United States District Court, W.D. North Carolina, Charlotte Division
COGBURN JR. UNITED STATES DISTRICT JUDGE
MATTER is before the court on plaintiff's Motion for
Partial Summary Judgment (#16), defendant's Motion for
Summary Judgment (#20), and the parties' Joint Motion for
Continuance of Trial Setting (#29). Having considered the
parties' motions and reviewed the pleadings, the court
enters the following Order.
about October 23, 2015, plaintiffs experienced a significant
water and sewage intrusion into their home due to a broken
sewer lateral leading to their property. The sewer lateral in
question was located in the street and off the
plaintiffs' property. Companies involved with installing
a fiber optic network in and around the Charlotte area
engaged in underground boring and struck the sewer lateral.
As a result, a large amount of water, sewage, and other
materials entered plaintiffs' home through a downstairs
contacted representatives from companies involved, in order
to request that they remediate the damage to the home and pay
for all necessary repairs. During this process, plaintiffs
were informed that remaining in the home was hazardous to
their health and the health of their teenage daughter, and
were advised on October 25, 2015 to vacate the property until
cleanup and necessary repairs were completed.
same day, plaintiffs contacted defendant to report a claim
pursuant to their homeowners insurance policy. On October 26,
2015, plaintiffs were advised that defendant would pay for
them to stay in a hotel due to the damage to the home. In
accepting the claim, defendant also agreed to provide
plaintiffs with additional living expenses pursuant to the
policy. The next day, defendant sent letters to plaintiffs
confirming the coverage on their policy.
the next several months, plaintiffs attempted to resolve
their claim with the companies involved in striking the sewer
lateral, but were unsuccessful in reaching an agreement.
During these negotiations, defendant continued paying
plaintiffs' hotel expenses. Defendant provided additional
authorization to the plaintiffs' hotel multiple times
over the next several months, and paid a total of $33, 143.73
for plaintiffs' hotel expenses.
on March 15, 2016, defendant sent an email to plaintiffs
indicating that the policy only provided benefits for the
length of time that it takes to make repairs to the home, and
that sufficient time had elapsed for repairs to be completed.
As a result, defendant would not pay for plaintiffs'
hotel beyond April 1, 2016. Plaintiffs contacted defendant
via phone on March 16, 2016, and were informed that their
claim was subject to an endorsement on the policy that
limited total coverage for their claim to $10, 000. On March
18, 2016, plaintiffs again spoke to defendant, and defendant
agreed to pay for hotel expenses through May 1, 2016. On
March 24, 2016, after reviewing photographs and a work order
from the City of Charlotte showing what repairs had been
made, defendant confirmed with plaintiffs that coverage for
the loss was limited to $10, 000 due to the endorsement and
that defendant would not pay for any hotel expenses beyond
May 1, 2016.
proceeded to hire counsel in April of 2016. Plaintiffs'
counsel sent a letter to defendant on April 27, 2016, asking
for defendant to review their denial of additional benefits
for hotel expenses and that it agree to pay for repairs to
plaintiffs' home, given that the companies involved
appeared unwilling to do so. Defendant responded via letter
on May 5, 2016, stating that its investigation showed that
the sewer issue happened off the premises of plaintiffs'
home and reasserted that plaintiffs' claim was subject to
an endorsement limiting coverage for the loss to $10, 000.
Defendant also indicated in the letter than any additional
claims related to this loss were denied and that defendant
was closing its file.
proceeded to file suit in August of 2016, against defendant
and the companies involved with breaking the sewer lateral,
with the City of Charlotte later added as a third party
defendant. Claims with other parties were resolved and
dismissed from this action on August 3, 2017. On August 4,
2017, defendant removed this matter to this court pursuant to
diversity jurisdiction under 28 U.S.C. § 1332(a) and
(c). Essentially, plaintiffs allege that their
homeowner's policy, provided through defendant, is not
subject to the endorsement limiting their claim to $10, 000
and move for summary judgment on this issue. Defendant argues
that the endorsement is valid and applicable to
plaintiffs' situation, and that plaintiffs' other
allegations, specifically bad faith and unfair and deceptive
trade practices claims, fail as a matter of law.
judgment is warranted “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). A factual dispute is genuine “if
the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is
material only if it may affect the suit's outcome under
governing law. Id. The movant has the “initial
responsibility of informing the district court of the basis
for its motion, and identifying those portions of the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
which it believes demonstrate the absence of a genuine issue
of material fact.” Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986) (internal citations omitted). The
burden then shifts to the nonmoving party. That party
“must set forth specific facts showing that there is a
genuine issue for trial.” Id. at 322 n.3. The
nonmoving party may not rely upon mere allegations or denials
of allegations in pleadings to defeat a motion for summary
judgment. Id. at 324. Instead, that party must
present sufficient evidence from which “a reasonable
jury could return a verdict for the nonmoving party.”
Anderson, 477 U.S. at 248; accord Sylvia Dev.
Corp. v. Calvert Cnty., Md., 48 F.3d 810, 818 (4th Cir.
Court views evidence and any inferences from evidence in the
light most favorable to the nonmoving party.
Anderson, 477 U.S. at 255. “‘Where the
record taken as a whole could not lead a rational trier of
fact to find for the nonmoving party, there is no genuine
issue for trial.'” Ricci v. DeStefano, 557
U.S. 557, 586 (2009) (quoting Matsushita v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986)). The
question posed by summary judgment is whether the evidence
“is so one-sided that one party must prevail as a
matter of law.” Anderson, 477 U.S. at 252.
insurance policies are concerned, the courts of the State of
North Carolina have long held that insurance policy
provisions should be “construed liberally so as to
provide coverage, whenever possible by reasonable
construction.” State Capital Ins. Co. v. Nationwide
Mut. Ins. Co., 318 N.C. 534, 539 (1986) (citing
Moore v. Hartford Fire Ins. Co., 270 N.C. 532 (1967)).
The effect is to broaden coverage available to the insured,
such that “provisions which exclude liability of
insurance companies are not favored and therefore all
ambiguous provisions will be construed against the insurer
and in favor of the insured.” Id. (citing
Wachovia Bank & Trust Co. v. Westchester Fire Ins.
Co., 276 N.C. 348 (1970)).
interpreting a policy's language and terms, “[i]f
no definition is given, non-technical words are to be given
their meaning in ordinary speech, unless the context clearly
indicates another meaning was intended.” Woods v.
Nationwide Mut. Ins. Co., 295 N.C. 500, 506 (1978).
Should words or provisions be ambiguous or “capable of
several reasonable interpretations, the doubts will be
resolved against the insurance company and in favor of the
policyholder.” Id. In determining the meaning
of a policy's terms, the court must strive for
consistency, and ensure that the “various terms of the
policy are to be harmoniously construed, and if possible,
every word and every provision is to be given effect.”
Id. Finally, determining the meaning of policy
language is a question of law for the court.
Wachovia, 276 N.C. at 354 (citations omitted).
court has reviewed the parties' pleadings and the rest of
the record. Plaintiff makes three claims against defendant in
their Complaint (#1-1): breach of contract, bad faith, and
unfair and deceptive trade practices, all based on
plaintiffs' homeowners insurance policy with defendant.
The court will consider plaintiffs' claims in turn.
Plaintiffs' breach of contract claim
the court will consider plaintiffs' breach of contract
claim. The relevant portions of the insurance policy are as
3 - SPECIAL FORM SECTION I - EXCLUSIONS
A. We do not insure for loss caused directly or indirectly by
any of the following. Such loss is excluded regardless of any
other cause or event contributing concurrently or in any
sequence to the loss. These exclusions apply whether or not
the loss event results in widespread damage or affects a
a. Flood, surface water, waves, including tidal wave and
tsunami, tides, tidal wave, overflow of any body of water, or
spray from any of these, all whether or not driven by wind,
including storm surge;
b. Water which:
(1) Backs up through sewers or drains; or
(2) Overflows or is otherwise discharged from a sump, sump
pump or related equipment;
c. Water below the surface of the ground, including water
which exerts pressure on, or seeps, leaks or flows through a
building, sidewalk, driveway, patio, foundation, swimming
pool or other structure; or
d. Waterborne material carried or otherwise moved by any of
the water referred to in A.3.a. through A.3.c. ...