Forest Oaks Shreveport Apartments, LLC v. W. World Ins. Co.

FOREST OAKS SHREVEPORT APARTMENTS, LLC v. WESTERN WORLD INSURANCE CO.

CIVIL ACTION NO. 20-286

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA SHREVEPORT DIVISION

June 21, 2021

JUDGE ELIZABETH E. FOOTE

MAGISTRATE JUDGE HORNSBY

MEMORANDUM RULING

Now before the Court is a Motion for Summary Judgment, filed by Plaintiff Forest Oaks Shreveport Apartments, LLC ("Plaintiff"). The motion has been fully briefed. For the reasons below, Plaintiff's motion [Record Document 25] is DENIED.

BACKGROUND

This case involves the interpretation of a commercial property insurance policy issued by Defendant Western World Insurance Company ("Defendant"). Plaintiff is the owner and operator of an apartment complex in Shreveport, Louisiana. Record Document 8, ¶ 6. The apartment complex has four buildings with addresses ranging from 1668-1676 David Raines Road (the "David Raines Road Properties"). Record Document 25-8, p. 3. On May 17, 2019, the building with an address of 1670 David Raines Road (the "Building") was significantly damaged by a fire. See Record Documents 25-1, p. 8; 25-15, p. 31; 27, p. 9. The parties do not dispute that the appraised cost of the damage was $939,188.33, after accounting for the depreciated cash value and the $25,000 deductible. Record Document 25-11, p. 2. On September 26, 2019, Defendant issued a payment in the amount of $407,000, which Defendant claimed to be the coverage limit for the Building. Record Document 25-12, p. 2. Plaintiff disagreed with Defendant's interpretation of the coverage limit and filed suit on March 5, 2020, to recover $532,188.33, which is the unpaid portion of the actual adjusted amount of the loss.¹ Record Document 8, ¶ 13. In Plaintiff's complaint, it accuses Defendant of withholding payment arbitrarily, capriciously, and without probable cause and seeks an additional $266,094.16 pursuant to Louisiana Revised Statute § 22:1892. Id. ¶¶ 14-15.

The undisputed facts² show that in May of 2018, Plaintiff's affiliate, AMG Realty Group, LLC ("AMG"), purchased apartment complexes in Arkansas. AMG had its professional retail insurance agent, Insurance Offices of America ("IOA"), obtain insurance for Plaintiff's properties. IOA contacted a wholesale insurance broker, Peachtree Special Risk Brokers ("Peachtree"), to purchase said insurance. On May 29, 2018, Peachtree contacted Defendant's underwriter, Rob Halsey ("Halsey"), who works for Defendant's general managing agent, Validus Specialty Underwriting Services, Inc., for an insurance quote for AMG's properties. Peachtree also submitted a Schedule of Values ("SOV"),³ which detailed the values of the properties. On June 21, 2018, the parties executed a primary insurance contract, which covered the properties.

A few months later, AMG acquired more properties, including the David Raines Road Properties. AMG, through IOA and Peachtree, requested that the new properties be added to the existing insurance policy. Peachtree provided an updated SOV, which valued each building at the David Raines Road Properties at $407,000. Record Document 25-8, p. 5. Halsey agreed to the update and added the David Raines Road Properties to the insurance contract.

There is no dispute that the loss of the Building is a covered loss. See Record Document 25-16, p. 1. The only dispute is how much money Defendant owes under the policy. See id. Defendantcontends that the insurance contract is clearly and unambiguously a scheduled policy. Record Document 27, p. 1. As such, Defendant argues that its limit of liability is the value of the property as listed on the SOV on file with the company: $407,000. Id.

Plaintiff counters that when reading the contract, there is no language that expressly and unambiguously limits the coverage to the value listed on the SOV. Record Document 25-1, p. 5. Plaintiff contends that the only limit of liability within the four corners of the contract is the $5,000,000 limit of liability primary per occurrence. Id. Plaintiff argues that it is clear from the insurance contract that the SOV merely provides a description of the property and does not limit any liability. Id. As such, Plaintiff states that it is entitled to judgment as a matter of law based on the unambiguous language of the insurance contract for the full amount of the undisputed loss, minus depreciation costs and the deductible. Alternatively, Plaintiff avers that if there is a limit of liability according to the SOV, then it is $1,628,000, which is the aggregate value of the four separately listed buildings at the Forest Oaks Shreveport Apartments on David Raines Road.⁴ Record Document 28, p. 4. Regardless, Plaintiff asserts that it is covered for the full actual adjusted amount of the loss.

SUMMARY JUDGMENT STANDARD

Federal Rule of Civil Procedure 56(a) directs a court to "grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Summary judgment is appropriate when the pleadings, answers tointerrogatories, admissions, depositions, and affidavits on file indicate that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). When the burden at trial will rest on the non-moving party, the moving party need not produce evidence to negate the elements of the non-moving party's case; rather, it need only point out the absence of supporting evidence. See id. at 322-23.

If the movant satisfies its initial burden of showing that there is no genuine dispute of material fact, the non-movant must demonstrate that there is, in fact, a genuine issue for trial by going "beyond the pleadings and designat[ing] specific facts" for support. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citing Celotex, 477 U.S. at 325). "This burden is not satisfied with some metaphysical doubt as to the material facts," by conclusory or unsubstantiated allegations, or by a mere "scintilla of evidence." Id. (internal quotation marks and citations omitted). However, "[t]he 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 (1985) (citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 158-59 (1970)). While not weighing the evidence or evaluating the credibility of witnesses, courts should grant summary judgment where the critical evidence in support of the non-movant is so "weak or tenuous" that it could not support a judgment in the non-movant's favor. Armstrong v. City of Dall., 997 F.2d 62, 67 (5th Cir. 1993).

Additionally, Local Rule 56.1 requires the movant to file a statement of material facts as to which it "contends there is no genuine issue to be tried." The opposing party must then set forth a "short and concise statement of the material facts as to which there exists a genuine issue to be tried." W.D. La. R. 56.2. All material facts set forth in the movant's statement "will be deemed admitted, for purposes of the motion, unless controverted as required by this rule." Id.

LAW & ANALYSIS

I. Louisiana Contract Principles

The parties do not dispute that Louisiana law applies to the interpretation of this insurance contract. Under Louisiana law, "[a]n insurance policy is a contract between the parties and should be construed by using the general rules of interpretation of contracts set forth in the Louisiana Civil Code." Cadwallader v. Allstate Ins. Co., 02-1637, p. 3 (La. 6/27/03); 848 So. 2d 577, 580 (citations omitted). When interpreting an insurance contract, a court is "to ascertain the common intent of the insured and insurer as reflected by the words in the policy." Peterson v. Schimek, 98-1712, p. 4 (La. 3/2/99); 729 So. 2d 1024, 1028 (citing La. Civ. Code art. 2045). If the words of an insurance contract are "clear and explicit and lead to no absurd consequences, courts must enforce the contract as written and may make no further interpretation in search of the parties' intent." Id. (citing La. Civ. Code art. 2046). "Words of art and technical terms must be given their technical meaning when the contract involves a technical matter." La. Civ. Code art. 2047. Additionally, each provision of a policy "must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole." Id. art. 2050. "An insurance policy should not be interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion." Orleans Par. Sch. Bd. v. Lexington Ins. Co., 2011-1720, p. 4 (La. App. 4 Cir. 8/22/12); 99 So. 3d 723, 726.

An insurance policy is ambiguous if it is "susceptible to two or more reasonable interpretations." Cadwallader, 848 So. 2d at 580 (emphasis in original). "A provision susceptible of different meanings must be interpreted with a meaning that renders it effective and not with one that renders it ineffective." La. Civ. Code art. 2049. The ambiguous provision should "be interpreted as having the meaning that best conforms to the object of the contract." Id. art. 2048. Wheninterpreting an ambiguous provision, a court may "interpret it in light of the custom and usages of the industry." Rainbow USA, Inc. v. Crum & Forster Specialty Ins. Co., 711 F. Supp. 2d 655, 663 (E.D. La. 2010) (citing La. Civ. Code art. 2053).

II. Application

The Court finds that the dispositive point of contention is the type of coverage that this policy provided. Defendant contends that the policy at issue is clearly a scheduled policy. Plaintiff, on the other hand, counters that it did not request scheduled coverage or blanket coverage. Nonetheless, Plaintiff's interpretation of the policy would require the Court to find that the policy at issue provides for blanket coverage.⁵

The terms "scheduled policy" and "blanket policy" are...