United States District Court, D. Arizona
The Racquet Club at Scottsdale Ranch Condominium Association, Inc., Plaintiff,
Philadelphia Indemnity Insurance Company, Defendant.
G. CAMPBELL SENIOR UNITED STATES DISTRICT JUDGE
case involves an insurance coverage dispute stemming from a
2010 hail storm in the metro-Phoenix area. Plaintiff Racquet
Club at Scottsdale Ranch asserts breach of contract and bad
faith claims against Defendant Philadelphia Indemnity
Insurance Company. Defendant has filed a motion for summary
judgment. Doc. 49. The motion is fully briefed (Docs. 51,
54), and oral argument will not aid the Court's decision.
See Fed. R. Civ. P. 78(b); LRCiv 7.2(f). For reasons
stated below, the motion will be granted in part and denied
following facts are not disputed for purposes of summary
judgment. See Docs. 50, 53. Plaintiff operates a
condominium complex in Scottsdale, Arizona. The property
spans nearly forty acres and has seventy buildings within
five subdivisions: Hampton Courts, Casitas, Townhomes,
Hammocks, and Villas. On October 5, 2010, a hail storm caused
damage to the property. Defendant had issued a commercial
insurance policy to Plaintiff that covered physical damage
caused by hail.
Roofing maintained the property at the time of the storm and
for several years thereafter, but never alerted Plaintiff to
the presence of hail damage. Plaintiff began working with
Paramount Roofing in early 2015. Paramount found hail damage
to two buildings in the Villas and apprised Plaintiff of the
damage in February 2015.
notified Defendant of the hail damage on June 30, 2015.
Defendant sent its adjuster, Engle Martin & Associates,
to inspect the property one week later. Defendant's
roofing expert, Roof Technical Services, inspected the
property in late August. Engle Martin issued a report in
September that found a net loss of $2, 390.15 ($10, 361.89
total loss less depreciation and the $5, 000 deductible).
Defendant paid this amount four days later.
was sent a proof of loss form to sign on October 23, 2015.
One month later, Defendant closed the file because it had not
received a signed proof of loss.
February 2016, Plaintiff retained Pride Adjusters to inspect
the property and represent Plaintiff on the claim. Defendant
reopened the file in March and sent Pride a letter with
Defendant's damages estimate and a request for
Pride's competing estimate. Pride submitted its report
five months later, estimating a loss of nearly $4 million.
Defendant rejected this estimate in early September 2016.
parties agreed to joint inspections of the property, several
of which occurred over the next two months. Core Consulting
Group inspected the property on behalf of Defendant. Core
issued a report on January 18, 2017, estimating the total
cost of repairs to be $13, 971.47. Defendant paid Plaintiff
$6, 351.32 on February 8, 2017.
filed suit two months later. Doc. 1. Plaintiff asserts breach
of contract and bad faith claims, and seeks both compensatory
and punitive damages. Id. ¶¶ 46-72.
Defendant moves for summary judgment on each claim and the
request for punitive damages. Doc. 49. With respect to the
breach of contract claim, Defendant contends that coverage is
precluded because Plaintiff breached the policy by waiting
nearly five years after the storm to notify Defendant of the
loss, and the delay prejudiced Defendant. Id. at
8-13. Defendant further contends that the evidence does not
support a finding of bad faith or an award of punitive
damages. Id. at 13-16.
Summary Judgment Standard.
seeking summary judgment “bears the initial
responsibility of informing the court of the basis for its
motion and identifying those portions of [the record] which
it believes demonstrate the absence of a genuine issue of
material fact.” Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986). Summary judgment is appropriate if the
moving party 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). Summary judgment is also
appropriate 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, 477 U.S. at 322.
evidence must be viewed in the light most favorable to the
nonmoving party, and all justifiable inferences are drawn in
that party's favor. Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986).
“Credibility determinations, the weighing of evidence,
and the drawing of inferences from the facts are jury
functions.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255 (1986). To avoid summary judgment, the
factual dispute must be genuine - that is, the evidence must
be sufficient for a reasonable jury to return a verdict for
the nonmoving party. Id. at 248.
Notice of Loss.
Arizona law, an insurer is not contractually obligated to
provide coverage where (1) the insured breached the policy by
failing to provide timely notice of a loss, and (2) the delay
prejudiced the insurer. See Lindus v. N. Ins. Co. of
N.Y., 438 P.2d 311, 315 (Ariz. 1968); Globe Indem.
v. Blomfield, 562 P.2d 1372, 1374 (Ariz.Ct.App. 1977);
Liberty Mut. Fire Ins. v. Mandile, 963 P.2d 295
(Ariz.Ct.App. 1997); Salerno v. Atl. Mut. Ins., 6
P.3d 758, 764 (Ariz.Ct.App. 2000). The insurer has the burden
of proving both the breach and resulting prejudice. See
Lindus, 438 P.2d at 315 (“[T]he burden of proving
prejudice is on the insurance company.”); Carpenter
v. Super. Ct., 422 P.2d 129, 132 (Ariz. 1966)
(“The insurer has the burden of proving the
insured's breach . . . in order to ...