United States District Court, E.D. Louisiana
FINDINGS OF FACT & CONCLUSIONS OF LAW
ELDON C. FALLON, District Judge.
I. PROCEDURAL HISTORY
This action arises out of a flood insurance claim made by Plaintiff Everage Tuircuit ("Mr. Tuircuit") against his flood insurer, Defendant Wright National Flood Insurance Company ("Wright"),  for damage his house sustained during Hurricane Isaac.
On October 28, 2013, Mr. Tuircuit brought a complaint alleging that Wright breached the insurance contract and failed to tender payment for losses covered under that contract. (Rec. Doc. 1). Specifically, Mr. Tuircuit sought reimbursement for those losses, court costs, and any other fair and equitable relief. Id. In its answer, Wright denies the allegations and asserts various affirmative defenses. (Rec. Doc. 5). On August 25, 2014, the Court denied in part, and granted in part, Wright's motion for summary judgment. Although the Court found genuine issues of material fact, it also ruled that Mr. Tuircuit's Coverage A claim was limited to the actual cash value ("ACV") of the dwelling. (Rec. Doc. 35). The Court also dismissed any extra-contractual claims.
This matter came for trial before the Court without a jury on September 15, 2014. After considering the testimony of the witnesses, the exhibits admitted into evidence, and the memoranda submitted by the parties, the Court now makes the following findings of fact and conclusions of law, pursuant to Federal Rule of Civil Procedure 52. To the extent that a finding of fact constitutes a conclusion of law, the Court adopts it as such; to the extent that a conclusion of law constitutes a finding of fact, the Court also adopts that as such.
II. FINDINGS OF FACT
This action arises out of damage caused by Hurricane Isaac. Everage Tuircuit held a standard flood insurance policy ("SFIP") with Defendant Wright National Flood Insurance Company, providing property coverage on a dwelling in LaPlace, Louisiana, up to $223, 900 and contents coverage up to $88, 200, each subject to a $1, 000 deductible. Mr. Tuircuit purchased the house in 2008 and never lived at the property. Rather, his daughter, Courtney Tuircuit lived at the dwelling with her fiance, Brian Brown from 2008 until Hurricane Isaac swept through. Jared Tuircuit, Mr. Tuircuit's son, previously lived at the dwelling for a period of time, but moved out before Hurricane Isaac. Courtney, Brian, and Jared lived at the dwelling, with Mr. Tuircuit's permission, rent-free and without a lease. Courtney Tuircuit paid the mortgage on the house.
On or about August 29, 2012, Hurricane Isaac caused flood damage to the insured house. In early September 2012, Courtney called to notify Wright of the flood damage. On September 6, 2012, Wright sent an independent adjuster, Carl Neill of Fountain Group Adjusters, to inspect the insured dwelling. During Mr. Neil's inspection, Courtney, Brian, and Mr. Tuircuit were present, and Courtney explained to Mr. Neil that she and Brian lived in the house, which Mr. Tuircuit owned. Shortly thereafter, Courtney hired a public adjuster, Michael Michio of ProClaim, to assess the flood damage. Mr. Michio inspected the property and in October 2012 issued an estimate placing the replacement cost value of the dwelling at $132, 759.05. Mr. Michio based his estimate on local pricing of construction goods and services in New Orleans, Louisiana. Mr. Michio also helped the Tuircuits prepare an inventory of personal property at the insured dwelling that was damaged by the storm. That inventory set the personal property damage at a replacement cost value of $90, 844.00.
After completing his estimate, Mr. Michio assisted the Tuircuits in drafting a proof of loss in the amount of $214, 528.04. Mr. Tuircuit and Courtney signed the proof of loss, dated October 20, 2012. At some point between October 20, 2012 and November 16, 2012, Mr. Michio submitted that proof of loss to Wright. Mr. Michio also sent his estimate to Wright. Although Wright presented testimonial evidence that it never received the October 20, 2012 signed proof of loss, the Court finds that Mr. Michio's testimony is credible, and the Court concludes that the Tuircuits indeed timely submitted the October 20, 2012 proof of loss.
On January 4, 2013, Mr. Neil submitted his estimates: (1) building damage with a replacement cost value of $56, 117.75 and an actual cash value of $51, 604.63 and (2) contents damage with a replacement cost value of $38, 475.84 and an actual cash value of $32, 878.07. Based on Mr. Neil's estimates, Mr. Tuircuit signed a proof of loss dated January 3, 2013 for $83, 482.70, along with a building replacement cost proof of loss for $4, 081.04 in recoverable depreciation. Based on Mr. Neil's estimates, Wright paid Mr. Tuircuit $55, 685.67 in building damages and $31, 878.07 in contents damages for a total of $87, 563.74.
To begin repairing the insured dwelling, Mr. Tuircuit, Courtney, and Brian spent several days gutting the dwelling's interior. Next, Courtney hired Santos Remediation to perform additional gutting, drying, and cleaning. The house was subjected to a "four foot gut, " which means that the sheetrock is removed up to four feet. The parties agree that a four foot gut is the most cost effective way to gut a home, largely due to the standard four-foot size of drywall. Thereafter, Courtney took estimates from general contractors to continue repairs. After obtaining estimates from several companies from $90, 000 to well over $100, 000 in repair costs, Courtney hired DDS Construction, which gave her an estimate of $65, 386.50. DDS did not complete repairs, however, as the Tuircuits ran out of money.
The Tuircuits spent the following sources of money on repairing the house: $55, 685.67 from Wright's building coverage payment, approximately $16, 000 from Wright's contents payments, and between $5, 000 and $7, 000 of Courtney's personal money. Courtney testified that she used the repair process as an opportunity to remodel several features of the house. Based on Courtney's own testimonial admissions, and the convincing testimony of Wright's expert contractor John Crawford, the Court finds that some of the renovations constituted upgrades from the August 2012 condition of the home. Specifically, Courtney upgraded the formal living room (which now has a domed ceiling), the main bathroom (which now contains an upgraded tub and ceramic tiles instead of the previous, cheaper linoleum flooring), and parts of the kitchen (which now has a larger refrigerator and expanded granite countertops).
At trial, the parties presented largely conflicting expert testimony. The Court qualified Mr. Tuircuit's hurricane damage causation and cost estimate expert, Mr. Michio, and Wright's forensic/structural engineering and construction expert, John Crawford. Each expert testified regarding their own expert reports and the expert report of their opposing counterpart. Both experts agreed on several issues: (1) the hurricane caused damaged throughout the home, (2) the hurricane damaged tile floor throughout the home, the kitchen's granite countertops, and the front door, all of which required replacement, (3) Xactimate is industry-standard software proper for flood estimates using September/October 2012 local pricing in New Orleans, Louisiana, and (4) some of the repairs performed by DDS were substandard. Mr. Crawford's support for the items listed in (2), above, supplant Wright's initial estimate from Carl Neill that such items did not require replacement. Both estimates also include a 10% profit and 10% overhead for a general contractor. The experts disagreed about whether specified items required replacement, and they also disagreed on general methodology for determining the loss.
Upon consideration of the evidence, the Court finds Mr. Crawford's expert opinion more persuasive than that of Mr. Michio. Notably, Mr. Crawford provided specific, compelling critiques of Mr. Michio's methodology, while Mr. Michio largely only provided general, unsubstantiated criticism of Mr. Crawford's analysis. Although Mr. Crawford's analysis is tempered by the fact that he visited the insured home for the first, and last, time on June 25, 2014, more than a year and half after the hurricane damage occurred, his assessment of the required repairs is nonetheless convincing. He explained various flaws and overestimates in the analysis of Mr. Michio. For example, Mr. Crawford explained that Mr. Michio's estimate provided for full wall replacement costs (including drywall installation, painting, and finishing) for parts of rooms which did not contain wall space - such as window breaks and entry ways. This flaw substantially undermines the value of Mr. Michio's estimate. Moreover, Mr. Crawford's credible testimony explained that Mr. Michio, in part: (1) estimated drywall expenses that were approximately double the actual cost, (2) seemingly manually overrode the Xactimate software improperly on various estimates, and (3) improperly contained an estimate for unnecessary and sometimes unperformed repairs. For example, Mr. Crawford ...