Summary
In Pro-Cure, Inc. v. Farmers Ins. Exch., No. Civ. 03-6355-TC, 2004 WL 1383196, at *1 (D.Or. June 18, 2004), the policy language at issue was similar to the policy here in that it provided as follows: "permit us to make copies from your books and records."
Summary of this case from Womer v. Assurance Company of AmericaOpinion
Civil No. 03-6355-TC.
June 18, 2004
FINDINGS AND RECOMMENDATION
Presently before the court is defendant's motion (#14) for summary judgment.
BACKGROUND
Where the parties have put forth conflicting evidence, I describe the facts in the light most favorable to the plaintiff.
Plaintiff Pro-Cure is a corporation involved in the manufacture of fish bait. Defendant Farmers Insurance Exchange ("Farmers") issued a commercial property insurance policy to plaintiff for the period of March 29, 2001 to March 29, 2002. Unfortunately for all concerned, plaintiff's place of business suffered significant destruction in an accidental fire that occurred on September 4, 2001. Plaintiff, through its owner, met with Farmer's adjuster and hired an accountant to prepare a claim and submit documentation to Farmers. Once the claim was prepared, plaintiff submitted it, pursuant to the insurance contract, and Farmers paid plaintiff the policy limits on its personal property coverage ($208,000). Farmers' adjuster requested certain documents related to the business income and extra expense coverage claim; the parties agreed on a summary format, the adjuster accepted plaintiff's information, and Farmers processed plaintiff's claim, paying out $97,000 of the $400,000 limit on plaintiff's business income and extra expenses coverage.
Plaintiff's accountant then prepared and submitted additional documentation in support of another $90,000 in lost business and extra expenses. The adjuster advised that a check for $90,000 had been issued and was in the mail. However, after several weeks, the check had still not arrived. As a result, plaintiff hired an attorney, Thomas Greif, to secure the payment. Greif sent defendant a lengthy letter and a demand for damages, alleging that the documentation supported a claim for $450,000, but advising that plaintiff would settle for $250,000. Farmers assigned a new adjuster to plaintiff's claim, who rejected the data plaintiff had submitted in support of the business loss claim, calling the format unacceptable. Plaintiff's accountant reformatted the data and resubmitted it. It was rejected again.
Plaintiff released Greif and hired Randy Gower, who held himself out as an experienced adjuster who had successfully submitted a significant number of fire insurance claims. Gower worked with Pro-Cure's owner and the retained accountant to compile information to support the claim, and also independently gathered a significant amount of new data. After preparing the revised claim, Gower submitted it to Farmers.
Sometime after receiving the new claim, Farmers assigned a forensic accountant to meet with Pro-Cure's representatives. At that meeting, held August 13, 2002, the accountant requested some new information and expressed an intent to gather some additional information herself. The information the accountant requested that Pro-Cure provide was never supplied; rather, Pro-Cure filed the present suit, alleging breach of contract and promissory estoppel. Defendant now seeks summary judgment in its favor, on the grounds that Pro-Cure breached the insurance contract by failing to provide the requested materials and that the suit limitation provision in the contract bars Pro-Cure from maintaining the action.
STANDARD OF REVIEW
A party is entitled to summary judgment as a matter of law if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c);Bahn v. NME Hosp's, Inc., 929 F.2d 1404, 1409 (9th Cir. 1991). The moving party must carry the initial burden of proof. This burden is met through identifying those portions of the record which demonstrate the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986). Once the initial burden is satisfied, the burden shifts to the opponent to demonstrate through the production of probative evidence that there remains an issue of fact to be tried. Id. The facts on which the opponent relies must be admissible at trial, although they need not be presented in admissible form for the purposes of opposing the summary judgment motion. Id.
The court must view the evidence in the light most favorable to the nonmoving party. Bell v. Cameron Meadows Land Co., 669 F.2d 1278, 1284 (9th Cir. 1982). All reasonable doubt as to the existence of a genuine issue of fact should be resolved against the moving party. Hector v. Wiens, 533 F.2d 429, 432 (9th Cir. 1976). The inferences drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion. Valadingham v. Bojorquez, 866 F.2d 1135, 1137 (9th Cir. 1989). Where different ultimate inferences may be drawn, summary judgment is inappropriate. Sankovich v. Insurance Co. Of North America, 638 F.2d 136, 140 (9th Cir. 1981).
Deference to the non-moving party does have some limit. The non-moving party "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e) (emphasis added). Where "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corporation, 475 U.S. 574, 587 (1986). The "mere existence of a scintilla of evidence in support of the plaintiff's position would be insufficient."Anderson v. Liberty Lobby Inc., 477 U.S. 242, 252 (1986). If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Id. at 248. However, trial courts should act with caution in granting summary judgment, and may deny summary judgment "in a case where there is reason to believe that the better course would be to proceed to a full trial." Anderson, 477 U.S. at 255.
DISCUSSION
I. Failure to produce the requested information
The business income insurance contract between the parties contains the following relevant loss conditions:
2. Duties in the Event of Loss
a. You must see that the following are done in the event of loss:
. . .
(5) As often as may be reasonably required, permit us to inspect the property proving the loss or damage and examine your books and records. Also . . . permit us to make copies from your books and records.
. . .
(7) Cooperate with us in the investigation or settlement of the claim.
Concise Statement of Material Facts (#16, Ex. A) at 42-43. Defendant relies on this section in support of its assertion that plaintiff may not maintain its action, arguing that plaintiff's failure to provide the material Farmers requested at the August 13, 2002 meeting violated both clauses (5) and (7).
This court agrees that by the "very nature of things," an insurance company reasonably expects and requires a policyholder to provide truthful and accurate information in support of its claims, and that the failure of a policyholder to do so can constitute a breach of the insurance contract. See, e.g., Fowler v. Phoenix Inc. Co., 35 Or. 559 (Or. 1898). However, defendant has not demonstrated that as a matter of law plaintiff has failed to do so here. Defendant alleges that the information it had prior to the August 13, 2002 meeting was insufficient to sustain lost business damages of more than the $97,000 it had already paid, and that plaintiff agreed at that August 13 meeting to provide additional documentation in support of the claim. Affidavit of Katharyn Thompson (# 16, Ex. B), ¶¶ 2-4. Plaintiff concedes that it did not provide any additional information after that meeting. However, plaintiff alleges that the original adjuster retained by Farmers, Steve Bollin, accepted the supplementary documentation that was provided in support of the additional losses plaintiff was claiming, and that Bollin had even stated that a check had already been cut. Affidavit of Phil Pirone (#22, Ex. A) ¶ 10. Plaintiff also alleges that after a new adjuster was assigned to the claim by Farmers, the accountant retained by Pro-Cure reformatted the data and resubmitted it.Id. at ¶ 13. After that submission was again rejected, plaintiff then states that it hired an experienced adjuster, who spent considerable time compiling supporting documentation and who submitted it to Farmers once again. Id. at ¶¶ 14-15. After Farmers again indicated that more information would be needed, "with no end in sight," plaintiff filed this suit. Id. at ¶¶ 16-17. Plaintiffs version of the facts, if believed, does not suggest that plaintiff had — as a matter of law-failed to cooperate with defendant's investigation. Rather, it suggests that Pro-Cure's owners, frustrated with the length of time the processing of its damages claim was taking, decided (perhaps impetuously) that the best thing to do was to file a lawsuit rather than turn over additional information. That may or may not have been the optimal decision to make, but the court cannot say that in failing to provide the information and instead taking legal action plaintiff breached its contract with defendant.
This conclusion is reinforced by several items in (or absent from) the record. Notably, the parties did not provide the specifics of what plaintiff turned over to Farmers the first three times it submitted its additional claim, so it is impossible to determine whether it was, in fact, insufficient. The court has only the representations of the plaintiff that it was, and the defendant that it was not. Plaintiff claims, however, that it did indeed provide information on several occasions to Farmers in support of its supplemental claim; without knowing what was actually provided, I cannot say that as a matter of law plaintiff refused to cooperate. Further, I note that at least one of the items that Farmers' accountant demanded plaintiff provide after the August 13, 2002 meeting — information about a competitor's comparables — is clearly unreasonable. If Farmers needed that information to adequately consider plaintiff's claim, it had the means to obtain it itself. It is unreasonable to expect that the insured should — or could — implore a competitor to share sales trend information. Finally, it is entirely unclear that the cooperation clause would have been breached in any event, even had plaintiff failed to create and turn over detailed information in support of its claim at all. The plain text of the clauses requires plaintiff to "permit [Farmers] to inspect the property proving the loss or damage and examine [plaintiff's] books and records[.]" There is no contention that plaintiff ever refused Farmers access to any information it had. To the extent that the cooperation clause or other provisions in the contract implied that plaintiff should or must independently create and provide records and information beyond this inspection obligation, I cannot, on the record before me, say that that duty was not adequately carried out.
II. Suit limitation provision
The insurance contract between the parties provides that a policyholder cannot bring a lawsuit against the insurer unless the policyholder has fully complied with all terms of the contract:
LEGAL ACTION AGAINST US
No one may bring a legal action against us under this Coverage Part unless:
1. There has been full compliance with all of the terms of this Coverage Part; and
2. The action is brought within two years after the date on which the direct physical loss or damage occurred.
Concise Statement of Material Facts (#16, Ex. A) at 20. As described above, I cannot conclude on the record before me that plaintiff did not fully comply with the terms of his insurance contract. As there is no contention that this action was not brought in a timely fashion, this clause does not provide a basis for granting summary judgment in favor of defendant.
CONCLUSION
There are disputed issues of material fact regarding what information was provided to Farmers in support of its supplemental business loss claim and the adequacy of such information. However, it is asserted that some information was turned over, and not contended that plaintiff refused to provide Farmers with whatever access to its books and records Farmers might want. On these facts, it cannot be said that plaintiff violated the inspection or cooperation clauses of the insurance contract. As such, plaintiff is not in violation of the suit limitation provision of the contract. Defendant's motion (#14) for summary judgment should be denied.