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Montalvo v. American Family Mutual Insurance Co.

United States District Court, D. Arizona

July 1, 2014

Pedro G. Montalvo, et al., Plaintiffs,
American Family Mutual Insurance Company, et al., Defendants.


JAMES A. TEILBORG, Senior District Judge.

Pending before the Court is Defendant American Family Mutual Insurance Company ("American Family")'s Motion for Partial Summary Judgment (Doc. 48). The Court now rules on the motion.

I. Background

The facts of this case, construed in the light most favorable to Plaintiffs Pedro G. Montalvo and Rihilma S. Montalvo, are as follows.[1] Plaintiffs purchased a homeowners insurance policy (the "Policy") from American Family. (Doc. 49-1 at 3). The Policy covers "risks of accidental direct physical loss to property described in Coverage A - Dwelling and Dwelling Extension, unless the loss is excluded in this policy." ( Id. at 9). Excluded losses include "faulty, inadequate, or defective... construction, renovation, repair, remodeling or renovation;... materials used in construction, reconstruction, repair, remodeling or renovation;... design, workmanship, or specifications." ( Id. at 11). The Policy also specifies the timing of payment for losses as follows:

Loss Payment. We will adjust all losses with you. We will pay you unless some other party is named in the policy or is legally entitled to receive payment. Loss will be payable 30 days after we receive your properly completed proof of loss and:
a. we reach agreement with you;
b. there is an entry of a final judgment; or
c. there is a filing of an arbitration award with us.

( Id. at 12) (emphasis omitted).

On October 5, 2010, a hail storm occurred in the Phoenix metropolitan area. On August 17, 2011, Plaintiffs first reported a claim to American Family for damage caused by this hail storm. (Doc. 49-1 at 31). American Family's claim notes report the description of the claim as "roof damage to the tiles on the roof, swimming pool damage, siding damageg [sic]." ( Id. )

American Family assigned the claim to Pacesetter Claims Service, which employed Cheryl Batstone as a field adjuster. ( Id. at 62). Ms. Batstone began her career as an adjuster in March 2011; the October 2010 hail storm was the first storm for which she had adjusted the subsequent insurance claims. (Doc. 55-2 at 12:19-13:11). On August 24, 2011, Ms. Batstone inspected Plaintiffs' property and identified storm-related damage to window screens and two air conditioning units. (Doc. 49-1 at 62). Plaintiffs expressed to Ms. Batstone that their adjuster had found additional property damage. (Doc. 55-2 at 102:14-22). Nevertheless, Ms. Batstone estimated repair costs of $546.94 for the damage that she had identified, which did not exceed Plaintiffs' $2, 500 deductible. (Doc. 49-1 at 62). On August 28, 2011, American Family notified Plaintiffs via letter that "no payment can be issued at this time." ( Id. at 73).

On October 4, 2011, Plaintiffs called American Family and requested an extension of time with respect to their claim. American Family declined to grant an extension. ( Id. at 55-56). On December 15, 2011, Plaintiffs, through counsel, sent a demand letter to American Family accusing American Family of acting in bad faith with respect to their claim. ( Id. at 75). In the letter, Plaintiffs asserted that their independent adjuster had found substantial damage to the property totaling $126, 642.68 and threatened to file a lawsuit in fifteen days if American Family did not settle for $145, 000. ( Id. at 77, 79).

In response to Plaintiffs' letter, American Family sent two contractors to Plaintiffs' property to investigate the damage. ( Id. at 54). During Getty Engineering Services ("Getty")'s January 10, 2012 inspection of the property, Plaintiff Pedro Montalvo and Plaintiffs' counsel's representative Doug Austin were present but gave only limited answers or withheld answers to Getty's background questions regarding the property.[2] ( Id. at 89; Doc. 55-3 at 2). On January 12, 2012, Getty sent a list of background questions to Plaintiffs' counsel to be answered by Mr. Montalvo. (Doc. 49-1 at 113-14). Plaintiffs' counsel promised to "do [his] best" to answer the questions in a timely manner. ( Id. at 117).

Following the report of American Family's air conditioning contractor that one air conditioning unit needed to have its condenser fins repaired and the other two units needed to be replaced, American Family paid Plaintiffs $10, 798.15 less recoverable depreciation and deductible, for a total of $5, 489.15. (Doc. 49 ¶¶ 18-19; Doc. 55 ¶¶ 18-19).

On February 13, 2012, Getty informed Plaintiffs' counsel that Mr. Montalvo's failure to respond to the background questions regarding the property was delaying Getty's report. (Doc. 49-1 at 133). On March 26, 2012, American Family sent Plaintiffs' counsel a letter asking for the background information. ( Id. at 135). Plaintiffs answered three days later. (Doc. 49 ¶ 22; Doc. 55 ¶ 22). Getty issued its report on April 30, which resulted in American Family paying Plaintiffs $17, 413.27 less recoverable depreciation, deductible, and credit for previous payments, for a total of $3, 402.42. (Doc. 49 ¶¶ 23-24; Doc. 55 ¶¶ 23-24).

American Family sent Getty's report to Plaintiffs' counsel along with an explanation as to the adjustment of Plaintiffs' claim based upon Getty's findings. (Doc. 49 ¶ 26; Doc. 55 ¶ 26). American Family's letter stated that it was covering roof tiles with "cosmetic edge chip damage, " those damaged "by foot fall, " but not those damaged due to manufacturing defects or improper installation. (Doc. 49-1 at 148). American Family declined to cover the windows because those damages were, according to American Family, due to a ladder and gunfire. ( Id. at 149). American Family declined to cover the pool deck because it found no hail damage, only normal cracks and wear and tear. ( Id. ) American Family covered hail damage to the inside pool surface in one location and declined to cover the other damage to the pool surface as non-hail damage. ( Id. at 150). American Family covered the gutter damage and some stucco repair but not for cracked and smashed areas damaged by blunt force objects or faulty construction. ( Id. at 151). American Family also covered window screens. ( Id. at 152).

Plaintiffs subsequently sent American Family a second demand letter reiterating the same $145, 000 demand. ( Id. at 155). American Family responded that it believed it had properly adjusted Plaintiffs' claim, and offered to take the claim to appraisal. ( Id. at 167). On September 28, 2012, Plaintiffs filed this lawsuit. (Doc. 1-1).

II. Summary Judgment Standard

Summary judgment is appropriate when "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." Fed.R.Civ.P. 56(a). "A party asserting that a fact cannot be or is genuinely disputed must support that assertion by... citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits, or declarations, stipulations... admissions, interrogatory answers, or other materials, " or by "showing that materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Id. 56(c)(1)(A), (B). Thus, summary judgment is mandated "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." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

Initially, the movant bears the burden of pointing out to the Court the basis for the motion and the elements of the causes of action upon which the non-movant will be unable to establish a genuine issue of material fact. Id. at 323. The burden then shifts to the non-movant to establish the existence of material fact. Id. The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts" by "com[ing] forward with specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (quoting Fed.R.Civ.P. 56(e) (1963) (amended 2010)). A dispute about a fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The non-movant's bare assertions, standing alone, are insufficient to create a material issue of fact and defeat a motion for summary judgment. Id. at 247-48. However, in the summary judgment context, the Court construes all disputed facts in the light most favorable to the non-moving party. Ellison v. Robertson, 357 F.3d 1072, 1075 (9th Cir. 2004).

III. Plaintiffs' Expert Disclosures

American Family asserts that Plaintiffs have not disclosed any admissible material evidence disputing Getty and Falcon Air's reports, and therefore there is no question of fact for the jury as to whether American Family owes Plaintiffs additional amounts under the Policy. (Doc. 48 at 9). Specifically, American Family argues that two pieces of Plaintiffs' evidence are inadmissible: (1) the insurance estimate purportedly authored by Austin Insurance Services and (2) the report of RB Engineering (the "RB Report"). ( Id. at 10).

A. Background

Plaintiffs' initial demand letter to American Family stated that Plaintiffs' counsel had sent an independent adjuster to Plaintiffs' property and that "[a] copy of this independent adjuster's report is enclosed." (Doc. 49-1 at 75). The enclosed report was captioned as "Statement of Loss" and listed the adjuster as David Chami (Plaintiffs' counsel), with the insurance company as "Price Law Group, APC." ( Id. at 78). The report also listed the "Claim Rep." as "David Chami" and the "Contractor Company" as "Price Law Group LLC." ( Id. at 80).

Plaintiffs' initial disclosure statement included a complete copy of this estimate (the "Loss Estimate"), which Plaintiffs identified as "Report of Doug Settell, of Austin Insurance Services, dated October 1, 2011." ( Id. at 175). The complete estimate includes thirty-nine pages of photographs of Plaintiffs' property, with each photo listed as "Taken By: David Chami." See ( id. at 191-229). Plaintiffs also in their ...

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