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Slavin v. Garrison Property And Casualty Insurance Co.

United States District Court, D. Colorado

July 10, 2017




         This matter is before me on the following pre-trial motions: 1) Motion In Limine to Exclude Evidence of Post-Litigation Events, Attorney Fees and Causation, filed by Plaintiff Patrick Slavin [Doc #162]; and 2) Motion to Exclude the Expert Opinions of Mr. Kevin Hromas, filed pursuant to Federal Rule of Evidence 702 by Defendant, Garrison Property and Casualty Insurance Company (“Garrison”). [Doc #158] After consideration of the parties' briefs and attachments, as well as oral arguments at a hearing on June 28, 2017, I GRANT IN PART, DENY IN PART, and HOLD IN ABEYANCE PART of Plaintiff's motion in limine, and I GRANT Garrison's Rule 702 motion to exclude the expert testimony of Mr. Hromas.


         Plaintiff filed a property claim with Garrison, pursuant to his homeowner's insurance policy, after a hailstorm on June 6, 2012 caused damage to the front of his home. The front of his home is L-shaped and only one side - known as the front façade - incurred damage. The harm included damage to the window frames and to the brick on the front façade. Plaintiff's policy provides for replacement cost coverage.

         Garrison issued an initial payment to Plaintiff on June 21, 2012. After a structural engineer assessed the brick damage, Plaintiff sent Garrison a bid from his contractor to repair the damage (including replacing the brick) on the front façade. Garrison's adjustor inspected the damage in early November of 2012, and then issued Plaintiff another check on December 21, 2012.

         Sometime in late 2012 or early 2013, Plaintiff's contractor determined that the brick on Plaintiff's home was previously manufactured by General Shale, but was no longer being produced as a standard product. General Shale told Plaintiff's contractor that it would be willing to manufacture a special production run of 50, 000 bricks. In March and again in April of 2013, Plaintiff requested that Garrison pay to have the 50, 000 bricks manufactured by General Shale (although far less were needed) to replace the damaged bricks on the front façade of his home. Garrison rejected Plaintiff's request.

         General Shale then provided Plaintiff a bid for the special run of 50, 000 bricks of $25, 774.99 on August 23, 2013. On September 24, 2013, Plaintiff provided Garrison an estimate from his contractor of $59, 645.99 to replace the damaged brick on the front façade. This amount included $25, 744.99 for the 50, 000 bricks to be made by General Shale.

         Garrison responded that the cost to manufacture the brick was excessive, and countered with a contractor's bid to replace “the entire front of his home (not just the damaged front façade) with new brick” that would not match the existing brick in color and in texture, in early November of 2013, for $24, 439.55. Because the cost to repair the front façade with the specially manufactured brick exceeded the cost to replace the entire front elevation, Garrison indicated that it would pay to replace the entire front elevation pursuant to the policy language which allows for replacement cost coverage to “(1) Replace, or pay you our cost to replace the property with new property of like kind and quality without deduction for depreciation.” Garrison's contractor's bid was for brick that would be “as close as possible to your existing brick, but will not have the same texture and will be slightly off color, ” and that was why Garrison “is going to replace the entire front of your home corner to corner.” On April 10, 2014, Garrison completed its investigation of Plaintiff's claim, closed the file, and sent him another check.

         Plaintiff thereafter filed this lawsuit, on May 30, 2014, in District Court of Douglas County, Colorado. [Doc #2-5] The case was subsequently removed to this court by Garrison, on the basis of diversity jurisdiction pursuant to 28 U.S.C. §1332 and §1444. [Doc #1] Plaintiff's Amended Complaint asserts claims against Garrison for: 1) Breach of Contract; 2) Common Law Bad Faith Breach of Contract; and 3) Statutory Unreasonable Delay or Denial of Insurance Benefits pursuant to Colorado Revised Statutes §10-3-1115 and §10-3-1116 . [Doc #9]


         Eight to nine months after Plaintiff filed this lawsuit, in February/March of 2015, General Shale agreed to produce a lesser amount of the specialty brick upon the request of Garrison's counsel. Specifically, it indicated that it would be willing to manufacture a reduced run of 16, 000 (as opposed to its previous requirement of 50, 000) bricks. The estimate for this smaller run was approximately $11, 203, as opposed to the $24, 439.55 for the 50, 000 run.

         Plaintiff then elected to have the amount of the loss on his claim determined by invoking the appraisal clause of his homeowner's insurance policy on March 16, 2015. The resulting Appraisal Award, which only addressed contested line items, determined the amount for replacement windows (at $12, 884.61) and for replacement of the brick (at $23, 623.25) with the specialty brick to be manufactured by General Shale in a reduced run. Pursuant to my court-ordered itemized accounting, Garrison contends it has overpaid Plaintiff by $6, 603.36 and Plaintiff contends that Garrison still owes him $4, 890.64. [Doc #156]

         On March 1, 2017, I denied Garrison's motion for summary judgment. [Doc # 156] I ruled that because a genuine issue of material fact exists as the total amount of the loss set by the Appraisal Award (of the awarded amount for the brick and the windows plus the line items not set by the appraisers) and, in turn, whether Garrison has paid Plaintiff's claim in full or not, Plaintiff's breach of contract claim could not be dismissed on summary judgment. Additionally, I ruled that Plaintiff's bad faith breach claims - for bad faith breach of an insurance contract and for statutory unreasonable delay or denial of payment - could not be dismissed because a jury could find that Garrison acted unreasonably in handling Plaintiff's claim.


         In his Motion In Limine, Plaintiff seeks a pre-trial ruling excluding evidence based on its lack of relevancy. Rule 402 of the Federal Rules of Evidence provides that relevant evidence is generally admissible, and evidence is considered relevant if: (1) it has any tendency to make a fact more or less probable that it would be without the evidence; and (2) the fact is of consequence in determining the action. Fed.R.Evid. 401. A court may exclude relevant evidence, however, if its probative value is substantially outweighed by the danger of unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence. Fed.R.Evid. 403. This Court's Rule 401 and 403 determinations receive deference and are reviewed under an abuse of discretion standard. See Tanberg v. Sholtis, 401 F.3d 1151, 1162 (10th Cir. 2005).


         Plaintiff first seeks a ruling that evidence relating to events that occurred after he filed this lawsuit is not admissible at trial. After Plaintiff filed this lawsuit in May of 2014, Garrison's counsel contacted General Shale, sometime in early 2015, to see if it would agree to make a smaller run of the specialty bricks. General Shale agreed to the reduced-run. Then, a month or so later, in March of 2015, Plaintiff invoked the appraisal provision of the insurance policy “to determine the total amount of loss owed.” The appraisal clause in the policy specifically provides that:

If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss . . . The appraisers will separately set the amount of the loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of the loss.

         The specific amount of the loss determined by the Appraisal Award is disputed by the parties. Garrison believes that the appraised value of the entire loss on the claim was assessed at $48, 009.68, and Plaintiff believes that it was $60, 503.68 - the difference of $12, 494.00 is based on whether the amounts determined by the appraisers to repair the windows and the brick was duplicative of other work on the claim. It is undisputed, however, that the appraisers relied upon the cost of the reduced-run of specialty bricks from General Shale when assessing the amount of the loss.

         Evidence of the post-litigation events (both General Shale's agreement to produce a reduced-run of specialty brick and the Appraisal Award process and amount) could be relevant to several different issues to be decided by the jury in this case. Specifically, the evidence relates to a determination of the dollar amount of the “covered benefit, ” whether Garrison breached its insurance contract with Plaintiff, and whether Garrison acted reasonably or in bad faith when handling Plaintiff's claim.

         I first address whether evidence of the Appraisal Award is relevant to the determination of the dollar amount of the covered benefit for the purpose of assessing damages on a successful unreasonable delay/denial claim. Plaintiff argues that the amount of the covered benefit is a jury determination and that the Appraisal Award “could not and did not determine the amount of the covered benefit as of November 2013 based upon information available to the parties then.” [Doc #171 pp 3-4] See Colo Rev. Stat § 10-3-1116(1); Colo. Jury Ins. 25:10. Defendant argues, in response, that the amount of the Appraisal Award is a binding determination of the amount of the covered benefit.

         As I indicated in my ruling from the bench, the parties in this case agree that the “covered benefit” in this case consists of the amount of the loss assessed by the Appraisal Award on the contested items; specifically, the amount for replacement windows ($12, 884.61) and for replacement of the brick ($23, 623.25) for a total of: $36, 507.86. Therefore, evidence of the Appraisal Award is not relevant to an assessment of the amount of the covered benefit because that amount has been stipulated to by the parties. See Hansen v. American Family Mutual Insurance Co., 383 P.3d 28, 37 (Colo.App. Dec. 19, 2013), rev'd on other grounds, 375 P.3d 115 (Colo. June 20, 2016)(ruling that the jury should not have been instructed to determine the amount of the covered benefit which was set at the maximum UIM policy benefits available after reduction of payment by the legally liable party, and the amount paid by the insurer following a mediation settlement); see also Home Loan Investment Co. v. St. Paul Mercury Ins. Co., 78 F.Supp.3d 1307 (D. Colo. 2014); Peden v. State Farm Mut. Auto. Ins. Co., 2016WL7228830 (D. Colo. Dec. 14, 2016)(unpublished)(ruling that because the maximum amount of the UIM benefits available were ultimately paid to the plaintiff, the amount of the “covered benefit” was not subject to dispute). Additionally, I note that Plaintiff concedes that such stipulation by the parties as to the amount of the covered benefit, and that Garrison has paid Plaintiff for the amount ...

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