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Majstorovic v. State Farm Fire and Casualty Co.

United States District Court, E.D. North Carolina, Western Division

March 24, 2018




         On November 12, 2015, Betty Majstorovic ("Majstoiovic" or "plaintiff') sued State Farm Fire and Casualty Company ("State Farm" or "defendant") in Cumberland County Superior Court for unfair claims settlement practices in violation of N.C. Gen. Stat. § 58-63-15(11), unfair and deceptive trade practices in violation of N.C. Gen. Stat. § 75-1.1, breach of contract, bad faith, and mental and emotional distress. Compl. [D.E. 1-1]. On August 25, 2016, State Farm removed the action to this court [D.E. 1].

         On July 26, 2017, State Farm moved for partial summary judgment [D.E. 19], filed a supporting memorandum [D.E. 21], moved to exclude Majstorovic's proposed expert [D.E. 22], and filed a supporting memorandum [D.E. 23]. On August 16, 2017, Majstorovic responded in opposition to both motions [D.E. 24, 26] and filed memoranda in support [D.E. 25, 27]. On September 7, 2017, State Farm replied [D.E. 32]. As explained below, State Farm's motion for partial summary judgment is granted and State Farm's motion to exclude Majstorovic's proposed expert is denied as moot.


         Majstorovic owned a condominium in Fayetteville, North Carolina. See Compl. ¶ 9; Majstorovic Aff. [D.E. 29-1] ¶ 6. State Farm issued Majstorovic a homeowner's insurance policy. See Compl. ¶¶ 8-10. The policy was in effect from July 3, 2012, through July 3, 2013. [D.E.20] ¶ 2. Sometime between December 24, 2012, and January 26, 2013, water began leaking into Majstorovic's condominium from the ceiling. See Majstorovic Aff. ¶ 8; Greg Briggs Dep. [D.E. 20-3] 3. The leak originated from Gregg Briggs's condominium which was located directly above Majstorovic's condominium. See Briggs Dep. at 3; Betty Majstorovic Dep. [D.E. 20-10] 3. Majstorovic contacted Briggs concerning the leak. See Briggs Dep. at 3. Majstorovic initially agreed to allow Briggs to make the necessary repairs to her condominium because the leak originated from his condominium. See Briggs Dep. at 6; Alice McCorquodale Dep. [D.E. 20-4] 6.

         Majstorovic's daughter, Shelia Young, was out of town when the leak occurred. Young learned about the leak when she returned home and began assisting her mother in handling the issue. See Shelia Young Aff. [D.E. 29-2] ¶¶ 3-5. OnFebruary25, 2013, MajstorovicandYoung contacted State Farm for the first time. See Shelia Young Dep. [D.E. 20-6] 9-11. Majstorovic and Young spoke with Donna Kimmons ("Kimmons"). See Id. Kimmons was an employee of the State Farm agency that issued the insurance policy to Majstorovic. See John LaPrade Dep. [D.E. 20-7] 3. After speaking with State Farm, Majstorovic decided to pursue her property damage claim against Briggs and his insurance carrier. See Majstorovic Dep. at 7; Young Dep. at 9-11. Shortly thereafter, Briggs ceased working on the condominium when Young contacted the Fayetteville Police Department and accused Briggs of breaking and entering. See Young Dep. at 9, 11; McCorquodale Dep. at 3.

         Sometime in late February or early March 2013, Majstorovic and Young contacted All Seasons Air Conditioning and Heating, Inc. ("All Seasons") to complete the repair work. See Young Dep. at 11; Majstorovic AfT. ¶ 26. All Seasons inspected Majstorovic's property and provided her with a work estimate which included replacing the sheetrock in the ceiling, the air conditioning and heating unit, the fan coil, and the duct system. See Majstorovic Aff. ¶ 26; Young Aff. ¶ 15; [D.E. 29-2] (estimate). All Seasons subcontracted part of the work to David Wheeler. See Wheeler Dep. [D.E. 20-8] 9. Specifically, All Seasons hired Wheeler to tear out and repair the ceilings. See id. Majstorovic and Young also hired Wheeler to remove wallpaper, paint the walls, and remove the carpet. See id.; Majstorovic Aff. ¶¶ 29-30. After Wheeler finished painting the condominium, Young did not pay Wheeler the outstanding balance for his work due to a dispute over the quality of the paint. See Wheeler Dep. at 20-21. In early April, Wheeler ceased working on the condominium due to the dispute. See Id. at 23-24, 28

         On March IS, 2013, Young, on behalf of Majstorovic, emailed State Farm to follow-up concerning the February 25 conversation with Kimmons. Young Aff. ¶ 10; [D.E. 20-7] 28. The e- mail stated:

1.1 called your office on 25 February 2013 and spoke with Donna, regarding water damage to my home, caused the upstairs apartments hot water heater bursting, on 26 January 2013.1 have been dealing with the owner of the upstairs apartment, and attempting to have him, or his home owners insurance handle the reimbursement for damages to my interior dwelling, and personal property, along with loss of use of my dwelling[.]
2. On January 26th, 2013, the upstairs units water heater burst, causing water to drain into my apartment, through the ceiling, the heating and air vents, and my electrical fixtures. This incident caused damage to my ceilings, heating and air unit, electrical fixtures, drywall, carpet and flooring.
3. So, far the owner of the upstairs unit has been to say the least extremely uncooperative. He falsely claimed Allstate as is homeowners insurance, and then USAA. Apparently, he had no homeowners insurance at the time of the incident.
4.I am seeking legal counsel regarding this incident, and will contact you again if need be, but I wish at this time to hold the upstairs units owner responsible for the damages he has caused.

         [D.E. 20-7] 28 (emphasis added).

         On April 15, 2013, and sometime after learning that Briggs did not have the proper renter's insurance, Young filed an insurance claim with State Farm through a State Farm's agent's office. See Donald Dinsmore Dep. [D.E. 20-5] 14; Sharon Hering Aff. [D.E. 20-9] ¶ 3. On April 17, 2013, State Farm assigned the claim to Sharon Hering ("Hering''). See Hering Aff.¶ 4. OnAprill9, 2013, Hering inspected Majstorovic's condominium. See Id. ¶ 5. When Hering inspected Majstorovic's condominium, all of the ceilings and carpets had been removed, which made it difficult for Hering to ascertain the extent of the water damage. See id. Majstorovic and Young explained to Hering the work that had already been done to the condominium. Young Aff. ¶¶ 15, 25. Moreover, during the inspection, Young provided Hering with invoices and documentation of the work that was completed, including the proposal that Majstorovic and All Seasons signed. See Id. ¶ 25.

         On April 23, 2013, State Farm sent Majstorovic a reservation of rights letter. Hering Aff. ¶ 6; [D.E. 20-9] 5. The letter stated that "[i]t is questionable whether the conditions of the policy have been violated by reason of delay by or on behalf of the insured in giving written notice to the Company concerning the accident or occurrence." [D.E. 20-9] 5. The letter also stated "[i]t is questionable whether the conditions of the policy have been violated by reason of failure to exhibit damaged property." Id.

         Around May 30, 2013, Majstorovic and Young provided Hering with photographs of the damage. See [D.E. 20-2] 7 (claim log notes). Hering reviewed all of the photographs and invoices submitted to her. See id.; Hering. Aff. ¶ 7. Most of the photographs were taken after the ceilings and carpets had been removed. See Hering Aff. ¶ 7. In the course of her investigation, Hering called All Seasons three times to learn more about the damage, but All Seasons did not return her calls. See Id. ¶ 10. On July 26, 2013, Hering sent a letter to Majstorovic explaining the results of her investigation and enclosed a check for $3, 309.92. See Id. ¶ 11. The letter stated:

I have [] reviewed the information which you provided. The documentation provided does not support a significant water loss which would have required the pack out of all personal property nor having to vacate the property. The photos depict water stains on the ceiling in areas of light fixtures and vents. This would not warrant the removal of all ceilings throughout the entire unit No water extraction company was called, which would normally be necessary in a signifi[c]ant water loss. You stated during my inspection that buckets were used to collect water dripping from the ceiling.
I contacted CarpetOne. They indicated that all of the flooring was removed prior to their arrival therefore they could not verify the extent of water damage to the carpet Depending on the amou[n]t of water, condition of carpet and how long the ...

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