CARL E. STEWART, Circuit Judge:
The original opinion in this case was issued by the panel on May 11, 2010. No active judge of this court having requested a poll (FED. R.APP. P. 35; 5TH CIR. R. 35), the petition for rehearing en banc is DENIED. The petition for panel rehearing is GRANTED to the extent that we VACATE our previous opinion (606 F.3d 215 (5th Cir.2010)) and replace it with the following. In all other respects, the petition for panel rehearing is DENIED.
This appeal involves an insurance dispute arising from the total destruction of Felton and Lucille Bradley's home as a result of flood and wind damage suffered during Hurricane Katrina. The Bradleys' homeowners policy with Allstate Insurance Company carried a dwelling limit of $105,600. The Bradleys have received $105,139.06 in total insurance payments for their dwelling—$41,339.06 under their Allstate homeowners policy and $63,800 from their flood insurance policy. The Bradleys filed suit against Allstate, alleging that they were entitled to the full limits under their homeowners policy and additional payments for loss of personal property, additional living expenses, mental and physical distress, and Allstate's bad faith. The district court determined that, despite the total loss provision of the homeowners policy, the Bradleys were only entitled to the actual cash value of their home. The district court found that the actual cash value of the home prior to its destruction was less than the total amount they received under their homeowners and flood policies, and any further recovery by the Bradleys would amount to a double recovery. The district court further held that the Bradleys had not advanced any evidence in support of their other claims. The district court awarded the Bradleys some relief as to additional living expenses, but granted summary judgment in favor of Allstate on all other claims. We AFFIRM in part and VACATE and REMAND in part.
This appeal presents the following issues: (1) whether the total loss or actual cash value provision of the policy controls; (2) the proper definition of actual cash value under Louisiana law; (3) how to determine whether the insured has received a double recovery, i.e., collected insurance proceeds in excess of actual losses; and (4) whether the district court erred by granting summary judgment on the Bradleys' claims for loss of personal property, additional living expenses, mental and physical distress, and bad faith.
Prior to Hurricane Katrina, the Bradleys owned and resided at a house located at 2637 Tennessee Street, New Orleans, Louisiana. The property was insured under a homeowners policy issued by Allstate and a separate flood policy issued by Fidelity National Insurance Company. Like many homeowners policies, the Bradleys' homeowners policy specifically excluded flood damage. The homeowners policy contained coverage limits of $105,600 for the dwelling, $73,920 for the contents, and $10,560 for other structures.
Hurricane Katrina destroyed the Bradleys' home in August 2005. A few badly damaged concrete blocks were the only structural component of the house left on the property. The Bradleys notified Allstate of their loss and filed a claim on September 1, 2005. Allstate first sent an engineer to inspect and adjust the loss on December 22, 2005. The engineer's report concluded that "the structure has been destroyed from a combination of hurricane winds and flooding." On two later occasions, Allstate again sent engineers to adjust the claim. On January 5, 2006, one of those Allstate adjusters concluded that "the dwelling is unlivable due to Catastrophic Wind Damage."
Allstate ultimately paid $41,339.06 for structural damage and $10,632 for contents under the homeowners policy. From their flood insurance, the Bradleys received the policy limits of $63,800 for structural damage and $6,200 for home contents. Thus, the total payment to the Bradleys for structural damage to their home under both policies was $105,139.06.
Allstate subsequently performed a retroactive analysis that appraised the pre-storm market value of the Bradleys' home at $85,000. At deposition, Mr. Bradley testified that the pre-storm value of the home was between $85,000 and $95,000, and Mrs. Bradley testified that the pre-storm value was in the neighborhood of $97,000. An expert hired by the Bradleys estimated the cost to rebuild the home at $265,427.
To date, the Bradleys have not rebuilt their Tennessee Street house, although Mr. Bradley stated at deposition that he intends to rebuild. In order to benefit from government assistance through the Road Home program, the Bradleys attested that they will rebuild and return to the property. The Bradleys did purchase another home in New Orleans East for $134,500, but they have not designated that home as a replacement property.
On May 30, 2007, the Bradleys filed suit against Allstate in Louisiana state court; Allstate removed the case to federal court based upon diversity jurisdiction. The Bradleys claimed that Allstate breached the insurance contract, acted negligently, and acted in bad faith. They further alleged that under the Louisiana's Value Policy Law (VPL), they were entitled to the full policy limits from Allstate, without deduction or offset. The complaint specifically sought to recover: (1) the policy limits under their homeowners insurance, because their home was rendered a total loss; (2) additional recovery for loss of their personal property; (3) additional living expenses (ALE); (4) compensation for mental anguish and emotional distress related to Allstate's handling of their homeowners claim for structural damage; and (5) damages for Allstate's alleged bad faith pursuant to LA.REV.STAT. §§ 22:1220 and 22:658.
Through a series of orders addressing multiple motions for partial summary
The Bradleys filed this appeal, arguing that the district court erred in granting summary judgment. The Bradleys contend that summary judgment was improper because: (1) the district court ignored the plain language of the insurance contract providing for the payment of policy limits in the event of a total loss; (2) used the wrong measure of value to determine their scope of recovery; (3) improperly allowed Allstate to offset its payments with the Bradleys' recovery from their flood insurance; (4) failed to consider the weight of the evidence regarding lost personal property and ALE; and (5) wrongly dismissed the Bradleys' bad faith, mental anguish, and emotional distress claims.
"This court reviews a district court's grant of summary judgment de novo." Breaux v. Halliburton Energy Servs., 562 F.3d 358, 364 (5th Cir.2009). We also review de novo the district court's interpretation of state law and give no deference to its determinations of state law issues. See Salve Regina Coll. v. Russell, 499 U.S. 225, 239-40, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991). Summary judgment is appropriate when "the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c). All the facts and evidence must be taken in the light most favorable to the non-movant. Breaux, 562 F.3d at 364.
Summary judgment is also proper if the party opposing the motion fails to establish an essential element of his case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The non-moving party must do more than simply deny the allegations raised by the moving party. See Donaghey v. Ocean Drilling & Exploration Co., 974 F.2d 646, 649 (5th Cir.1992). Rather, the nonmovant must come forward with competent evidence, such as affidavits or depositions, to buttress his claims. Id.
Under Louisiana law,
A contract is ambiguous only if its terms are unclear or susceptible to more than one reasonable interpretation, or the intent of the parties cannot be ascertained from the language employed. Cadwallader v. Allstate Ins. Co., 2002-C-1637, p. 4 (La.6/27/03); 848 So.2d 577, 580. Where an insurance policy includes ambiguous provisions, the "[a]mbiguity ... must be resolved by construing the policy as a whole; one policy provision is not to be construed separately at the expense of disregarding other policy provisions." In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir.2007) (quoting La. Ins. Guar. Ass'n. v. Interstate Fire & Cas. Co., 93-0911 p. 5 (La. 1/14/94); 630 So.2d 759, 763); LA. CIV.CODE art. 2050. "Words susceptible of different meanings must be interpreted as having the meaning that best conforms to the object of the contract." LA. CIV.CODE art. 2048. "Ambiguity may also be resolved through the use of the reasonable-expectations doctrine, `by ascertaining how a reasonable insurance policy purchaser would construe the clause at the time the insurance contract was entered.'" In re Katrina Canal Breaches Litig., 495 F.3d at 206 (quoting La. Ins. Guar. Ass'n, 93-0911 at p. 6, 630 So.2d at 764).
"If, after applying the other general rules of construction, an ambiguity remains, the ambiguous contractual provision is to be construed against the insurer who furnished the policy's text and in favor of the insured finding coverage." Peterson, 98-1712 at p. 5; 729 So.2d at 1029 (citing LA. CIV.CODE art.2056). "The purpose of liability insurance is to afford the insured protection from damage claims. Insurance contracts, therefore, should be interpreted to effect, not deny, coverage." Id. at p. 4; 729 So.2d at 1028 (citing Yount v. Maisano, 627 So.2d 148 (La.1993)).
The section of the homeowners policy referenced in 5(e), Coverage A Dwelling Protection, provides as follows:
Without addressing the section 5(e) total loss provision, the district court held that the measure of the Bradleys' recovery was the ACV under 5(b). The Bradleys argue that—contrary to the determination of the district court—section 5(e) of their homeowners policy is the controlling provision in the event of a total loss,
The critical language of section 5(e) provides that "payment for covered loss will be by one or more of the following methods ... In the event of a total loss of your dwelling and all attached structures covered under Coverage A—Dwelling Protection, we will pay the limit of liability...." (emphasis added). The total loss provision unambiguously applies only when the total loss is caused by a covered peril. It is undisputed that the Bradleys' home was "destroyed from a combination of hurricane winds and flooding" due to Hurricane Katrina. Thus, the Bradleys' loss was due in part to a non-covered peril under section 1—flood. Under section 23, however, if wind, rather than flood, was the predominant cause of loss—as the Bradleys argue—then the loss is covered and subject to the section 5(e) total loss provision.
The relevant question therefore becomes whether a non-covered peril was the predominant cause of the loss. This contested issue of fact has not been addressed by the district court.
The district court did not address the total loss provision under section 5(e), instead
The district court found that the ACV of the Bradleys' home was $97,000 because the market value of the Bradleys' home at the time that it was destroyed did not exceed $97,000. Allstate contends that the district court correctly determined the ACV of the Bradleys' home based on its pre-storm value and appropriately held that they were not entitled to recover further payment under their homeowners policy. The Bradleys argue that ACV is properly calculated as the replacement value of the home less depreciation, but that—regardless—ACV is not the correct measure of their potential recovery.
"The touchstone for ... determining actual cash value is the basic principle that an adequately insured person should incur neither economic gain nor loss when his property is destroyed...." Bingham v. St. Paul Ins. Co., 503 So.2d 1043, 1045 (La.App. 2 Cir.1987). The homeowners policy does not define ACV. Louisiana law defines ACV as "reproduction cost less depreciation." Hackman v. EMC Ins. Co., 07-552, p. 7-8 (La.App. 5 Cir. 3/25/08); 984 So.2d 139, 143 (citing Real Asset Mgmt., 61 F.3d at 1228 n. 7); see also La. Dept. Ins., Insurance Bulletin No. 06-06 ("ACV is the amount needed to repair or replace the damaged or destroyed property, minus the depreciation.").
Thus, ACV is computed as the cost of replacing the building as it existed at the time of the accident, taking into account the replacement costs within a reasonable time after the accident, minus depreciation. The district court erred by calculating ACV based on the pre-storm market value of the house and holding that there were no disputed issues of material fact regarding the ACV of the Bradleys'
An insured party in Louisiana may generally "recover under all available coverages provided that there is no double recovery." Cole v. Celotex, 599 So.2d 1058, 1080 (La.1992) (quoting 15A Couch on Insurance § 56:34 (2d ed.1983)); see also Albert v. Farm Bureau Ins. Co., 940 So.2d 620, 622 (La.2006) ("... Louisiana law does not allow for double recovery of the same element of damages."). The fundamental principle of a property insurance contract is to indemnify the owner against loss, that is "to place him or her in the same position in which he would have been had no [accident] occurred." Berkshire Mut. Ins. Co. v. Moffett, 378 F.2d 1007, 1011 (5th Cir.1967). Consequently, "while an insured may not recover in excess of his actual loss, an insured may recover under each policy providing coverage until the total loss sustained is indemnified." Cole, 599 So.2d at 1080 (quoting Appleman, Insurance Law and Practice § 5192 (1981)).
As discussed above, the district court incorrectly found that the ACV of the Bradley's home was $97,000 because the evidence established that the market value of the Bradleys' home did not exceed $97,000 at the time that it was destroyed by Hurricane Katrina. The court held that because the Bradleys had already collected $105,139.06 from flood and homeowners coverage combined, any additional recovery would amount to a double recovery. Relying upon Cole v. Celotex, the district court therefore held that the Bradleys were not entitled to further recovery as a matter of law.
Allstate contends that the Bradleys were not entitled to recover any further payment under their homeowners policy because they have already recovered the ACV of the property, relying on the incorrect definition of ACV.
In order to determine whether there has been a double recovery by an insured party, the court must ascertain actual loss relative to amounts already recovered under the homeowners policy and other insurance coverages. In the context of evaluating double recovery—or whether any of the insured's losses remain uncompensated—the insured's scope of recovery
A review of decisions under Louisiana law demonstrates that actual loss has alternately been measured by the cost of repair, replacement, or ACV—depending on the circumstances of each case.
Here, however, it is undisputed that the Bradleys have not repaired, rebuilt, or replaced the Tennessee Street property within the two-year period allowed under the policy and Louisiana law. See Versai Mgmt. Corp. v. Clarendon Am. Ins. Co., 597 F.3d 729, 737 (5th Cir.2010) ("Versai's claim for replacement costs likewise was properly dismissed because Versai has not completed repairs on its property as required by the insurance policy."); La. Dept. Ins., Directive 195.
Because the district court treated ACV as synonymous with the pre-storm market value of the Bradleys' home, it incorrectly held that there was no evidence suggesting the Bradleys had uncompensated losses.
The Bradleys additionally argue that because of the mutually exclusive nature of the wind and flood policies, the distinct coverages preclude double recovery for the same element of damages. They assert that the district court erred in its order-of-operations; after the court determines which contractual provision of the policy controls, the Bradleys claim that the district court's next step must be evaluating whether the losses resulted from covered or excluded causes. They aver that only after the fact-finder
An insured "whose property sustains damage from flood and wind can clearly recover for his or her segregable wind and flood damages except to the extent that he seeks to recover twice for the same loss." Johnson v. State Farm Fire & Cas. Co., No. 07-1226, 2008 WL 2178059, at *2 (E.D.La. May 19, 2008) (citing Weiss v. Allstate Ins. Co., No. 06-3774, 2007 WL 891869, at *2 (E.D.La. Mar. 21, 2007)). Insureds are entitled to recover any previously uncompensated losses that are covered by their homeowners policy and which, when combined with their flood proceeds, do not exceed the value of their property. Id. The homeowners and flood insurance policies provide distinct coverages; each protects against a different form of damage. See Ferguson v. State Farm Ins. Co., No. 06-3936, 2007 WL 1378507, at *4 (E.D.La. May 9, 2007) ("While it is true that plaintiffs paid for two separate policies, one homeowners and one flood, that does not equate to double coverage in the event of a given loss. The flood policy is not excess insurance. Instead, it covers a loss not covered by the homeowner policy."). The interplay between the segregation of flood and wind losses and the double recovery rule ensures that proper adjustment by the insurance companies or segregation of covered and excluded damages will, in theory, prevent the insured from receiving a double recovery.
Therefore, the district court first evaluates whether the insured has already been fully compensated by payments under wind and flood insurance. If the court concludes that the homeowners' insurer is not liable for further payments to the insured because additional payments would result in a double recovery, then the homeowners' insurer effectively receives the benefit of the overpayment by the flood insurance. Whether "the flood insurance overpayments ... would have to later be returned to the federal government is not at issue here...." Ferguson, 2007 WL 1378507, at *5 n. 34. But it is worth noting that the benefit will not necessarily serve to enrich the insurer, because NFIP policies contain a subrogation clause providing:
44 C.F.R. § 61.13 app. A(1), § VII(S) (2002).
Because Louisiana's double recovery bar prevents the insured from recovering in excess of actual loss, a district court does not necessarily err by evaluating double recovery prior to the resolution of disputed issues of causation. Where the value of the property in question has been conclusively established, a district court may find as a matter of law that the insured is limited to a specific recovery. Lambert v. State Farm Fire & Cas. Co., 568 F.Supp.2d 698, 703 (E.D.La.2008) (citing Broussard v. State Farm Fire & Cas. Co., No. 06-8084, 2007 WL 2264535, at *5 (E.D.La. Aug. 2, 2007)). But where the insurer has not conclusively established the value of the property—as here—the court cannot find as a matter of law that
For the reasons discussed above, depending on the factual determinations of the district court on remand as to the predominant cause of the damage to the Bradleys' property, either: (1) the total loss provision in section 5(e) will dictate that the Bradleys are entitled to recover the full policy limits for covered losses; or (2) the ACV provision in section 5(b) will dictate that the Bradleys are entitled to recover the ACV of their home, replacement cost minus depreciation. Under either section 5(e) or (b), the Bradleys' recovery will be subject to the prohibition against double recovery.
Assuming the double recovery rule does not bar further payments to the Bradleys, then they are entitled to recover up to the policy limits of the homeowners policy.
The Bradleys asserted claims for bad faith and mental and physical distress under Louisiana Revised Statutes §§ 22:658
A cause of action for penalties under § 22:658 requires a showing that: (1) the insurer has received satisfactory proof of loss; (2) the insurer fails to tender payment within thirty days of receipt thereof; and (3) the insurer's failure to pay is arbitrary, capricious or without probable cause. LA.REV.STAT. ANN. § 22:658. With respect to mental anguish damages, "[t]he conduct prohibited in R.S. 22:658(A)(1) is virtually identical to the conduct prohibited in R.S. 22:1220(B)(5): the failure to timely pay a claim after receiving satisfactory proof of loss when that failure to pay is arbitrary, capricious, or without probable cause." Sher v. Lafayette Ins. Co., 2007-2441 p. 26 (La.4/8/08); 988 So.2d 186, 206 (quoting Reed v. State Farm Mut. Auto Ins. Co., 03-0107, p. 12 (La.10/21/03); 857 So.2d 1012, 1020). Thus, "a plaintiff attempting to base her theory of recovery against an insurer on [§§ 22:658 and 22:1220] must first have a valid, underlying, substantive claim upon which insurance coverage is based." Clausen v. Fid. & Deposit Co. of Md., 95 0504, p. 3 (La. App. 1 Cir. 8/4/95); 660 So.2d 83, 85.
The district court did not speak to the arbitrariness of the insurer's failure to pay; it instead granted summary judgment in favor of Allstate on the §§ 22:658 and 22:1220 claims based on its conclusion that the Bradleys had not carried their burden of establishing a valid, underlying breach of contract. Because the §§ 22:658 and 22:1220 claims are inextricably intertwined with the underlying breach of contract claims, we do not reach the question of entitlement to recovery under §§ 22:658 and 22:1220. We have held that the district court improperly granted summary judgment on the issue of the uncompensated structural damages and we therefore vacate the grant of summary judgment on the §§ 22:658 and 22:1220 claims as well, and remand for reconsideration consistent with this opinion.
The Bradleys initially filed a loss of contents claim for $36,378, which included loss of jewelry, two flat-screen televisions, digital recording equipment, DVD equipment, VCRs, computers, leather jackets, and a mink coat. The claim relied upon the original purchase price of these items rather than their ACV as required under the policy.
During the discovery process, Allstate propounded the following interrogatory:
Based on the Bradleys' failure to put forth any summary judgment evidence of the value of the specific items claimed and the answer to Interrogatory No. 13, the district court concluded that there was no genuine issue of material fact regarding uncompensated loss of contents, and granted summary judgment in Allstate's favor on this issue. Allstate asserts that the district court correctly held that no material facts are in dispute regarding the Bradleys' claim for uncompensated loss of contents. The Bradleys claim that the original, handwritten two-page loss of contents list totaling $36,878 establishes a genuine issue of material fact regarding their recovery under the homeowners policy.
Ordinarily, an affidavit in conjunction with a list of lost contents suffices to raise a genuine issue of material fact. Lambert, 568 F.Supp.2d at 709. In response to Allstate's motion for summary judgment, however, the Bradleys did not offer even an affidavit as to the value of their lost contents. The failure to advance any Rule 56(c) proof, together with the concession in their interrogatory response,
The policy provides for ALE as follows:
1. Additional Living Expense
When the Bradleys evacuated, they initially went to a relative's home in Alabama. Allstate advanced $850 to the Bradleys shortly after the evacuation. After approximately two or three weeks, the Bradleys moved to Phoenix City, Alabama, and lived in a hotel that was paid for by FEMA for two weeks. The Bradleys then moved to an apartment in Phoenix City, where they lived for three or four months. The Bradleys presented evidence that they participated in a Section 8 housing assistance program and received $179 toward their rent, beginning in September 2005. The out-of-pocket cost for rent was $280 per month, and FEMA reimbursed the Bradleys for two months of rent payments. The Bradleys also received $2,000, which FEMA provided to Katrina victims. The Bradleys next moved to Columbus, Georgia,
The district court sua sponte granted summary judgment in favor of the Bradleys for ALE incurred while living in Columbus, awarding them $7,200. The district court concluded that Allstate did not act in bad faith in failing to pay ALE because the Bradleys did not present evidence of ALE in a timely manner.
The Bradleys assert that there exist genuine issues of material fact regarding unpaid ALE. They argue that leases provided to Allstate for the period that they lived outside of New Orleans are sufficient to establish a genuine issue regarding uncompensated expenses, and any payments that they received from Section 8 and FEMA should not be credited to Allstate. Allstate argues that, by definition, the Bradleys' living expenses did not increase during a time period in which they incurred no expenses because they received payments from other sources, such as FEMA.
The Bradleys have not presented evidence establishing a genuine issue of material fact regarding further uncompensated ALE; no estimate has been provided regarding uncompensated losses. Because the Bradleys have not established any plausible breach of contract for unpaid ALE, there is no basis for asserting a bad faith claim against Allstate with respect to unpaid ALE. The district court did not err in granting summary judgment on both the breach of contract claim and the related bad faith claim for ALE.
The district court erred by ignoring the section 5(e) total loss provision of the homeowners policy, instead prematurely relying on the section 5(b) ACV provision. In order to determine whether section 5(e) controls here, on remand the court must evaluate whether a "covered loss" predominantly caused the damage to the Bradleys' property. The district court also erred by utilizing an incorrect method of calculating ACV, rather than using replacement cost minus depreciation as required by Louisiana law. Its holding that the double recovery rule precluded further recovery by the Bradleys, based on an incorrect method of calculating ACV, must therefore be vacated. Additionally, because the district court granted summary judgment on the §§ 22:658 and 22:1220 claims based upon its determination that the Bradleys could not show an underlying breach of contract, we vacate the grant of summary judgment on the §§ 22:658 and 22:1220 claims. With respect to loss of contents of the home, the Bradleys' interrogatory response and absence of Rule 56(c) evidence demonstrates that, for purposes of summary judgment, they failed to meet their threshold burden of proof regarding the loss of contents; the district court did not err in concluding that there was no genuine issue of material fact regarding uncompensated loss of contents. Lastly, the district court properly granted summary judgment on the Bradleys' ALE claim because they advanced no summary judgment evidence creating a genuine issue of material fact regarding uncompensated ALE.
For the reasons discussed above, the district court's grant of summary judgment is VACATED and REMANDED for consideration consistent with this opinion as to the breach of contract and related bad faith claims for uncompensated structural damage to the Bradleys' home. The summary judgment is AFFIRMED with respect to the claim for loss of contents and ALE and the associated claims of bad faith.
Id.
503 So.2d at 1045.
Id. (internal citations omitted).
Ferguson, 2007 WL 1378507, at *4.
