United States District Court, E.D. North Carolina, Western Division
C. DEVER, III CHIEF UNITED STATES DISTRICT JUDGE.
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].
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.
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.
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.
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
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
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
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.
20-7] 28 (emphasis added).
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.
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
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 ...