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Veranda Gardens, LLC v. Secura Insurance

United States District Court, W.D. Kentucky, Louisville Division

June 11, 2019



          David J. Hale, Judge.

         In September 2016, Plaintiff Veranda Gardens, LLC filed a claim with its insurer, Defendant SECURA Insurance, alleging that its property had sustained wind damage. (Docket No. 1-2, PageID # 8). The site inspector hired by SECURA, Steve Weber, examined the property and concluded that the damage was not caused by wind. (Id., PageID # 9) Veranda disagreed with Weber's assessment and invoked the appraisal clause of its insurance policy, which allows Veranda and SECURA to each appoint an impartial appraiser to reexamine the property. (D.N. 11, PageID # 45) Despite Veranda's objection, SECURA appointed Weber. (D.N. 1-2, PageID # 9) Veranda and Plaintiff Sawyer Construction & Roofing, Inc., the assignee of Veranda's insurance claim, then brought this action seeking a declaration that SECURA must select another appraiser because Weber is not impartial.[1] (Id., PageID # 10) The parties have now filed cross-motions for declaratory judgment, asking the Court to determine whether Weber is an impartial appraiser under the insurance policy. (D.N. 13; D.N. 14) After careful consideration, the Court finds that Weber is an impartial appraiser.

         I. BACKGROUND

         In September 2015, Veranda obtained a business-protection insurance policy from SECURA. (D.N. 11, PageID # 44) The following year, Veranda filed a wind-damage claim with respect to the roof of its property. (D.N. 1-2, PageID # 8) Veranda assigned the claim to Plaintiff Sawyer Construction & Roofing, Inc. (Id.)

         SECURA retained Rimkus Consulting Group, Inc. to determine the cause and extent of the reported damage. (Id., PageID # 9) Rimkus employee Steve Weber examined Veranda's property and concluded that the damage was not caused by recent or historic winds. (Id.) After reviewing Weber's report, as well as reports from other individuals, SECURA denied Veranda's claim. (D.N. II, PageID # 45)

         Veranda then initiated the insurance policy's appraisal process. (Id.) The policy provides that in the event of disagreement regarding the amount of loss, each party may select a competent and impartial appraiser to assess the damage. (Id.) If the appraisers disagree, an umpire chosen by the appraisers decides which appraisal is correct. (Id.)

         SECURA appointed Weber as its appraiser. (D.N. 1-2, PageID # 9) Veranda contested Weber's appointment, arguing that he is not impartial due to his prior involvement. (Id., PageID # 10) SECURA disagreed and refused to replace Weber. (Id.) Thus, Veranda and Sawyer filed this action seeking a declaration that the insurance policy requires SECURA to withdraw its appointment of Weber and select an impartial appraiser. (Id.) The parties then filed cross-motions for declaratory judgment asking the Court to determine whether or not Weber is an impartial appraiser under the policy. (D.N. 13; D.N. 14)

         II. STANDARD

         Although the parties filed cross-motions for declaratory judgment, the Declaratory Judgment Act does not contemplate “motions for declaratory judgment.” Under the Act, the Court “may declare the rights and other legal relations of any interested party seeking such a declaration” where a party files “an appropriate pleading.” 28 U.S.C. § 2201(a). The Federal Rules “govern the procedure for obtaining a declaratory judgment under [the Act].” Fed.R.Civ.P. 57. Thus, motions for declaratory judgment in declaratory-judgment actions are construed as motions for summary judgment. State Farm Fire & Cas. Co. v. Taylor, No. CV 5: 17-360-DCR, 2018 WL 3594973, at *3 (E.D. Ky. July 26, 2018); Metaldyne, LLC v. JD Norman Indus., Inc., No. 17-CV-10758, 2017 WL 1395888, at *3 (E.D. Mich. Apr. 19, 2017); Kerns v. Encompass Ins. Co., No. 5:10-CV-121-REW, 2011 WL 310210, at *5 n.2 (E.D. Ky. Jan. 28, 2011).

         Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” State Farm Fire & Cas. Co., 2018 WL 3594973, at *3 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)); see also Fed.R.Civ.P. 56(c). “When reviewing cross-motions for summary judgment, [the Court] must evaluate each motion on its own merits and view all facts and inferences in the light most favorable to the nonmoving party.” Westfield Ins. Co. v. Tech Dry, Inc., 336 F.3d 503, 507 (6th Cir. 2003) (citing Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1991)). The mere existence of a scintilla of evidence in support of the nonmoving party's position will be insufficient; there must be evidence upon which a jury could reasonably find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

         Here, all parties seek a declaration on the issue of Weber's qualification as an “impartial appraiser” under the insurance policy. The interpretation of insurance-policy language is a matter of law for the Court, which will apply Kentucky law to construe the terms of the policy. Westfield Ins., 336 F.3d at 507 (citing Stone v. Ky. Farm Bureau Mut. Ins. Co., 34 S.W.3d 809, 810 (Ky. Ct. App. 2000)); Bays v. Summitt Trucking, LLC, 691 F.Supp.2d 725, 736 (W.D. Ky. 2010) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)); Morganfield Nat'l Bank v. Damien Elder & Sons, 836 S.W.2d 893, 895 (Ky. 1992).


         Under Kentucky law, where insurance policy terms are not ambiguous, “the ordinary meaning of the words chosen by the insurer is to be followed.” Westfield Ins. Co., 336 F.3d at 507 (citing James Graham Brown Found. v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d 273, 279 (Ky. 1991)). An insurance policy or provision therein is ambiguous if its meaning is susceptible to more than one reasonable interpretation. Principal Life Ins. Co. v. Doctors Vision Ctr. I, PLLC, No. 5:12-CV-00125-JHM, 2014 WL 6751201, at *6 (W.D. Ky. Dec. 1, 2014) (citing True v. Raines, 99 S.W.3d 439, 442 (Ky. 2003), as amended (Apr. 2, 2003)). The fact that the parties present competing interpretations of a term does not render it ambiguous. Vencor, Inc. v. Standard Life & Acc. Ins. Co., 317 F.3d 629, 635 (6th Cir. 2003); Principal Life Ins. Co., 2014 WL 6751201, at *7; True, 99 S.W.3d at 442.

         Here, the parties contend that “impartial” is unambiguous but disagree as to how the term should be interpreted in the context of the insurance policy. (D.N. 13, PageID # 53-54; D.N. 14-1, PageID # 63, 65-76) Because “impartial” is not susceptible to multiple reasonable interpretations, the ...

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