Jadick v. Nationwide Property & Casualty Insurance Co.

Citations: 98 So. 3d 5; 2011 Ala. Civ. App. LEXIS 357; 2011 WL 6275693Docket: 2100432

Court: Court of Civil Appeals of Alabama; December 15, 2011; Alabama; State Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Alexander Paul Jadick, as administrator ad litem of Val Jadick's estate, appeals a summary judgment from the Mobile Circuit Court favoring Nationwide Property Casualty Insurance Co. The case originated in June 2009, with Jadick alleging Nationwide breached an insurance policy by not adhering to an appraisal clause and acted in bad faith. Jadick's requests for appraisal and an umpire in November 2009 were denied, as was his January 2010 motion to recuse. A subsequent motion for reconsideration was also denied, and a petition for writ of mandamus regarding recusal was dismissed as untimely. 

In July 2010, Nationwide moved for summary judgment, which Jadick opposed. Nationwide challenged an affidavit submitted by Jadick as hearsay, leading to its striking. After a December 2010 hearing, during which Jadick submitted a supplemental affidavit, Nationwide again moved to strike it, citing hearsay and procedural issues regarding its timing. The trial court granted Nationwide's second motion to strike and ultimately ruled in its favor with a summary judgment in December 2010. Following Jadick's death during the appeal, Alexander Paul Jadick was substituted as the appellant.

The undisputed facts indicate that Jadick reported a fire loss at his home on August 4, 2007, with Nationwide inspecting the damage the next day and providing an estimate on August 22, 2007. The estimate contained a directive for contacting Nationwide regarding any hidden damages. Nationwide issued a payment of $63,072.23 on August 28, 2007, with a potential total payout of approximately $76,004.59 contingent on hiring a contractor. Jadick subsequently contracted with Robert Mullen Builders, Inc. for repairs totaling $78,000.

In December 2007, Nationwide instructed Jadick to report any hidden costs during repairs, reiterating language from a prior payment letter. In January 2008, Mullen Builders demanded full payment, including an additional $1,448.23 for county-inspection fees, which Nationwide subsequently paid. Jadick's insurance policy included an appraisal clause allowing either party to demand appraisal if there was a disagreement on the loss amount. In April 2009, Jadick requested an appraisal based on a higher estimate from Hargrove Company, LLC, marking the first instance he disputed the original estimate from Nationwide. Nationwide refused to conduct an appraisal, arguing Jadick had not properly invoked the clause or demonstrated disagreement with the initial estimate. After Nationwide denied Jadick's motion to invoke the appraisal clause and appoint an umpire, Jadick filed a lawsuit. Nationwide opposed this by stating it had urged Jadick to report any additional damages and argued he lacked grounds to dispute the original estimate, citing Jadick's own discovery response where he admitted needing an appraisal to ascertain damages. Following the trial court's denial of Jadick's motion, Nationwide sought summary judgment. Jadick countered by asserting the initial payment limited Mullen Builders' ability to complete necessary repairs, supported by an affidavit from Robert Mullen, indicating he only replaced part of the roof and chose carpet over hardwood flooring due to insurance constraints.

No evidence exists indicating a disagreement or coverage issues related to the initial estimate, nor does it show that Nationwide refused to pay prior to Mullen Builders beginning repairs. Nationwide's motion to strike Mullen's affidavit was granted, and on the hearing day for Nationwide's summary judgment motion, Jadick submitted a supplemental response with a second Mullen affidavit. Nationwide contended these should be struck due to hearsay and untimeliness. The trial court granted summary judgment for Nationwide and struck Mullen's affidavit. On appeal, the administrator argues: 1) the trial court erred in denying the recusal motion; 2) it erred in denying the appraisal clause invocation and umpire appointment, and in concluding Nationwide did not breach its policy; and 3) it erred in striking Mullen's affidavit. Nationwide asserts the recusal motion was properly denied and claims the trial court's decision is unreviewable due to the prior dismissal of Jadick's mandamus petition. This argument aligns with res judicata principles; however, Alabama courts have clarified that a mandamus denial does not equate to a binding judgment on the merits. Specifically, since Jadick's petition was dismissed on procedural grounds, it lacked res judicata impact. Upon reviewing the recusal motion's merits, the court determined the administrator's arguments did not warrant reversal. The standard for reviewing recusal motions assesses whether the trial judge exceeded discretion, based on the totality of circumstances, to determine if a reasonable question of the judge's impartiality exists.

The administrator contends that the trial judge should have recused himself due to several alleged improprieties, including: the judge's premature assumption of Nationwide's objection to Mullen’s second affidavit based on Jadick’s non-compliance with Rule 56(c)(2); reliance on Jadick's actions during the claims adjustment process to justify Nationwide’s denial of appraisal without citing relevant contractual language; comparison of Jadick’s appraisal request delay to a similar case; failure to cite any contractual prohibitions against the appraisal request; unsupported conclusions regarding an unsworn estimate from Hargrove; an alleged violation of Jadick's constitutional rights to contract and a jury trial; previous reversals of the judge's rulings in Jadick's other cases; inconsistent claims regarding procedural rules; perceived lack of credibility from the judge; and false accusations against Jadick, including extortion attempts. However, the administrator's arguments primarily suggest judicial errors rather than personal bias or prejudice, which do not justify recusal. Legal precedent indicates that mere unfavorable rulings do not imply bias, and specific evidence of bias is required for recusal. The administrator's claims lack factual support and legal citations, which are necessary for a valid argument. Consequently, the court finds no abuse of discretion in denying the recusal motion and will also address the trial court's denial of the appraisal clause invocation and the determination that Nationwide did not breach its policy.

Nationwide's argument that Jadick's appeal regarding the trial court's refusal to invoke the insurance policy's appraisal clause is untimely is rejected. Nationwide incorrectly assumes that Jadick needed to file a petition for a writ of mandamus within 42 days of the trial court's denial. A writ of mandamus is only necessary when an appeal does not offer an adequate remedy for preventing undue injury, which is not the case here, as Jadick can appeal any trial court order after a final judgment.

The court then addresses the merits of Jadick's breach-of-contract claim, particularly whether the trial court erred in finding insufficient evidence for Jadick's allegations of Nationwide's bad faith and fraud. Summary judgment is appropriate when no genuine issues of material fact exist, shifting the burden to the nonmoving party, here Jadick, to present substantial evidence to the contrary. Substantial evidence is defined as that which allows fair-minded individuals to reasonably infer the fact in question.

To establish a breach-of-contract claim, Jadick must prove the existence of a valid contract, his performance, Nationwide's nonperformance, and resultant damages. The key issue is whether Nationwide has proven there are no genuine issues of material fact regarding its compliance with the insurance policy. Nationwide provided an estimate for the loss, which Jadick accepted, and he subsequently hired a contractor to perform repairs per that estimate. Nationwide paid the full estimate amount and additional contractor charges, indicating its compliance with the policy terms.

Nationwide is accused of breaching its insurance policy by not conducting an appraisal requested by Jadick 15 months post-repair and after the claim was fully paid. Nationwide denied the request, stating that no disagreement existed regarding the loss amount, which is a prerequisite for an appraisal. The administrator argues that the trial court erred in concluding that Jadick failed to provide evidence of a disagreement, and that the court improperly assumed Nationwide would not be prejudiced by the delay. The administrator claims that Nationwide's acknowledgment of a disagreement indicates bad faith in refusing the appraisal. He also argues that Nationwide’s request for time to name an appraiser prior to litigation implies awareness of a disagreement. Conversely, Nationwide contends it did not breach the policy, asserting that Jadick's delay in seeking the appraisal nullified his request. The court found that while a disagreement arose when Jadick sought the appraisal, the interpretation of "disagreement" within the policy’s context is critical. The court ultimately rejected the administrator’s claims of bad faith and fraud, emphasizing the importance of the timing of Jadick’s appraisal request.

In this case, "disagreement" does not simply imply a difference of opinion but suggests a specific obligation for Jadick to notify Nationwide if he believed the initial estimate was insufficient for repairs. According to the policy terms, Jadick was required to inform Nationwide "immediately" if he or Mullen Builders believed additional coverage was necessary. The policy also stipulated that any hidden damages needed to be assessed before any additional payments could be made and instructed the parties not to dispose of damaged items until Nationwide could review them. 

Despite these requirements, Jadick did not contest Nationwide’s estimate until 15 months after repairs were completed and the claim was fully paid. The critical issue is whether Jadick's failure to express any disagreement in a timely manner constitutes a waiver of his right to invoke the appraisal clause of the insurance policy. Both parties reference Rogers v. State Farm Fire Casualty Co. to support their positions on waiver. In Rogers, the court found that the insured party did not demonstrate substantial prejudice from the insurer's delayed invocation of the appraisal clause, leading to a reversal of the trial court's decision that had found a waiver. 

Thus, the essential questions are whether Jadick adequately manifested a disagreement to justify invoking the appraisal clause and whether his delayed response constituted a waiver of that right.

The insured party presented limited evidence to support his claim of prejudice due to the insurer's use of the appraisal clause, primarily arguing that he incurred significant litigation costs over a span of more than a year. The insurer sought partial summary judgment, having already issued a payment for the agreed amount. The insured did not prove that his litigation expenses exclusively related to the bad-faith claim rather than the breach-of-contract claim. The trial court found sufficient evidence to conclude that the insured waived his right to appraisal, as the property damage was already repaired by the time he sought appraisal, making it impossible to assess the damage. The insured was aware of the procedures for reporting coverage issues and had previously requested additional payments without objection. The validity of the insured’s vague appraisal request was questioned, particularly since he could not specify additional damages not covered in the original estimate. 

The administrator contested the trial court's decision to strike a second affidavit from Mullen, arguing it corrected deficiencies in the first. However, the court upheld the strike, asserting the first affidavit lacked factual basis, and the second was filed too close to the summary judgment hearing. Even if the court erred, it deemed any mistake harmless since the affidavit did not alter the fact that the insured's delay in seeking appraisal constituted a waiver of rights. The court affirmed the summary judgment favoring the insurer, emphasizing that a 15-month delay after full payment and property repair prejudiced the insurer's ability to assess damages. Additionally, the trial court pointed out an inappropriate ex parte communication made by the insured regarding the judge's recusal, which it deemed unethical. The court also addressed the insured's bad-faith and fraud allegations.