Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-01261/USCOURTS-azd-2_06-cv-01261-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1331 Fed. Question: Breach of Contract

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WO NN

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Robert Hoff and Cathy Hoff, husband

and wife; Action Acquisitions, L.L.C., an

Arizona limited liability company, 

Plaintiffs, 

vs.

Hartford Fire Insurance Company, a

foreign corporation domiciled in

Connecticut; Hartford Underwriters

Insurance Company d/b/a The Hartford, a foreign corporation domiciled in

Connecticut; John and Jane Doe 1-10, 

Defendants. 

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No. CV 06-1261-PHX-EHC

ORDER

Defendant Hartford Fire Insurance Company’s Motion for Summary Judgment

(“DMSJ”) (Dkt. 46) was filed July 30, 2007. Plaintiffs’ Motion for Partial Summary

Judgment on the Homeowners Insurance Coverage Issue (“PMSJ”) (Dkt. 48) was filed July

31, 2007. Both motions have been fully briefed.

I. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate “when there is no genuine issue of material fact”

such that “the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56.

In determining whether to grant summary judgment, a district court must view the underlying

facts and the inferences to be drawn from those facts in the light most favorable to the

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nonmoving party. See Matsushita Elec. Co. v. Zenith Radio Corp., 475 U.S. 574, 587

(1986).

If a party will bear the burden of proof at trial as to an element essential to its claim,

and fails to adduce evidence establishing a genuine issue of material fact with respect to the

existence of that element, then summary judgment is appropriate. See Celotex Corp. v.

Catrett, 477 U.S. 317, 322-23 (1986). Not every factual dispute is capable of defeating a

properly supported motion for summary judgment. Rather, the party opposing the motion

must show that there is a genuine issue of material fact. See Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 247-48 (1986). A factual dispute is genuine if the evidence is such that

a rational trier of fact could resolve the dispute in favor of the nonmoving party. Anderson,

477 U.S. at 248. A fact is material if determination of the issue might affect the outcome of

the case under the governing substantive law. Anderson, 477 U.S. at 248. Thus, a party

opposing a motion for summary judgment cannot rest upon bare allegations or denials in the

pleadings, but must set forth specific facts demonstrating a genuine issue for trial. See

Anderson, 477 U.S. at 250. If the nonmoving party’s evidence is merely colorable or not

significantly probative, a court may grant summary judgment. See Anderson, 477 U.S. at

249; see also Cal. Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, 818 F.2d 1466,

1468 (9th Cir. 1987).

II. DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

A. Breach of Contract Claim

1. Facts

On April 7, 2006, Plaintiffs filed a Complaint alleging Breach of Contract and

Declaratory Relief in Count 1, and Bad Faith and Breach of Covenant of Good Faith and Fair

Dealing in Count 2. (Dkt. 1, Ex. A). 

The following facts are not in dispute unless indicated otherwise: 

Defendants (“Hartford”) issued an insurance policy (“policy”) with a coverage period

of February 27, 2004 through February 27, 2005 for Plaintiffs’ house located in Phoenix.

(Defendant Hartford Fire Insurance Company’s Statement of Facts in Support of its Motion

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1

The foreclosure was initiated by the HOA because Lorne was behind in his HOA

payments by thousands of dollars.

2

Although Hartford alternately cites the date of this letter as being in 2006 and 2007

in ¶ 18, the Court ascertained from the exhibit itself that the year was 2004. (DSOF ¶ 18,

Exh. 10).

3

Plaintiffs do not contest the denial of coverage for the stolen plants.

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for Summary Judgment (“DSOF”) (Dkt. 47) ¶ 2). Plaintiffs had purchased the home from

a Sheriff’s foreclosure sale on April 24, 2003. (DSOF ¶ 5, Exh. 3). Lorne Willment,

(“Lorne”) the previous owner, contested the foreclosure and sued the Homeowners

Association (“HOA”)1

 in Maricopa County Superior Court, CV 2002-091967. (DSOF, Exh.

4). The court denied Lorne’s Motion to Set Aside Default Judgment and Sheriff’s Sale on

January 13, 2004. (DSOF, Exh. 4).

Plaintiffs’ son, Brian Hoff (“Brian”), contacted police on April 24, 2004, and a police

report was filed for theft and property damage to the house. (DSOF ¶ 3, Exh. 3). Brian had

witnessed two males stealing plants from the front yard and loading them into a minivan.

(DSOF ¶ 8, Exh. 6, p. 41, line 13 - p. 42, line 20). The men told Brian they worked for

Lorne. (DSOF ¶ 9, Exh. 3). According to the police report, suspect Lorne was responsible

for “removing appliances, interior fixtures, and exterior plants and landscaping.” (DSOF ¶

4, Exh. 3). After going inside the property, Brian reported that the house was “gutted” with

extensive items missing. (DSOF ¶ 10, Exh. 3, Exh 6, p. 14, lines 11-21). In his deposition,

Brian testified that “other than smashed marble from a bathroom and pieces of kitchen

countertop granite, he could not describe in any detail what items were in the property” prior

to the theft and vandalism. (DSOF ¶ 27, Exh. 6, p.13, lines 8-17). Also, Brian did not know

when Lorne moved out of the house. (DSOF ¶ 16, Exh. 6, p. 31, lines 10-18), nor “whether

the loss occurred at one time or was an accumulation of damages over time before the house

was conveyed.”(DSOF ¶ 28, pp. 13-18).

Hartford claims adjustor Stoutenburg inspected the loss on April 28, 2004. (DSOF ¶

12). On June 18, 20042

, Stoutenburg denied coverage for the theft of plants.3 (DSOF ¶ 18,

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4

Defendants did not file a motion for partial summary judgment, but rather a motion

for summary judgment.

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Exh. 10). In the same letter, he stated he could not determine the condition of the property

when Plaintiffs assumed an insurable interest. (DSOF ¶ 18, Exh. 10). He concluded “he was

unable to file additional claims for Plaintiffs since they could not determine what specific

items were taken or when.” (DSOF ¶ 19, Exh. 10).

Hartford alleges that Brian “had never seen the inside of the house before the date

police investigated the theft,” according to his deposition. (DSOF ¶ 7, Exh. 6). Hartford

reiterates this by citing to Brian’s recorded statement. (DSOF ¶ 15, Exh. 8). Plaintiffs do not

dispute this fact, but they challenge Hartford’s conclusion which they derive from that fact:

Hartford investigator Patti Kratzke “questioned how Plaintiffs knew when the actual damage

occurred since they became the owner of the property on October 24, 2003 but never did a

walk through of the property until discovering the damage on April 23, 2004.” (DSOF ¶ 14,

Exh. 8). 

Plaintiffs counter that insured Plaintiff Robert Hoff (“Robert”) testified in his

deposition that he had been inside the house once, in December 2003, before the house was

damaged. (Plaintiffs’ Controverting Statement of Facts in Support of Their Response to

Defendant’s Motion for Partial [sic]4

 Summary Judgment (“PRSOF”) (Dkt. 53) ¶ 2, Exh. 1,

pp. 15-17). Robert also described the damage to the house in his testimony. (PRSOF ¶ 2, pp.

22-23).

Hartford also alleges Robert Hoff testified in his deposition that he had no specific

recollection of “what or when anything was taken from the house . . .” (DSOF ¶ 26; Exh. 13,

p. 21, lines 3-5) (emphasis added). Plaintiffs argue Robert “did not testify that he had no

recollection of what was taken from the house. Rather, he testified that he did not know

specifically when the items were taken.” (PRSOF ¶ 4, Exh. 1, p. 21, lines 3-5).

 The PRSOF includes an additional statement of facts relevant to their response.

(PRSOF ¶¶ 13-27). They are summarized as follows:

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• The policy limit for liability is $400,000 and paid for a “Landlord’s Optional

Coverage Endorsement” of $500,000. (PRSOF ¶ 13).

• Brian received a telephone call from a neighbor who indicated that fixtures of the

property had been removed. This prompted Brian to call the police and go to the

house where he witnessed the two men pulling plants out of the ground. (PRSOF ¶

14).

• Plaintiffs discovered that the house had been “completely stripped from the inside.”

Plaintiffs allege the following was removed: all appliances, shelves; sinks, light

fixtures; baseboards; metal air vents; molding around doors; interior doors; pipes in

the shower (torn out by someone cracking through the tile); the bathtub (including

pipes, “leaving a huge hole in the floor.” (PRSOF ¶ 15).

• Lorne occupied the house at the time the property was damaged. (PRSOF ¶ 16).

• Kratzke recorded Brian’s statement which included a description of the property

damage in detail. (PRSOF ¶ 17).

• Kratzke recorded Robert’s statement which included a detailed description of the loss.

He offered to walk Kratzke through the house, and estimated that the damage ocurred

with the six weeks prior to April 23, 2004, when the damage was discovered. (PRSOF

¶ 18).

• Hartford interviewed the neighbor who called Brian, Sal Sendick. On April 20, 200,

2004, after returning from vacation, he observed, from his upstairs porch that looks

down onto the property, that the window blinds had been removed and he could see

the plumbing fixtures had been ripped off the walls. (PRSOF ¶ 19).

• Sendick estimated the damage was done after March 20, 2004. (PRSOF ¶ 20).

• “While Sal Sendick was on vacation (from March 20 through April 20) his neighbor

Kathleen Dudek witnessed damage to the house. (PRSOF ¶ 21).

• Stoutenburg arbitrarily denied the policy claim “on the assumption that the removal

of the property was ‘methodical’ and occurred over a period of time.” (PRSOF ¶ 22).

• Plaintiffs’ attorney sent a demand letter to Hartford on August 6, 2004. (PRSOF ¶ 23).

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• Stoutenburg sent a second denial letter indicating Hartford would not cover claims for

‘multiple events or a systematic removal of property over time.’ He added that he

could only address the stolen plants and shrubs on April 23, 2004. (PRSOF ¶ 24).

• Plaintiffs allege Stoutenburg stated in his letter that because they could not prove a

specific date for the rest of the damage to the house, they were denied

coverage.(PRSOF ¶ 25).

• Plaintiffs argue that they had complied with the policy’s requirements: they described

what had been stolen and damaged and it was readily apparent by a simple inspection

of the property. Plaintiffs owned the property and the deed is a matter of public

record. Robert and neighbor Sendick provided an approximate time frame when the

theft and vandalism took place. (PRSOF ¶ 26).

• Plaintiffs allege Hartford ignored the “ample evidence” in this case.

2. Analysis

“In order to establish a prima facie case, [the insured] must prove the insurance policy,

the happening of the insured event, and the giving of notice as provided in the policy.” Pac.

Indem. Co. v. Kohlhase, 9 Ariz.App. 595, 597, 455 P.2d 277, 279 (App. 1969) (citations

omitted). Proof of the insurance policy and the giving of notice are not disputed. The

occurrence of the insured event is the disputed issue.

Hartford alleges the “Plaintiffs have never been able to establish the condition of the

Property at the time they assumed an insurable interest in it, what specific other fixtures,

appliances or parts of the Property were taken, and when those items were actually taken.”

(DMSJ, p. 5). 

Although reasonably refuted by Plaintiffs, Hartford insists that Plaintiffs admitted they

had never entered the insured premises before the theft and vandalism occurred. (Defendants

Hartford Insurance Company and Hartford Underwriters Insurance Company’s Reply in

Support of Their Motion for Summary Judgment (“Defendants’ Reply”) (Dkt. 54), p. 2).

Hartford goes so far as to say that the “question to this day remains unanswered by

Plaintiffs.” (Defendants’ Reply , p. 2). Robert’s deposition indicates he walked through the

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property premises in December 2003 and described the interior. (PRSOF ¶ 2, Exh. 1, pp. 15-

17. It is further discussed in Brian’s recorded statement taken by Hartford’s own

investigator, Patti Kratzke, found in Hartford’s exhibits. (DSOF, Exh 8, p 4)..

Hartford alleges that Plaintiffs characterize the damage to the home as “vandalism,”

which is not covered in their policy. (Defendant’s Reply, p. 2). Hartford argues that

Plaintiffs are incorrect when they assert that the policy covers a vandalism claim and asserts

that “[t]his flies in the face of the express language of the Hartford policy.” (Defendant’s

Reply, p. 2). Disconcertingly, this is false. The policy excludes “vandalism and malicious

mischief . . if the dwelling has been vacant for more than 30 consecutive days immediately

before the loss.” (DSOF, Exh. 2, p. 7) (emphasis added). 

However, the police report describes the incident as a “theft.” (DSOF, Exh. 3, p. 1).

 Also, Hartford’s own Activity Log Notes reflect the following entries by their adjustor:

“Tenant took kitchen cabinets, sink, toilet, shower, bathtub, baseboard, pool equipment.

Counter tops were smashed in garage. Doors in whole house were taken, shandeleer [sic],

etc.” (DSOF, Exh. 7, p. 1); “Received and reviewed insd’s [insured’s] GC’s estimate:

$131,862.” (DSOF, Exh. 7, p. 3); and finally, “I inspected yesterday. This is a whole-house

vandalism, where former owner (repossessed) stole/removed all cabinets/counters and even

doors/baseboards. This may be a large loss due to the property being premium grade (all

travertine tile 1,818 sf) and marble or granite counters, etc.” (DSOF, Exh. 7, p. 4).

Therefore, contrary to Hartford’s contention, Plaintiffs have been able to establish the

condition of the Property at the time they assumed an insurable interest in it; Robert had

walked through the house before the theft/vandalism occurred and described it. Hartford’s

claim that Plaintiffs could not specify the fixtures, appliances or other parts of the Property

which were taken is also incorrect; the police report, Robert’s description of the property, and

Hartford’s adjustor’s own notes describing the damage to the house reflect more than

sufficient information to ascertain what was stolen and damaged. Lastly, when those items

were actually taken have been proffered by Robert and neighbor Sal Sendick that it occurred

somewhere between March 20, 2004 and April 20, 2004.

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In light of the Court’s duty to view the underlying facts and the inferences to be drawn

from those facts in the light most favorable to the nonmoving party, Hartford has not

succeeded in establishing that there is no genuine issue of material fact. See Matsushita Elec.

Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

B. Bad Faith Claim

1. Facts

Hartford alleges that Robert admitted he had “no evidence that Hartford instituted

programs or policies to reduce claim payments or to reward and encourage a reduction of

indemnity payments”; no evidence “showing that Hartford unfairly or arbitrarily reduced

payments on legitimate claims to attain reduction goals and increase profits.”; “no evidence

that Hartford or any of its representatives made any false or misleading statements or

engaged in fraud, trickery, or deceit in connection with his claims”; and “no evidence

whatsoever that Hartford breached its duty of good faith and fair dealing owed to anyone in

connection with Plaintiffs’ claims.” (DSOF ¶¶ 34-37). Hartford also alleges that Robert’s

son, Brian, “likewise testified that while he believes the claim was wrongfully denied, he has

no such evidence.” (DSOF ¶ 38). Plaintiffs argue that Robert’s lack of firsthand knowledge

of how Hartford breached its duty of good faith is irrelevant. (PRSOF ¶ 11).

2. Analysis

The thrust of Plaintiffs’ allegation of bad faith is a charge in their Complaint that

Hartford has “instituted a program to reduce its claim payments to insureds in Arizona.”

(Complaint, ¶ 47). Plaintiffs allege this program operates as follows: Hartford “has

established programs or policies that reward and encourage the achievement of corporate

goals for the reduction of indemnity payments”; “has established programs or policies that

use indemnity payment reduction goals and cost containment procedures as a method of

profit-making”; “has established programs or policies to minimize payment on claims and

maximize profits and engaged in unfair and unlawful practices resulting in inadequate

settlement values or denials of legitimate claims; and did not disclose that claims may be

subjected to those goals. (Complaint, ¶¶ 48-51). They further allege that Hartford “made

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false and misleading representations and omissions to Plaintiffs and the public; engaged in

a corporate plan of fraud, trickery and deceit and using delay, oppression and intimidation

to force insureds to accept lower benefits; and breached its duty of good faith and fair

dealing. (Complaint, ¶¶ 53-55). Lastly, Plaintiffs allege that Hartford has engaged in similar

practices with other insureds; ignored Plaintiffs’ interests, depriving them of benefits and

services; maintains practices that are “fundamentally lacking in honesty and fairness”; carried

out its “plan, scheme, and design” to increase profits; and did so “willfully, oppressively,

deceptively, with conscious disregard” of Plaintiffs’ rights, with “the intent to harm or injure”

Plaintiffs. For those reasons, Plaintiffs request that Hartford be assessed punitive damages.

(Complaint, ¶¶ 56-60). 

Careful consideration of all the facts do not reflect any evidence at all of a program

or policy instituted by Hartford to reduce claim payments to the general public. All of the

facts offered by Plaintiffs pertain exclusively to Plaintiffs’ claim. Hartford argues that

Plaintiffs’ bad faith claim relies on “unfounded speculation and mere suppositions.” (DMSJ,

p. 9). The Court agrees. A party opposing a motion for summary judgment cannot rest upon

bare allegations or denials in the pleadings, but must set forth specific facts demonstrating

a genuine issue for trial. See Anderson, 477 U.S. at 250. Plaintiffs have arguably offered

a colorable claim of bad faith but that is not sufficient. See Anderson, 477 U.S. at 249 (If the

nonmoving party’s evidence is merely colorable or not significantly probative, a court may

grant summary judgment). Even viewing the underlying facts and the inferences to be drawn

from those facts in the light most favorable to the nonmoving party, Plaintiffs’ argument

fails. See Matsushita Elec. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

III. PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT

Plaintiffs move for summary judgment solely on its breach of contract claim.

Plaintiff’s facts in this case have already been reviewed. 

Hartford, as the nonmoving party, must “identify with reasonable particularity the

evidence that precludes summary judgment.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir.

1996) (quoting Richards v. Combined Ins. Co., 55 F.3d 247, 251 (7th Cir. 1995), and noting

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Both parties have failed to adhere to the local rules in this regard. See LRCiv. 56.1

(2007).

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that it is not a district court's task to “scour the record in search of a genuine issue of triable

fact”). If the nonmoving party fails to make this showing, the moving party is entitled to

judgment as a matter of law. See Celotex, 477 U.S. at 323. The Local Rules of Civil

Procedure also state this requirement. See LRCiv. 56.1(b) (2007) (“Any party opposing a

motion for summary judgment shall file a statement . . . setting forth . . . a correspondingly

numbered paragraph indicating whether the party disputes the statement of fact set forth in

that paragraph and a reference to the specific admissible portion of the record supporting the

party’s position if the fact is disputed.”5

). 

Hartford has failed to do this. They throw too many facts into one paragraph that refer

to a variety of different portions of the record, ostensibly responding to the correspondingly

numbered paragraph in Plaintiffs’ Statement of Facts in Support of Their Motion for Partial

Summary Judgment on the Homeowners Insurance Coverage Issue (“PSOF”) (Dkt. 49). It

is not the duty of the Court to wade through the numerous extraneous facts included in each

paragraph in Defendant Hartford Fire Insurance Company’s Responding Statement of Facts

in Opposition to Plaintiffs’ Motion for Partial Summary Judgment on the Homeowners’

Insurance Coverage Issue (“DRSOF”) (Dkt. 51). The Court’s attempts to do so reveal that

most, if not all, of the assertions do not even address the material facts alleged in the PSOF.

Moreover, most of the sentences are unnecessarily repeated several times over several

paragraphs. For instance, Hartford contends five times that “Brian Hoff had never seen the

inside of the house before the date police investigated the theft.” (DRSOF ¶¶ 1-5). Hartford

alleges eight times that “Patti Kratzke [Hartford’s investigator] obtained a recorded statement

from Brian Hoff with his attorney Dan Kloberdanz, wherein he admitted he had never been

in the residence prior to finding the damage.”(DRSOF ¶¶ 7-14). These two statements allege

the same thing, that Brian Hoff did not know what the house looked like prior to discovering

the damage in the house. What is particularly troubling is that this undisputed fact is

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immaterial. Hartford apparently attempts to mislead the Court by repeating this fact thirteen

times without ever mentioning that in their own briefs and statements of facts, Robert Hoff’s

deposition and Brian’s recorded statement, obtained by Hartford’s own investigator, Patti

Kratzke, indicate that Robert, the insured Plaintiff, did walk through the house before the

house was damaged. There are many more assertions repeated incessantly and not relevant

to the corresponding paragraph in the PSOF.

“Each numbered paragraph of the statement of facts set forth in the moving party’s

separate statement of facts shall, unless otherwise ordered, be deemed admitted for purposes

of the motion for summary judgment if not specifically controverted by a correspondingly

numbered paragraph in the opposing party’s separate statement of facts.”LRCiv. 56.1(b)

(2007) (emphasis added). The Court deems the PSOF admitted for purposes of this motion,

and incorporates the same herein. 

IV. CONCLUSION

The Court finds that Defendants have failed to show the absence of a genuine issue

of material fact in Plaintiffs’ breach of contract claim but have succeeded in doing so in

Plaintiffs’ bad faith claim. Furthermore, the Court finds that Plaintiffs have shown there is

no genuine issue of material fact with regard to the breach of contract claim, such that they

are entitled to judgment as a matter of law.

Accordingly,

IT IS ORDERED that Defendants’ Motion for Summary Judgment (Dkt. 46) is

granted in part and denied in part:

Defendants’ Motion with regard to the breach of contract claim in Count 1 is denied.

Defendants’ Motion with regard to the bad faith claim in Count 2 is granted.

IT IS FURTHER ORDERED that Plaintiffs’ Motion for Partial Summary Judgment

(Dkt. 48) is granted.

DATED this 31st day of March, 2008.

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