United States District Court, D. Arizona
Murray Snow Chief United States District Judge
before the Court are the Motion for (Partial) Summary
Judgment of Plaintiffs Adams Craig Acquisitions, LLC
(“ACA”) and Adams Craig Technologies, LLC
(“ACT”) (Doc. 55.) and the (Cross) Motion for
Summary Judgment of Defendants Atain Specialty Insurance Co.
(“Defendant Atain”) and Dynamic Claims Services,
Inc. (“Defendant Dynamic”) (Doc. 53.). For the
following reasons Plaintiffs' Motion is denied, and
Defendants' Motions are granted in part and denied in
case arises out of an insurance contract. Plaintiff ACA
purchased a Comprehensive General Liability Policy
(“Policy”) from Defendant Atain effective
December 17, 2015 through December 17, 2016.
March 2014, Plaintiffs contracted to remodel a residence in
Paradise Valley. The remodel was completed in June 2016. In
August 2016, the homeowners notified Plaintiffs of a water
leak in the garage. It was eventually determined that roof
caps, incorrectly installed by one of Plaintiffs'
subcontractors, JLC Roofing, Inc. (“JLC”), were
the cause of the leak. The Arizona Registrar of Contractors
(“ROC”) ordered JLC to repair the defective roof
caps. JLC complied with the ROC's order. However, JLC
refused to repair and denied responsibility for any damage
caused by water seepage under the walk deck above the garage.
JLC's insurance carrier also refused to participate in
resolving the issue. On February 24, 2017, Plaintiffs decided
to make a claim under their policy with Atain. Atain promptly
hired Defendant Dynamic as an independent adjuster to review
Dynamic's representative Mr. Marvin Heinl met with
Plaintiffs' principal, Mr. Adams, to inspect the
residence. After the inspection, Mr. Heinl told Mr. Adams
that he had a duty to “mitigate his damages.”
(Doc. 56-5 at 18.) Mr. Heinl then issued the inspection
report (“Dynamic Report”) on March 21, 2017. The
Dynamic Report acknowledged that “damages to the
drywall in the garage [are] directly related to the
deficiency in the roof cap installation on the second level
roof.” (Doc. 56-6 at 9.) The Dynamic Report further
noted that Mr. Adams claimed the deficient roof caps also
resulted in damage to the walk deck above the garage. The
Dynamic Report did not opine on the cause of the damage to
the walk deck, but instead suggested that a third-party
expert be hired to evaluate Mr. Adams's assertion.
However, the Dynamic Report did explain that much of the
evidence “of the waterproof barriers and deck
application, and the sealing with the parapets and perimeter
wall of the home” had been lost. (Doc. 56-6 at 9.)
Defendant Atain did not conduct any further investigation.
is some dispute as to the comprehensiveness of the
information Plaintiffs provided to Defendant Atain. All
parties agree, however, that Defendant Atain sent requests
for information on April 4, 2017, May 11, 2017, and June 9,
2017. On July 21, 2017, Defendant Atain issued its initial
coverage analysis. Plaintiffs submitted additional
information in September 2017. Defendant Atain issued its
final coverage determination in a letter on October 11, 2017
and remitted payment for the covered claims. Plaintiffs
requested reimbursement for $120, 008.37, and Defendant Atain
paid Plaintiffs $28, 362.97.
Atain determined there were three categories to ACA's
Claim: (1) repairs and costs related to the incorrectly
installed roof caps-the source of the water intrusion; (2)
repairs and costs to the drywall and insulation resulting
from the water intrusion; and (3) repairs and replacement of
the walk deck above the garage. Defendant Atain agreed to pay
the costs associated with the repairs of the resulting damage
to the drywall and insulation but refused to pay the costs
associated with repairing the roof caps and the walk deck.
Defendant Atain asserted that the denied costs were not
covered under the Policy because they were incurred to repair
“defective work” rather than “resulting
damage.” Defendant Atain also denied Plaintiffs'
requests for coverage of their own labor costs in
investigating and repairing the leak and other damages.
brought suit against Defendant Atain in the Superior Court
for Maricopa County alleging breach of contract, breach of
the covenant of good faith and fair dealing, promissory
estoppel, and negligent misrepresentation. Plaintiffs also
assert that Defendant Dynamic aided and abetted Defendant
Atain in breaching its insurance contract with Plaintiffs.
Defendants timely removed the action to this court.
Subsequently, Plaintiffs moved for summary judgment on the
breach of contract and bad faith claims, while Defendants
cross-moved for summary judgment on all the asserted claims.
purpose of summary judgment is “to isolate and dispose
of factually unsupported claims.” Celotex Corp. v.
Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91
L.Ed.2d 265 (1986). Summary judgment is appropriate if the
evidence, viewed in the light most favorable to the nonmoving
party, shows “that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(c). Only
disputes over facts that might affect the outcome of the suit
will preclude the entry of summary judgment, and the disputed
evidence must be “such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
party seeking summary judgment always bears the initial
responsibility of informing the district 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, 477 U.S. at 323.
Parties opposing summary judgment are required to
“cit[e] to particular parts of materials in the
record” establishing a genuine dispute or “show[
] that the materials cited do not establish the absence . . .
of a genuine dispute.” Fed. R. Civ. P.
56(c)(1). A district court has no independent duty
“to scour the record in search of a genuine issue of
triable fact[.]” Keenan v. Allan, 91 F.3d
1275, 1279 (9th Cir. 1996). “[W]hen
simultaneous cross-motions for summary judgment on the same
claim are before the court, the court must consider the
appropriate evidentiary material identified and submitted in
support of both motions, and in opposition to both motions,
before ruling on each of them.” Fair Housing
Council of Riverside Cnty., Inc. v. Riverside Two, 249
F.3d 1132, 1134 (9th Cir. 2001).
Breach of Contract
Policy provides, “[w]e will pay those sums that the
insured becomes legally obligated to pay as damages because
of bodily injury or property damage to which this insurance
applies.” (Doc. 54-1 at 57.) The ...