Court Opinion

ID: 4454767
Source: CourtListenerOpinion
Date Created: 2019-11-11 08:00:33.812525+00
Date Added: 2024-06-11T14:18:02.470854
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 19-1731
VILLAS AT WINDING RIDGE,
                                                  Plaintiff-Appellant,
                                 v.

STATE FARM FIRE AND CASUALTY COMPANY,
                                     Defendant-Appellee.
                     ____________________

         Appeal from the United States District Court for the
         Southern District of Indiana, Indianapolis Division.
           No. 1:16-cv-3301 — Tanya Walton Pratt, Judge.
                     ____________________

 ARGUED SEPTEMBER 23, 2019 — DECIDED NOVEMBER 8, 2019
               ____________________

   Before EASTERBROOK, HAMILTON, and ST. EVE, Circuit
Judges.
    ST. EVE, Circuit Judge. In June 2013, a storm passed over
Villas at Winding Ridge (“Winding Ridge”), a condominium
complex located in Indiana, causing some minor damage
from hail. Winding Ridge did not discover the damage until
almost a year later when a contractor inspected the property
to estimate the cost of replacing its aging roofs. Remembering
its one-year State Farm Fire and Casualty Company (“State
2                                                  No. 19-1731

Farm”) insurance policy, Winding Ridge submitted a claim to
State Farm. Winding Ridge and State Farm inspected the
property and exchanged estimates on the amount of the loss,
but they could not reach an agreement. Winding Ridge sub-
sequently demanded an appraisal under the insurance policy,
and State Farm complied. After exchanging competing ap-
praisals, the umpire upon whom both sides had agreed issued
an award, which later became binding.
    Winding Ridge filed suit against State Farm alleging
breach of contract, bad faith, and promissory estoppel. The
parties cross-moved for summary judgment. The district
court granted in part and denied in part Winding Ridge’s
cross-motion for partial summary judgment and granted
State Farm’s motion for summary judgment. Winding Ridge
now appeals the district court’s ruling on State Farm’s motion
for summary judgment.
    We aﬃrm. We hold that the policy is unambiguous and
enforceable. There is also no evidence that State Farm
breached the policy or acted in bad faith when resolving the
claim.
                         I. Background
    Winding Ridge is a condominium complex with 32 resi-
dential buildings and a clubhouse located in Indianapolis, In-
diana. State Farm insured Winding Ridge under a Residential
Community Association Policy effective between July 1, 2012
and July 1, 2013. The policy covered “accidental direct physi-
cal loss” to the covered property, unless the loss is subject to
a policy exclusion.
   If the loss is covered under the policy, State Farm can
choose one of the following loss payment options:
No. 19-1731                                                  3

      (a) Pay the value of lost or damaged property;
      (b) Pay the cost of repairing or replacing the lost
          or damaged property;
      (c) Take all or any part of the property at an
          agreed or appraised value; or
      (d) Repair, rebuild or replace the property with
          other property of like kind and quality.
    The policy states that State Farm will determine the value
of the covered property as follows:
      (a) At replacement cost without deduction for
          depreciation, as of the time of loss, subject to
          the following:
            i.    We will pay the cost to repair or re-
                  place, after application of the deduct-
                  ible and without deduction for depre-
                  ciation, but not more than the least of
                  the following amounts:
                  …
                        2) The cost to replace, on the
                           described premises, the lost
                           or damaged property with
                           other property of compara-
                           ble material, quality and
                           used for the same purpose;
                  ….

   If the parties disagree on the amount of the loss, either
party may demand an appraisal.
      If we and you disagree on the value of the prop-
      erty or the amount of loss, either may make
4                                                    No. 19-1731

       written demand for an appraisal of the loss. In
       this event, each party will select a competent
       and impartial appraiser. Each party will notify
       the other of the selected appraiser’s identity
       within 20 days after receipt of the written de-
       mand for an appraisal. The two appraisers will
       select an umpire. If the appraisers cannot agree
       upon an umpire within 15 days, either may re-
       quest that selection be made by a judge of a
       court having jurisdiction. The appraisers will
       state separately the value of the property and
       amount of loss. If they fail to agree, they will
       submit their differences to the umpire. A deci-
       sion agreed to by any two will be binding. Each
       party will:
       (1) Pay its chosen appraiser; and
       (2) Bear the other expenses of the appraisal and
           umpire equally.
       If there is an appraisal, we will still retain our
       right to deny the claim.
    In 2014, Winding Ridge worked with Rocklane Company
(“Rocklane”), a contractor, to assess its 9- to 16-year-old roofs.
Rocklane inspected the roofs and identified hail damage to 7
or 8 buildings’ roofs. Around April 18, 2014, Winding Ridge
tendered the claim to State Farm, claiming a June 13, 2013 date
of loss.
    Eric Meador, a State Farm claims adjuster, spoke to a
Rocklane representative, who advised that approximately 12
of the 32 residential buildings had sustained hail damage to
their roofs. Meador inspected all 33 buildings at Winding
No. 19-1731                                                  5

Ridge in May 2014 and observed minimal hail damage. Spe-
cifically, he found “soft metal damage, hail damage to the soft
metal condensers of some air conditioning units, damage to
fascia, some unrelated wind damage that took place following
the cancellation of the policy, mechanical damage from ice re-
moval, damage to screens, prior mismatched shingle repairs
and golf ball dents on the golf course side of complex.” On
May 29, 2014, Meador prepared a replacement cost estimate
for hail damage totaling $65,713.54, which included repairs to
soft metal, some air conditioning condensers, screens, and
gutters and downspouts. It did not include repairs to any
roofing shingles. State Farm subsequently paid Winding
Ridge for the estimated repairs less depreciation.
    Winding Ridge disagreed with State Farm’s estimate and
hired Matthew Latham, a public adjuster at Crossroads
Claims Consulting, to provide a competing estimate. Latham
concluded that there was hail damage to all 33 buildings and
estimated a replacement cost of $1,975,264. This estimate in-
cluded full replacement for all shingles, decking, metal vents,
flashing, caps, gutters and downspouts on all 33 buildings.
    Meador reviewed Latham’s estimate and agreed to rein-
spect the buildings. He reinspected them in April 2015 and
hired Doug Brown, an engineer, to conduct a separate inspec-
tion. Brown drafted a report of his findings and concluded
that “[t]he roofing shingles throughout the neighborhood had
not been functionally damaged by hailstone impacts.” Brown
also found that the areas identified by Latham “exhibited
granule loss consistent with blistering and the normal aging
of the shingles, and were not attributable to hailstone im-
pacts.” Lastly, he identified hail damage to soft metals,
screens, and some air-conditioning units. Meador provided
6                                                    No. 19-1731

Latham with a copy of Brown’s report and confirmed that
State Farm’s estimate included the full scope of damages cov-
ered by the insurance policy.
    On September 9, 2015, Winding Ridge demanded an ap-
praisal under the policy, which State Farm accepted. In doing
so, State Farm referred to the policy’s appraisal provision and
informed Winding Ridge that “[a]ppraisal is a process by
which the amount of loss, if any, may be determined. Ap-
praisal does not resolve coverage disputes. In other words, it
is not a process by which coverage is determined for a partic-
ular loss or item of damage.”
   Both parties complied with the policy’s appraisal provi-
sion. State Farm and Winding Ridge each hired independent
appraisers Michael Scott and Garrett Kurtt, respectively, and
they reinspected the buildings. Scott estimated $79,921.80 for
repairs to all 33 buildings, but his estimate did not include full
shingle replacement on any building. Kurtt estimated
$676,824.07 for repairs including full shingle replacement on
13 buildings. Kurtt did not claim full shingle replacement for
any of the remaining buildings.
    Again, the parties could not agree on an estimate. The
main disagreement between the parties was whether all shin-
gles needed to be replaced on 13 buildings. Pursuant to the
policy’s appraisal provision, the parties’ appraisers selected
an independent umpire, Al Kalemba with Illiana Claims Ser-
vices. Scott, Kurtt, and Kalemba inspected the property. On
April 30, 2016, Kalemba issued a proposed award for (1) 20%
repair allowance for roofing shingles on 13 buildings, (2) re-
placement costs for soft metal damage on all 33 buildings, and
(3) replacement costs for roofing shingles around new turtle
roof vents on all 33 buildings. Specifically, Kalemba found
No. 19-1731                                                   7

that “[t]he granule loss does not indicate hail damage. During
the life of a shingle granules are constantly shedding from the
mat as designed.” Kalemba’s proposed award totaled
$154,391.77.
    Winding Ridge was dissatisfied with the proposed award.
On May 20, 2016, Kurtt asked Kalemba to modify the award
to cover full shingle replacement on 13 buildings. For the first
time, Kurtt reported that the original shingles were discontin-
ued, and any replacement shingles would not match the ex-
isting shingles. During the appraisal process, Winding Ridge
had received a letter from shingle manufacturer GAF dated
November 18, 2015, stating that the shingles on Winding
Ridge’s roofs are no longer available, and “GAF does not have
a direct replacement that is compatible in color or that would
keep the roof uniformed [sic].” Winding Ridge failed to share
this information with Kalemba or State Farm’s appraiser be-
fore Kalemba issued the proposed award. And Winding
Ridge did not submit this issue as part of the disputed loss.
   Kalemba reviewed the additional information, but he did
not amend the award.
       Our charge was to establish the existence of hail
       damage to the shingles which was in dispute.
       Per my findings clearly depicted on my award
       report there is very little if any hail damage to
       the shingles observed. I have allowed for ap-
       proximated spot repairs based upon the minor
       damage observed.…
       As to the matching argument, I would again
       state that we are establishing the presence of
       damage to the shingles and I have allowed for
8                                                 No. 19-1731

      same as well as the replacement of shingles
      around the replacement of roof vents. In addi-
      tion, there was evidence of prior patching of
      shingles on many of the roof’s [sic] inspected.
      The case law presented here is not applicable
      and matching issues are in the realm of policy
      coverage issues which are not a part of this ap-
      praisal process.
      Therefore, my original recommended award re-
      mains.
   Both Kalemba and Scott signed the award, making it bind-
ing, and State Farm issued payment to Winding Ridge.
    Winding Ridge filed suit against State Farm in Indiana
state court, and State Farm removed the suit to federal court.
The complaint alleges claims for breach of contract, bad faith,
and promissory estoppel. At some point after Winding Ridge
tendered the claim to State Farm, Winding Ridge inde-
pendently took out a $1.5 million loan to replace the shingles
on all 33 buildings. Winding Ridge now seeks damages for
approximately $1.5 million plus the interest on the loan ($97
per day) and prejudgment interest.
   Both parties moved for summary judgment. The district
court granted in part and denied in part Winding Ridge’s
cross-motion for partial summary judgment, granted State
Farm’s motion for summary judgment, and denied as moot
State Farm’s motion to preclude expert testimony. Winding
Ridge now appeals the district court’s ruling on State Farm’s
motion for summary judgment.
No. 19-1731                                                      9

                          II. Discussion
   We review the district court’s summary judgment ruling
de novo and in the light most favorable to Winding Ridge.
Peerless Network, Inc. v. MCI Commc’n Serv., Inc., 917 F.3d 538,
545 (7th Cir. 2019). Summary judgment is appropriate when
“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).
   A. Breach of Contract
    Winding Ridge asserts legal and factual challenges to the
district court’s ruling. First, it argues that the appraisal provi-
sion is ambiguous and therefore is unenforceable. Second,
Winding Ridge asserts that the award is not binding because
the umpire improperly determined the scope of the loss ra-
ther than just the amount of the loss. Third, it claims that there
are genuine issues of material fact that State Farm breached
the insurance policy.
    Under Indiana law, courts give unambiguous contract
terms their plain meaning. Vesuvius USA Corp. v. Am. Commer-
cial Lines LLC, 910 F.3d 331, 333 (7th Cir. 2018). “‘Clear and
unambiguous terms in a contract are deemed conclusive, and
we will not construe an unambiguous contract or look to ex-
trinsic evidence, but will merely apply the contractual provi-
sions.’” Id. (quoting Brockmann v. Brockmann, 938 N.E.2d 831,
834 (Ind. Ct. App. 2010)).
    Indiana courts have repeatedly enforced appraisal clauses
in insurance contracts. See, e.g., Philadelphia Indem. Ins. Co. v.
WE Pebble Point, 44 F. Supp. 3d 813, 817 (S.D. Ind. 2014); see
also Shifrin v. Liberty Mut. Ins., 991 F. Supp. 2d 1022, 1038 (S.D.
Ind. 2014). And the resulting appraisal awards are binding
10                                                    No. 19-1731

absent exceptional circumstances, which means manifest in-
justice, fraud, collusion, misfeasance, or unfairness. See Jupiter
Aluminum Corp. v. Home Ins. Co., 225 F.3d 868, 872, 875 (7th
Cir. 2000); FDL, Inc. v. Cincinnati Ins. Co., 135 F.3d 503, 505 (7th
Cir. 1998); Atlas Const. Co., Inc. v. Indiana Ins. Co., Inc., 309
N.E.2d 810, 813–14 (Ind. Ct. App. 1974) (“When, however, the
award is uninfected with such unfairness or injustice, it is not
to be set aside and replaced by the subjective judgment of a
reviewing court.”). This is particularly true when the parties
voluntarily submit to an appraisal under the policy. See Jupiter
Aluminum Corp., 225 F.3d at 875; FDL, Inc., 135 F.3d at 505.
    We find that the policy’s appraisal provision is unambig-
uous. The policy states that, if the parties “disagree on the
value of the property or the amount of loss, either may make
written demand for an appraisal of the loss.” Winding Ridge
and State Farm disagreed on the amount of loss, Winding
Ridge demanded an appraisal, and State Farm accepted the
demand. As required, both Winding Ridge and State Farm se-
lected appraisers. The parties’ appraisers disputed how much
hail damage Winding Ridge had sustained. Specifically,
Winding Ridge claimed shingle replacements were needed
for 13 buildings. Following the appraisal provision, the ap-
praisers selected an independent umpire and presented their
estimates to him. Kalemba resolved the dispute by awarding
(1) 20% repair allowance for roofing shingles on 13 buildings,
(2) replacement costs for soft metal damage on 33 buildings,
and (3) replacement costs for roofing shingles around new
turtle roof vents on 33 buildings. Both Kalemba and Scott
signed the award, and the award became binding.
   In an attempt to set aside the award, Winding Ridge ar-
gues that the award is not binding because Kalemba
No. 19-1731                                                   11

mistakenly determined the scope of the loss. We disagree.
First, Kalemba resolved the dispute that the parties presented
to him: namely, the amount of hail damage to the roofing
shingles on 13 buildings and to the soft metal on 33 buildings.
Winding Ridge has not identified any exceptional circum-
stances such as unfairness, manifest injustice, fraud, collu-
sion, or misfeasance that would warrant setting this award
aside. See FDL, Inc., 135 F.3d at 505. Second, the mere presence
of coverage disputes (like matching shingles) in addition to
an amount of loss dispute does not negate an appraisal
award. See Philadelphia Indem. Ins. Co., 44 F. Supp. 3d at 818
(“To hold otherwise would be to say that an appraisal is never
in order unless there is only one conceivable cause of dam-
age—for example, to insist that ‘appraisals can never assess
hail damage unless a roof is brand new.’” (citation omitted)).
Here Kalemba determined the value of the loss based on the
disputed loss submitted by the parties’ appraisers and as re-
quired under the policy; he did not decide the coverage is-
sues.
    Winding Ridge also claims there are genuine issues of ma-
terial fact regarding State Farm’s purported breach that pre-
clude summary judgment. To state a breach of contract claim,
a plaintiff must allege the existence of a contract, defendant’s
breach, and damages. See, e.g., Shifrin, 991 F. Supp. 2d at 1043;
Auto-Owners Ins. Co. v. C & J Real Estate, Inc., 996 N.E.2d 803,
805 (Ind. Ct. App. 2013). There is no dispute that the insurance
policy exists. The issue is whether State Farm breached that
policy. Winding Ridge argues that State Farm breached the
policy by (1) failing to pay for new roofs on all 33 buildings,
(2) applying the appraisal award to the entire claim when it
only resolved damage on 13 buildings, and (3) failing to
amend the award to cover matching shingles on 13 buildings.
12                                                  No. 19-1731

We conclude that none of these factors create an issue of ma-
terial fact.
    State Farm did not breach the policy by declining to pay
for new roofs on all 33 buildings. Winding Ridge’s own ap-
praiser, Garrett Kurtt, found no hail damage to the roofing
shingles on 20 buildings; his estimate only included full shin-
gle replacements on 13 buildings. Both State Farm’s appraiser
and the umpire disagreed with Kurtt’s estimate and found
minimal hail damage on 13 buildings. The award compen-
sated Winding Ridge for 20% shingle replacement on those
buildings. The fact that Winding Ridge independently re-
placed the shingles on all 33 buildings for $1.5 million while
its claim was pending does not obligate State Farm under the
policy or mean State Farm breached the policy.
    Further, the appraisal award plainly resolved the entire
claim, not just the damage to 13 buildings as Winding Ridge con-
tends. The parties submitted the disputed loss to the umpire,
and that disputed loss did not include the replacement of the
shingles on all buildings. The umpire resolved the parties’ dis-
pute. Specifically, the binding award has three parts. The first
and big-ticket item was whether the hail damaged some or all
the shingles on 13 buildings. The umpire testified that State
Farm’s and Winding Ridge’s appraisers agreed that there was
no shingle damage on the other 20 buildings. Neither Scott’s es-
timate nor Kurtt’s estimate provided for full roof replacement on
all 33 buildings. Instead, Scott’s estimate did not include full
shingle replacement on any building while Kurtt’s estimate in-
cluded full shingle replacement on 13 buildings. The umpire de-
termined that there was minor hail damage to the roofing shin-
gles on 13 buildings and awarded 20% allowance to repair those
shingles. Second, the award also included replacement costs for
soft metal damage on all 33 buildings. Specifically, it provided
No. 19-1731                                                 13

$54,846.61 actual cash value for “roofing metals and elevation
repairs” and noted that “the above line item reflects the York
Appraisal estimated damage,” which itemized soft metal
damage to the entire property. Lastly, the award covered the
cost of replacement shingles around the new turtle roof vents
on all 33 buildings.
    Finally, Kalemba’s decision not to amend the proposed
award for matching shingles does not create a genuine dis-
pute of material fact. Winding Ridge’s matching shingles ar-
gument was untimely. It tendered the initial claim to State
Farm in April 2014. The parties inspected the property several
times before Winding Ridge demanded an appraisal. During
the appraisal process, the appraisers and umpire inspected
the property, and the umpire reached a proposed award on
April 30, 2016. It was not until May 20, 2016 that Winding
Ridge’s appraiser first reported that the shingle manufacturer
discontinued the original shingles. Winding Ridge could have
raised this issue on November 18, 2015, six months earlier,
when it received a letter from the shingle manufacturer GAF
stating that direct replacements are not available. It did not.
To permit this kind of second guessing would only frustrate
the purpose of a binding appraisal in the first place. See FDL,
Inc., 135 F.3d at 505.
   Winding Ridge makes several, additional arguments as to
why the district court’s ruling was improper. None of these
have merit, but we briefly address each one in turn below.
   First, Winding Ridge argues that industry standards and
State Farm’s policy guidelines require State Farm to cover the
replacement cost for matching shingles on 13 buildings. These
documents are extrinsic evidence, which we can consider
only if the policy is ambiguous. See Vesuvius USA Corp., 910
14                                                    No. 19-1731

F.3d at 333. Because the provision at issue is unambiguous,
we decline Winding Ridge’s invitation to consider extrinsic
evidence to interpret the provision.
    Second, Winding Ridge claims that, “but for” the hail
storm, it would have had uniform roofs with matching shin-
gles. All 33 roofs are therefore a covered loss under the policy
that State Farm is obligated to repair. Winding Ridge forfeited
this argument by failing to raise it before the district court. See
Scheidler v. Indiana, 914 F.3d 535, 540, 544 (7th Cir. 2019) (“A
party generally forfeits issues and arguments raised for the
first time on appeal.”).
    Third, it also argues that two cases support its position
that the policy term “comparable material” means a reasona-
ble color match for the entire roof. These cases are factually
distinguishable. In Erie Insurance Exchange v. Sams, the court
held that the entire roof, cathedral ceiling, and exterior vinyl
siding had sustained direct physical damage from the storm.
Erie Ins. Exch., v. Sams, 20 N.E.3d 182, 186, 190 (Ind. Ct. App.
2014). There was also evidence that the house had a uniform
appearance before the storm and that a mismatching roof
slope and siding would devalue the home. Id. In Cedar Bluffs
Townhome Condominium Association, the appraisal panel is-
sued an award for total replacement of the siding panels. Ce-
dar Bluff Townhome Condo. Ass’n, Inc. v. Am. Family Mut. Ins.
Co., 857 N.W.2d 290, 292 (Minn. 2014). Here, the umpire con-
cluded that only some of the shingles were damaged on some
buildings.
   Lastly, Winding Ridge argues that replacing one shingle
requires replacing all shingles and cites Gutkowski v. Oklahoma
Farmers Union Mutual Insurance Company, 176 P.3d 1232, 1234
(Okla. Civ. App. 2007). We disagree. In Gutkowski, there was
No. 19-1731                                                   15

evidence that replacing the top layer of damaged composition
shingles would necessarily damage the underlying wooden
shingles. Gutkowski, 176 P.3d at 1234. Here there is no evi-
dence that replacing the damaged shingles would harm the
undamaged shingles. We previously analyzed similar policy
language and stated that “[i]f one shingle at the corner of a
slate roof is damaged and no matching replacement shingle is
available, a building owner would not be entitled to an entire
new roof.” See Windridge of Naperville Condo. Ass’n v. Phila. In-
dem. Ins. Co., 932 F.3d 1035, 1042 (7th Cir. 2019). Winding
Ridge does not present any meritorious arguments why we
should find otherwise here.
   B. Bad Faith
    Winding Ridge argues that there is evidence that pre-
cludes summary judgment on the bad faith claim. First, the
award was more than State Farm’s appraiser’s initial esti-
mate. Second, State Farm’s handling of another claim sug-
gests that State Farm handled the Winding Ridge claim in bad
faith.
    Under Indiana law, insurers are required to deal in good
faith with their insureds. See Erie Ins. Co., v. Hickman, 622
N.E.2d 515, 518 (Ind. 1993). This obligation includes refrain-
ing from “(1) making an unfounded refusal to pay policy pro-
ceeds; (2) causing an unfounded delay in making payment;
(3) deceiving the insured; and (4) exercising any unfair ad-
vantage to pressure an insured into a settlement of his claim.”
Id. at 519. This does not create a new cause of action every
time an insurer erroneously denies a claim. Id. at 520 (“That
insurance companies may, in good faith, dispute claims, has
long been the rule in Indiana.”). “To prove bad faith, the
plaintiff must establish, with clear and convincing evidence,
16                                                   No. 19-1731

that the insurer had knowledge that there was no legitimate
basis for denying liability.” Freidline v. Shelby Ins. Co., 774
N.E.2d 37, 40 (Ind. 2002). Plaintiffs are also required to prove
an insurer’s “conscious wrongdoing” or “culpable mental
state.” See Sexson v. State Farm Fire & Cas. Co., 61 F. App’x 267,
271 (7th Cir. 2003) (citing Colley v. Indiana Farmers Mut. Ins.
Grp., 691 N.E.2d 1259, 1261 (Ind. Ct. App. 1998)). This is a high
burden of proof. Inman v. State Farm Mut. Auto. Ins. Co., 981
N.E.2d 1202, 1207 (Ind. 2012).
    We conclude that State Farm did not act in bad faith. There
is no evidence that State Farm delayed payment to Winding
Ridge, deceived Winding Ridge, or exercised an unfair ad-
vantage to pressure Winding Ridge to settle the claim. The
only question is whether State Farm made an unfounded re-
fusal to pay policy proceeds to Winding Ridge. It did not. In-
surance companies may dispute claims in good faith. Hick-
man, 622 N.E.2d at 518. Winding Ridge submitted a claim for
hail damage to State Farm. State Farm investigated the claim,
reached a claim estimate, and issued payment to Winding
Ridge. Winding Ridge disputed the claim estimate and de-
manded an appraisal under the policy terms. State Farm co-
operated in the appraisal process by re-inspecting the prop-
erty and presenting a claim estimate to the umpire and Wind-
ing Ridge’s appraiser. The umpire reached an award, which
State Farm’s appraiser signed. State Farm subsequently paid
Winding Ridge what it owed under the binding award. Wind-
ing Ridge has not shown any evidence, let alone clear and
convincing evidence, that State Farm acted in bad faith.
   Nor is there any evidence that State Farm acted with a cul-
pable state of mind. The mere fact that State Farm’s initial es-
timate was less than the award does not suggest culpability.
No. 19-1731                                                   17

At best, it may suggest that State Farm’s first inspection was
inadequate. But this alone does not constitute bad faith. See
Eli Lilly & Co. v. Zurich Am. Ins. Co., 405 F. Supp. 2d 948, 958
(S.D. Ind. 2005).
    Winding Ridge argues that State Farm’s claims adjuster
engaged in deceitful ignorance of hail damage to Winding
Ridge’s roofs in retaliation for another claim called Briarstone.
Briarstone is another condominium complex that tendered a
claim for hail damage to State Farm. State Farm evaluated the
claim and found no hail damage. The parties agreed to arbi-
trate the claim, but eventually settled the claim. Winding
Ridge believes that State Farm was upset with the Briarstone
settlement and that experience negatively influenced State
Farm’s initial estimate of the Winding Ridge claim. The facts
do not support Winding Ridge’s theory. Indeed, State Farm’s
claims adjuster provided an initial estimate and submitted
payment to Winding Ridge before Briarstone tendered its
claim to State Farm on June 19, 2014. State Farm’s initial esti-
mate therefore could not have been influenced by the Briar-
stone claim.
   For the foregoing reasons, we AFFIRM the district court.