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Titan Exteriors, Inc. v. Certain Underwriters at Lloyd's, London

United States District Court, N.D. Mississippi

February 26, 2018



         This court has before it Plaintiff Titan Exteriors' motion for partial judgment on the pleadings [10]. Having considered the matter the court finds that the motion should be granted.

         Factual and Procedural Background

         Nonparty Columbus Business Center ("CBC") owned a shopping center that it insured through a policy (the "Policy") written by Defendant Certain Underwriters at Lloyd's, London ("Underwriters"). Compl. [Doc. No. 1] ¶ 5. This Policy provided that in the event of a covered loss, Underwriters would "pay the value of lost or damaged property, or the cost of its repair or replacement, in accordance with the applicable terms of the Valuation Condition in this Coverage Form . . . ." Policy, [Doc. No. 1-1] at pg. 31. The Policy provided that "the value of Covered Property" would be determined as "[at] actual cash value as of the time of loss or damage. . ." Policy, at pg. 32. The Policy did not define "actual cash value."

         In April 2014, while CBC's policy with Underwriters was in effect, the shopping center suffered hail and wind damage, purportedly resulting in $5, 000, 000 in damages to the property. Compl. ¶¶ 11, 12. In March 2016, CBC reported the loss to Underwriters. Id. ¶ 14; Def.'s Ans. [Doc. No. 6] ¶ 14. CBC then contracted with Plaintiff Titan Exteriors to repair the damage to the property. Compl. ¶ 13; Def.'s Ans. ¶ 13.

         In March 2017, Underwriters notified CBC that they would issue an actual cash value payment for the damaged property in the amount of $1, 217, 545.60. Compl. ¶ 16; Def.'s Ans. ¶ 16. In order to reach that figure, Underwriters used the "replacement cost value less depreciation" methodology to compute the actual cash value. Compl. ¶¶ 26, 27; Def.'s Ans. ¶¶ 26, 27. Underwriters first estimated the replacement cost value which is the cost to repair or replace the damage with new materials, as $3, 980, 142.81. Compl. ¶ 29; Def.'s Ans. ¶ 29. Underwriters then subtracted depreciation, with it calculated as $2, 662, 597.21. Compl. ¶ 30; Def.'s Ans. ¶30. Finally, it subtracted the applicable deductible of $100, 000 to reach the actual cash figure of $1, 217, 545.60. Compl. ¶ 31; Def.'s Ans. ¶ 31. Underwriters informed Titan Exteriors that of the $2, 662, 597.21 depreciation, $1, 054, 023.63 was for depreciation of labor. Compl. ¶ 38-39; Def.'s Ans. ¶ 38-39.

         In June 2017, CBC assigned its insurance claim to the actual cash value payment to Titan Exteriors, despite a non-assignment provision being in CBC's insurance policy. Compl. ¶ 18. Underwriters refuses to release the certain insurance proceeds to Titan Exteriors, because it believes there has been no valid assignment under the policy, and so Titan Exteriors filed the present suit. Compl. ¶ 23.

         Titan Exteriors has moved for a judgment on the pleadings [Doc. No. 10]. In its motion, Titan Exteriors argues that CBC's assignment to Titan Exteriors was valid. It then argues that "actual cash value, " as it is defined in the policy, is ambiguous in that reasonable minds could differ as to whether it encompasses the depreciation of labor costs or materials only. It argues that this ambiguity should be resolved in favor of the insured, in this case Titan Exteriors, such that the insurer may not depreciate labor when calculating the actual cash value under the Policy. Therefore, Titan Exteriors asks this Court to enter a partial judgment in its favor in the amount of $1, 054, 023.63, the amount Underwriters deducted for labor depreciation. Underwriters has responded, and this matter is now ripe for review.

         12(c) Motion for Judgment on the Pleadings Standard

         After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings." Fed.R.Civ.P. 12(c). A Rule 12(c) motion is governed by the same standards as a Rule 12(b)(6) motion. See Brown v. CitiMortgage, Inc., 472 Fed.App'x. 302, 303 (5th Cir. 2012) (per curiam) (citing St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 440 n.8 (5th Cir. 2000)). "A motion brought pursuant to [Rule] 12(c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts." Hebert Abstract Co. v. Touchstone Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990) (per curiam) (citing 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1367, at 509-10 (1990)).


         Because this case is before the Court pursuant to its diversity jurisdiction under 28 U.S.C. § 1332, state substantive law applies. Under Mississippi law, the interpretation of an insurance policy is a question of law, not one of fact. Lewis v. Allstate Ins. Co., 730 So.2d 65, 68 (Miss.1998). When interpreting an insurance policy under Mississippi law, the Court must "look at the policy as a whole, consider all relevant portions together and, whenever possible, give operative effect to every provision in order to reach a reasonable overall result " J & W Foods Corp. v. State Farm Mut. Auto. Ins. Co., 723 So.2d 550, 552 (Miss. 1998). "[When] the words of an insurance policy are plain and unambiguous, the court will afford them their plain, ordinary meaning and will apply them as written." Noxubee Cty. Sch. Dist. v. United Nat. Ins. Co., 883 So.2d 1159, 1165 (Miss. 2004).

         A term is ambiguous if it "can be interpreted to have two or more reasonable meanings." J & W Foods Corp., 723 So.2d at 552 (citing Ins. Co. of N. Am. v. Deposit Guar. Nat. Bank, 258 So.2d 798, 800 (Miss. 1972)). "Under Mississippi law, ambiguous and unclear policy language must be resolved in favor of the non-drafting party-the insured." Noxubee Cty. Sch. Dist. v. United Nat. Ins. Co., 883 So.2d 1159, 1165 (Miss. 2004) (citing Harrison v. Allstate Ins. Co., 662 So.2d 1092, 1094 (Miss. 1995)).

         There are no disputes about the material facts underlying this motion. The parties agree that CBC made an attempted assignment of its insurance claim to Titan Exteriors in June 2017, after CBC reported the loss to Underwriters. The parties also agree that Underwriters deducted $1, 054, 023.63 for depreciation of labor when determining the actual cash value of the damaged property. The only two questions before the Court are questions of law - whether the Policy prohibited CBC's assignment to Titan Exteriors and whether the Policy allowed Underwriters to depreciate labor when computing actual cash value.

         1. Was CBC's assignment to ...

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