JEAN C. HAMILTON, District Judge.
This matter is before the Court on Church Mutual Insurance Company's ("Church Mutual") Motion for Summary Judgment and Pleasant Green Missionary Baptist Church's ("Pleasant Green") Motion for Partial Summary Judgment. (ECF Nos. 55, 58.) Also pending before the Court are the Parties' Motions to Strike the reports and testimony of several experts. (ECF Nos. 53, 61, 63.) The Motions have been fully briefed and are ready for disposition.
The summary judgment record reveals the following facts. Pleasant Green owns a building located at 1220 Rev. G. H. Pruitt Place in St. Louis, Missouri (hereinafter, the "Building"). Pleasant Green had a policy of insurance for the Building through Church Mutual (hereinafter, the "Policy"), which provides, in pertinent part:
All coverage parts included in this policy are subject to the following conditions:
(Plf. Ex. 2, ECF No. 56.2.) The Policy also contains a provision that excludes from coverage certain causes of loss, including "wear and tear"; "continuous or repeated seepage or leakage of water, or the presence of condensation of humidity, moisture, or vapor that occurs over a period of 14 days or more"; and "faulty, inadequate, or defective...design, [or] construction." Id.
On December 6, 2012, Church Mutual sent a Notice of Cancellation to Pleasant Green for nonpayment of the Policy premium. The Notice provided Pleasant Green until December 21, 2012 to make payment in order to avoid cancellation. (Plf. SUMF ¶ 4, Plf. Ex. 3.) On December 27, 2012, Church Mutual sent a final billing statement to Pleasant Green, indicating that the "Policy Period" had run from "09/17/12 — 12/21/12" and that the Policy was "[c]ancelled," and requesting payment for an earned premium. (Plf. SUMF ¶ 5, Plf. Ex. 5.) Pleasant Green paid the earned premium, and on January 29, 2013, Church Mutual sent a letter to Pleasant Green acknowledging receipt of the "earned premium," and confirming that "coverage on this policy has ceased." (Plf. SUMF ¶¶ 6, 7; Plf. Ex. 7.)
On April 17, 2013, the ceiling of the Building's sanctuary collapsed. (Plf. SUMF ¶ 9.) The same day, Trustee Carlton Wicker contacted Church Mutual regarding the ceiling failure. (Plf. SUMF ¶ 10.) Church Mutual advised him that the Policy had been cancelled in December 2012. (Plf. SUMF ¶ 11.) Several days later, Deacon Barry Taylor sent a letter on behalf of Pleasant Green to Church Mutual regarding the "unjustifiable cancellation" of the Policy, and requesting that the Policy be reinstated. (Plf. Ex. 10.) The letter explained that the "church trustee board was unaware of the cancellation" due to reasons that were "being addressed internally," and that there had been confusion regarding the payment plan. Id. Church Mutual denied Mr. Taylor's request for reinstatement; however, it thereafter issued Pleasant Green a new policy that excluded coverage of the damage to the sanctuary. (Plf. SUMF ¶ 16, Plf. Ex. 1.) On August 7, 2013, Pleasant Green filed a Complaint with the Department of Insurance, alleging that the Policy was "unjustifiably canceled." (Plf. SUMF ¶ 21; Plf. Ex. 16.) The Department of Insurance ultimately concluded that it could find no wrongdoing by Church Mutual and that it had no basis to continue its investigation. (Plf. SUMF ¶ 23, Plf. Ex. 18.)
On November 20, 2013, Pleasant Green filed a claim with Church Mutual, alleging an April 2012 hailstorm as the cause of loss in connection with the ceiling collapse. (Plf. SUMF ¶¶ 26, 36.) The same day, Church Mutual hired an adjuster to inspect the Building. The adjuster inspected the Building on December 9, 2013 and recommended that Church Mutual hire an engineer to fully inspect the roof and further investigate the claim. (Plf. SUMF ¶¶ 28, 34, 35; Plf. Exs. 26, 27.) Church Mutual thereafter hired an engineer, but due to weather-related delays he was unable to inspect the Building until February 18, 2014. In a report issued on April 24, 2014, the engineer noted hail damage to shingles on parts of the roof, which according to weather data could have occurred on, among other dates, April 28, 2012. He concluded, however, that "[d]ue to the removal of the ceiling prior to the site visit, no conclusion can be made regarding the cause of the ceiling collapse"; and that "[t]he interior moisture intrusion...is the result of long-term ongoing deterioration and is unrelated to wind or hail." (Plf. Ex. 35.)
Meanwhile, on February 6, 2014, Church Mutual sent Pleasant Green a reservation of rights letter, and in March 2014 Mr. Taylor signed a proof of loss claiming "[n]o less than: $2,059,916." Church Mutual thereafter requested that Pleasant Green submit to an Examination Under Oath (hereinafter, the "Examination"). (Plf. SUMF ¶¶ 48-50, Plf. Exs. 21, 32.) Prior to the Examination, Pleasant Green produced to Church Mutual two engineering reports that addressed the ceiling collapse: one report, dated June 14, 2013, was issued by J. Lu International, LLC (hereinafter, the "J. Lu Report"), and the other report, dated December 9, 2013, was issued by Unified Investigations & Sciences, Inc. (hereinafter, the "UIS Report").
The J. Lu Report concluded that:
(Plf. Ex. 41.) The UIS Report noted evidence of hail damage that had diminished the roof's functional life and water-shedding capability, but concluded that:
(Plf. Ex. 40.)
During the Examination, which took place on April 21, 2014, Mr. Taylor confirmed that Pleasant Green had received the December 2012 Notice of Cancellation, but that its staff had "mishandled" the Notice. (Plf. SUMF ¶ 8, Plf. Ex. 1 at 4-5.) He also confirmed that Pleasant Green had relied upon the J. Lu and UIS Reports in determining the cause of loss, and that the UIS Report was the only engineering analysis Pleasant Green had to support is claim that hail had caused the ceiling failure. (Plf. Ex. 1 at 14, 41-43.) Mr. Taylor explained that Pleasant Green attributed the cause of loss to the April 2012 storm because it had "discover[ed] shortly thereafter a crack in one of the window alcoves," which "started as a hairline" and eventually expanded to the area that collapsed. Id. at 31-32. According to Mr. Taylor, Pleasant Green "didn't originally connect [the crack] with the hail," and it did not report the crack to Church Mutual. Id. at 32-33, 43-44.
On August 20, 2014, Church Mutual filed this action for declaratory judgment, seeking a determination of the Parties' rights and obligations under the Policy. (ECF No. 1.) Pleasant Green thereafter filed a Counterclaim, asserting claims for breach of contract and vexatious refusal to pay. (ECF No. 19.) The Parties now move for summary judgment. (ECF No. 55, 58.) They also move to strike the reports and testimony of several experts. (ECF No. 53, 61, 63.)
Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." "Where Parties file cross-motions for summary judgment, each summary judgment motion must be evaluated independently to determine whether a genuine issue of material fact exists and whether the movant is entitled to judgment as a matter of law." Jaudes v. Progressive Preferred Ins. Co., 11 F.Supp.3d 943, 947 (E.D. Mo. 2014). The substantive law determines which facts are material, and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The moving party bears the burden of showing the absence of a genuine issue of material fact. See id. at 256. When a summary judgment motion is properly supported by evidence, the burden then shifts to the non-moving party who must set forth affirmative evidence showing that there is a genuine issue for trial. See id. at 256-57. In ruling on a motion for summary judgment, the Court is required to view the facts in the light most favorable to the non-moving party and must give that party the benefit of all reasonable inferences that may be drawn from the record. See Hott v. Hennepin Cnty., Minn., 260 F.3d 901, 904-05 (8th Cir. 2001) (citations omitted).
As an initial matter, Pleasant Green argues that it had reasonable expectations of coverage in April 2013 which should be honored, and that, in the alternative, the Policy should be reformed. For the following reasons, this Court disagrees with Pleasant Green's allegations that it "had no reason to doubt" that it was insured at the time the ceiling collapsed.
On December 6, 2012, Church Mutual sent Pleasant Green a Notice of Cancellation. During the Examination, Mr. Taylor acknowledged that Pleasant Green had received this Notice, and explained that Pleasant Green's staff had mishandled it:
(Plf. Ex. 1 at 4, 7.) On December 27, 2012, Church Mutual sent Pleasant Green a final billing statement for the earned premium, which indicated that the "Policy Period" had run from "09/17/12-12/21/12," and that the Policy was "[c]ancelled." Church Mutual subsequently confirmed in the January 29, 2013 letter that "[t]he coverage on this policy has ceased." Although Pleasant Green contends that there was confusion regarding the payment plan, the Court notes that there is no evidence suggesting that Pleasant Green ever contacted Church Mutual when it did not receive a statement in February 2013 as expected. In addition, Pleasant Green does not dispute that it received the January 29, 2013 letter confirming cancellation of the Policy. While Pleasant Green's mishandling of its correspondences and its purported misunderstanding of its payment obligations present unfortunate circumstances, they do not provide grounds for application of the reasonable expectations doctrine or for reformation. See Nabil v. State Farm Mut. Auto. Ins. Co., 877 S.W.2d 177, 178 (Mo. Ct. App. 1994) ("The principal of reasonable expectations provides that the "objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations."); Kopff v. Economy Radiator Serv., 838 S.W.2d 449, 452 (Mo. Ct. App. 1992) (party seeking reformation must show that written contract does not accurately set forth terms of agreement actually made, or does not incorporate true prior intentions of parties; unilateral mistake alone is not adequate basis for reformation). Therefore, the Court concludes that in April 2013 the Policy was no longer in effect, and that in order to succeed on its claim for breach of contract Pleasant Green must show that the cause of loss occurred prior to December 22, 2012, and that there was coverage pursuant to the terms of the Policy.
Church Mutual disputes the cause and extent of loss alleged by Pleasant Green. Church Mutual further asserts that the Policy is void because Pleasant Green failed to cooperate in its investigation of the claim and made numerous misrepresentations relating to the loss. Specifically, Church Mutual contends that Pleasant Green, among other things, failed to give prompt notice of the loss and to take reasonable steps to protect the property from further damage. (ECF No. 57.) Pleasant Green counters that Church Mutual has failed to establish that it intentionally concealed and misrepresented material facts relating to the claim, and it seeks partial summary judgment with respect to Church Mutual's "fraud and misrepresentation defense." (ECF No. 59.)
Upon consideration of the Parties' arguments and the record before it, the Court concludes that the Policy is void. Even assuming that the April 2012 hailstorm did in fact cause the loss, the Court finds that it is beyond genuine dispute that Pleasant Green failed to give Church Mutual prompt notice of the loss and to take reasonable steps to protect the property from further damage.
Here, the Policy states that, "in event of loss or damage," the insured must give Church Mutual "prompt notice of the loss or damage" and "take all reasonable steps to protect the Covered Property from further damage..." (Plf. Ex. 2.)
"Conditions of an insurance policy which require that the insured give notice of a loss to the insurer within a certain time are valid and enforceable." East Attucks Cmty. Housing, Inc. v. Old Republic Sur. Co., 114 S.W.3d 311, 326 (Mo. Ct. App. 2003) (citing Johnston v. Sweany, 68 S.W.3d 398, 401 (Mo. 2002) (en banc)). "However, the insured will not be barred from recovering under a policy based on the breach of such a condition, unless the insurer can demonstrate that it has been prejudiced by such breach." Id. "Generally, when a policy does not specify a time period within which the insured is to give notice to the insurer, notice is to be given within a reasonable time." Travers v. Universal Fire & Cas. Ins. Co., 34 S.W.3d 156, 165 (Mo. Ct. App. 2000) (citations omitted). The question of whether notice of loss was given within a reasonable time is usually a question for the jury, however, "where all reasonable persons would conclude that notice or proof was not given or made within [a reasonable] time, under all the circumstances, then it becomes a question of law for the court." Tresner v. State Farm Ins. Co., 913 S.W.2d 7, 14 (Mo. 1995) (en banc) (quotations and citation omitted); see also Interstate Cleaning Corp. v. Commercial Underwriters Ins. Co., 325 F.3d 1024, 1029 (8th Cir. 2003) ("Although a question of fact, the issue of prejudice may become a question of law if all reasonable persons would conclude the insured did not provide notice in a reasonable time.").
Church Mutual asserts that it was "prejudiced by not being notified of the crack and damages when they developed," and that if it had received timely notice "it would have had the opportunity to inspect the property and make any repairs that were needed to prevent further spreading and damage." Pleasant Green counters that its failure to give timely notice should be excused because it was "impossible" for Pleasant Green to alert Church Mutual of a claim when it did not learn of one until April 2013. The record, however, refutes Pleasant Green's allegations that it was not aware of a claim.
Pleasant Green's admissions regarding the ceiling crack that existed in April 2012 demonstrate that Pleasant Green was aware of damage that needed to be addressed. During the Examination, Mr. Taylor testified that shortly after the April 2012 storm Pleasant Green discovered a crack in one of the window alcoves which worsened over time, and that the crack was Pleasant Green's "first inclination that something was going on..." (Plf. Ex. 1 at 30-31, 34.) As to why Pleasant Green did not notify Church Mutual until over a year after it noticed the ceiling crack, Mr. Taylor testified as follows:
Id. at 37-38, 44-47. Mr. Taylor also conceded, in effect, that Church Mutual was prejudiced by the lack of timely notice:
Id. at 44-45.
In view of Pleasant Green's concessions, the Court concludes that Pleasant Green breached its duties under the Policy. Pleasant Green "saw a problem" and "realized something had to be done," but it neither provided prompt notice of the ceiling crack to Church Mutual nor took reasonable steps in an effort to prevent further damage. Id. at 46. Therefore, the Court concludes that the Policy is void.
Pleasant Green further counters that Church Mutual is estopped from asserting or has waived its Policy defenses, because its contention that the Policy was cancelled in December 2012 is inconsistent with its acceptance and investigation of Pleasant Green's claim in November 2013. Similarly, Pleasant Green asserts that the reservation of rights letter was not timely sent.
The Court disagrees with Pleasant Green's construction of the facts. Church Mutual's investigation of Pleasant Green's November 2013 claim was not prompted by a change in Church Mutual's stance on the December 2012 cancellation of the Policy; rather, Church Mutual investigated the claim because Pleasant Green had newly identified an April 2012 storm as the cause of loss. In addition, Church Mutual sent the reservation of rights letter approximately five weeks after its adjuster had issued a report recommending that an engineer inspect the roof. At that time, Church Mutual's engineer had been unable to inspect the Building due to weatherrelated delays; the Examination, which revealed information about the underlying ceiling crack that developed shortly after the April 2012 storm, had not taken place; and Pleasant Green had not submitted its proof of loss. Thus, Church Mutual had not yet completed its investigation of the facts underlying Pleasant Green's claim. Therefore, the Court finds that it is beyond genuine dispute that the letter was timely sent. See Kinnaman-Carson v. Westport Ins. Corp., 283 S.W.3d 761, 765 (Mo. 2009) (en banc); see also City of Carter Lake v. Aetna Cas & Sur. Co, 604 F.2d 1052, 1060 (8th Cir. 1979).
For the foregoing reasons, the Court concludes that the Policy is void, and that Pleasant Green's claim for breach of contract fails. In view of this conclusion, the Court declines to address the Parties' arguments regarding whether or not the record supports the cause and extent of loss alleged by Pleasant Green in its claim with Church Mutual.
Finally, the Court concludes that, because Pleasant Green's claim for breach of contract fails, its claim for vexatious refusal to pay must also fail. See Macheca Transp. v. Phila. Indem. Ins. Co., 649 F.3d 661, 674 (8th Cir. 2011) (to establish claim for vexatious refusal to pay, insured must prove: (1) it had insurance policy with insurer; (2) insurer refused to pay; (3) insurer's refusal to pay was without reasonable cause or excuse) (citing Dhyne v. State Farm Fire & Cas. Co., 188 S.W.3d 454, 457 (Mo. 2006) (en banc)).
A separate Judgment will accompany this Memorandum and Order.
