Opinion
Civil Action No. 4:22-cv-00466-O
2022-11-30
Amy BLUEITT and Damond Blueitt, Plaintiffs, v. CRESTBROOK INSURANCE COMPANY, Defendant.
Andrew Dalton Spadoni, Preston J. Dugas, III, Dugas Cheek & Circelli PLLC, Fort Worth, TX, Michelle L. Calhoun, William Lee Calhoun, Calhoun Law Firm PLLC, San Antonio, TX, for Plaintiffs. Patrick M. Kemp, Robert Glen Wall, Mario Mauricio Chavez, Segal McCambridge Singer & Mahoney Ltd., Austin, TX, Austin, TX, for Defendant.
Andrew Dalton Spadoni, Preston J. Dugas, III, Dugas Cheek & Circelli PLLC, Fort Worth, TX, Michelle L. Calhoun, William Lee Calhoun, Calhoun Law Firm PLLC, San Antonio, TX, for Plaintiffs. Patrick M. Kemp, Robert Glen Wall, Mario Mauricio Chavez, Segal McCambridge Singer & Mahoney Ltd., Austin, TX, Austin, TX, for Defendant. OPINION & ORDER Reed O'Connor, UNITED STATES DISTRICT JUDGE
This case involves homeowners suing an insurance company in a dispute over payment for residential hail damage. The Defendant, Crestbrook Insurance Company, filed a Motion for Summary Judgment (ECF No. 22) on August 29, 2022 that is currently pending before the Court and is now ripe for review. Embedded in its Reply in Support of Its Motion for Summary Judgment (ECF No. 32), filed October 7, 2022, Defendant Crestbrook advanced an Objection to Plaintiffs' Summary Judgment Evidence. Defendant's Objection prompted Plaintiff to offer Plaintiffs' Opposed Motion for Leave to File Plaintiffs' Surreply to Defendant's Corrected Motion for Summary Judgment (ECF No 34), filed October 13, 2022. Plaintiffs' Motion is now also ripe for review.
The Court first addresses Defendant Crestbrook's Objection to Plaintiffs' Summary Judgment Evidence and finds that Defendant's hearsay objection should be OVERRULED. Accordingly, Plaintiffs' Motion for Leave to File Plaintiffs' Surreply (ECF No. 34) is MOOT, since Plaintiff offered it "out of an abundance of [caution]" in case the Court sustained Defendant's Objection. Finally, as for Crestbrook's Motion for Summary Judgement (ECF No. 22), the Court finds that it should be GRANTED in part and DENIED in part. The Court's reasoning for each of these rulings is explained below. Defendant's Objection to Plaintiffs' Summary Judgment Evidence and Plaintiffs' Opposed Motion for Leave to File Plaintiffs' Surreply
Mot. for Leave to File Surreply 1, ECF No. 34.
In its Reply in Support of Its Motion for Summary Judgment (ECF No. 32), filed October 7, 2022, Defendant Crestbrook advanced an Objection to Plaintiffs' Summary Judgment Evidence. Specifically, Crestbrook objects to the Declaration of Brady Sandlin, Exhibit A of Plaintiffs' Response to Crestbrook's Motion for Summary Judgment, as impermissible hearsay under Federal Rules of Evidence 801 and 802. Beyond its citation to the Federal Rules of Evidence, Defendant offers no further caselaw to support its objection.
Def.'s Reply 1, ECF No. 32.
Defendant's objection fails because it ignores the context in which the Declaration of Brady Sandlin is offered. Federal Rule of Civil Procedure 56 governs the evidence that a court can consider at the summary judgment stage and states, in relevant part, "An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." FED R. CIV. PRO. 56(c)(4) (emphasis added).
The Fifth Circuit has emphasized this permissive rule on numerous occasions. For example, as the Fifth Circuit stated in LSR Consulting, LLC v. Wells Fargo Bank, N.A., "At the summary judgment stage, materials cited to support or dispute a fact need only be capable of being 'presented in a form that would be admissible in evidence.' " 835 F.3d 530, 534 (5th Cir. 2016) (emphasis original) (citing FED R. CIV. PRO. 56(c)). In fact, the Fifth Circuit held that a district court abused its discretion and committed an error of law by excluding unsworn expert reports when deciding a motion for summary judgment in case involving alleged plagiarism and academic disciplinary procedures. Patel v. Texas Tech Univ., 941 F.3d 743, 746 (5th Cir. 2019). Put simply, the Court may consider evidence at the summary judgment stage if that evidence contains facts which would be admissible at trial, even if that evidence is unsworn or in a presently inadmissible form.
The Fifth Circuit proceeded to affirm the district court since the erroneously excluded expert reports did not alter the ultimate disposition of the case. Patel v. Texas Tech Univ., 941 F.3d 743, 748 (5th Cir. 2019).
Upon reviewing the contested Declaration of Brady Sandlin, the Court finds that it contains facts which are capable of being admitted at trial. Namely, Brady Sandlin could directly testify to his own opinions as an expert witness at trial, as he is already anticipated to do. Therefore, the Court can properly consider the Declaration of Brady Sandlin at the summary judgment stage, and Defendant's Objection to Plaintiffs' Summary Judgment Evidence must be, and is hereby, OVERRULED.
The Court offers no opinion on Crestbrook's Motion to Strike Plaintiffs' Expert Brady Sandlin (ECF No. 45) which is currently pending before the Court. At present, the Court simply finds that Brady Sandlin could testify at trial, without resolving whether he actually will be allowed to testify.
Having made this ruling on Defendant's Objection, the Court turns to resolve Plaintiffs' Opposed Motion for Leave to File Plaintiffs' Surreply to Defendant's Corrected Motion for Summary Judgment (ECF No 34), filed October 13, 2022. As stated in their briefing, the primary purpose of Plaintiffs' proposed surreply would be to introduce Brady Sandlin's expert opinions through another avenue if the Court otherwise intended to exclude his opinions. But since the Court has decided to review the Declaration of Brady Sandlin as proper summary judgment evidence, there is no need to introduce that same evidence through a separate avenue. Therefore, Plaintiffs' Opposed Motion for Leave to File Plaintiffs' Surreply to Defendant's Corrected Motion for Summary Judgment (ECF No 34) is MOOT.
Mot. for Leave to File Surreply 1, ECF No. 34.
Defendant's Motion for Summary Judgment
Plaintiffs' First Amended Complaint alleges the following claims: (1) breach of contract; (2) violation of Sections 541.051, 541.060(a)(1), (a)(2), (a)(3), (a)(4), and (a)(7) of the Texas Insurance Code ("541 Insurance Code Violations"); (3) violation of Sections 17.50(a)(1)-(3) of the Texas Deceptive Trade Practices Act ("DTPA Violations"); (4) breach of the duty of good faith and fair dealing; (5) violation of Sections 542.058 and 542.060 of the Texas Insurance Code ("Prompt Payment Statute Violations"); and (6) attorneys' fees pursuant to the Texas Civil Practice & Remedies Code Chapter 38 and Texas Insurance Code Sections 541.152 and 542.060. Defendant Crestbrook seeks summary judgment on all of these claims. The Court GRANTS summary judgment in favor of Crestbrook on the 541 Insurance Code Violations, the DTPA Violations, and the breach of the duty of good faith and fair dealing claim. The Court DENIES summary judgment on the breach of contract claim, the Prompt Payment Statute Violations, and the attorneys' fees. I. Facts
Pls.' First Amended Complaint, ECF No. 14.
Def.'s Mot. for Summ. J., ECF No. 22.
These facts are drawn from the Parties' briefing. See Def.'s Br. in Supp. of Mot. for Summ. J. 2-5, ECF No. 23; Pls.' Resp. 2-4, ECF No. 29. Disputed facts are noted as such.
Plaintiffs Amy Blueitt and Damond Blueitt own a home in Tarrant County, Texas, and they purchased insurance for their home from Crestbrook between September 19, 2016 and September 19, 2020. While the exact date of Plaintiffs' alleged loss is disputed, Plaintiffs first reported the loss at issue in this case to Crestbrook on July 8, 2021. According to Plaintiffs, their property was severely damaged by hail impacts and their home suffered water leaks as a result. Defendant disputes the existence, extent, and cause of the alleged damage.
Following Plaintiffs' report, Crestbrook claims representative Kenneth Hicks was assigned to handle Plaintiffs' claims. On July 12, 2021, four days after Plaintiffs' initial report, Crestbrook dispatched Christopher Chapman to inspect Plaintiffs' property. The parties dispute Mr. Chapman's qualifications and the results of his inspection. Regardless, Mr. Hicks relied on Mr. Chapman's report to prepare an estimate of $1,762.76 for Plaintiffs' damages which was less than Plaintiffs' $10,000 deductible.
Plaintiffs were unsatisfied with this outcome, so they hired LongHorn Public Adjusters to reinspect their property. The LongHorn public adjuster determined that Plaintiffs' property had been severely damaged by hail and estimated that the cost to replace Plaintiffs' roof amounted to $129,019.13.
In response to the LongHorn damage assessment, Defendant dispatched David Brosig to reinspect Plaintiffs' property on October 27, 2021. Mr. Brosig's report identified some evidence that hail fell on Plaintiffs' property, but ultimately concluded that the damage to Plaintiffs' property was minor and either man-made or due to normal wear and tear. Based on Mr. Brosig's report, Mr. Hicks revised his damage estimate to $9,553.07, but that amount still fell under Plaintiffs' deductible, so no award was issued.
Still unsatisfied with this result, Plaintiffs filed a pre-suit demand on February 28, 2022, and filed this suit on May 3, 2022. Since then, Plaintiffs' expert Brady Sandlin inspected Plaintiffs' property on July 7, 2022, and he compiled a report supporting Plaintiffs' claims of severe hail damage. Likewise, Crestbrook's experts Eric Moody and Randall Taylor inspected Plaintiffs' property on July 20, 2022; they concluded that the property was not hail damaged, and that even if repairs were necessary, those repairs would be less expensive than Plaintiffs allege.
II. Legal Standard
Summary judgment is appropriate only where the pleadings and evidence show "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 not "a disfavored procedural shortcut," but rather an "integral part of the Federal Rules as a whole, which are designed 'to secure the just, speedy and inexpensive determination of every action.' " Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting FED. R. CIV. P. 1). A genuine dispute of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "[T]he substantive law will identify which facts are material." Id. The movant must inform the court of the basis for its motion and identify the portions of the record that reveal there are no genuine disputes of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548.
The court must view the evidence in the light most favorable to the nonmovant. Ion v. Chevron USA, Inc., 731 F.3d 379, 389 (5th Cir. 2013). "Moreover, a court must draw all reasonable inferences in favor of the nonmoving party and may not make credibility determinations or weigh the evidence." Id. And if there appears to be some support for disputed allegations, such that "reasonable minds could differ as to the import of the evidence," the court must deny the motion for summary judgment. Anderson, 477 U.S. at 250, 106 S.Ct. 2505. "[Y]et the nonmovant may not rely on mere allegations in the pleadings; rather, the nonmovant must respond to the motion for summary judgment by setting forth particular facts indicating that there is a genuine issue for trial." Caboni v. Gen. Motors Corp., 278 F.3d 448, 451 (5th Cir. 2002) (cleaned up). "After the nonmovant has been given an opportunity to raise a genuine factual issue, if no reasonable juror could find for the nonmovant, summary judgment will be granted." Id.
III. Analysis
In their briefing, the parties group Plaintiffs' claims into four categories. First, there is the core breach of contract claim that underpins all of Plaintiffs' assertions of Crestbrook's wrongdoing. Second, there are the alleged Insurance Code Violations, DTPA Violations, and breach of the duty of good faith and fair dealing claims. These claims all involve allegations of bad faith on the part of Crestbrook, and the parties collectively refer to them as the extra-contractual claims. Third and fourth, there are the Prompt Payment Statute Violations and the attorneys' fees, respectively. The Court addresses each category in turn.
See, e.g., Def.'s Br. in Supp. of Mot. for Summ. J., ECF No. 23; Pls.' Resp., ECF No. 29; Def.'s Reply, ECF No. 32.
a. Breach of Contract Claim
Defendant Crestbrook argues that it is entitled to summary judgment because Plaintiffs have failed to prove that hail, a peril covered by Plaintiffs' insurance policy, was the cause of the damage to their property.
"Under Texas law, an insured bears the burden of proving that a loss is covered under the terms of an insurance policy." Fiess v. State Farm Lloyds, 392 F.3d 802, 807 (5th Cir. 2004). Furthermore, "[i]f covered and non-covered perils combine to create a loss, the insured may only recover the amount caused by the covered peril." Id. Taken together, "[b]ecause the insured may only recover for damage caused by covered perils, the insured bears the burden of presenting evidence that will allow the trier of fact to segregate covered losses from non-covered losses." Id.
Crestbrook's arguments related to causation are two-fold. First, Plaintiffs cannot prove that hail caused any damage to their property. And second, Plaintiffs fail to distinguish between hail-related damage and damage caused by other sources that would not be covered under their insurance policy. In support of these arguments, Crestbrook cites to the reports from its experts which deny the existence of hail damage, and instead offer alternate explanations for any damage to Plaintiffs' property such as normal wear and tear or man-made damage to roof tiles due to footfalls and dropped tools.
Def.'s Br. in Supp. of Mot. for Summ. J. 7-9, ECF No. 23.
In response, Plaintiffs note that Brady Sandlin does identify hail as the cause of the damage to Plaintiffs' property, and he does rule out the alternate explanations proffered by Defendant's experts. In fact, Defendant's Reply acknowledges that Brady Sandlin's declaration contains these findings. Admittedly, Defendant attacks the reliability and conclusory nature of Brady Sandlin's opinions, but that does not erase the fact that his opinions are part of the record in this case. This means that Plaintiffs have successfully pointed to specific evidence that highlights a dispute of material fact on the issue of causation. Therefore, the Court cannot grant summary judgment in favor of Crestbrook on Plaintiffs' breach of contract claim.
Pls.' Resp. 7-8, ECF No. 29.
Def.'s Reply 2, ECF No. 32.
As a final point on this question, the Court notes that there are other pieces of evidence revealing a dispute of material fact on the issue of causation in addition to the Declaration of Brady Sandlin. For example, there is the LongHorn Public Adjusters report which calculated $129,019.31 of damages to Plaintiffs' property and categorized the "Type of Loss" as "Hail." Similarly, Crestbrook's own investigator, David Brosig, authored a report which identified collateral indicators of hail damage at Plaintiffs' property and concluded that hail less than ½ inch wide fell at the property. That same report also analyzed weather data and noted that hail up to 1 ½ inches in diameter fell within ten miles of the property around the time period when the loss is alleged to have occurred. These pieces of evidence raise an issue of material fact that Plaintiffs' property suffered hail damage. And while Defendant can point to contradictory evidence about these facts, weighing the sufficiency of disputed evidence is precisely the kind of balancing that this Court cannot engage in while resolving Defendants' motion. See, e.g., Anderson, 477 U.S. at 250, 106 S.Ct. 2505. Therefore, the central issue of whether Plaintiffs' home was damaged by hail remains an open question that cannot be resolved at the summary judgment stage.
Def.'s App., Ex. B-6, ECF No. 24.
Def.'s App., Ex. B-7, ECF No. 24.
Id.
b. Extra-Contractual Claims
Defendant Crestbrook levies two arguments against Plaintiffs' extra-contractual claims. First, Crestbrook argues that the extra-contractual claims should be dismissed because Plaintiffs' underlying claim for breach of contract is invalid. And second, Crestbrook argues that it cannot be held liable for any extra-contractual damages because its refusal to pay Plaintiffs' any benefits is due to a bona fide dispute about policy coverage. Defendant's first argument is moot since the Court is denying summary judgment on Plaintiffs' breach of contract claim after finding that it may have merit. Defendant's second argument requires further analysis.
Def.'s Br. in Supp. of Mot. for Summ. J. 10-12, ECF No. 23.
Under Texas law, there is a duty on the part of the insurer to deal fairly and in good faith with an insured in the processing of claims. Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987). A plaintiff may sue for a breach of this duty if their insurer denies or delays their claim without any reasonable basis for the denial or delay. Id. However, "[a] bona fide controversy is sufficient reason for failure of an insurer to make a prompt payment of a loss claim. As long as the insurer has a reasonable basis to deny or delay payment of a claim, even if that basis is eventually determined by the fact finder to be erroneous, the insurer is not liable for the tort of bad faith." Higginbotham v. State Farm Mut. Auto. Ins. Co., 103 F.3d 456, 459 (5th Cir. 1997) (internal citations omitted). Furthermore, Texas courts have recognized the close relationship between common law bad faith claims and the statutory bad faith claims found in the Texas Insurance Code and the Deceptive Trade Practices Act. Id. at 460 ("Although these claims are individual causes of action which do not depend on each other for support, Texas courts have clearly ruled that these extra-contractual tort claims require the same predicate for recovery as bad faith causes of action in Texas." (collecting cases)). Because of this similarity, Texas courts have held that the bona fide dispute rule also applies to statutory bad faith claims under the Deceptive Trade Practices Act and the Texas Insurance Code. Id.
As previously discussed, there is ample dispute about the existence, extent, and cause of hail damage to Plaintiffs' property. For its part, Crestbrook commissioned two reports on Plaintiffs' property in the months preceding this suit. Crestbrook claims representative Kenneth Hicks also revised his initial damages evaluation in response to the latter of these reports. And even though Plaintiffs identify multiple alleged errors in these reports, there is no dispute that Crestbrook commissioned them in a timely manner and that Mr. Hick's relied upon them when compiling his damage estimates.
Def.'s Br. in Supp. of Mot. for Summ. J. 2-4, ECF No. 23.
Id.
At trial, it may be proven that Plaintiffs' property did suffer extensive hail damage and that Mr. Hicks was wrong to deny coverage. But the law allows for Mr. Hick to be wrong, so long as his error was the product of good faith. And here, the evidence shows that Mr. Hick's reasonably relied upon the information available to him to reach his conclusions about Plaintiffs' entitlement to insurance coverage. The record even reveals that Mr. Hicks revised his conclusions when presented with new information. While Plaintiffs can, and do, point to evidence of mistake on the part of Crestbrook, they do not identify any evidence of bad faith. Accordingly, the Court must grant summary judgment in favor of Crestbrook on all of Plaintiffs' extra-contractual claims.
Defendant's argumentation on Plaintiffs' extra-contractual claims only mentions the common law beach of the duty of good faith claim and the Insurance Code Violations, but it omits any discussion of the DTPA Violations. See Def.'s Br. in Supp. of Mot. for Summ. J. 10-12, ECF No. 23. Nevertheless, the same analysis applies to all these claims, and thus Defendant is entitled to summary judgment on all of them.
c. Prompt Payment Statute Violations
Defendant Crestbrook argues that it is entitled to summary judgment on the Prompt Payment Statute Violations since these claims rely upon Plaintiffs' breach of contract claim and, according to Defendant, summary judgment is proper on the breach of contract claim. However, the Court is denying summary judgment on Plaintiffs' breach of contract claim. Supra. Since Defendant offers no other reasoning for why it is entitled to summary judgment on these claims, the Court must deny summary judgment on the Prompt Payment Statute Violations.
Def.'s Br. in Supp. of Mot. for Summ. J. 12-13, ECF No. 23.
d. Attorneys' Fees
Defendant Crestbrook argues that it is entitled to summary judgment on the issue of attorneys' fees since Plaintiff cannot recover attorneys' fees absent another valid claim. But Plaintiffs' breach of contract claim has survived summary judgment, so that claim constitutes a basis upon which Plaintiffs may recover attorneys' fees. Since Defendant offers no other reasoning for why it is entitled to summary judgment on this issue, the Court denies summary judgment on the question of attorneys' fees.
Def.'s Br. in Supp. of Mot. for Summ. J. 13, ECF No. 23.
IV. Conclusion
For the reasons stated in this Opinion & Order, Crestbrook's Motion for Summary Judgement (ECF No. 22) should be, and is hereby, GRANTED in part and DENIED in part. The Court GRANTS summary judgment in favor of Crestbrook on the 541 Insurance Code Violations, the DTPA Violations, and the breach of the duty of good faith and fair dealing claim. The Court DENIES summary judgment on the breach of contract claim, the Prompt Payment Statute Violations, and attorneys' fees.
SO ORDERED on this 30th day of November, 2022.