 F.3d 1057, 1060 (10th Cir. 1996).