Lambirth v. USAA Cas. Ins. Co.

667 F.Supp.3d 1073

Hunter LAMBIRTH and Rachael Lambirth, husband and wife, Plaintiffs, v. USAA CASUALTY INSURANCE COMPANY,Business Entity Does I through X, and Does I through X, Defendant.

Case No. 1:20-cv-00193-DKG

United States District Court, D. Idaho

Signed April 3, 2023

Kenneth L. Pedersen, Pedersen & Jackson, Twin Falls, ID, Michael J. Hanby, II, Jarom A. Whitehead, Jeffrey P. Dearing, Pedersen Whitehead & Hanby, Twin Falls, ID, for Plaintiffs.

Jaclyn Terese Gans, Matthew L. Walters, Elam & Burke, P.A., Boise, ID, for Defendant USAA Casualty Insurance Company.

MEMORANDUM DECISION AND ORDER

Debora K. Grasham, United States Magistrate Judge

INTRODUCTION

This case involves a dispute over the adjustment and payment of a claim for benefits brought under a homeowners insurance policy issued by USAA Casualty Insurance Company (USAA CIC) on the rental property of Plaintiffs, Hunter and Rachel Lambirth. Presently before the Court are Plaintiffs' motion to amend the complaint to add a claim for punitive damages (Dkt. 58, 80), and Defendant's motion for summary judgment (Dkt. 72). The motions are fully briefed and a hearing was conducted on March 13, 2023. After careful consideration of the record, the parties' briefing and supporting materials, and oral argument, the Court will grant in part and deny in the motion for summary judgment. The Court will deny the motion to add a claim for punitive damages.

FACTUAL BACKGROUND¹

Plaintiffs are the named policyholders on the insurance policy (the Policy) issued by USAA CIC for their rental property located in Cascade, Idaho, effective from March 2, 2018 through March 2, 2019. (Dkt. 72-3, Dec. Boyle, Ex. A.) The Policy provided a $175,000 coverage limit with a $1,000 deductible, and covered loss of rent for a period of twelve-months in the event the home was uninhabitable. (Dkt. 72-2, SUDF at ¶ 3); (Dkt. 72-3, Dec. Boyle, Ex. A.)

On February 18, 2019, pipes at the property froze and burst, resulting in damage to the interior of the property. (Dkt. 4-2 at ¶ 5.) The same day, Plaintiffs hired Restoration North to mitigate the damage. (Dkt. 78, SOF at ¶ 4.) On February 19, 2019, Plaintiffs notified USAA CIC of the incident and filed a claim under the Policy. USAA CIC senior property adjuster Becki Boyle was assigned to adjust the claim.

On February 25, 2019, Plaintiffs advised USAA CIC that the home was uninhabitable, their renter was unable to reside in the home, and they were incurring additional utility expenses due to the loss. (Dkt. 4-2 at ¶¶ 9-11); (Dkt. 72-3, Dec. Boyle at ¶¶ 4, 7.) At the time of the loss, the home was being rented for $950.00 per month. (Dkt. 4-2 at ¶ 10); (Dkt. 72-2, SUDF at ¶ 4.) The lost rent amount increased in September 2019, due to an increase in Plaintiffs' mortgage. (Dkt. 4-2 at ¶¶ 37, 39); (Dkt. 72-2, SUDF at ¶ 38); (Dkt. 72-3, Dec. Boyle at ¶¶ 46, 51.) USAA CIC paid Plaintiffs for twelve months of lost rent for the months of February 2019 through February 2020.² While Plaintiffs do not dispute the amounts of lost rent paid by USAA CIC, Plaintiffs allege some of the lost rent payments were untimely resulting in late charges from Plaintiffs' lender. (Dkt. 78, SOF at ¶ 18.)

The parties disagree concerning the handling and resolution of the Policy claim as to the construction rebuild cost and the asbestos mitigation cost. From February 2019 to July 2019, the parties exchanged a number of communications and estimates attempting to adjust the claim as to construction and asbestos mitigation costs. The parties dispute the cause of the delay in resolving the Policy claim during the adjustment process.

On February 25, 2019, USAA CIC retained independent adjuster - Larry Oletski of David Morse and Associates (DMA) - to conduct an inspection of the property and provide a repair estimate. (Dkt. 72-2, SUDF at ¶ 6); (Dkt. 78, SOF at ¶ 8.)

Oletski inspected the property on March 1, 2019 and provided an estimate dated March 9, 2019 (DMA Initial Estimate) of $18,380.45 for replacement cost value (RCV), and $15,059.77 for actual cash value (ACV), with the net claim totaling $14,059.77 after the $1,000 deductible. (Dkt. 72-3, Dec. Boyle, Ex. C.) The DMA Initial Estimate was for construction costs only. It did not include any costs associated with asbestos abatement or mitigation. (Dkt. 69, Boyle Depo. at p. 43:1-5.) Oletski supplemented the estimate to clarify that the $10,000 Policy limit did not apply to the loss. (Dkt. 72-3, Dec. Boyle, Ex. D.)

Based on the DMA Initial estimate, on March 12, 2019, USAA CIC issued a check in the amount of $14,059.77. (Dkt. 69, Ex. 7); (Dkt. 78, SOF at ¶ 12.)³ On May 28, 2019, Plaintiffs notified Boyle that they had not cashed the check and that a new lender owned the mortgage on the property, making the check nonnegotiable because it named the prior lender as payee. (Dkt. 78, SOF at ¶¶ 12, 19.) Boyle advised Mr. Lambirth that USAA CIC could stop payment and reissue a new check once the parties knew the settlement amount and correct mortgage company. (Dkt. 72-2, SUDF at ¶ 18.) Plaintiffs provided the new lender's information to USAA CIC on June 11, 2019. No new check was issued. On August 28, 2019, Boyle asked Mr. Lambirth about the outstanding March 12, 2019 check, and he told Boyle to void the check as he had already shredded it. (Dkt. 72-2, SUDF at ¶ 31.)

On April 4, 2019, Plaintiffs submitted an invoice from P & B Drain Cleaning and Septic Services in the amount of $3,185.00, which USAA CIC paid in full the next day. (Dkt. 72-2, SUDF at ¶ 12.) Plaintiffs did not dispute this payment.

Restoration North informed USAA CIC on April 10, 2019 that the property contained asbestos. (Dkt. 69, Boyle Depo. at 48:11-17; 49:3-5); (Dkt. 72-2, SUDF at ¶ 11); (Dkt. 78, SOF at ¶ 14.) On May 17, 2019, Restoration North emailed USAA CIC an estimate to remediate the asbestos in the amount of $81,328.54 (Restoration North Estimate). (Dkt. 69, Ex. 11); (Dkt. 72-2, SUDF at ¶ 14); (Dkt. 78, SOF at ¶ 17.) The estimate did not include construction repair costs. (Dkt. 72-2, SUDF at ¶¶ 15-16); (Dkt. 78, SOF at ¶ 17.)

The parties disagree concerning the estimates submitted by DMA and Restoration North. USAA CIC contends the bids provided "disparate estimates," based upon Boyle's initial belief that the Restoration North Estimate included construction repair costs as well as asbestos mitigation, which prompted USAA CIC to re-inspect the property. (Dkt. 72-2, SUDF at ¶ 15.) Plaintiffs, on the other hand, argue the bids were not "disparate" as they were for two different costs - asbestos abatement in Restoration North's Estimate and construction rebuild in the DMA Initial Estimate. (Dkt. 78, SOF at ¶ 17.) Thus, Plaintiffs argue the Restoration North Estimate was undisputed at that time.

On May 28, 2019, Boyle was informed by Oletski that the Restoration North Estimate was for asbestos abatement and mitigation only, not construction costs. (Dkt. 72-2, SUDF at ¶ 16.) The property was reinspected on May 31, 2019 by both Oletski and Restoration North, with both concluding asbestos abatement was necessary. (Dkt. 72-2, SUDF at ¶ 19); (Dkt. 78, SOF at ¶ 28.) On June 12, 2019, Oletski provided a revised repair estimate of $20,673.48 ACV less deductible, and $26,658.13 if depreciation is recovered (DMA Revised Estimate). (Dkt. 72-2, SUDF at ¶¶ 21-23); (Dkt. 78, SOF at ¶ 28.) The DMA Revised Estimate again did not include asbestos mitigation.

Also on June 12, 2019, USAA CIC contacted Disaster Pro to obtain a second opinion regarding asbestos mitigation. On July 30, 2019, Disaster Pro provided USAA CIC with an estimate for asbestos abatement in the amount of $37,762.18 RCV (Disaster Pro Estimate). (Dkt. 72-2, SUDF at ¶ 28); (Dkt. 78, SOF at ¶ 39.) Plaintiffs contend the Disaster Pro Estimate was never provided to them and the bid amount was never tendered despite being undisputed. (Dkt. 78, SOF at ¶¶ 40-41.) USAA CIC asserts it did not provide the Disaster Pro Estimate to Plaintiffs or tender payment in the amount of the estimate because Plaintiffs initiated the appraisal process the day before USAA CIC received the Disaster Pro Estimate. (Dkt. 72-2, SUDF at ¶ 29.)

On this point, USAA CIC contends that Mr. Lambirth submitted a written appraisal demand notification to USAA CIC on July 29, 2019, via an email message. (Dkt. 72-3, Dec. Boyle, Ex. P.) Plaintiffs do not contest that they requested the appraisal process or that the appraisal process commenced by at least the end of July 2019. (Dkt. 77 at 11) ("[Plaintiffs] repeatedly demanded appraisal. USAA refused to participate."); (Dkt. 78, SOF at ¶ 38) ("Rather than accept and approve Restoration North's estimate, for which USAA had no contradicting information, USAA stated it would select JS Held as its appraiser and would accept the appraisal request previously made . . . .").⁴

On July 30, 2019, Boyle contacted J.S. Held to retain an appraiser, and ultimately hired Joe Kirsten of J.S. Held as USAA CIC's appraiser. (Dkt. 72-3, Dec. Boyle at ¶ 37.) In mid-October or early November, Kirsten advised Boyle that an appraisal umpire was needed and that Plaintiffs' chosen appraiser had been replaced by Shane Monday. (Dkt. 72-2, SUDF at ¶ 32); (Dkt. 78, SOF at ¶ 47.) Kirsten later advised Boyle that Monday had not been responsive. (Dkt. 72-3, Dec. Boyle at ¶ 44.)

On December 19, 2019, Kirsten provided a proposed appraisal award (JS Held Appraisal) to Monday and to USAA CIC, as later amended, as follows:

Mitigation:

$49,598.60

Dwelling Repairs:

$26,169.65

Total:

$76,768.25 (RCV)

(Dkt. 72-3, Dec. Boyle, at ¶¶ 47-48, Ex. U); (Dkt. 72-2, SUDF at ¶¶ 33-34); (Dkt. 78, SOF at ¶ 51.) In early January of 2020, Kirsten advised USAA CIC that Monday had recused himself without proposing an appraisal award. (Dkt. 72-3, Dec. Boyle at ¶ 48, Ex. V.)

On January 7, 2020, Boyle provided the JS Held Appraisal to Plaintiffs and asked if Plaintiffs would agree to settle the claim for the amount of the asbestos mitigation in the appraisal ($49,...