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Creel v. State Farm Fire & Casualty Co.

United States District Court, E.D. Washington

March 16, 2018



          ROSANNA MALOUF PETERSON United States District Judge.

         BEFORE THE COURT are cross-motions for summary judgment from Plaintiffs Douglas and Alejandra Creel, ECF No. 42, and Defendant State Farm Fire and Casualty Company (“State Farm”), ECF No. 39. Having reviewed all submitted documents related to the motions and having heard oral argument from the parties on February 28, 2018, the Court grants Defendant's summary judgment motion and denies Plaintiffs' motion.

         BACKGROUND Facts The following facts are undisputed, unless otherwise noted.

         On November 17, 2015, a record-breaking windstorm felled a tree that inflicted severe damage on the house of Plaintiffs Alejandra and Douglas Creel, in south Spokane. See ECF No. 41-1 at 2-3. At the time of the storm, the Creels were insured by State Farm under a homeowner's insurance policy covering damage to their dwelling (“Coverage A”) and to their personal property (“Coverage B”), as well as additional living expenses (“Coverage C”) as a result of their loss. ECF Nos. 41-2 at 6-7; 41-5 at 9. Only the coverage for damage to the Creels' dwelling, Coverage A, is at issue in this lawsuit.[1]

         The night of the windstorm, the Creels entered into a contract with a restoration contractor, Guardian Restoration (“Guardian”), to perform the repairs on their house. ECF No. 41-5 at 4-5. Mr. Creel reported the loss to State Farm the following morning. ECF No. 41-5 at 6. State Farm accepted the Creels' claim.

         A State Farm adjustor inspected the property on November 22, 2015, and on or around December 4, 2015, made an initial estimate of the loss associated with the structural damage to the house. ECF No. 41-2 at 2-3.

         The Creels' policy through State Farm insured the “cost to repair or replace with similar construction and for the same use . . . the damaged part of the property . . . .” ECF No. 41-17 at 2. The policy further provided that:

(1) until actual repair or replacement is completed, [State Farm] will pay only the actual cash value at the time of the loss of the applicable limit of liability shown in the Declarations, not to exceed the cost to repair or replace the damaged part of the property;
(2) when the repair or replacement is actually completed [State Farm] will pay the covered additional amount [the insured] actually and necessarily spend[s] to repair or replace the damaged part of the property, or an amount up to the applicable limit of liability shown in the Declarations, whichever is less;
(3) to receive any additional payments on a replacement cost basis, [the insured] must complete the actual repair or replacement of the damaged part of the property within two years after the date of loss, and notify [State Farm] within 30 days after the work has been completed; . . . .

ECF No. 41-17 at 2.

         It is undisputed that State Farm paid the Creels for the replacement and repair of the damaged property, rather than the actual cash value of the property, which would have included depreciation. ECF No. 41-2 at 12-13. State Farm avers that it paid replacement cost to the Creels because the Creels immediately retained a contractor to perform the work and represented throughout the claims adjustment process that their intention was to repair the property. Id.

         State Farm's structural damage claim policy further bound the insurer to provide the insured “with a detailed estimate of the scope of the damage and cost of repairs.” ECF No. 41-8 at 1. In a document explaining the policy, State Farm informed the Creels:

If you select a contractor whose estimate is the same as or lower than our estimate, based on the same scope of damages, we will pay based upon their estimate. If your contractor's estimate is higher than ours, you should contact your claim representative prior to beginning repairs.

ECF No. 46-18 at 1.

         By December 30, 2015, Guardian estimated the total cost to restore the dwelling as $330, 829.78. ECF No. 41-14. State Farm initially estimated $95, 512.95 in damage to the dwelling under Coverage A and paid the Creels that amount on December 4, 2015. ECF No. 41-2 at 2-3, 7. According to State Farm's adjustor, the initial Coverage A payment covered the damage apparent during State Farm's first visual inspection of the premises. ECF No. 41-2 at 3. Guardian next supplied an estimate to the Creels and State Farm that included $73, 936.76 in demolition and asbestos removal. A State Farm adjuster met with a representative of Guardian on January 28, 2016, to inspect the property with respect to Guardian's estimate. Subsequently, on February 1, 2016, State Farm paid the Creels an additional $81, 769.11 under Coverage A for asbestos abatement, demolition, and estimate revisions. ECF No. 41-2 at 4-6, 8.

         From March until June 2016, State Farm and Guardian went back and forth with estimates regarding the comprehensive replacement cost for the damaged portions of the Creels' house. In April 2016, State Farm engaged an engineer to provide a “structural engineering opinion regarding the extent of repairs necessary to restore the home . . . .” ECF No. 46-17. By June 17, 2016, State Farm updated its estimate to $208, 756.24 to repair the damage to the dwelling, and paid the Creels the difference between that estimate and its previous estimate. ECF No. 41-5 at 7. State Farm also requested that the Creels begin construction at that time. ECF No. 41-5 at 7. As of late June 2016, State Farm's estimate of comprehensive repair cost was approximately $122, 000 less than Guardian's estimate. ECF Nos. 14-13 and 14-14.

         Around June 2016, Ms. Creel casually encountered an agent from the local State Farm office while both women were pursuing a hobby; after hearing Ms. Creel's frustrations regarding what she perceived as a stalled adjustment process, the agent suggested to the Creels two alternative contractors to contact for repair estimates. ECF No. 41-5 at 7. Mr. Creel contacted one of the two businesses, Capstone Construction Co., Inc. (“Capstone”), and asked for an estimate to repair their property. Id. On July ...

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