Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Lafollette v. Liberty Mutual Fire Insurance Co.

United States District Court, W.D. Missouri, Central Division

March 16, 2017

ERIC LAFOLLETTE and CAMILLE LAFOLLETTE, individually and on behalf of others similarly situated, Plaintiffs,
v.
LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendant.

          ORDER

          NANETTE K. LAUGHREY, United States District Judge

         Pending before the Court are the cross motions for summary judgment of Plaintiffs Eric and Camille Lafollette and Defendant Liberty Mutual Fire Insurance Company. [Docs. 198 and 194]. As set forth below, Plaintiffs'and Defendant's motions are granted in part and denied in part.

         I. Undisputed Facts[1]

         Plaintiffs Eric and Camille Lafollette purchased a LibertyGuard Deluxe Homeowners Insurance Policy, Form HO 00 03 (Edition 04 91), from Defendant Liberty Mutual Fire Insurance Company (“Liberty Mutual”). The Lafollettes' policy includes an endorsement for wind and hail damage. In January 2008, the Lafollettes' home was damaged by hail, and they sought payment from Liberty Mutual for that hail damage.

         A. Liberty Mutual's General Claims Handling Procedure

         When a homeowner sustains damage to his or her property that is covered by a LibertyGuard Deluxe Homeowners Policy, the claim is handled and paid in two phases: (1) the actual cash value (“ACV”) phase and (2) the replacement cost value (“RCV”) phase. After the policyowner makes his or her claim, an adjustor goes to the location of the insured property to ascertain the damage. [Doc. 199-5, p. 141-45 (Depo. of Ricky Summerlin)]. The adjustor then uses a program called “Xactimate” to put a dollar figure on the amount of the damage. Id. The total amount of the loss is referred to as the “replacement cost.” Id. at p. 145. After the total amount of the loss is calculated, the adjustor inputs factors for depreciation, and the amount of depreciation is subtracted from the replacement cost to give the ACV loss. Id. at 145-46.

         Following this calculation, the policyowner is paid the ACV of the loss, minus the deductible.[2] No further payment on the claim is made unless the insured decides to repair or replace the damage to the property. Id. at p. 155-56. The insured is not required to undertake this repair. Id. at p. 148-50. Nor is the insured required to come back and submit a replacement cost claim for payment of the withheld depreciation. Id. at p. 150-51. Instead, the insured may take the ACV payment in satisfaction of their claim to do with whatever he or she chooses. Id. at p. 148-50. To recover the RCV, the insured must repair or replace the damage and submit proof of the repairs to Liberty Mutual. Id. at p. 155-56.

         B. The Lafollettes' Claim

         In January 2008, the Lafollettes' home sustained hail damage, and they submitted a claim for coverage. This claim constituted a loss that was covered under the terms of the policy. Liberty Mutual estimated the ACV of the loss and paid the Lafollettes the ACV minus a $1000 deductible. On April 8, 2014, the Lafollettes filed a putative class action against Liberty Mutual alleging that Liberty Mutual unlawfully applied a deductible to the ACV payment for their hail damage claim.

         On October 19, 2015, the Court denied Liberty Mutual's motion for summary judgment. [Doc. 115]. On August 1, 2016, the Court certified a Rule 23(b)(3) class and four subclasses. [Doc. 177]. The Court appointed the Lafollettes as representatives of the plaintiff class, which is defined as:

All persons who received an ACV payment, directly or indirectly, from Liberty Mutual Fire Insurance Company for physical loss or damage to their dwelling or other structures located in the state of Missouri arising under policy Form HO 03 (Edition 04 91) and endorsements, such payments arising from losses that occurred from April 8, 2004 to August 1, 2016, where a deductible was applied to the ACV payment for the person's dwelling or other structure (Coverage A and/or B).
Excluded from the Class are: (1) All persons who submitted a claim for and received a replacement cost payment from Liberty Mutual Fire Insurance Company under Coverage A and/or B; (2) All persons whose payment(s) plus the amount of any deductible applied was less than $2, 500; (3) All persons whose claim(s) were caused by earthquake; (4) Liberty Mutual Fire Insurance Company and its affiliates, officers, and directors; (5) Members of the judiciary and their staff to whom this action is assigned; and (6) Plaintiffs' Counsel.

         There are three certified subclasses, defined as:

(1) All parties who received an ACV payment for loss arising solely under the base policy and/or Home Protector Plus Endorsement;
(2) All parties who received an ACV payment for loss arising under the Wind/Hail Endorsement; and
(3) All parties who received an ACV payment for loss arising under the Functional Replacement Cost Loss Settlement Endorsement.[3]

         C. Deductible Information for Purposes of Damages

         Liberty Mutual's manager of business systems, Jeffrey Gabriel, testified that Defendant could determine the amount of a deductible applied to a claim. [Doc. 215, p. 18; Doc. 199-8, p. 137 and 180-81]. Liberty Mutual has produced two spreadsheets containing data identifying the amount of deductible withheld from each class member's property claims. The spreadsheets identify each potential class member's claim, and in the column marked “Unique Deductible amount from Trans Detail, ” the spreadsheets identify the amount of deductible withheld from each claim. [Doc. 215, p. 18; Doc. 199-6 and 199-7 (Spreadsheets)].

         D. Class Members' Policies

         The class members' policies contain three relevant sections: the Declarations, the base policy language, and the endorsements. These sections work together to define the parameters of their coverage. The Declarations set out the limits on recovery under the policy, list the endorsements included in the policy, and note the deductibles that may be assessed under the policy. The base policy language contains the standard terms of the policy. The endorsements are additions to the policy which customize the coverage and terms of the base policy language to create the specific coverage purchased by the policyowner. The terms of the endorsements control over conflicting provisions in the base policy language or Declarations. Grable v. Atlantic Cas. Ins. Co., 280 S.W.3d 104, 108 (Mo.Ct.App. 2009).

         1. The Base Policy

         The Lafollettes' and class members' base policy form HO 00 03 (Edition 04 91) includes, among others, the following: Section I - Property Coverages; Section I - Perils Insured Against; Section I - Exclusions; and Section I - Conditions. The base policy's coverage provision states:

         SECTION I - PROPERTY COVERAGES

         COVERAGE A - Dwelling

We cover:
1. The dwelling on the “residence premises” shown in the Declarations, including structures attached to the dwelling; and
2. Materials and supplies located on or next to the “residence premises” used to construct, alter or repair the dwelling or other structures on the “residence premises.” This coverage does not apply to land, including land on which the dwelling is located.
COVERAGE B - Other Structures
We cover other structures on the “residence premises” set apart from the dwelling by clear space. This includes structures connected to the dwelling by only a fence, utility line, or similar connections.
. . .
The limit of liability for this coverage will not be more than 10% of the limit of liability that applies to Coverage A. Use of this coverage does not reduce the Coverage A limit of liability.
COVERAGE C - Personal Property We cover personal property owned or used by an “insured” while it is anywhere in the world.
. . .
Special Limits of Liability. These limits do not increase the Coverage C limit of liability. . . .
. . .
COVERAGE D - Loss of Use
The limit of liability for Coverage D is the total limit for all the coverages that follow.
1. If a loss covered under this Section makes that part of the “residence premises” where you reside not fit to live in, we cover, at your choice, either of the following. However, if the “residence premises” is not your principal place of residence, we will not provide the option under paragraph b. below.
a. Additional Living Expense, meaning any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living; or
b. Fair Rental Value, meaning the fair rental value of that part of the “residence premises” where you reside less any expenses that do not continue while the premises is not fit to live in.
Payment under a. or b. will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere. . . .
ADDITIONAL COVERAGES
. . .
4. Fire Department Service Charge. We will pay up to $500 for your liability assumed by contract or agreement for fire department charges incurred when the fire department is called to save or protect covered property from a Peril Insured Against. . . . This coverage is additional insurance. No deductible applies to this coverage. . . .
The base policy's loss settlement provisions for Coverages A, B, and C are included within Section I - Conditions, as follows:

         SECTION I - CONDITIONS

. . .
3. Loss Settlement.Covered property losses are settled as follows:
a. Property of the following types:
(1) Personal property;
(2) Awnings, carpeting, household appliances, outdoor antennas and outdoor equipment, whether or not attached to buildings; and
(3) Structures that are not buildings; at actual cash value at the time of loss but not more than the amount required to repair or replace.
b. Buildings under Coverage A or B at replacement cost without deduction for depreciation, subject to the following:
(1) If, at the time of loss, the amount of insurance in this policy on the damaged building is 80% or more of the full replacement cost of the building immediately before the loss, we will pay the cost to repair or replace, after application of deductible and without deduction for depreciation, but not more than the least of the following amounts:
(a) The limit of liability under this policy that applies to the building;
(b) The replacement cost of that part of the building damaged for like construction and use on the same premises; or
(c) The necessary amount actually spent to repair or replace the damaged building.
(2) If, at the time of loss, the amount of insurance in this policy on the damaged building is less than 80% of the full replacement cost of the building immediately before the loss, we will pay the greater of the following amounts, but not more than the limit of liability under this policy that applies to the building:
(a) The actual cash value of that part of the building damaged; or
(b) That proportion of the cost to repair or replace, after application of deductible and without deduction for depreciation, that part of the building damaged, which the total amount of insurance in this policy on the damaged building bears to 80% of the replacement cost of the building. . . .
(4) We will pay no more than the actual cash value of the damage until actual repair or replacement is complete. Once actual repair or replacement is complete, we will settle the loss according to the provisions of b. (1) and b. (2) above.
. . .
(5) You may disregard the replacement cost loss settlement provisions and make claim under this policy for loss or damage to buildings on an actual cash value basis. You may then make claim within 180 days after loss for any additional liability according to the provisions of this Condition 3. Loss Settlement.

[Doc. 214-1, p. 6-15 (Lafollette Policy, Bates LMFIC000066-75)].

         2. The Endorsements

         The Lafollettes' and some class members' insurance policies include a Home Protector Plus Endorsement. If certain conditions are met, [4] the Home Protector Plus Endorsement has a slightly different loss settlement provision, as follows:

         HOMEPROTECTOR PLUS ENDORSEMENT

. . .
B.REPLACEMENT COST PROVISION - DWELLING AND PERSONAL
PROPERTY
. . .
3. Loss Settlement. Covered property losses are settled as follows:
a. The applicable limit of liability for Buildings under Coverage A or B is the replacement cost, after application of deductible and without deduction for depreciation, subject to the following:
(1) We will pay the cost of repair or replacement, but not exceeding: (a) The replacement cost of the part of the building damaged using like construction on the same premises and intended for the same occupancy and use;
(b) With respect to Coverage A, an amount not exceeding 20% greater than the limit of liability stated in the declarations, as modified by the Inflation Protection Provision of the policy;
(c) With respect to Coverage B, the limit of liability stated in the declarations, as modified by the Inflation Protection Provision of the policy;
(d) The amount actually and necessarily spent to repair or replace the damage.
(2) We will pay no more than the actual cash value of the damage until actual repair or replacement is complete. Once actual repair or replacement is complete, we will settle the loss according to the provisions of a. (1) above. . . .
c. Personal property, carpeting and domestic appliances: at replacement cost but not exceeding the amount needed to repair or replace subject to the following:
(1) Our limit of liability for loss to Personal Property shall not exceed the smallest of the following:
(a) Replacement cost with a similar item of like kind and quality at the time of loss;
(b) The full cost of repair;
(c) Any special limit of liability described in the policy or stated in this endorsement; or
(d) The Coverage C limit of liability stated in the declarations, as modified by the Inflation Protection Provision of the policy.
(2) This endorsement shall not apply to:
(a) Fine arts and items which, by their nature cannot be replaced with new items.
(b) Articles whose age or history contribute substantially to their value including souvenirs or collector's items.
(c) Property that is unusable for the purope for which it was originally intended due to age or historic condition.
(3) We will not pay for any loss to personal property under this endorsement until actual repair or replacement is complete.
d. You may disregard the replacement cost provision and make a claim for loss of or damage to property on an actual cash value basis and then make claim within 180 days after loss for additional liability under this endorsement.
. . .
D. ADDITIONAL COVERAGES
Lock Replacement Coverage We will pay up to $250 for replacing the locks or cylinders on the exterior doors of the residence premises when your keys have been stolen. The theft of the keys must be reported to the police for this coverage to apply.
This coverage is additional insurance. No deductible applies to this coverage.

[Doc. 214-1, p. 23-24 (Lafollette Policy), Bates LMFIC000083-84].

         The Lafollettes' and some class members' insurance policies also contain a Windstorm or Hail Deductible Endorsement (“Wind/Hail Endorsement”), which states:

         WINDSTORM OR HAIL DEDUCTIBLE

The following special deductible is added to the policy:
With respect to the peril of Windstorm Or Hail, we will pay only that part of the total of all loss payable under Section I that exceeds the windstorm or hail deductible.
The dollar or percentage amount of the windstorm or hail deductible is shown on the policy declaration.
. . .
No other deductible in the policy applies to loss caused by windstorm or hail.

[Doc. 214-1, p. 34 (Lafollette Policy), Bates LMFIC000094].

         Finally, some class members' policies contain a Functional Replacement Cost Loss Settlement Endorsement (“FRCE”). This endorsement also contains its own loss settlement provision, which provides:

         FUNCTIONAL REPLACEMENT ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.