Domino Two, LLC v. Auto-Owners Insurance Co.

IN THE UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

DOMINO TWO LLC, )

)

Plaintiff, )

)

v. ) No. 4:21-cv-00050-DGK

)

AUTO-OWNERS INSURANCE )

COMPANY, )

)

Defendants. )

ORDER DENYING PLAINTIFF’S MOTION IN LIMINE, ECF NO. 103

This case arises from an insurance contract whereby Global Real Estate Investments, LLC

(“Global”), the owner of an apartment complex in Grandview, Missouri, purchased a commercial

property and general liability insurance policy from Defendant. Plaintiff Domino Two, LLC, as

assignee of Global’s rights and claims, alleges Defendant failed to pay an insurance claim for wind

and hail damage from a storm in April 2019. Plaintiff asserts claims for breach of contract and

vexatious refusal to pay.

Now before the Court is Plaintiff’s motion in limine to exclude testimony regarding

Defendant’s improper installation defense. ECF No. 103. For the reasons stated below, the motion

is DENIED.

Background

In 2019, Greg and Stacy Rich (collectively, the “Riches”), along with Shaun McNamara,

owned Cedarwood Apartments, an apartment complex in Grandview, Missouri which consists of

sixteen separate buildings (“property”). Greg Rich and Shaun McNamara were the principal

members of Global Real Estate Investments, LLC (“Global”). On September 25, 2018, Defendant

issued Global an insurance policy on the property for the policy period of November 14, 2018, to

November 14, 2019 (“Policy”). Policy at 12–28, Def. Ex. 1, ECF No. 66-1. The Policy provided

hail and wind storm coverage, but this coverage excluded damage resulting from “wear and tear”

and “faulty, inadequate, or defective . . . [d]esign, specifications, workmanship, repair,

construction, renovation, remodeling, grading, compaction . . . [and] maintenance of part or all of

any property on or off the described premises.” Id. at 103–04.

In April of 2019, a hail and wind storm hit the property. On April 26, 2019, Global filed a

claim (“April 2019 Claim”) on the policy for damage to roofs, siding, windows, doors, HVAC

systems, and other exterior components of the buildings. The claim noted that the roofs of many

of the buildings were leaking. Claim at 2, Def. Ex. 2, ECF No. 66-2. Defendant received the claim

on May 17, 2019.

Defendant subsequently retained Casey Clay, P.E., who inspected the property on July 9,

2019, and submitted a report to Defendant on August 10, 2019. In the report, he opined that the

roofs on the property had no hail damage from the storm, and that damage to the roofs could not

have been caused by the April 2019 storm and instead resulted from improper installation of the

shingles. Clay Report at 21, ECF No. 93-1. Clay also noted that roof shingles had “severe granule

erosion” consistent with long-term age and weathering. Id.

On September 25, 2019, Defendant issued Global a check for $2,817.46.1 Def. Ex. D, ECF

No. 121-4. That same day, Defendant’s adjustor, Mike Sola, emailed Greg Rich to tell him that—

based on his inspection of the property, Clay’s inspection, and the inspection of an independent

appraiser—the buildings had sustained minor wind and hail damage. Id. Sola noted that the

amount Defendant was willing to pay was limited because “[m]ost of what we experienced is the

deterioration (wear/tear) of the buildings, specifically the roofs, due to age and exposure.” Id.

1 Ultimately, Defendant paid a total of $5,134.72 on this claim. See Order at 3, ECF No. 102.

Also in September 2019, Billie Hufford, a rental inspector for the City of Grandview

(“City”), inspected the property as part of the City’s Rental Inspection Program. On October 1,

2019, Ms. Hufford wrote a letter to Messrs. Rich and McNamara informing them that the property

violated multiple provisions of the city’s Minimum Building Preservation Code. Hufford Letter,

Def. Ex. 3 at 6–8, ECF No. 66-3. However, the letter only required repairs to roofs on two

buildings on the Property: Building 5506 and 5507. Id. Messer’s Rich and McNamara then hired

Pyramid Roofing Company (“Pyramid”) to replace each roof on the property.2 Order at 6, ECF

No. 102. Pyramid charged $176,000 for this work, and replaced every roof by November 5, 2019.

Id.

On December 26, 2019, Defendant sent Global it’s coverage position letter, which asserted

the wear and tear exclusion and included a copy of Clay’s report. Pl.’s Ex. 5, ECF No. 103-5. The

coverage position letter stated that that the letter was “not intended to be an exhaustive statement

of [Defendant’s] position concerning its coverages under the [P]olicy.” Id.

On September 15, 2020, Plaintiff purchased the property from the Riches and Mr.

McNamara. As part of the sale, Plaintiff also purchased their interest in “all existing insurance

coverage, claims, proceeds, or any other insurance-related items, including . . . all claims, benefits

or causes action against [the Policy].” Initial Disclosures at 6, Def. Ex. 6, ECF No. 66-6.

On December 4, 2020, Plaintiff brought this suit in the Circuit Court for Jackson County,

Missouri. Plaintiff alleged that Defendant refused to pay any of the bill from Pyramid beyond the

amount it had already paid on the April 2019 Claim, and that this constituted a breach of contract

(Count I) and vexatious refusal to pay (Count II). Compl., ECF No. 1. Defendant filed its answer

on January 26, 2021, asserting a number of affirmative defenses. Answer, ECF No. 5. The two

2 Though it is not material to this motion, it appears from the record that a different contractor replaced one roof on

the property. See Manning Report at 8, ECF No. 90-1.

relevant to this motion are Defendant’s Fourth Affirmative Defense—that damage caused by wear

and tear is excluded under the Policy (“wear and tear defense”)—and its Fifth Affirmative

Defense—that damage resulting from improper installation is excluded under the Policy

(“improper installation defense”).

Discussion

As an initial matter, the Court notes that Plaintiff’s motion is a dispositive motion seeking

to prevent Defendant from asserting an affirmative defense. “Normally, motions in limine are not

proper procedural devices for the wholesale disposition of theories or defenses.” Kaplan v. Mayo

Clinic, 947 F. Supp. 2d 1001, 1012 (D. Minn. 2013) (citation omitted); see also Harrington v. City

of Council Bluffs, 902 F. Supp. 2d 1195, 1198 (S.D. Iowa 2012) (“Although labeled as motions in

limine, Defendants' first three motions are actually dispositive motions. Since they were not filed

by the deadline for dispositive motions, they are hereby stricken as untimely.”). The Court

therefore denies Plaintiff’s motion since Plaintiff could have made it prior to the dispositive motion

deadline. That said, if the Court ruled on the merits it would still deny the motion for the reasons

stated below.

Plaintiff argues that Defendant should be estopped from asserting the improper installation

defense. “[E]stoppel requires ‘(1) an admission, statement or act inconsistent with the claim

afterwards asserted and sued upon, (2) action by the other party on the faith of such admission,

statement or act, and (3) injury to such other party, resulting from allowing the first party to

contradict or repudiate the admission, statement, or act.’” Brown v. State Farm Mut. Auto. Ins.

Co., 776 S.W.2d 384, 388 (Mo. 1989) (quoting Mississippi–Fox Drainage Dist. v. Plenge, 735

S.W.2d 748, 754 (Mo.App.1987)). Plaintiff argues that Messrs. Rich and McNamara—its

predecessors in interest—relied on Mike Sola’s representation that wear and tear caused the

damage to the roofs and thus decided to have the roofs replaced in the fall of 2019. Because

Defendant did not assert the improper installation defense until after the roofs were replaced,

Plaintiffs argue they are injured because they are unable to present evidence to show how the

previous roofs were installed. Mot. at 4, ECF No. 103.

The motion fails to demonstrate the first and third elements of estoppel. First, Defendant

has not made any admission, statement, or act inconsistent with its assertion that wear and tear

caused the damage to the roofs. “Absent a statement which excludes other defenses and upon

which the insured reasonably relies in preparing to preserve its claim, estoppel is not applicable.”

Brown, 776 S.W.2d at 389; see also Shelby v. Oak River Ins. Co., No. 4:17-CV-0224-DGK, 2018

WL 2013043, at *5 (W.D. Mo. Apr. 30, 2018). While Mike Sola’s September 25, 2019, email

stated that the much of the damage to the roofs was due to wear and tear, the email did not state

that the wear and tear exclusion was the only applicable exclusion under the Policy. Further,

Defendant’s coverage position letter expressly stated that it was not “an exhaustive statement of

[Defendant’s] position concerning its coverages under the [P]olicy.” Pl.’s Ex. 5, ECF No. 103-5.

In addition, Plaintiff has failed to show that it is prejudiced by Defendant’s assertion of the

improper installation defense. Each of Plaintiff’s disclosed experts inspected the roofs prior to the

replacement. Pl.’s Expert Disclosure, ECF No. 42. Further, Plaintiff’s expert Brian Manning had

access to Clay’s report when he inspected the roof, and noted that the roofs had been improperly

installed. Manning Report at 5, ECF No. 90-1 (“Based on the fact that these roofs have 2 layers

of shingles and no ventilation, the premature aging would have been accelerated.”) As such, the

Court concludes that Defendant is not estopped from asserting the improper installation defense.

Plaintiff also asserts that Defendant has waived its improper installation defense because

Defendant failed to disclose that it would assert the improper installation defense until it filed its

answer on January 26, 2021. Waiver is the intentional relinquishment of a known right, and

requires either 1) an express waiver by the insurer or 2) “conduct which clearly and unequivocally

shows a purpose by the insurer to relinquish a contractual right.” Brown, 776 S.W.2d at 387; see

also Cedar Hill Hardware & Const. Supply, Inc. v. Ins. Corp. of Hannover, 563 F.3d 329, 342 (8th

Cir. 2009).

Plaintiff has not shown that Defendant expressly waived its right to assert the improper

installation defense or that Defendant’s actions showed a purpose to relinquish that right. In fact,

Defendant’s coverage position letter indicates that Defendant desired to maintain all of its rights

under the Policy. Defendant has not waived the improper installation defense.

Conclusion

For the reasons above, Plaintiff’s motion is DENIED.

IT IS SO ORDERED.

Date: August 9, 2022 /s/ Greg Kays

.

GREG KAYS, JUDGE

UNITED STATES DISTRICT COURT