Kasper Smoke Kastle LLC v. Atlantic Casualty Insurance Co.

          ORDER

          David G. Campbell, Senior United States District Judge

         Plaintiff Kasper Smoke Kastle LLC asserts claims for breach of contract, bad faith, and punitive damages against Defendant Atlantic Casualty Insurance Company. Doc. 1-1 at 5-11. Defendant moves for partial summary judgment and to strike portions of Plaintiff's response and controverting statement of facts. Docs. 76, 84. Plaintiff moves for alternative relief in regard to the motion to strike. Doc. 89. The requests for oral argument are denied because the issues are fully briefed and oral argument will not aid the Court's decision. See Fed. R. Civ. P. 78(b); LRCiv 7.2(f). The Court will grant the motion for partial summary judgment, deny the motion to strike as improper, and deny the motion for alternate relief as moot.

         I. Background.

         The following facts are undisputed unless otherwise noted. On August 21, 2016, a fire occurred at Plaintiff's retail business, causing fire damage to the roof and smoke damage throughout much of the building. Docs. 77 ¶ 15, 81 ¶ 16. Plaintiff held a business insurance policy issued by Defendant that provided $300, 000 in building coverage and $300, 000 in business personal property coverage. Doc. 77 ¶ 4. Plaintiff submitted a timely claim for the loss. Id. ¶ 17.

         Defendant retained Mosher Adjustment Company (“Mosher”) to assist with inspecting and adjusting the claim. Id. ¶ 19. Plaintiff first retained Resolution Fire Flood (“Resolution”) and subsequently retained the Brown O'Haver Public Adjusters (“BOH”) to represent its interests. Id. ¶¶ 20, 27. The parties disagree on whether Plaintiff is entitled to payment for additional replacement costs for the structure, and the value of Plaintiff's business personal property.

         The parties agree that the structure portion of Plaintiff's insurance claim includes a replacement cost value (“RCV”) of $75, 326.42 and an actual cash value (“ACV”) for repairs of $64, 907.76. Id. ¶ 51. The $10, 418.67 difference between the RCV and ACV represents the added value for replacement costs. Id.

         Defendant's policy states that Defendant will not pay replacement costs until “the lost or damaged property is actually repaired or replaced” and “[u]nless the repair or replacement is made as soon as reasonably possible after the loss or damage.” Id. ¶ 59. The policy also states that Defendant will not pay any RCV in excess of “the amount actually spent for necessary repair or replacement.” Id. ¶ 60. Defendant has paid Plaintiff the $64, 907.76 for the ACV of the structure loss, but has not paid the additional $10, 418.67 in RCV because the parties dispute whether Plaintiff has in fact completed the required repairs. Docs. 76 at 8, 80 at 4.

         On the business personal property claim, Plaintiff's initial adjuster, Resolution, estimated the value of the salvageable items at $26, 854.54. Doc. 77 ¶ 26. Defendant's adjuster, Mosher, estimated the value of the non-salvageable items at $15, 004.81. Id. ¶ 24. Defendant paid Plaintiff both of these amounts, totaling $41, 859.35. Id. ¶ 26. Plaintiff ultimately rejected Resolution's findings regarding the salvageability of various items and retained BOH. Id. ¶ 39. BOH developed its own valuation of the contents, arriving at a retail value of $73, 528.08 (Doc. 77-4 at 43-50) and business personal property value of $137, 380.35 (Id. at 94-98). Defendant declined to pay more than the $41, 859.35 it already had paid based on Resolution's estimate. Doc. 77 ¶¶ 26, 42.

         II. Discussion.

         A. Summary judgment standard.

         A party seeking summary judgment “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 Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving 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. Only disputes over facts that might affect the outcome of the suit will preclude 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).^[1]

         1. Breach of Contract for Structure Damage.

         Defendant argues that it is entitled to summary judgment on the structural portion of Plaintiff's claim because it has paid all of the amounts specified in Plaintiff's proofs of loss, minus the RCV. Defendant contends that Plaintiff has neither completed its repair work nor submitted the necessary invoices showing the repairs and therefore is not entitled to the RCV. Doc. 76 at 8. Plaintiff argues that it did complete the required repair work and that Defendant has violated the policy by failing to pay the RCV. Doc. 80 at 4.

         RCV is available under the policy only if Plaintiff completes the required repair work. Doc. 77 ¶ 59. The policy states: “we will not pay on a replacement cost basis for any loss or damage: (1) Until the lost or damaged property is actually repaired or replaced; and (2) Unless the repair or ...