Opinion ID: 213920
Heading Depth: 2
Heading Rank: 2

Heading: Award Under Homeowners Policy

Text: The Plaintiffs and Allstate together raise three claims of error related to the district court's award of $123,000 for wind damage to the Plaintiffs' home. First, Allstate contends that there is insufficient evidence in the record to support a finding that the Plaintiffs were due additional payment on their dwelling claim. Allstate also argues that the award permits the Plaintiffs to recover more in insurance proceeds than the value of their home, resulting in an impermissible windfall to the Plaintiffs. Second, the Plaintiffs assert that the district court erred as a matter of law in failing to apply the Extended Limits Endorsement in the policy to the Plaintiffs' claim, which would have increased the liability limit on the claim (and thus, they argue, the amount of the award). Third, the Plaintiffs argue that the district court erred in failing to award payment under the Additional Living Expenses provision of the policy. With respect to Allstate's claim, we review the district court's factual finding that the Plaintiffs were entitled to additional insurance proceeds for clear error. The Plaintiffs' two claims present questions of law, and we therefore review them de novo. See Dickerson, 556 F.3d at 294.
We consider at the threshold how Allstate agrees to pay for a covered loss under the terms of its homeowners policy. The relevant contract terms appear in a section titled How We Pay For A Loss, which specifies that Allstate will pay on an actual cash value (ACV) basis in the following circumstances: Actual Cash Value. If you do not repair or replace the damaged ... property, payment will be on an actual cash value basis. This means there may be a deduction for depreciation. Payment will not exceed the limit of liability shown on the Policy Declarations for the coverage that applies to the damaged... property, regardless of the number of items involved in the loss. You may make claim for additional payment as described in paragraph c [Building Structure Reimbursement] [7] ... if you repair or replace the damaged... covered property within 180 days of the actual cash value payment. (emphasis added). We have previously scrutinized this ACV provision from Allstate's homeowners policy. See Bayle, 615 F.3d 350 (5th Cir. 2010); Nunez, 604 F.3d 840 (5th Cir.2010); Bradley, 620 F.3d 509 (5th Cir.2010). We have concluded in our prior cases that under this provision, insured homeowners are not entitled to any payments for structural damage in excess of the ACV of their house unless they repair or replace their damaged property. Bayle, 615 F.3d at 362. [8] The provision also makes clear that where the insured has not repaired or replaced the damaged property, she may not recover an amount greater than the policy limit for the dwelling. If the insured subsequently repairs or replaces the covered property, she may claim the additional expenses incurred, subject to the 180-days limit. In this case, it is undisputed that the Plaintiffs have not repaired or replaced their damaged property. Allstate's liability under the homeowners policy is thus subject to the ACV provision, as the district court noted in its oral ruling at the close of trial. With this principle in mind, we turn to the parties' challenges to the district court's award of additional insurance proceeds.
At the close of trial, the district court judge concluded that the cost of repairs to the Plaintiffs' dwelling would exceed or at least equal the dwelling limit of $338,000 on their homeowners policy. He thus awarded the difference between the amount Allstate had already paid the Plaintiffs on their dwelling claimroughly $215,000and the dwelling limit of $338,000, an amount equal to $123,000. Several findings persuaded the district judge that the Plaintiffs were entitled to their policy limit on the dwelling. First, he determined that the Plaintiffs had introduced sufficient evidence at trial to demonstrate that the cost to repair the extensive damage to their home would exceed the dwelling limit. LaGrange, for instance, had testified that the total wind damage to the Plaintiffs' home equaled $452,378.99, well above the dwelling limit. The judge noted in his oral ruling that he was not convinced this estimate was all justifiable; for one, LaGrange appeared to have based that [estimate] on replacement cost and not ACV. But the judge found the Plaintiffs' overall evidence on this factual question persuasive. Second, the judge found that Allstate's estimates had consistently lowballed the amount of the Plaintiffs' damages. Finally, the judge noted that prior to trial, he had visited the Plaintiffs' home and observed firsthand its damaged condition. At trial, the Plaintiffs and Allstate provided damage estimates that were, in the district court's words, all over the board, and thus the question of the cost of wind damage to the Plaintiffs' home turned essentially on witness credibility. The district court, as the finder of fact in a bench trial, is best positioned to evaluate the credibility of the witnesses. Dickerson, 556 F.3d at 295. We are not persuaded that the district court's findings are against the preponderance of credible testimony, as Allstate urges us to hold. On this record, a reasonable factfinder could conclude that the Plaintiffs offered the more credible account of the ACV of the wind damage to their home. Allstate also argues that the $123,000 award to the Plaintiffs constitutes an impermissible windfall because it permits the Plaintiffs to recover more in insurance proceeds than the value of the home. In Louisiana, an insured may not recover in excess of his actual loss, although he may recover under each policy providing coverage until the total loss sustained is indemnified. Wegener v. Lafayette Ins. Co., ___ So.3d ___, ___, 2011 WL 880339, at  (La. Mar. 15, 2011) (quoting Cole v. Celotex, 599 So.2d 1058, 1080 (La.1992)); see also Bradley, 620 F.3d at 521 (An insured party in Louisiana may generally `recover under all available coverages provided that there is no double recovery.' (quoting Cole, 599 So.2d at 1080)). Where the insured has not repaired, rebuilt, or replaced his damaged property, the appropriate measure of the [insured's] actual loss is the ACV of the property. Bradley, 620 F.3d at 522. As the district court noted in its oral ruling, by the start of trial Allstate had paid the Plaintiffs $215,292.88 for wind damage to the dwelling, and the flood insurer had paid $171,708 for flood damage to the dwelling. The Plaintiffs had thus recovered a total of $387,000.88 in insurance proceeds for Katrina-related damage to their home. With the district court's award of $123,000, the Plaintiffs' total recovery for their home climbed to $510,000.88. Allstate argues that $510,000.88 exceeds the Plaintiffs' actual loss to their home, and therefore the award gives them a double recovery. We note that Allstate raised this very argument in the district court both before trial, in its proposed findings of fact, and after trial, in its Rule 52(b) motion. Both times the argument was rejected: the district court declined to adopt Allstate's position at the close of trial; and, in denying Allstate's Rule 52(b) motion, the district court implicitly reaffirmed that the Plaintiffs' pre-trial recovery fell short of indemnifying them for their losssufficiently so that the additional award for wind damage did not constitute a double recovery. We cannot say that this finding was clearly erroneous. The calculation of the Plaintiffs' actual lossthe ACV of the damaged propertyis a question that must be determined by the factfinder. See Bradley, 620 F.3d at 522 (The fact-finder must determine, or the parties may stipulate, the ACV of the property.). We reiterate that the district court was best positioned to make credibility determinations of the witnesses to ascertain the Plaintiffs' actual loss. Moreover, there was sufficient evidence at trialas Allstate itself points outthat the ACV of the Plaintiffs' dwelling, and the Plaintiffs' corresponding actual loss, exceeded $510,000.88. [9] We thus hold that there is a preponderance of evidence in the record sufficient to support the district court's award and its finding that the award does not constitute an impermissible double recovery. Finding no clear error, we affirm.
The Plaintiffs contend that the district court erred in concluding that they may not benefit from the Extended Limits Endorsement. The Endorsement is available to an insured for an additional premium, and, where applicable, modifies the provision of the paragraph titled How We Pay For A Loss that states: Building Structure Reimbursement. Under Coverage ADwelling Protection and Coverage BOther Structures Protection, we will make additional payment to reimburse you for cost in excess of actual cash value if you repair, rebuild or replace damaged, destroyed or stolen covered property within 180 days of the actual cash value payment. . . . Building Structure Reimbursement will not exceed the smallest of the following amounts: a) the replacement cost . . .; b) the amount actually and necessarily spent to repair or replace the damaged building structure(s) . . .; or c) the limit of liability applicable to the building structure(s) as shown on the Policy Declarations . . . . Building Structure Reimbursement payment will be limited to the difference between any actual cash value payment made for the covered loss to building structures and the smallest of 1), 2) or 3) above. (emphasis added). The Endorsement, where applicable, substitutes the following language into (3): 3) 120% of the limit of liability applicable to the building structure(s) as shown on the Policy Declarations. . . . (emphasis added). All other policy terms and conditions remain the same. The district court rejected the Plaintiffs' argument that the Extended Limits Endorsement applied to their wind-damage claim. To prevail on their argument, the district court concluded, the Plaintiffs, at the threshold, had to show that they had repaired or replaced their damaged property, and it was undisputed at trial that the Plaintiffs had not made any permanent repairs to their dwelling. The district court concluded that the Extended Limits Endorsement did not apply for an additional reason: it concluded as a factual matter that the Plaintiffs had not insured their property to a hundred percent of its replacement cost, as required under the Endorsement. [10] We agree with the district court's legal conclusion and therefore do not address its alternative factual determination. As is plainly evident from the text of the Extended Limits Endorsement, it modifies only the Building Structure Reimbursement provision, and therefore an insured may benefit from the Endorsement only if she is entitled to Building Structure Reimbursement. The Plaintiffs here are not entitled to any Building Structure Reimbursement for the simple reason that they have not repaired, rebuilt, or replaced the damage to their home. In this way, they are identically situated to the plaintiffs in Bayle. The Bayles sought damages under the building structure reimbursement provision of their policy with Allstate, but it was undisputed that the Bayles neither repaired their damaged property nor replaced it on the same lot. 615 F.3d at 361-62. The district court thus rejected the proposition that any of the Bayles' structural damage should be calculated under the `building structure reimbursement' provision, maintaining that the Bayles were limited to the ACV of the property. Id. at 361. We affirmed in that case, holding that [t]he district court did not err in concluding that the Bayles are not entitled to any payments for structural damage in excess of the ACV of their house. Id. at 362. The same conclusion is inescapable in this case. Because the Plaintiffs are not entitled to payment for Building Structure Reimbursement, the Endorsement does not apply. In an argument raised for the first time on appeal, the Plaintiffs assert that Allstate's inadequate payments prevented them from starting repairs to their home. They argue that because it was effectively Allstate's fault that they did not repair their home, their failure to repair should be excused under Article 1772 of the Louisiana Civil Code. See LA. CIV.CODE art. 1772 (A condition is regarded as fulfilled when it is not fulfilled because of the fault of a party with an interest contrary to the fulfillment.). We decline to address the substance of the Plaintiffs' contention because it was not made below. Under this Circuit's general rule, arguments not raised before the district court are waived and will not be considered on appeal unless the party can demonstrate extraordinary circumstances. AG Acceptance Corp. v. Veigel, 564 F.3d 695, 700 (5th Cir.2009) (internal quotation marks omitted). The Plaintiffs make no argument or showing of extraordinary circumstances in this case, and we therefore adhere to our general rule.
The Plaintiffs next contend that they are entitled to payment under the Additional Living Expenses (ALE) provision of their homeowners policy and that the district court erred in denying payment. The policy's ALE provision, appearing in the subsection titled Additional Protection, states: Additional Living Expenses a) We will pay the reasonable increase in living expenses necessary to maintain your normal standard of living when a direct physical loss we cover. . . makes your residence premises uninhabitable. . . . . Payment for additional living expense as a result of a covered loss . . . will be limited to the least of the following: 1. the time period required to repair or replace the property we cover, using due diligence and dispatch; or 2. if you permanently relocate, the shortest time for your household to settle elsewhere; 3. 12 months. The Plaintiffs assert that testimony at trial established that they would require approximately $5,000 a month to maintain their standard of living while their home was being repaired. Assuming that it would take at least 12 months to repair their home, the Plaintiffs requested ALE benefits of $60,000. The district court concluded that because the Plaintiffs had not introduced evidence of any additional living expenses actually incurred, they were not entitled to payments under the ALE provision. Were the Plaintiffs to later commence repairs that required them to vacate their home, and thereby incur ALE, the district court stated, they could then claim payment under the provision. On appeal, the Plaintiffs do not dispute that they have not established the predicate requirement of actually incurring ALE. Indeed, it is undisputed that the Plaintiffs have continuously resided at their house since 2003 and have not commenced any permanent repairs to their home. Instead, the Plaintiffs again argue that their failure to repair should be excused under Article 1772 of the Louisiana Civil Code. And again, we decline to address this argument raised for the first time on appeal. We do note our agreement with the district court that under the homeowners policy, it appears that the Plaintiffs may later claim ALE payment once they have actually incurred those expenses.