Hicklin v. State Farm Fire & Cas. Co.

W. Hugh Hicklin, III and Joyce Hicklin, Plaintiffs, v. State Farm Fire and Casualty Company, State Farm Defendant.

C/A No. 5:17-cv-03463-SAL

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA ORANGEBURG DIVISION

March 13, 2020

ORDER

Before the court is a motion for summary judgment filed by Defendant State Farm Fire and Casualty Company ("State Farm") as to all claims asserted by Plaintiffs W. Hugh Hicklin, III ("Plaintiff Hugh Hicklin") and Joyce Hicklin ("Plaintiff Joyce Hicklin") (together "Plaintiffs"). [ECF No. 30.] The dispute surrounds the payment of insurance benefits following a fire at the insured property.

Plaintiffs filed suit in the South Carolina Court of Common Pleas for Orangeburg County, alleging three causes of action: (1) breach of contract; (2) bad faith refusal to pay insurance benefits; and (3) violation of the South Carolina Unfair Trade Practices Act ("SCUTPA"). [ECF No. 1-1.] All of Plaintiffs' claims relate to State Farm's purported refusal to pay benefits under the insurance policy. [ECF No. 1-1, Am. Compl., at ¶¶ 7, 8, 10, 12.] State Farm removed the action to this court on December 27, 2017, on the basis of diversity jurisdiction, 28 U.S.C. § 1332. [ECF No. 1.] On March 26, 2019, State Farm filed the motion that is the subject of this Order. [ECF No. 30.] Plaintiffs filed a response [ECF No. 34], and State Farm filed a reply [ECF No. 35]. The court heard argument on February 18, 2020, and the matter is now ripe for resolution.

For the reasons outlined herein, the court finds that there is no genuine dispute as to any material fact, and State Farm is entitled to judgment as a matter of law on all claims.

BACKGROUND AND UNDISPUTED FACTS

Plaintiff Joyce Hicklin owns a rental property located at 592 Bennett Street, Orangeburg, South Carolina (the "property"), which is insured by State Farm under policy number 99-BS-16189-1 (the "policy"). On December 5, 2014, the property sustained fire damage. On December 8, 2014, State Farm sent a claim representative, Shawndell Matthews, to inspect the property. Four days after the inspection, Plaintiff Joyce Hicklin engaged a public adjuster, Timothy J. Pegelow of Goodman-Gable-Gould/Adjusters International, to assist in the adjustment of her claim. By letter dated December 12, 2014, Mr. Pegelow informed State Farm of his engagement by Plaintiff Joyce Hicklin and of her intent to pursue replacement cost coverage, if available under the policy.

1. January 2015 Payment of Actual Cash Value Benefits.

By letter dated January 9, 2015, Ms. Matthews sent Plaintiff Joyce Hicklin a check in the amount of $36,731.25, along with an estimate of the costs of repairs. The letter provides that State Farm is "paying [the] claim based on the cost of repairs with deduction for depreciation." It further states that the policy includes replacement cost coverage, which "provides for payment of the actual, necessary cost of making repairs to your dwelling without any deduction for depreciation." But the "policy requires that repairs be completed before replacement benefits may be claimed." The letter also explains that an "additional amount of $24,838.86 is available . . . for replacement cost benefits and may be claimed upon completion of the repairs." Finally, the letter instructsPlaintiffs to contact State Farm if they obtain their own estimate for repairs that exceeds the estimate prepared by State Farm.¹ The letter includes Ms. Matthews's phone and fax numbers.

Upon receipt of the $36,731.25 check, Plaintiffs placed it in a "box."² Plaintiffs did not inform State Farm that they were not going to cash the check, nor did Plaintiffs undertake to repair the property with the funds.³ Rather, both Plaintiffs testified that they were not going to undertake to repair the property with only the actual chase value portion of the funds. Plaintiff Joyce Hicklin testified as follows:

Q Why didn't you cash the check?

A Because I -- it was not enough to pay for the -- for repairing the house, so I didn't see any need in starting off with that amount.

[ECF No. 30-5, Dep. of J. Hicklin, at 35:6-9.] Plaintiff Hugh Hicklin's testimony is similar:

Q Why did you not cash the check?

A Because it didn't meet up to the required funds needed to fix the house, and I'm not going to start on a pilgrimage of fixing a house with partial funds.

[ECF No. 30-4, Dep. of H. Hicklin, at 56:20-24.]

2. February 4, 2015 Letter and Subsequent Estimates.

In a letter dated February 4, 2015, Ms. Matthews writes to Plaintiff Joyce Hicklin regarding a January 28, 2015 conversation with Plaintiff Hugh Hicklin. The letter reconfirms the January 9, 2015 "detailed estimate for the repairs to [Plaintiff Joyce Hicklin's] rental dwelling property" and the "actual cash value payment." [ECF No. 30-4, Hicklin SF 272.] The letter notes that Plaintiff Hugh Hicklin advised State Farm that Plaintiffs were in the process of seeking "a detailed comparative estimate from [their] own contract of choice." Ms. Matthews reminds Plaintiff Joyce Hicklin that she may recover loss of rents under a provision in the policy, but that recovery is based on the period of restoration, starting from the time State Farm issued the actual cash value payment. In this case, State Farm estimated 2.5 months for restoration.

Thereafter, Plaintiffs obtain three additional estimates: (1) January 5, 2015 estimate by Atlantic Estimating, LLC; $77,230.78 "replacement cost value" [ECF No. 34-4]; (2) June 20, 2017 F.E. Gaskins, Jr., General Contractor, Inc. quote⁴ for cost of repair quote, totaling $85,683.00 [ECF No. 34-7]; and (3) an undated Atlantic Estimating, LLC estimate, totaling $81,055.82 [ECF No. 30-3].⁵ Plaintiffs fail to identify any correspondence evidencing their submission of the "comparative estimate[s]" to State Farm.⁶ Moreover, there is no evidence that Plaintiffs accepted one of the above-listed estimates and began repairs to the property.

Plaintiffs ultimately filed suit in the Orangeburg County Court of Common Pleas in November 2017, alleging State Farm refused to pay insurance benefits. [ECF No. 1-1.] During the course ofthe litigation, State Farm sent a second claim representative, Deanna Hadjuk, to inspect the property. At that time, Ms. Hadjuk estimated a replacement cost value of $72,201.02, and an actual cash value of $45,896.31. [ECF No. 34-8.] The difference between Ms. Matthews's January 2015 estimate and Ms. Hadjuk's February 2018 estimate is $8,165.06. On March 4, 2019, State Farm issued a check for $81,65.06. [ECF No. 30-7.]

3. Replacement Cost Benefits, Lawsuit, and Motion.

It is undisputed that Plaintiffs did not accept an estimate and undertake repairs to the property. Based on the record before this court, it is further undisputed that Plaintiffs never submitted a claim for any purported additional actual cash value benefits or for the $24,838.86 in replacement cost benefits. Almost three years after the fire, Plaintiffs filed suit against State Farm for refusal to pay insurance benefits. State Farm moved for summary judgment on all claims.

State Farm argues it is entitled to summary judgment on the breach of contract claim because Plaintiffs are seeking replacement cost benefits, and it is not required to pay replacement cost benefits where the insured fails to accomplish the repairs within two years of the date of the loss. For this same reason, State Farm claims it had a reasonable ground upon which to base its handling of the claim and, therefore, is entitled to judgment as a matter of law on the claim for bad faith refusal to pay insurance benefits. And, finally, State Farm argues the SCUTPA claim fails because insurance practices are exempt from the SCUTPA, there is no evidence of an impact on the public interest, and State Farm's handling of the claim does not constitute unfair or deceptive acts as a matter of law.

In response, Plaintiffs argue that the dispute before the court is whether State Farm paid an unreasonably low actual cash value payment. According to Plaintiffs, there is a genuine dispute of material fact over whether the check in the amount of $36,731.25 was a reasonable actual cashvalue payment. Plaintiffs further argue that they should not be bound by the two-year provision in the policy because Plaintiffs were not advised of its existence.

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate if a party "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). "In determining whether a genuine issue has been raised, the court must construe all inferences and ambiguities in favor of the nonmoving party." HealthSouth Rehab. Hosp. v. American Nat'l Red Cross, 101 F.3d 1005, 1008 (4th Cir. 1996). The party seeking summary judgment shoulders the initial burden of demonstrating to the court that there is no genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party makes this threshold demonstration, the non-moving party may not rest upon mere allegations or denials averred in the pleading, but rather must, by affidavits or other means permitted by the Rule, set forth specific facts showing that there is a genuine issue for trial. See Fed. R. Civ. P. 56; see also Celotex Corp., 477 U.S. at 323.

A party asserting that a fact is genuinely disputed must support the assertion by "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." Fed. R. Civ. P. 56(c)(1)(A). A litigant is unable to "create a genuine issue of material fact through mere speculation or the building of one inference upon another." Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985). "[W]here the record taken as a whole could not lead a rational trier of fact to find for...