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GuideOne Elite Insurance Co. v. Landmark Sprinkler, Inc.

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

September 7, 2018

GUIDEONE ELITE INSURANCE COMPANY, Plaintiff,
v.
LANDMARK SPRINKLER, INC., Defendant.

          OPINION AND ORDER

          KAREN K. CALDWELL, CHIEF JUDGE UNITED STATES DISTRICT COURT.

         This matter is before the Court pursuant to two Motions for Summary Judgment, one filed by Plaintiff GuideOne Elite Insurance Company (DE 39) and the other filed by Defendant Landmark Sprinkler, Inc. (DE 53). For the following reasons, Plaintiff's motion is GRANTED IN PART and DENIED IN PART, and Defendant's motion is DENIED.

         I. INTRODUCTION

         In 2013, Landmark Sprinkler, Inc. (“Landmark”) performed an annual inspection of the dry sprinkler system at Laurel Heights Home for the Elderly (“Laurel Heights”).

         On January 8, 2014, water discharged from a ruptured sprinkler head that was connected to the dry sprinkler system, causing water damage to the Laurel Heights facility. Laurel Heights' insurer, GuideOne, alleges that it paid restoration costs of $607, 442.29 according to the terms and provisions of Laurel Heights's insurance policy. (DE 39-1 at 2). In this subrogation action, GuideOne seeks to recover the restoration costs from Landmark on grounds of negligence, negligent misrepresentations, and breach of contract. (DE 1). The Court considers the parties' arguments regarding summary judgment below.

         II. ANALYSIS

         A. Legal Standards

         Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the initial burden and must identify “those portions of the pleadings...which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal citation omitted).

         Once the movant meets the initial burden, the opposing party “must set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e). In the Court's consideration of the motion, “the evidence should be viewed in the light most favorable to the non-moving party.” Ahlers v. Schebil, 188 F.3d 365, 369 (6th Cir. 1999) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505 (1986)).

         The parties have invoked the diversity jurisdiction of the Court, meaning the substantive law of the Court's forum state, Kentucky, will apply. See State Auto Property and Cas. Ins. Co. v. Hargis, 785 F.3d 189, 195 (6th Cir. 2015).

         B. Plaintiff GuideOne's Motion for Partial Summary Judgment (DE 39)

         Plaintiff GuideOne seeks partial summary judgment on damages, arguing that Landmark has failed to rebut its expert witness regarding the reasonable cost of restoring the Laurel Heights facility. (DE 39-1). In addition, GuideOne seeks dismissal of several affirmative defenses originally pled in Landmark's answer. Id. The motion is granted in part and denied in part.

         i. Damages

         The Kentucky Supreme Court has upheld two distinct types of damages in injury-to-property cases: (1) diminution in fair market value of the property when the injury is permanent; and (2) reasonable restoration costs when the injury is temporary. Ellison v. R&B Contracting, Inc., 32 S.W.3d 66, 69 (Ky 2000). Kentucky courts generally determine whether an injury is permanent or temporary by comparing the two potential damage figures. See Worldwide Equipment Enterprises, Inc. v. Broan-Nuton LLC,191 F.Supp.3d 684, 687-88 (E.D. Ky. 2016). But when there is no evidence of fair market value, the correct measure of damages is reference to the reasonable restoration costs. See Arch Ins. Co. v. Broan NuTone, LLC,509 Fed.Appx. 453, 461 (6th Cir. 2012); see also WorldWide Equipment Enterprises, Inc., 191 F.Supp.3d at 690-91 (“[I]f the defendants choose not to present any evidence of diminution in value, then the presumption is that the diminution in value is equal to the replacement costs”). Finally, the Kentucky Supreme ...


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