Pavelka v. Allstate Prop. & Cas. Ins. Co., Case No. 14–cv–10706.

91 F.Supp.3d 931

Patrick PAVELKA, Nicola Pavelka, Plaintiffs

v.ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant.

Case No. 14–cv–10706.

United States District Court, E.D. Michigan, Southern Division.

Signed March 18, 2015.

Michael H. Fabian, Fabian, Sklar, Farmington Hills, MI, for Plaintiffs.

Phillip K. Yeager, Yeager, Davison & Day, P.C., Ada, MI, for Defendant.

OPINION AND ORDER GRANTING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT [# 19]

GERSHWIN A. DRAIN, District Judge.

I. INTRODUCTION

In October 2012, the home and personal property of Plaintiffs, Patrick and Nicola Pavelka, was destroyed in a fire. Two months after the fire, Plaintiffs submitted sworn statements concerning their total loss claims to their home insurer, Defendant, Allstate Property and Casualty Insurance Company (“Allstate”). On February 13, 2014, Plaintiffs filed the instant Complaint against Allstate for breach of their insurance contract. Plaintiffs specifically allege that Allstate has failed to make timely payments on their damage claims.

On February 17, 2015, Magistrate Judge Michael J. Hluchaniuk conducted a settlement conference with both parties. The parties settled Plaintiffs' breach of contract claims for building loss damage and the additional living expenses.

Presently before the Court is Plaintiffs' Motion for Partial Summary Judgment [# 19], filed on November 10, 2014. Plaintiffs move for partial summary judgment as to the applicability of Allstate's judicial estoppel defense. Plaintiffs also seek an order for an appraisal of their personal property. Additionally, they request that the appraisal is based on replacement cost and/or actual cash value. Plaintiffs finally note that this motion addresses neither their insurance claims relating to the demolition and damage of “other structures” nor their claims for 12–percent interest due to Allstate's delay of payment.

On February 21, 2015, this Court conducted a hearing concerning the applicability of Allstate's judicial estoppel defense and Plaintiffs' request for an appraisal. For the reasons discussed below, the Court will grant the motion on both of the issues raised by Plaintiffs.

II. FACTUAL BACKGROUND

Patrick Pavelka is a former plastics engineer. In March 2005, he sustained a traumatic brain injury that left him permanently disabled and unable to work. Soon thereafter, Patrick Pavelka and his wife, Nicola Pavelka, began to live solely from the income that Mrs. Pavelka made as a registered nurse. Unable to meet their debts, in February 2010, the Pavelkas filed for Chapter 13 bankruptcy. Their bankruptcy case later turned into a Chapter 7 proceeding.

On or about October 19, 2012, Plaintiffs' home and personal property, located in Clarkston, Michigan, was destroyed by a fire. On June 1, 2012—four months prior to the home fire and two months after the conclusion of the Chapter 7 bankruptcy proceedings—Plaintiffs purchased a Homeowners Property and Casualty Policy from Allstate (“Allstate Policy”). At the time of the home's destruction, the Allstate Policy was therefore in effect.¹ The Allstate Policy covers building loss, structural damages, and the loss of personal property.

The Plaintiffs notified Allstate that they had suffered from the loss of their home and personal property and that, as a result, they were incurring additional living expenses. In addition, on or about December 24, 2012, Plaintiffs submitted to Allstate a “Sworn Statement in Proof of Loss.” Allstate received this statement shortly after December 27, 2012. The statement included their building damage claim as well as their claims for damage to other structures and demolition.

On or about January 16, 2013, Plaintiffs submitted another Sworn Statement in Proof of Loss regarding their personal property. In the sworn statement, Plaintiffs asserted that the replacement cost of their personal property was $317,292.28; the actual cash value of Plaintiffs' personal property amounted to $268,809.56. This amount exceeds the Allstate Policy limits of $254,618.00 for personal property loss. Plfs.' Mot. Summ. J., Ex. C. Plaintiffs further listed 3,704 items as inventory.

Plaintiff's total loss claims were referred to Allstate's Special Investigation Unit because local authorities determined that the fire was caused by an act of arson. Allstate suspected that Plaintiffs played a part in the arson. The timing of the issuance of the Allstate Policy and information that Plaintiffs had been involved in a number of other insurance claims in addition to other factors played a part in Allstate's suspicion. See Def.'s Answer to Plfs.' Mot. Partial Summ. J. 2–3.

Allstate conducted an investigation but found no wrongdoing on the part of the Plaintiffs. Allstate asserts that the delay in payment of Plaintiffs' building loss and additional living expenses claims was a result of its investigation. At present, Allstate has tendered $41,765.00 to compensate for Plaintiffs' personal property loss claim.

III. LAW AND ANALYSIS

A. Motion for Summary Judgment Standard

Federal Rule of Civil Procedure 56(a) empowers the court to render summary judgment forthwith “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 judgment as a matter of law.” See Redding v. St. Eward, 241 F.3d 530, 532 (6th Cir.2001). The Supreme Court has affirmed the court's use of summary judgment as an integral part of the fair and efficient administration of justice. The procedure is not a disfavored procedural shortcut. Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; see also Cox v. Kentucky Dept. of Transp.,

53 F.3d 146, 149 (6th Cir.1995).

The standard for determining whether summary judgment is appropriate is “ ‘whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.’ ” Amway Distributors Benefits Ass'n v. Northfield Ins. Co., 323 F.3d 386, 390 (6th Cir.2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251–52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). The party seeking summary judgment “bears the initial burden of specifying the basis upon which it contends judgment should be granted and of identifying that portion of the record which, in its opinion, demonstrates the absence of a genuine issue of material fact.” Celotex, 477 U.S. at 322, 106 S.Ct. 2548. The evidence and all reasonable inferences must be construed in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Redding, 241 F.3d at 532 (6th Cir.2001). The evidence presented must be such on which a jury could reasonably find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Id. at 247–48, 106 S.Ct. 2505 (emphasis in original); see also Nat'l Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 907 (6th Cir.2001).

If the movant establishes by use of the material specified in Rule 56(c) that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law, the opposing party must come forward with “specific facts showing that there is a genuine issue for trial.” First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 270, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968) ; see also McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir.2000). Mere allegations or denials in the non-movant's pleadings will not meet this burden, nor will a mere scintilla of evidence supporting the non-moving party. Anderson, 477 U.S. at 252, 106 S.Ct. 2505. Rather, there must be evidence on which a jury could reasonably find for the non-movant. McLean, 224 F.3d at 800 (citing Anderson, 477 U.S. at 252, 106 S.Ct. 2505 ).

B. Discussion

In the present motion, Plaintiffs argue that Allstate breached the insurance policy by failing to pay for the total loss of their personal property claim. Allstate, on the other hand, contends that Plaintiffs have misrepresented the total cost of their personal property loss. To support its argument, Allstate points to Plaintiffs' 2010 bankruptcy petition.

Allstate asserts that Plaintiffs should have calculated their personal property claim in the same manner that they calculated the value of their personal property in their 2010 bankruptcy schedules. Plaintiffs' bankruptcy petition utilized liquidation and “garage sale” values. The Allstate Policy dictates the application of replacement cost or actual cash value in estimating loss of personal property.

Allstate asserts the judicial estoppel defense bars Plaintiffs present personal property loss claim. Both parties move for a determination, as a matter of law, as to the applicability of the judicial estoppel defense. In addition, Plaintiffs seek an order for an appraisal of their personal property purportedly destroyed in the home fire.

1. Defendant's judicial estoppel doctrine as an affirmative defense is inapplicable.

Judicial estoppel is an equitable doctrine that “prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase.” Lewis v. Weyerhaeuser Co., 141 Fed.Appx. 420, 424 (6th Cir.2005) (citing New Hampshire v. Maine, 532 U.S. 742, 749, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) ). The doctrine therefore “ ‘preserve[s] the integrity of the courts by preventing a party from abusing the judicial process through cynical gamesmanship.’ ” Id. (quoting Browning v. Levy, 283 F.3d 761, 776 (6th Cir.2002) ). The Sixth Circuit has further described...