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Ferrell v. Liberty Mutual Group, Inc.

United States District Court, E.D. Kentucky, Southern Division, Pikeville

March 20, 2014

WILLIAM FERRELL, Plaintiff,
v.
LIBERTY MUTUAL GROUP, INC. and LIBERTY INSURANCE CORPORATION, Defendants.

OPINION AND ORDER

KAREN K. CALDWELL, Chief Judge.

This matter is before the Court on motion for partial summary judgment by the Defendant, Liberty Insurance Corporation (DE 24) and the motion for summary judgment by the Plaintiff (DE 45).

I. Background

The Plaintiff's house in Harold, Kentucky was damaged in a fire. The house was insured by Liberty Insurance Corporation. Pursuant to the policy, Liberty has paid the Plaintiff $295, 719.16, which it asserts is the actual cash value of the dwelling at the time of the loss, and $292, 132.50 in personal property coverage. (DE 24-1, Mem. at p. 2).

The regular policy limit for the dwelling was $390, 000. The policy limit for personal property was $292, 500. (DE 24-5, Policy, CM-ECF p. 3.) There is no dispute over the amounts paid for personal property coverage. The Plaintiff's complaint does not indicate that there is any dispute over the payment of the actual cash value of the dwelling either.

Instead, the Plaintiff indicates in his complaint that the dispute between the parties arises over his coverage for "expanded replacement cost" of the dwelling. (DE 24-5, Policy at CM-ECF p. 3.) Pursuant to that coverage, the policy limits for the dwelling are increased by 20 percent to $468, 000. (DE 24-5, Policy at CM-ECF p. 3.)

The Plaintiff states in his complaint that he has obtained an estimate indicating that his costs to replace or repair the home would be $468, 000, which again is the policy limit for the expanded replacement cost coverage. In his complaint, the Plaintiff alleges that Liberty has estimated the cost to repair the dwelling to be only $339, 655.27.

The Plaintiff attaches to his complaint a letter from a licensed public adjuster to Liberty in which the adjuster states that the cost to replace the home would be $485, 436.05. (DE 1-1, Complaint, Letter.) The letter makes clear that the Plaintiff is requesting the $468, 000 policy limit for the "expanded replacement cost." It states:

Again, the insured does not believe that your replacement cost estimate of $339, 000.00 is... adequate to replace the house and other structures. The policy limit for the replacement of the home (Coverage A) is $390, 000 and has additional Expanded Coverage up to $78, 000 for a total limit of $468, 000. We are requesting payment in full of the total amount of $468, 000 at this time...

(DE 1-1, Complaint, Letter).

The Plaintiff asserts a breach of contract claim and state common-law and statutory bad faith causes of action against Liberty. In accordance with the parties' agreement, the Court bifurcated the claims into two separate proceedings, the first of which would address the breach-of-contract claim and the second, if necessary, would address the bad-faith claims. (DE 12, Order.)

Both parties now move for summary judgment on the breach-of-contract claim.

II. Analysis

In analyzing the motions for summary judgment, the Court emphasizes that the Plaintiff filed this action asking the Court to find that he is entitled under the policy to $468, 000 for the ...


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