United States District Court, Eastern District of Louisiana
THE ESTATE OF LOUIS D. HAUSER ET AL
WESTCHESTER SURPLUS LINES INSURANCE COMPANY
ORDER AND REASONS
HELEN G. BERRIGAN UNITED STATES DISTRICT JUDGE
Before the Court are a Motion for Partial Summary Judgment on the Issue of Increased Cost of Construction/Code Upgrades (Rec. Doc. 44); Motion in Limine (Rec. Doc. 45); Motion for Leave to Supplement Record for the Motion in Limine (Rec. Doc. 49); and Motion to Strike, or in the Alternative, to Limit Expert Testimony (Rec. Doc. 42) filed by defendant, Westchester Surplus Lines Insurance Company ("WSLIC"). Having considered the record, the law, and the memoranda of counsel, the Court hereby and for the reasons that follow:
1. GRANTS IN PART and DENIES IN PART the Motion for Partial Summary Judgment (Rec. Doc. 44);
2. GRANTS the Motion for Leave to Supplement Record for the Motion in Limine (Rec. Doc. 49);
3. DENIES the Motion in limine (Rec. Doc. 45); and
4. GRANTS IN PART and DENIES IN PART the Motion to Strike (Rec. Doc. 42).
I. Factual background
This case concerns a dispute over the amount of payment owed on an insurance policy covering commercial properties in the New Orleans area. Plaintiffs own a number of pieces of commercial real estate in Louisiana covered by an insurance policy issued by WSLIC ("the policy"). Rec. Doc. 1 at ¶7. On August 28, 2012, these properties sustained damage from Hurricane Isaac. Id . at ¶8. The policy issued by WSLIC was active at the time. Rec. Doc. 8 at ¶8.
According to plaintiffs, shortly after Hurricane Isaac, they notified WSLIC of the damage to their property and allowed WSLIC's adjusters and consultants to inspect the properties. Rec. Doc. 1 at ¶10. Plaintiffs aver that they are entitled to $1, 094, 641.75 under the policy. Id . At ¶9. However, WSLIC agreed to pay plaintiffs only $208, 848.35. Id . at ¶11.
On August 28, 2013, plaintiffs filed this lawsuit against WSLIC, alleging breach of contract, breach of duty to properly adjust their insurance claim, and failure to provide timely payment after receipt of proof of loss. Rec. Doc. 1 at ¶12-17. In January 2015, WSLIC filed the instant motions, which plaintiffs have opposed.
II. Law and Analysis
a. Increased Cost of Construction provision
WSLIC moves for partial summary judgment on the issue of whether the Policy limits coverage of Plaintiffs' claim. WSLIC argues that a section of the policy known as the Increased Cost of Construction provision expressly excludes from coverage 1) any costs to bring property into compliance with ordinance or law that was not compliant prior to Hurricane Isaac and 2) any costs for required upgrades that took place after August 29, 2014. Rec. Doc. 44-1 at 1-2. In response, plaintiffs claim that they are not seeking any increased construction costs to comply with ordinance or law, but rather, seek only to repair the property to the same condition it was in prior to Hurricane Isaac. Rec. Doc. 55 at 2. Plaintiffs further contend that because there is no actual controversy relating to increased construction costs, that the Court's judgment on the issue is prohibited. Id .
The Court will first discern whether there is indeed a controversy over the policy provisions in question. The Policy's Increased Cost of Construction provision provides that the insurer "will pay the increased cost incurred to comply with enforcement of an ordinance or law in the course of repair, rebuilding or replacement of damaged parts of that property" unless 1) the insured was required to comply with the ordinance or law when the building was damaged, but failed to comply, or 2) the repairs or replacement are made more than two years after the damage was incurred. Rec. Doc. 44-2 at 4-5. In addition, even if the damaged building qualifies for payment for increased cost of construction, the provision puts a cap of $10, 000 or 5% the value of the damaged building for such additional coverage. Id .
Although plaintiffs state that they do not seek coverage that would implicate any of these provisions, WSLIC challenges this claim. WSLIC points to repairs to an existing parapet wall at the Property which an inspection report deemed to be non-compliant with current building code wind load requirements. Rec. Doc. 44-3. The same report described damage to the parapet wall. Id . Thus, even if plaintiff seeks only to restore the property to its pre-storm condition, the report shows that such restoration would likely require additional costs to bring the potentially non- compliant parapet wall into compliance. Accordingly, the Court finds that there is a controversy with regards to ...