UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF INDIANA 

HAMMOND DIVISION 

ALLIANCE TANK SERVICE, LLC, 

 Third-Party Plaintiff, 

v. CAUSE NO.: 2:14-CV-302-TLS 

GREAT AMERICAN INSURANCE 

COMPANY OF NEW YORK, 

 Third-Party Defendant. 

OPINION AND ORDER 

 This matter is before the Court on a Motion for Summary Judgment [ECF No. 61], filed 

by Third-Party Defendant Great American Insurance Company of New York (“Great American” 

or “GAIC”), a Motion for Summary Judgment [ECF No. 62], filed by Third-Party Plaintiff 

Alliance Tank Service, LLC (“Alliance”), and a Motion to Strike or Exclude Certain Opinions of 

Dr. William Warfel [ECF No. 67], filed by Great American. The motions are fully briefed and 

ripe for ruling. For the reasons set forth below, the Court denies the parties’ motions for 

summary judgment and denies the motion to strike. Alliance’s claims for breach of contract and 

bad faith remain pending for trial. 

MOTION TO STRIKE 

Great American asks the Court to strike or exclude certain opinions of Alliance’s 

insurance expert, Dr. William Warfel. Great American argues that three portions of Dr. Warfel’s 

expert deposition should be excluded: (1) his opinions offering improper legal conclusions; (2) 

his opinions on topics outside the scope of his expertise including the effect of OSHA 

regulations; and (3) his opinions regarding bad faith because they were disclosed late and offer 

legal conclusions outside his expertise. Finding that none of these grounds warrant striking Dr. 

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Warfel’s expert opinions at the summary judgment stage, the Court denies Great American’s 

Motion to Strike. 

To start, Great American claims that some of Dr. Warfel’s opinions are improper legal 

conclusions or are on topics outside his field of expertise. Neither Alliance nor the Court relies 

on the specific statements identified by Great American in addressing summary judgment. 

Therefore, the Court will not grant Great American’s motion to strike on these grounds. See, e.g.,

Vaught v. Quality Corr. Care, LLC, No. 1:15-CV-346, 2018 WL 1900153, at *2 (N.D. Ind. Apr. 

19, 2018) (“Because the Court is able to distinguish which exhibits, affidavits, statements, and 

commentary may properly be considered when deciding whether summary judgment is 

appropriate, the Court declines to strike these statements from the Plaintiff’s Memorandum.”). 

Next, Great American requests that the Court strike Dr. Warfel’s opinions regarding 

Great American’s bad faith for being disclosed late. Expert witnesses must prepare and sign a 

written report containing a complete statement of all opinions to be expressed. Fed. R. Civ. P. 

26(a)(2)(B). Any additions or changes to the report necessary for the complete disclosure of the 

expert opinion must take place before the deadline for pretrial disclosures under Rule 26(a)(3). 

Fed. R. Civ. P. 26(e)(2). However, the duty to supplement cannot be used to disclose an entirely 

new expert opinion. Vill. of Sauk Vill. v. Roadway Express, Inc., No. 15-CV-9183, 2017 WL 

378424, at *2 (N.D. Ill. Jan. 25, 2017). If a party does not timely file the report, the court may 

exclude the expert from testifying at trial on the matters the party was required to disclose. Fed. 

R. Civ. P. 37(c)(1); NutraSweet Co. v. X-L Eng’g Co., 227 F.3d 776, 785 (7th Cir. 2000). “The 

sanction of exclusion is ‘automatic and mandatory unless the party to be sanctioned can show 

that its violation of Rule 26(a) was either justified or harmless.’” NutraSweet, 227 F.3d at 785–

86 (quoting Finley v. Marathon Oil Co., 75 F.3d 1225, 1230 (7th Cir. 1996)). Four factors guide 

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a court’s analysis of whether to exclude the testimony: “(1) the prejudice or surprise to the party 

against whom the evidence is offered; (2) the ability of the party to cure the prejudice; (3) the 

likelihood of disruption to the trial; and (4) the bad faith or willfulness involved in not disclosing 

the evidence at an earlier date.” David v. Caterpillar, Inc., 324 F.3d 851, 857 (7th Cir. 2003). 

Great American argues that Dr. Warfel’s opinions regarding the bad faith claims were not 

disclosed in his October 7, 2016 expert report but were raised for the first time in his depositions 

conducted in May and June 2017. However, the Court is convinced there was no prejudice 

resulting from the late disclosure. Great American was able to depose Dr. Warfel about his bad 

faith opinions, and the disclosures were made before the close of discovery on June 30, 2017. 

See ECF No. 58. The only prejudice Great American has identified is that it was unable “to 

explore the factual underpinnings for Dr. Warfel’s bad faith opinions with Mr. Reece,” 

Alliance’s Rule 30(b)(6) witness, during his deposition. Mot. to Strike 13, ECF No. 67. This 

argument is tenuous at best given Great American’s opportunity to question Mr. Reece 

extensively about the underlying facts of the case and his views of any alleged bad faith during 

his deposition in April 2017. Moreover, Great American does not identify any specific factual 

underpinnings of Dr. Wafel’s bad faith opinions that it did not have a chance to explore with Mr. 

Reece. Because any late disclosure of Dr. Warfel’s opinion on bad faith was harmless, the Court 

will not exclude his opinions on this ground. 

Great American also argues that Dr. Warfel’s bad faith opinions are improper legal 

conclusions and that he is not qualified to express an opinion on bad faith. As noted, the Court 

can identify improper statements like an improper legal conclusion, and it will consider the 

objections to Dr. Warfel’s bad faith opinions to the extent they arise in the summary judgment 

analysis. Regarding Great American’s claim that Dr. Warfel is not qualified to render an opinion 

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on bad faith, the Court finds that Dr. Warfel has decades of experience teaching topics related to 

insurance, including bad faith, and he has assisted in evaluating claims of bad faith for both 

insurers and insureds. See Warfel CV 1–8, ECF No. 71-1; Warfel Dep. 16:11–17:21, ECF No. 

71-2. He has also extensively researched and published on the topic of insurance, including bad 

faith. See Warfel CV 8–13. Although Dr. Warfel does not have hands-on experience in the 

industry, that does not require his opinion to be excluded. See DePaepe v. Gen. Motors Corp., 

141 F.3d 715, 719 (7th Cir. 1998); see also Smith v. Nexus RVs, LLC, 472 F. Supp. 3d 470, 476 

(N.D. Ind. 2020) (explaining that “[k]nowledge can be developed in myriad ways,” including 

through a professional degree or hands-on experience). Thus, for purposes of summary 

judgment, the Court finds that Dr. Warfel is qualified to provide an opinion on bad faith. 

It may be that some of the issues raised in Great American’s Motion to Strike will need to 

be addressed for trial purposes; however, at this stage of the case, the Court denies Great 

American’s Motion to Strike. See Fulton v. Dulin, No. 1:16-CV-10, 2018 WL 2432740, at *8 

(N.D. Ind. May 29, 2018) (“This would seemingly be an issue ripe for discussion and presented 

thoughtfully in a Motion in Limine prior to trial. In the meantime, the Plaintiff’s Motion to Strike 

is DENIED in its entirety.”). 

SUMMARY JUDGMENT STANDARD 

 Summary judgment is warranted when “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). In ruling on a motion for summary judgment, a court must construe all facts and 

draw all reasonable inferences in the light most favorable to the nonmoving party. Yeatts v. 

Zimmer Biomet Holdings, Inc., 940 F.3d 354, 358 (7th Cir. 2019) (citation omitted). When the 

movant seeks summary judgment on a claim on which it bears the burden of proof at trial, the 

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movant “must lay out the elements of the claim, cite the facts which it believes satisfies these 

elements, and demonstrate why the record is so one-sided as to rule out the prospect of a finding 

in favor of the non-movant on the claim.” Hotel 71 Mezz Lender LLC v. Nat’l Ret. Fund, 778 

F.3d 593, 601 (7th Cir. 2015). Alternatively, when the movant seeks summary judgment on a 

claim for which the non-movant bears the burden of proof at trial, the movant may demonstrate 

that it is entitled to judgment as a matter of law by “either: (1) showing that there is an absence 

of evidence supporting an essential element of the non-moving party’s claim; or (2) presenting 

affirmative evidence that negates an essential element of the non-moving party’s claim.” 

Hummel v. St. Joseph Cnty. Bd. of Comm’rs, 817 F.3d 1010, 1015–16 (7th Cir. 2016) (citation 

omitted). At the end of the day, a court’s role “is not to sift through the evidence, pondering the 

nuances and inconsistencies, and decide whom to believe. The court has one task and one task 

only: to decide, based on the evidence of record, whether there is any material dispute of fact that 

requires a trial.” Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994) (citations 

omitted). 

FACTUAL BACKGROUND 

A. Alliance’s Crane Rental 

In October 2013, Alliance rented a Mantis Model 6010LP telescoping-boom crane from 

Howell Tractor and Equipment, LLC (“Howell”). 2d Am. Third-Party Compl. 4, ¶ 9, ECF No. 

45. Alliance planned to use this crane for its business, which involved building above-ground 

storage tanks. Reece Dep. 7:3–25, ECF No 75-10. Under the Equipment Rental Agreement, 

Alliance agreed to “make[] no alterations, additions, modifications or improvements of or to” the 

crane without Howell’s written consent. GAIC Ex. C, at 8, ¶ 7(b), ECF No. 64-3. Alliance would 

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bear responsibility for the full cost of repairs and maintenance, and “for the full replacement cost 

of the equipment” in the event it is lost or destroyed. Id. 

In November 2013, Alliance was working on a project site in Michigan when the crane 

became stuck in some mud. 2d Am. Third-Party Compl. 3, ¶¶ 9–10. The crane’s boom was bent 

during Alliance’s efforts to free the crane from the mud. Id. at ¶ 10. After the incident, Howell 

had the crane transported back to its facility. Hammond Dep. 23:10–16, ECF No. 62-3. 

B. Howell’s Assessment of the Damage 

Now that Howell was in possession of the damaged crane, it reached out to Tadano 

Mantis Corporation (“Mantis”), the crane’s manufacturer and a company Howell had worked 

with for over a decade. See id. at 40:20–41:11; Ellis Dep. 74:4–18, ECF No. 64-4. Howell 

wanted to determine whether Mantis had “allowable boom deflection criteria.” Hammond Dep. 

40:20–41:11. Stephen Atherton, a Mantis customer support technician, responded that Mantis 

had a maximum allowable deflection of 1/8” for a boom crane. Atherton Dep. 7:10–16, 9:3–

11:25, ECF No. 75-5. Howell then disassembled the crane and one of its employees, Stan 

Balitewicz, measured the boom sections for deflections. Balitewicz Dep. 38:7–39:1, ECF No. 

62-6. Balitewicz identified the following deflections: 

 Main Section: 

o Maximum Camber – 7/16” 

o Maximum Sweep – N/A 

 Middle (2nd) section: 

o Maximum Camber – 5/16” 

o Maximum Sweep – 3/16” 

 Tip (3rd) section: 

o Maximum Camber – 1/4” 

o Maximum Sweep – 1/4” 

See id. at 38:22–40:19; Lamb Dep. 20:15–21:3, ECF No. 62-5; GAIC Ex. M, ECF No. 64-13; 

Bond Report 3, ECF No. 62-7. 

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On January 13, 2014, Howell reached out to Mantis again, this time providing the 

deflection measurements. Hammond Dep. 50:20–51:16; see Hammond Dep Ex. 20, ECF No. 62-

3. James Lamb, the general manager of customer support at Mantis, was in charge of reviewing 

boom measurements. Lamb Dep. 6:22–7:11. He explained in his deposition that he would 

compare deflection measurements against Mantis’ deflection criteria, which had been issued in 

2007 and were in effect at the time of the incident. Id. at 10:18–13:17. The Deflection criteria 

provided: 

Boom tube damage / defects: 

 ≤ 1/8” deep “ponding” or ≤ 1/16” deep scratches / gouges of the base metal 

on tension and shear surfaces (top & side panels) not in the bearing pad 

areas, typically do not require remediation. Similarly sized defects in the 

bottom (compression) surface or bearing pad areas should be carefully 

quantified, digitally photographed, and referred to the manufacturer for 

possible repair procedures. 

 > 1/8” deep defects should be carefully quantified, digitally photographed, 

and referred to the manufacturer for possible repair procedures. 

 > 1/16” deep scratches / gouges should be carefully quantified, digitally 

photographed, and referred to the manufacturer for possible repair 

procedures. 

GAIC Ex. 2, ECF No. 76-3.1

 When a defect is greater than 1/8”, it is referred to Mantis and, 

“depending upon the location, [Mantis] makes a determination whether it is acceptable or not.” 

Lamb Dep. 11:20–25. That decision seems to be based partially on the manufacturer’s 

engineering judgment. Ver Halen Dep. 103:22–104:12, ECF No. 76-4. 

On February 12, 2014, Lamb informed Howell by email that the defects exceeded 

Mantis’ criteria and that Mantis believed that the tubes should be replaced. GAIC Ex. N, at 2, 

ECF No. 64-14. Lamb further stated that “[i]t is of course the prerogative of the crane owner to 

1

 Great American maintains that, while it was told of a 1/8” deflection criteria, it was never provided with 

the specific written criteria until discovery in this lawsuit. GAIC Br. in Supp. 8, ¶ 24, ECF No. 69; see

Kozlove Dep. 70:3–9, ECF No. 62-2. 

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pursue other independent courses of action but they should obtain written assurances from those 

attempting to straighten or otherwise ‘repair’ these components.” Id. Five days later, Mantis 

provided a formal letter stating: 

The deformations exceed the limits of acceptance criteria published by [Mantis], 

and as the Manufacturer we recommend the boom should be replaced. Under no 

circumstances should repair / straightening of the damaged boom tube sections be 

attempted and if attempted [Mantis] will accept no responsibility for the continued 

operation or structural competence of this equipment. 

Hammond Dep. Ex. 25, ECF No. 62-3. Based on Mantis’ view that the crane boom should be 

replaced, Howell sought to recover the costs of replacement from Alliance. 2d Am. Third-Party 

Compl. 4–5, ¶ 14. 

C. Great American’s Assessment of the Damage 

Following the incident, Alliance also notified its insurer, Great American. 2d Am. ThirdParty Compl. 2–4, ¶¶ 5, 11. Great American had issued Insurance Policy No. IMP 196-70-72-02 

(“Policy”) to Alliance, which covered, among other things, “loss or damage to contractor’s 

equipment and tools, that you lease or rent from others . . . while such property is in your care, 

custody or control.” Policy 4, 37, ECF No. 62-1. When a covered liability arose, the Loss 

Payment provision of the Policy provided that Great American would pay for the loss within 30 

days after receiving “the sworn proof of loss” if Alliance has “complied with all the terms of this 

Coverage Part” and if either Great American and Alliance agreed “on the amount of the loss” or 

there was “an appraisal award.” Id. at 27, ¶ E.5. Under the Valuation provision of the 

“Equipment Leased or Rented from Others Coverage Endorsement” to the Policy, Great 

American would “pay the amount for which you are liable according to the terms of the lease or 

rental agreement, not to exceed the lesser of:” 

1. the replacement cost of a substantially identical new item (without 

deduction for depreciation) at the time of loss or damage; or 

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2. the amount necessary to repair the equipment (without deduction for 

depreciation); or 

3. the amount actually spent that is necessary to repair or replace the lost or 

damaged property; or 

4. the applicable Limit of Insurance shown above[.] 

Id. at 38. Finally, the Policy excludes certain losses, including those “caused by or resulting from 

. . . [d]elay, loss of use, loss of market or any other consequential loss.” Id. at 32, ¶ 2(a). 

 Once Alliance told Great American of the claim for the damaged boom, Great American 

began appraising the damage. 2d Am. Third-Party Compl. 4, ¶¶ 11, 13. On December 5, 2013, 

Great American retained Ben Glaser, a heavy equipment appraiser with Crawford & Company 

(“Crawford”), to assess the damage to the boom sections. Glaser Aff. 1–2, ¶¶ 3, 5, ECF No. 64-

18. Glaser travelled to Howell’s facility twice to inspect the crane’s boom sections; however, he 

did not take any independent deflection measurements. Id. at 2, ¶¶ 7, 9; Kozlove Dep. 69:8–10, 

ECF No. 62-2. Glaser photographed the boom sections and sent those pictures and Howell’s 

measurements to Midwest Certified Boom Repair (“Midwest”) to get its assessment of the 

damage. Glaser Aff. 2–3, ¶¶ 11–12. Midwest said that it would be able to repair the boom and 

that its repair would pass an OSHA inspection, providing a “Guarantee Certificate” to that effect. 

Id. at 3, ¶¶ 13–14; see Glaser Aff. Ex. D, ECF No. 64-18. Furthermore, Midwest told Glaser that 

it would accept liability for the boom if it did the repair. Glaser Aff. 3, ¶ 16; see GAIC Ex. W, at 

2–3, ECF No. 64-23. Based on Crawford’s findings and recommendation, Great American was 

aware that the boom sections could be repaired. Kozlove Dep. 50:7–51:11. 

 On March 26, 2014, Great American sought an opinion from WHECO Corporation, a 

crane repair shop. Id. at 78:11–79:20, 82:22–83:1. WHECO told Great American that it could 

also repair the boom, and that its repair could pass OSHA inspection. GAIC Ex. X, at 2, ECF No. 

64-24. Furthermore, in early April 2014, Great American retained Tony Bond, an engineer at 

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Haag Engineering, to inspect the boom and determine whether it could be repaired. Kozlove 

Dep. 57:4–16, 95:21–96:23. Bond felt that the boom sections could be repaired. Id. at 102:1–

103:4. However, Bond also took measurements of the boom sections, which reflected greater 

deflections than Howell’s measurements. See id. at 103:10–105:22. Bond described to Great 

American that the deviations were gradual and that there were no kinks or bends in the boom 

sections. Bond Aff. 2–3, ¶ 12, ECF No. 76-7. 

D. Dispute Over Repair Versus Replace 

On February 5, 2014, Glaser asked Howell whether it would agree to have the boom 

sections repaired, stating that he would like “to have the boom sections straightened and 

refinished.” GAIC Ex. W, at 6. Howell refused the offer, asserting that it could not accept repair 

under “current OSHA regulations” due to Mantis’ statements that it should be replaced. Id. at 4–

5. On February 14, 2014, Glaser again asked whether Howell would agree to replacing the boom, 

this time providing Midwest’s assumption of liability for the repair. Id. at 2–3. Still, Howell 

refused based on Mantis’ recommendation and Howell’s view that it could not have a crane in its 

rental fleet that is not supported by the manufacturer. GAIC Ex. Y, ECF No. 64-25. Howell 

further explained that if Great American refused to pay for replacement, it “will have no choice 

but to replace the boom at [its] own expense and seek legal redress against Alliance.” Id. at 2. 

As for Alliance, it was of the view that the boom sections might be repaired, as opposed 

to replaced. See Alliance Resp. to Req. for Admis. No. 5, ECF No. 64-11; GAIC Ex. AA, at 11, 

20, ECF No. 64-27. However, Sammy Reece, Alliance’s owner and Rule 30(b)(6) witness, 

explained that Alliance was relying on the experts to determine whether repair or replacement 

was the best option, and that it further relied on Great American to resolve the claim. Reece Dep. 

85:13–87:8. Alliance also expressed concern to Great American about the continued rental 

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payments Alliance owed Howell and the potential litigation costs. Id. at 86:22–87:8; Kozlove 

Dep. 124:23–127:19. 

Ultimately, on April 11, 2014, Great American sent a check to Howell for $48,298.78 

despite the fact Howell requested $142,645.55 to resolve the dispute. See GAIC Ex. CC, ECF 

No. 64-29; GAIC Ex. BB, at 1, ECF No. 64-28. Great American offered $48,298.78 based on a 

repair estimate of $53,298.78, as prepared by Crawford and Midwest, less the $5,000 Alliance 

owed as a deductible. Kozlove Dep. 87:11–22. Howell accepted the money but maintained that it 

was owed the full cost of replacement. See GAIC Ex. CC. Howell then filed this lawsuit against 

Alliance to recover the remaining replacement costs as well as additional rental payments and 

attorney’s fees. 2d Am. Third-Party Compl. 5, ¶ 16. 

On April 14, 2014, Alliance notified Great American that it hired a lawyer “due to the 

stress level and financial obligations from [the] claim not being handled in a timely manner.” 

Kozlove Dep. Ex. 100, ECF No 75-3. In a letter, Alliance’s attorney noted concerns about the 

amount of time it took to resolve the claim, issues with ongoing rental fees, and the risk of a 

lawsuit. Kozlove Dep. Ex. 101, ECF No. 75-3. The letter also stated that Alliance was 

considering “a breach of contract and bad faith claim against [Great American] for their delay in 

this matter.” Id. On May 7, 2014, Great American told Alliance that a closing letter was 

forthcoming, that it would only pay the repair cost, and that it would not defend against any 

claims brought by Howell. Kozlove Dep. Ex. 102, ECF No. 75-3. On May 13, 2014, Alliance’s 

attorney asked that Great American reconsider its position. See Kozlove Dep. Ex. 103, ECF No. 

75-3. Great American did not make any additional payment and issued a closing letter on June 

19, 2014. See Kozlove Dep. Ex. 105, ECF No. 75-3. In July 2014, Alliance’s insurance agent 

asked Great American’s agent to reconsider its position on repair versus replacement. See

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Kozlove Dep. Exs. 107, 108, ECF No. 75-3. Great American declined the request. See Kozlove 

Dep. Ex. 108, at 1. 

PROCEDURAL BACKGROUND

 On August 28, 2014, Howell filed its Complaint [ECF No. 1] in this Court against 

Alliance, seeking to recover damages that resulted from the crane being damaged. On December 

8, 2014, Alliance filed its Third-Party Complaint against Great American [ECF No. 9], seeking 

to recover damages for breaching their insurance contract. Alliance amended its complaint and 

added a bad faith claim against Great American. See Am. Third-Party Compl., ECF No. 15; 2d 

Am. Third-Party Compl., ECF No. 45. 

 On August 14, 2017, Great American, Alliance, and Howell all filed motions for 

summary judgment. ECF Nos. 61, 62, 65. Additionally, Howell filed a motion to bar many of 

Great American’s expert witnesses [ECF No. 68], and Great American filed its motion to strike 

Alliance’s expert witness, Dr. William Warfel [ECF No. 67]. 

On March 20, 2018, this Court granted Howell’s motion for summary judgment on the 

liability issue, concluding Alliance was liable for the full cost of replacement, but the Court 

denied summary judgment on the damages issue. Mar. 20, 2018 Op. & Order 23–24, ECF No. 

81. Because the damages issue would have to go to trial, the Court: (1) stayed Alliance’s thirdparty claims until after trial; (2) denied Alliance’s motion for summary judgment without 

prejudice and with leave to refile; (3) denied Great American’s motion for summary judgment 

without prejudice and with leave to refile; and (4) denied Great American’s motion to strike Dr. 

Warfel’s opinion without prejudice and with leave to refile. Id. Following the Court’s Opinion, 

Great American tendered an additional $89,346.77 to Howell and Alliance, which would cover 

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the remaining cost of replacement. See Aff. of Counsel 2, ¶ 7, ECF No. 104-1; Apr. 9, 2018 

Letter, ECF No. 104-2. 

 On April 16, 2019, the parties filed a stipulation and motion for dismissal of the action 

between Howell and Alliance [ECF No. 103] based on the parties reaching a settlement. On 

April 25, 2019, Alliance and Great American filed a joint motion to reinstate their motions for 

summary judgment [ECF No. 105], which the Court granted. See ECF No. 108. The parties filed 

supplemental briefing on Great American’s motion for summary judgment. ECF Nos. 104, 107. 

 Finally, on October 19, 2021, the Court held a telephonic status/ruling conference. ECF 

No. 119. The court gave a preliminary ruling denying the parties’ motions for summary 

judgment and Great American’s motion to strike, explaining that a final written decision would 

follow. Id. The Court informed the parties that their case would proceed to trial. 

ANALYSIS 

 Great American and Alliance both filed motions for summary judgment. Great American 

seeks summary judgment on Alliance’s breach of contract claim and its bad faith claim. Alliance 

seeks summary judgment on the issue of whether Great American was entitled to rely on the 

Policy provision allowing it to repair, rather than replace, the damaged boom sections. Both 

parties’ motions for summary judgment are denied, and the reasons for denial will be discussed 

in turn. 

A. Great American’s Motion for Summary Judgment—Breach of Contract 

Great American first seeks summary judgment on Alliance’s breach of contract claim, 

which alleges that Great American breached the Policy by refusing to pay the amount owed to 

indemnify Alliance against Howell’s claims and that Alliance suffered additional consequential 

damages as a result. See 2d Am. Third-Party Compl. 5–6, ¶¶ 17–19. Great American argues that 

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it paid the cost of replacement in a timely fashion once the Court determined Alliance owed 

Howell that amount in its March 20, 2018 Opinion. Alliance argues that the time of the breach 

was in 2014 when Great American refused to pay the replacement cost. 

Under Indiana law, a breach of contract claim requires showing: “(1) a contract existed, 

(2) the defendant breached the contract, and (3) the plaintiff suffered damage as a result of the 

defendant’s breach.” Collins v. McKinney, 871 N.E.2d 363, 370 (Ind. Ct. App. 2007) (citing 

Breeding v. Kye’s, Inc., 831 N.E.2d 188, 191 (Ind. Ct. App. 2005)). In their briefing, the parties 

primarily dispute whether there was a “breach,” which “is defined as the failure of one party to 

perform all of the obligations set forth in the governing contract.” Cincinnati Spec., Underwriters 

Ins. Co. v. DMH Holdings, LLC, No. 3:11-CV-357, 2013 WL 683493, at *5 (N.D. Ind. Feb. 22, 

2013) (citing Breeding, 831 N.E.3d at 191). 

An insurance contract “is subject to the same rules of interpretation as are other 

contracts.” Morris v. Econ. Fire & Cas. Co., 848 N.E.2d 663, 666 (Ind. 2006) (quoting USA Life 

One Ins. Co. of Ind. v. Nuckolls, 682 N.E.2d 534, 537–38 (Ind. 1997)). The goal of contract 

interpretation “is to ascertain and enforce the parties’ intent as manifested in the policy.” 

Peabody Energy Corp. v. Roark, 973 N.E.2d 636, 640 (Ind. Ct. App. 2012). Typically, 

interpretation of an insurance contract is a legal question for the court that is particularly suited 

for summary judgment. Secura Supreme Ins. Co. v. Johnson, 51 N.E.3d 356, 359 (Ind. Ct. App. 

2016). When the contract language is clear and unambiguous, it will be given its plain meaning. 

Beam v. Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind. 2002). However, when a contract is 

ambiguous and “its interpretation requires extrinsic evidence, its construction is a matter for the 

factfinder.” Buskirk v. Buskirk, 86 N.E.3d 217, 224 (Ind. Ct. App. 2017) (quoting Johnson v. 

Johnson, 920 N.E.2d 253, 256 (Ind. 2010)); see Secura Supreme, 51 N.E.3d at 359 (“[I]f the 

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terms of a written contract are ambiguous, it is the responsibility of the jury to ascertain the facts 

necessary to construe the contract.”). 

Here, Great American relies on the Policy’s Loss Payment provision to argue that it has 

not breached the insurance contract. The Loss Payment provision provides: 

We will pay for covered loss or damage within 30 days after we receive the sworn 

proof of loss if you have complied with all the terms of this Coverage Part and: 

a. we have reached agreement with you on the amount of the loss; or 

b. an appraisal award has been made. 

Policy 27, ¶ E(5). Great American seems to argue that once this Court’s March 20, 2018 Opinion 

was issued, it had 30 days to tender the remaining payment under the provision. However, Great 

American has not explained how the Opinion affects any of the provision’s prerequisites to 

payment, which would then trigger the 30-day clock. The Opinion does not involve the sworn 

proof of loss or Alliance’s compliance with the terms. The Opinion is not “an appraisal award” 

under the Policy. See Policy 26, ¶ B (describing the appraisal process, which involves the parties 

selecting separate appraisers and the possible use of an umpire). Nor can the Opinion be 

understood as an “agreement . . . on the amount of the loss.” The Court did not determine the 

value of the crane or resolve issues about cost estimates for repairing/replacing the boom. And it 

does not appear that Alliance and Great American ever disputed the estimates that were provided 

for the cost of replacement. Instead, the Court resolved a liability dispute between Howell and 

Alliance as to whether repair or replacement was required under the Equipment Rental 

Agreement. Resolution of Alliance’s liability to Howell would not, by itself, trigger the Loss 

Payment provision because the liability issue is distinct from a determination about the “amount 

of the loss.” Cf. Weidman v. Erie Ins. Grp., 745 N.E.2d 292, 297–98 (Ind. Ct. App. 2001) 

(explaining, in relation to the appraisal provision of a similar policy, that “the amount of the 

loss” is not the same as the parties’ liability); Travelers Prop. Cas. Co. of Am. v. Marion T, LLC, 

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No. 1:07-cv-1384, 2010 WL 1936165, at *8 (S.D. Ind. May 12, 2010).2

 Thus, Great American’s 

argument that it complied with the Policy by paying the replacement cost within 30 days of the 

Court’s Opinion does not warrant judgment in its favor. 

 Great American has offered no other reason to conclude that it fulfilled its obligations 

under the Policy by paying the remaining replacement cost in April 2018. As for Alliance, it has 

reasonably argued that the breach occurred in 2014 when Great American declined to pay the 

full replacement cost and issued a closing letter. Despite being relatively clear, the Policy’s terms 

do not provide an answer for the parties’ dispute. Specifically, the Policy does not seem to 

account for Great American initially refusing payment via a closing letter only to make that 

payment once the Court found Alliance liable to Howell years later. Because this ambiguity is 

caused by the case’s underlying facts, extrinsic evidence may be necessary to better understand 

the parties’ intent underlying the Policy and whether Great American’s delayed payment would 

have been consistent with the parties’ understanding. See Fresh Cut, Inc. v. Fazli, 650 N.E.2d 

1126, 1133 (Ind. 1995) (“Rules of contract construction and extrinsic evidence need to be 

employed to determine and give effect to the parties’ reasonable expectations.”). Either way, 

Great American has not carried its burden of negating an element of Alliance’s breach of 

2

 Although both Weidman and Marion T deal with appraisal awards, those cases are helpful for 

understanding whether Great American accurately describes how the Policy works. Under the Loss 

Payment provision, subparts (a) and (b) work in tandem to address the same issue—namely, to determine 

the amount of the loss. If the parties do not agree about the amount of loss, then appraisal is the 

alternative way for determining that amount. However, the appraisal process is not meant to address 

liability or coverage issues. See Weidman, 745 N.E.2d at 297–98; Marion T, 2010 WL 1936165, at *8; 

see also Villas at Winding Ridge v. State Farm Fire & Cas. Ins. Co., No. 1:16-cv-3301, 2019 WL 

1434220, at *8 (S.D. Ind. Mar. 29, 2019) (explaining how “appraisers are experts at determining how 

much damage a property has sustained but insurance adjusters, attorneys, and courts are better-suited to 

resolve the contract language, which determines how much of that loss is covered by the policy”). If the 

appraisal process does not address liability and coverage disputes, then it would make sense that an 

“agreement . . . on the amount of the loss” does not necessarily refer to an agreement on liability or 

coverage. Thus, after the Court’s March 20, 2018 Opinion, Great American cannot claim to have agreed 

“on the amount of the loss” as it is understood in the Loss Payment provision. The Opinion simply 

determined Alliance’s liability and would not necessarily trigger the 30-day clock. 

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contract claim. See Hummel, 817 F.3d at 1015–16. Therefore, summary judgment is not 

appropriate. 

B. Great American’s Motion for Summary Judgment—Bad Faith 

Great American next seeks summary judgment on Alliance’s bad faith claim, which 

alleges that Great American made an unfounded refusal to pay or caused an unfounded delay in 

payment. See 2d Am. Third-Party Compl. 6–7, ¶¶ 20–27. Great American argues that it has not 

denied or delayed payment and that any dispute between the parties was in good faith 

considering it relied on various experts when deciding to pay the cost of repair in 2014. 

 In Indiana, it has long been the case that an insurer has an implied legal duty to “deal in 

good faith with its insured.” Erie Ins. Co. v. Hickman, 622 N.E.2d 515, 518 (Ind. 1993). While 

there is no exhaustive list of bad-faith actions, good faith includes refraining “from (1) making 

an unfounded refusal to pay policy proceeds; (2) causing an unfounded delay in making 

payment; (3) deceiving the insured; and (4) exercising any unfair advantage to pressure an 

insured into a settlement.” Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 976 (Ind. 

2005) (quoting Hickman, 622 N.E.2d at 519). Generally, bad faith requires a showing “of a state 

of mind reflecting dishonest purpose, moral obliquity, furtive design, or ill will.” Id. at 977 

(quoting Colley v. Ind. Farmers Mut. Ins. Grp., 691 N.E.2d 1259, 1261 (Ind. Ct. App. 1998)). In 

fact, even if an insurer ultimately breached the contract, “a good faith dispute about the amount 

of a valid claim or about whether the insured has a valid claim” does not constitute bad faith. 

Hickman, 622 N.E.2d at 520. “Similarly, the lack of diligent investigation alone is not sufficient 

to support” a bad faith claim. Id. But if an insurer “denies liability knowing there is no rational, 

principled basis for doing so,” then it has breached its duty of good faith. Freidline v. Shelby Ins. 

Co., 774 N.E.2d 37, 40 (Ind. 2002) (citing Hickman, 622 N.E.2d at 520). 

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Here, Great American has not carried its burden at summary judgment. Although Great 

American has attempted to show a good faith dispute by describing its reliance on experts and 

Mr. Reece’s statements, Alliance has responded with its own evidence that, when viewed in a 

favorable light, show that Great American’s refusal to pay the replacement cost was unfounded. 

For example, Alliance has evidence showing that Great American and its experts were fully 

aware that Howell was relying on Mantis’ recommendation that the boom sections should be 

replaced. Howell’s concerns about OSHA compliance and its ability to rent a crane not 

supported by the manufacturer were also raised to Great American and its experts. Moreover, 

Alliance appeared to tell Great American about the consequences of delaying or refusing to pay 

the replacement cost, including the ongoing rental fees of $10,500 per month and the risk of 

litigation. Even after Great American determined to pay only the repair costs, Alliance’s attorney 

and insurance agent reiterated these concerns and asked Great American to reconsider its 

position. Great American’s decision to discount the concerns of Howell, Mantis, and Alliance 

could be reasonably perceived as bad faith on behalf of Great American. This is particularly true 

considering, toward the end of their negotiations, Howell was agreeing to resolve the dispute for 

$142,645.55, which was well under the Policy’s $800,000 limit. See Policy 37. 

The Indiana Court of Appeals addressed similar circumstances in Nelson v. Jimison, 

where it reversed a trial court’s grant of summary judgment on an insurance bad faith claim. 634 

N.E.2d 509, 513 (Ind. Ct. App. 1994). Despite the defendant insurance company offering 

“reasonable explanations for disputing the claim and the long delay in the payment,” the court 

concluded that the claim needed to be resolved by the jury. Id. It highlighted the fact that (1) the 

insurer conceded coverage and paid the claim five years later, (2) the plaintiff had two expert 

opinions saying it was unreasonable to dispute the value of the claim or delay payment, (3) the 

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insurer lost important documents, and (4) the plaintiff’s attorney tried to convince the insurer of 

the claim’s value. Id. at 512–13. Similarly, Great American seems to understand—though it does 

not admit—that it owes the full replacement cost under the Policy considering it paid the 

remaining balance after years of litigation. Alliance asked Great American to reconsider its 

decision, which Great American rejected. And finally, Alliance appears to have an insurance 

expert willing to testify that Great American operated in bad faith based on various actions it 

took in handling and resolving the insurance claim. See Warfel Dep. 131:3–133:18, ECF No. 64-

9.3 As in Jimison, the bad faith claim will need to be resolved at trial in light of these disputed 

facts. Therefore, summary judgment is not appropriate on this claim. 

C. Alliance’s Motion for Summary Judgment 

In its Motion for Summary Judgment, Alliance seeks judgment in its favor “on the issue 

of whether [Great American] was entitled to invoke the provision within the insurance policy 

allowing it to repair, rather than replace, covered property.” Alliance Mot. Summ. J. 1, ECF No. 

62. Although the phrase, “entitled to invoke the provision,” is a bit confusing in terms of the 

relief Alliance seeks, it appears that Alliance wants a judgment that Great American was 

3

 While Dr. Warfel’s opinion that Great American operated in bad faith might be on the ultimate issue for 

trial, the Court finds the basis for his opinion is helpful for assessing the bad faith claim at summary 

judgment. See Roundy’s Inc. v. N.L.R.B., 674 F.3d 638, 648 (7th Cir. 2012) (explaining how opinions that 

embrace an ultimate issue are still required to be helpful to the trier of fact and should not merely tell the 

trier of fact what result to reach (citing Fed. R. Evid. 704, 1972 advisory committee’s note)); see also Fed. 

R. Evid. 704(a) (“An opinion is not objectionable just because it embraces an ultimate issue.”). In the 

portions of his deposition provided with the summary judgment briefing, Dr. Warfel testifies that Great 

American’s failure to issue a reservation of rights letter shortly after the claim arose was a reason for his 

opinion that Great American acted in bad faith. See Warfel Dep. 131:3–133:18. Furthermore, other 

portions of Dr. Warfel’s deposition and his report—which were filed in connection to the motion to 

strike—provide additional clarity as to how he reached his opinion on bad faith. See Fed. R. Civ. P. 

56(c)(3) (“The court need consider only the cited materials, but it may consider other materials in the 

record.”). This includes his view that Great American did not give adequate consideration to Alliance’s 

interests in a variety of ways, see Warfel Dep. 95:23–99:8, ECF No. 67-1, and his opinion that Great 

American unreasonably breached the contract in light of Mantis’ recommendation, see Warfel Report 7, 

ECF No. 67-2. 

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required to pay the full cost of replacement in 2014 when it issued its closing letter.4

 But, like 

Great American’s Motion for Summary Judgment, that issue will need to be resolved by a jury. 

As discussed, the Policy is not clear on whether Great American was obligated to pay the 

full replacement cost at the time it issued its closing letter or whether it could wait until after the 

Court determined Alliance’s liability to Howell. Alliance’s arguments in its motion for summary 

judgment regarding the Valuation provision and the OSHA regulations—which, granted, were 

made before Great American tendered the remaining cost of replacement after the Court’s March 

20, 2018 Opinion—do not address whether Great American could wait to make the payment 

until after Alliance’s liability was determined. Because a reasonable jury could find that the 

Policy allowed Great American to hold off paying the full replacement cost, the Court denies 

Alliance’s motion for summary judgment on this issue. 

As a final note, in its response to Alliance’s motion for summary judgment, Great 

American argues that Alliance cannot recover attorney’s fees under its breach of contract claim. 

Alliance appropriately responds that attorney fees and litigation expenses arising from thirdparty litigation may be recovered under a breach of contract claim if “the defendant’s breach of 

contract caused the plaintiff to engage in litigation with a third party to protect its interest and 

4

 The phrase, “entitled to invoke the provision,” is confusing because it does not explicitly tie this request 

to a claim or part of a claim in its complaint. See Fed. R. Civ. P. 56(a) (“A party may move for summary 

judgment, identifying each claim or defense—or the part of each claim or defense—on which summary 

judgment is sought.”). Great American recognized this issue and chose to operate under the assumption 

that Alliance’s motion related to the breach of contract claim. See Great American Resp. 4 n.4, ECF No. 

76. In its Reply, Alliance did not correct Great American’s assumption or address the issue at all. 

Ultimately, whether Great American was “entitled to invoke” the repair provision seems relevant insofar 

as the Court is deciding whether Great American breached the Policy when it initially paid only to repair 

the crane in 2014. This understanding is consistent with Alliance’s concluding statement in its 

Supplemental Response, which “requests that the Court deny [Great American’s] Motion for Summary 

Judgment and grant Alliance’s Motion for Summary Judgment, finding that [Great American] was 

required to pay the full cost to replace the boom sections when it tendered cost for repair and issued its 

closing letter.” Alliance Supp. Resp. 10, ECF No. 107. Thus, it seems reasonable to view Alliance’s 

motion as requesting judgment on the liability issue under the breach of contract claim, as well as Great 

American’s Frist Affirmative Defense related to the Valuation provision. 

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21 

such action would not have been necessary but for defendant’s breach.” Masonic Temple Ass’n 

of Crawfordsville v. Ind. Farmers Mut. Ins. Co., 837 N.E.2d 1032, 1039 (Ind. Ct. App. 2005). 

However, because Alliance did not seek summary judgment on this issue of damages, the Court 

need not consider whether Alliance is entitled to them as a matter of law. 

CONCLUSION 

 Based on the foregoing, the Court hereby DENIES the Motion to Strike or Exclude 

Certain Opinions of Dr. William Warfel [ECF No. 67], DENIES Great American’s Motion for 

Summary Judgment [ECF No. 61], and DENIES Alliance’s Motion for Summary Judgment 

[ECF No. 62]. All claims remain pending for trial. 

SO ORDERED on November 19, 2021. 

s/ Theresa L. Springmann 

JUDGE THERESA L. SPRINGMANN 

UNITED STATES DISTRICT COURT 

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