Melendez v. S. Fid. Ins. Co.

503 F.Supp.3d 504

Elizabeth MELENDEZ

v.SOUTHERN FIDELITY INSURANCE COMPANY

CIVIL ACTION NO. 20-689

United States District Court, E.D. Louisiana.

Signed November 25, 2020

Galen M. Hair, Trent Jared Moss, Hair Shunnarah Trial Attorneys, LLC, Metairie, LA, for Elizabeth Melendez.

Matthew D. Monson, John D. Mineo, IV, Jonas Peyton Baker, Rachel L. Flarity, Brett F. Willie, Kevin P. Riche, Monson Law Firm, LLC, Joshua H. Dierker, Galloway Johnson Tompkins Burr & Smith, Mandeville, LA, Laura H. Abel, Law Office of Kimberly G. Anderson, Metairie, LA, for Southern Fidelity Insurance Company.

SECTION M (2)

ORDER & REASONS

BARRY W. ASHE, UNITED STATES DISTRICT JUDGE

Before the Court are the motions of defendant Southern Fidelity Insurance Company ("SFIC") for partial summary judgment.¹ Plaintiff Elizabeth Melendez opposes both motions.² SFIC replies in further support of its original motion.³ Having considered the parties’ memoranda, the record, and the applicable law, the Court issues this Order & Reasons dismissing all claims, including bad faith claims, related to the 2011 and 2014 incidents as having prescribed, but declining to dismiss bad faith claims related to the 2019 incident given the existence of unresolved issues of material fact.

I. BACKGROUND

This case arises from an insurance dispute. Melendez alleges that she owns property in Houma, Louisiana, which is covered by SFIC insurance policies protecting against wind and water.⁴ On March 5, 2011, Melendez reported that a windstorm caused her house to have foundation issues, a claim that was paid in part by SFIC.⁵ On July 14, 2011, SFIC's assigned independent adjuster, Carrol Smith of Trinity Insurance Services, created an estimate of repairs which included a $10,384 bid from Coastal Shoring, LLC ("Coastal Shoring") to straighten the house's piers.⁶ In connection with the Coastal Shoring bid, SFIC initially paid $7,307.20 to Melendez representing the amount of the bid less the cost of depreciation and the policy's $1,000 deductible.⁷ On April 6, 2012, SFIC then paid the remaining $2,076.80 representing recoverable depreciation for the claim.⁸ Melendez allegedly hired Coastal Shoring to complete the contracted work.⁹ She did not dispute the amount of the loss at that time,¹⁰ but she now argues that SFIC did not pay for additional losses including damages to her house's interior walls and flooring.¹¹ In her report, Trinity's Smith did not include any calculation of damages for the interior of the house.¹²

On May 19, 2014, the property again experienced foundation issues which caused the house to lean.¹³ According to SFIC, Smith, now of U.S. Cat Adjusters, determined the lean "appeared to be due to causes not covered by the policy, such as earth movement, settling, and faulty or defective workmanship or materials."¹⁴ As a result, SFIC denied coverage.¹⁵ Melendez argues that Smith actually concluded that the "claim appears to be the same type of damage as [the 2011] claim."¹⁶ Regardless, Melendez paid for the repairs and hired Allridge Services to relevel her property.¹⁷

On July 18, 2019, Hurricane Barry allegedly caused the house to lean again.¹⁸ The present case was filed in the wake of SFIC's denial of coverage for wind damage to the property as a result of the hurricane.¹⁹ SFIC again relied on its independent adjuster, this time Daniel Gullbeau of Associated Adjusters Network, who concluded that Hurricane Barry was not the cause of the damage.²⁰ Melendez asserts that Gullbeau actually concluded that the storm caused the piers to shift.²¹

After the filing of this lawsuit, the property collapsed on April 18, 2020.²² SFIC assigned engineer William Janowsky of U.S. Forensic to inspect the property, and he concluded in his June 3, 2020 report that the collapse was "the result of a long-term and progressive failure of the foundation system of the building."²³ SFIC denied coverage for the resulting additional claims.²⁴

II. PENDING MOTION

In its first motion for partial summary judgment, SFIC argues that any claims related to property damage from the foundation issues reported in 2011 and 2014 have prescribed. Specifically, it argues that the 2011 and 2014 policies specify their own prescriptive periods providing that "[n]o action can be brought against us 24 months after a loss."²⁵ It asserts that this provision is allowed under Louisiana law, specifically La. R.S. 22:868(B), which restricts insurance contracts from limiting the time period to bring an action against an insurer to any period shorter than 24 months from the inception of loss when the claim is a first-party claim.²⁶ In its second motion for partial summary judgment, SFIC argues that Melendez cannot successfully bring claims for statutory penalties and attorneys’ fees under La. R.S. 22:1973 and 22:1892 because she cannot prove that SFIC acted in an arbitrary or capricious manner.²⁷

In opposition, Melendez argues that the proper prescriptive period for any claim for SFIC's violations of Louisiana's bad faith insurance statutes is ten years because it is a contract claim.²⁸ Therefore, she concludes, her bad faith claims arising from the 2011 and 2014 insurance claims are brought well within the applicable prescriptive period.²⁹ Further, she argues that the bad faith claims have merit as SFIC underpaid or failed to pay her within 30 or 60 days of adequate proof of loss for each of her 2011, 2014, and 2019 claims.³⁰ Melendez asserts that this amounts to behavior that is "arbitrary, capricious, and without probable cause."³¹ In the alternative, she argues that bad faith is a factual determination that is ill-suited for summary judgment.³²

III. LAW & ANALYSIS

A. Summary Judgment Standard

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed. R. Civ. P. 56(c) ). " Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. A party moving for summary judgment bears the initial burden of demonstrating the basis for summary judgment and identifying those portions of the record, discovery, and any affidavits supporting the conclusion that there is no genuine issue of material fact. Id. at 323, 106 S.Ct. 2548. If the moving party meets that burden, then the nonmoving party must use evidence cognizable under Rule 56 to demonstrate the existence of a genuine issue of material fact. Id. at 324, 106 S.Ct. 2548.

A genuine issue of material fact exists if a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The substantive law identifies which facts are material. Id. Material facts are not genuinely disputed when a rational trier of fact could not find for the nonmoving party upon a review of the record taken as a whole. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; E.E.O.C. v. Simbaki, Ltd. , 767 F.3d 475, 481 (5th Cir. 2014). Unsubstantiated assertions, conclusory allegations, and merely colorable factual bases are insufficient to defeat a motion for summary judgment. See Anderson , 477 U.S. at 249-50, 106 S.Ct. 2505 ; Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir. 1994) ; Hopper v. Frank , 16 F.3d 92, 97 (5th Cir. 1994). In ruling on a summary judgment motion, a court may not resolve credibility issues or weigh evidence. See Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co. , 530 F.3d 395, 398-99 (5th Cir. 2008). Furthermore, a court must assess the evidence, review the facts, and draw any appropriate inferences based on the evidence in the light most favorable to the party opposing summary judgment. See Tolan v. Cotton , 572 U.S. 650, 656-57, 134 S.Ct. 1861, 188 L.Ed.2d 895 (2014) ; Daniels v. City of Arlington , 246 F.3d 500, 502 (5th Cir. 2001). Yet, a court only draws reasonable inferences in favor of the nonmovant "when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Little , 37 F.3d at 1075 (citing Lujan v. Nat'l Wildlife Fed'n , 497 U.S. 871, 888, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990) ).

After the movant demonstrates the absence of a genuine issue of material fact, the nonmovant must articulate specific facts showing a genuine issue and point to supporting, competent evidence that may be presented in a form admissible at trial. See Lynch Props., Inc. v. Potomac Ins. Co. , 140 F.3d 622, 625 (5th Cir. 1998) ; Fed. R. Civ. P. 56(c)(1)(A) & (c)(2). Such facts must create more than "some metaphysical doubt as to the material facts." Matsushita , 475 U.S. at 586, 106 S.Ct. 1348. When the nonmovant will bear the burden of proof at trial on the dispositive issue, the moving party may simply point to insufficient admissible evidence to establish an essential element of the nonmovant's claim in order to satisfy its summary judgment burden. See Celotex , 477 U.S. at 322-25, 106 S.Ct. 2548 ; Fed. R. Civ. P. 56(c)(1)(B). Unless there is a genuine issue for trial that could support a judgment in favor of the nonmovant, summary judgment must be granted. See Little , 37 F.3d at 1075-76.

B. Analysis

1. Under Louisiana law, Melendez's 2011 and 2014 claims have prescribed.

A federal court sitting in diversity applies state substantive law, see Erie R.R. Co. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), including "state statutes of limitations and related state law governing tolling of the limitation period."...