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Trudel v. American Family Mut. Ins. Co.

United States District Court, D. Arizona

August 15, 2014

Michael Trudel et al., Plaintiffs,
American Family Mut. Ins. Co., Defendant.


STEPHEN M. McNAMEE, Sr., District Judge.

Before the Court is Defendant American Family Mutual Insurance Company's ("American Family") fully briefed Motion for Partial Summary Judgement. (Docs. 57; 71; 75.) For the reasons that follow, the motion is denied.[1]


Since 1995, Plaintiffs Michael Trudel's and Sandra Staples-Trudel's (the "Trudels")[2] home in Scottsdale, Arizona has been insured by homeowners' insurance policies issued by American Family. (Docs. 66 ¶ 1; 72 ¶ 3.) On October 5, 2010, several homes including the Trudels' were damaged by a hail storm that moved through the Phoenix metropolitan area. (Docs. 66 ¶ 5; 72 ¶ 7.) On November 8, 2010, the Trudels filed a notice of loss for damage to their home. (Docs. 66 ¶ 5; 72 ¶¶ 8-9)

American Family hired an independent adjusting firm, Pacesetters, to assist with Trudels' claim; the Pacesetters' adjuster Randel Green ("Green") inspected the Trudels' home and found hail damage to two roof tiles, the skylight, a gutter, the garage door, window screens, the air conditioning unit, and a plastic dog crate. (Doc. 66 ¶¶ 6-7). Although Green was a licensed adjuster in other states, he was not licensed in Arizona. (Doc. 72 ¶ 12.) At the time, Green was adjusting 30 to 40 homes a week and was compensated according to the number of homes he adjusted. ( Id. ¶ 14.) Green would only conclude a roof tile was damaged by hail if he could observe an impact mark. ( Id. ¶ 22.) Since Green was unwilling to actually climb on the roof because it was so fragile (id. ¶ 17), [3] he only concluded a roof tile was damaged if he could see an impact mark from his vantage point at the edge of the roof (id. ¶¶ 22-23). American Family disputes this fact on the basis that Green's deposition testimony "makes no mention of the adjusters [ sic ] vantage point at the edge of the roof'" (Doc. 76 at 2), but a finder of fact could reasonably conclude as much given the fact that Green did not actually get on the roof. The Trudels did not have any questions and did not feel like there was any damage that Green's estimate did not address (Doc. 66 ¶¶ 11-12), but the estimate did not include damage to the stucco exterior of the Trudels' home nor did it account for the number of tiles that may be broken during repair. (Docs. 58-1 at 41-48; 72 ¶¶ 19-21; 76 at 2.) Less deductible and depreciation, the Trudels received $712.35. (Docs. 66 ¶¶ 8-10; 72 ¶ 18.)

The Trudels subsequently asked a local contractor for a repair estimate. (Docs. 72 ¶ 24; 76 at 2.) The local contractor identified several additional damaged tiles, noted that the particular type of tile was no longer manufactured, and suggested the entire roof needed to be replaced. (Doc. 72 ¶ 25.) While American Family argues this estimate is inadmissible hearsay, the contents of the report could be admitted at trial for a purpose other than the truth of the matters asserted therein, such as why the Trudels called and asked for the claim to be reopened, which they did. (Doc. 66 ¶ 14.) In turn, American Family reviewed the local contractor's estimate and sent a second adjuster, also from Pacesetters, to reinspect the Trudels' home; however, no additional damage was found and American Family denied additional coverage or payment consideration on the loss. ( Id. ¶¶ 14-17.)

The Trudels subsequently requested a copy of their claim, retained counsel, and filed suit in Maricopa County Superior Court alleging breach of contract and insurance bad faith. (Docs. 1-1 at 5-7; 66 ¶¶ 18, 20-21.) American Family removed on the basis of diversity. (Doc. 1.) During discovery, the Trudels disclosed repair estimates for their tile roof, flat roof, and pool area (Doc. 66 ¶ 22), and claimed that the entire roof needed to be replaced because their particular type of roof tile was no longer manufactured and their homeowners' association would not allow the use of non-matching tile (Doc. 72 ¶ 26).[4] The repair estimates ranged from $36, 890.44 and $106, 199.36. (Doc. 66 ¶ 26.) Notably, the lowest repair estimate is more than $30, 000 greater than the amount of ACV payments, and American Family does not contend it has paid everything due, but concedes that "[t]he amount American Family owes to plaintiffs on the claim" is a live issue. ( Id. at 1.)

American Family retained Haag Engineering ("Haag") to assess the damage to the Trudels' home; Haag disagreed that the pool damage was due to the storm. (Doc. 66 ¶ 23.) Haag also noted that the Trudels' estimates called for complete roof replacement and disagreed that such extensive repairs were necessary. ( Id. ¶¶ 24-25.) Even so, Haag found hail damage to the Trudels' home for which they were not compensated. (Docs. 72 ¶ 38; 76 at 4.) More than a year after receiving Haag's report, American Family paid an additional $3, 660.34 in undisputed damages to the Trudels' home. (Docs. 72 ¶ 39; 72-9 at 5.) After discovery, American Family moved for summary judgment. (Doc. 57.)

The policy terms that were in effect during the relevant time period (the "Policy") are the subject of dispute. According to American Family, "Arizona Amendatory Homeowners Endorsement 584(C)" amended the Policy to state:

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 appraisal award with us.
* * *
Matching of Undamaged Property. We will not pay to repair or replace undamaged property due to mismatch between undamaged and new material used to repair or replace damaged material because of:
a. Texture, dimensional difference;
b. Color, fading, oxidation, weathering differences;
c. Wear and tear, marring, scratching, ...

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