# Milia L.L.C. v. State Farm Fire & Casualty Company

> District Court, W.D. Tennessee · July 3, 2025

URL: https://www.frixlaw.com/law-library/cases/11089618

## Case

- **Court:** District Court, W.D. Tennessee
- **Decided:** July 3, 2025
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

MILIA LLC, )
)
Plaintiff, )
)
v. ) No. 2:23-cv-02005-JTF-atc
) JURY DEMAND
STATE FARM FIRE AND CASUALTY )
COMPANY, )
)
Defendant. )

ORDER GRANTING IN PART MOTION FOR SUMMARY JUDGMENT

In this insurance coverage dispute, policyholder Milia LLC argues that Defendant State Farm
Fire and Casualty Company’s (“State Farm”) allegedly wrongful denial of coverage for damage to
its premises entitles it to compensatory and punitive damages. (ECF No. 1-2, 9.) On March 31,
2025, State Farm moved for summary judgment. (ECF No. 51-1.) Milia responded on April 28,
and State Farm replied on May 12. (ECF Nos. 52 & 53.)
For the reasons set forth below, the Court GRANTS State Farm’s Motion for Summary
Judgment with respect to Milia’s claim for punitive damages but DENIES it with respect to all
other claims. The Court concludes that exclusions 1.j. and 2.k. do not apply as a matter of law. The
merits of all other claims and defenses will be decided at trial.
I. BACKGROUND1
A. The Evidence
On February 18, 2022, Milia purchased a two-building apartment complex located at 123 and
131 N. Bingham Street, Memphis, Tennessee 38112 (the “Premises”).2 (ECF No. 51-2, 1.) Milia

was present for National Property Inspections’ pre-purchase inspection of the Premises on
December 2, 2021. (Id.) The Pre-Purchase Inspection Report recommended that the roof be
repaired or replaced. (Id.) Regarding the roof, the report stated that (1) it was not possible to inspect
for the possibility of active leaks due to a lack of interior access; (2) the roof surface was composed
of two different materials of different ages; (3) the sealant on joints in the roof was deteriorated;
(4) loose and unsecured roofing material may allow water intrusion; (5) wrinkles in roofing
material and low spots allowed standing water; and (6) it was recommended that a qualified roofing
contractor evaluate the entire roof surface and make any repairs needed to protect against water
intrusion. (Id. at 2.) The report contained photographs depicting existing and/or ongoing water
pooling on the roof. (Id.) Additionally, it noted that the roof did not have a drainage system, and

deterioration on the trim in several locations around the buildings was indicative of water intrusion.
(Id.)
State Farm issued a Businessowners Policy to Milia bearing the policy number 92-NC-X094-
5 (the “Policy”) for the Premises. (Id.) The Policy had an effective date of February 17, 2022, and
ran through February 17, 2023. (ECF Nos. 51-2, 2-3 & 52-2, 2.)
On March 23 or 24 of 2022, Milia’s insurance agent reported a claim for damage to the roof to
State Farm based on information contractor Southern Roofing provided. (ECF Nos. 51-2, 5 & 52-

1 The Court only discusses the facts pertinent to State Farm’s Motion. The facts are taken from the parties’
filings. Any disputes of fact are noted.
2 Two different buildings are at issue in this case. However, the briefings do not distinguish between the
two in the argumentative sections. The Court follows the parties lead in doing so.
2, 3. & 5.) Southern Roofing reported that Building No. 123 had its roof ripped off and there was
significant interior water damage to Units 11 and 12. (Id.)
Milia retained Delta Public Adjusters, LLC (“Delta”) to inspect the Premises. (Id. at 6.) Delta
in turn requested that Wallace & Todd Consulting (“W&T”) inspect the two buildings. (ECF No.

51-4, 3.) W&T observed that (1) temporary repairs had been made to the west end of the building
where Delta’s photographs depicted wind damage, and to the apartment below the wind damage
on the east side of Building No. 123; (2) wind damage to the roof seams and an uplifted drip edge
along the south side of Building No. 131 could be observed from Building No. 123 and the ground
underneath; (3) no winds exceeding 40 MPH occurred on the date of loss and the most recent date
of elevated wind (recorded as 64 MPH) occurred on January 1, 2022; (4) the pre-purchase
inspection of the Premises did not mention the peeled back condition of the roof; and (5) the limited
amount of water damage to the cover board below the wind damaged seams in Building No. 131
supported the conclusion that the wind damage was a recent occurrence. (Id. at 4-8.)
Delta sent State Farm photographs and an estimate of the damages on April 18, 2022. (ECF

No. 51-2, 6.) On May 3, 2022, with Delta and Southern Roofing present on Milia’s behalf, State
Farm claims adjuster Elizabeth Fatovic inspected the Premises. (Id.) Fatovic evaluated Delta’s
report after her own inspection and requested that it provide an updated estimate. (Id.) State Farm
received the amended estimate on May 7, 2022. (Id.)
Based on Fatovic’s inspection and observations, State Farm retained a structural engineer from
Applied Building Sciences, Inc. (“ABS”) to investigate further. (Id.) ABS found, among other
things, that (1) the roof was damaged; (2) at least some of that damage, such as the peeling back
of the roof covering at the west end, south wing, and east wing of Building No. 123 occurred
during “the storm”; (3) there were numerous observable deficiencies on the roof including
functional, installation and age-related problems; (4) ponding water at various locations indicated
a long-term problem with a lack of drainage; (5) no high wind events were reported in the area on
the reported date of loss, and the last such event occurred on January 1, 2022; (6) the failure/peel
back of the roof covering occurred at relatively low wind speeds and was attributable to poor

installation and to the deteriorated condition of the roof; and (7) Building No. 131 did not incur
any storm-related damages.3 (ECF No. 51-5, 230-32 & 244-46.)
Based on State Farm’s investigation of the claim, ABS’s findings in its report, and Fatovic’s
observations, it determined that the Premises’ damage was not consistent with damage from a high
wind event occurring on the reported date of loss. (ECF No. 51-2, 6.) State Farm’s formal
determination states its conclusion that the damage to the Premises was the result of workmanship
issues and the overall poor condition of the roof, including but not limited to prior water intrusions
and neglect. (ECF No. 51-2, 6.) In a letter dated July 6, 2022, State Farm informed Milia it was
denying the claim because the damage was not covered based on the exclusions cited therein. (Id.
at 7.) Milia contends that the findings in ABS’s report are inconsistent with State Farm’s

conclusion. (ECF No. 52-2, 3.)
Milia’s expert, Robert M. Thompson, inspected the Premises on February 29, 2024, and his
report did not reference any damage caused by hail. (Id.) That report also acknowledged that winds
did not exceed 40 mph near the Premises, nor were there any “elevated wind events” recorded in
Shelby County, Tennessee on the date of loss. (Id. at 8.)
B. The Relevant Exclusions
As relevant here, the policy excludes coverage for:

3 ABS’s report refers to Building No. 123 and Building No. 135. (ECF No. 51-5, 230-32.) The relevant
building numbers in this case are 123 and 131. The Court assumes that reference to “Building No. 135” is a
typographical error.
1. . . . any loss which would not have occurred in the absence of one or more of the
following excluded events[:]
. . .
j. Fungi, Virus Or Bacteria
. . .
2. . . .any [] loss whether consisting of, or directly and immediately caused by, one or more
of the following:

k. Neglect
Neglect of an insured to use all reasonable means to save and preserve property
from further damage at and after the time of loss.

l. Other Types of Loss
(1) Wear and tear;
(2) Rust or other corrosion, decay, deterioration, hidden or latent
defect or any quality in property that causes it to damage or destroy
itself;
. . .
(4) Settling, cracking, shrinking or expansion;
. . .
But if an excluded cause of loss that is listed in Paragraphs (1) through (7) above
results in an accidental direct physical loss by any of the “specified causes of loss”
or by building glass breakage, we will pay for the loss caused by that “specified
cause of loss” or by building glass breakage.
. . .
p. Continuous Or Repeated Seepage, Discharge Or Leakage of Water
Continuous or repeated seepage, discharge or leakage of water, or the presence of
condensation of humidity, moisture or vapor, that occurs over a period of 14 days
or more.

(ECF No. 51-5, 13-15.)

The Policy also provides that:

3. [State Farm does] not insure under any coverage for any loss consisting of one
or more of the items below. Further, [State Farm does] not insure for loss described
in Paragraphs 1. and 2. immediately above regardless of whether one or more of
the following: (a) directly or indirectly cause, contribute to or aggravate the loss; or
(b) occur before, at the same time, or after the loss or any other cause of the loss:

a. Weather Conditions
Weather conditions. But this exclusion only applies if weather
conditions contribute in any way with a cause or event excluded in
paragraphs 1. and 2. above to produce the loss.
. . .
c. Work
Faulty, inadequate or defective:
(1) Planning, zoning, development, surveying, siting;
(2) Design, specifications, workmanship, repair, construction,
renovation, remodeling, grading, compaction;
(3) Materials used in repair, construction, renovation or remodeling;
or
(4) Maintenance; of part or all of any property (including land,
structures or improvement of any kind) on or off the described
premises.

(Id. at 15.)
C. The Lawsuit
After State Farm denied coverage, Milia brought this lawsuit in state court. (ECF No. 1-2.)
Milia alleged that “[o]n or about March 23, 2022, a certain severe weather event which included
high velocity wind of up to Sixty (60) MPH [] seriously damaged the [Premises’] roofing system.”
(Id. at 8.) Milia also alleged that the Premises were damaged by “large circumference hail.” (Id.)
It argued that State Farm was liable for breach of contract for refusing to cover the wind damage
to the roofing and the water damage to the interior incurred during the hail and high wind events.
(ECF No. 1-2, 9.) Milia sought $4,000,000 in compensatory damages, pre- and post-judgment
interest, attorney’s fees, and punitive damages “as the Court may deem appropriate.” (Id. at 12.) It
argued that punitive damages were appropriate because State Farm didn’t conduct a reasonable
investigation and wrongly denied the claim, in essence. (See id. at 11.)
State Farm removed the case to this Court on January 4, 2023. (ECF No. 1.) This motion for
summary judgment is the only substantive motion that has been filed in this case. The case is set
for a jury trial on September 8, 2025. (ECF No. 48.)
II. LEGAL STANDARD
Summary judgment is proper “if 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).
The court must view the facts in the record and reasonable inferences that can be drawn from those
facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986).
Once a properly supported motion for summary judgment has been filed, the party

opposing summary judgment must show that there is a genuine dispute of material fact by pointing
to evidence in the record or arguing that the moving party is not entitled to judgment as a matter
of law. Fed. R. Civ. P. 56(a), (c)(1). “When confronted with a properly supported Motion for
Summary Judgment, the party with the burden of proof at trial is obligated to provide concrete
evidence supporting its claims and establishing the existence of a genuine issue of fact.”
Cloverdale Equipment Co. v. Simon Aerials, Inc., 869 F.2d 934, 937 (6th Cir. 1989) (citing Celotex
Corp. v. Catrett, 477 U.S. 317 (1986)). The opposing party “cannot rest solely on the allegations
made in [his] pleadings.” Everson v. Leis, 556 F.3d 484, 496 (6th Cir. 2009) (alteration in original)
(internal quotation marks omitted) (quoting Skousen v. Brighton High Sch., 305 F.3d 520, 527 (6th
Cir. 2002)).

A genuine issue for trial exists if the evidence would permit a reasonable jury to return a
verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The
court’s role is not to weigh evidence or assess the credibility of witnesses, but simply to determine
“whether the evidence presents a sufficient disagreement to require submission to a jury or whether
it is so one-sided that one party must prevail as a matter of law.” Kroll v. White Lake Ambulance
Auth., 763 F.3d 619, 623 (6th Cir. 2014) (quoting Anderson, 477 U.S. at 251–52).
III. ANALYSIS
A. Evidentiary Objections
Milia argues that certain materials State Farm relies on to demonstrate the nonexistence of
genuine disputes of material fact are inadmissible. Specifically, Milia contends that the National

Property Inspections Report and CoreLogic Wind Verification Report constitute inadmissible
hearsay and lack authentication. (ECF No. 52-2, 2 & 5.) It also objects to the recitation of the
policy provisions under the best evidence rule. (Id. at 3.)
Fed. R. Civ. P. 56(c)(2) provides that, in litigating a motion for summary judgment, “[a] party
may object that the material cited to support or dispute a fact cannot be presented in a form that
would be admissible in evidence.” Fed. R. Civ. P. 56(c)(2). Assessing whether summary-judgment
evidence could “be presented in a form that would be admissible in evidence” at trial under Rule
56(c)(2) is “substantially more complicated than just deeming statements hearsay.” Siefert v.
Liberty Twp., No. 23-3692, 2024 WL 4100897, at *6 (6th Cir. Sept. 6, 2024) (Moore, J.,
concurring) (quoting Wyatt v. Nissan N. Am., Inc., 999 F.3d 400, 424 & n.8 (6th Cir. 2021)). “[T]he

advisory committee's commentary for Rule 56 as well as Supreme Court and Sixth Circuit
precedent support [the] conclusion that courts, in determining whether to consider hearsay
evidence, may inquire as to whether the party opposing summary judgment is capable of producing
an otherwise inadmissible hearsay statement in a form that will be admissible at trial, i.e., via
substituted oral testimony by the third-party declarant.” Wyatt, 999 F.3d 424 n.8.
i. The National Property Inspections Report
In its Motion for Summary Judgment, State Farm relies on National Property Inspections’
Pre-Purchase Inspection Report to show that the major issues with the Premises’ roof predated the
Policy’s coverage period. (ECF No. 51-2, 1-2.) Milia requests that the report be excluded because
it is unauthenticated inadmissible hearsay. (ECF No. 52-2, 2.) State Farm did not respond.
The report likely constitutes hearsay—it contains statements, all of which were made by
an out of court declarant, and it is being offered for its truth. Fed. R. Evid. 801(c). That said, the

report is admissible as a business record pursuant to Fed. R. Evid. 803(6), which allows for the
admission of:
A record of an act, event, condition, opinion, or diagnosis if:
(A) the record was made at or near the time by—or from information transmitted
by someone with knowledge;
(B) the record was kept in the course of a regularly conducted activity of a business,
organization, occupation, or calling, whether or not for profit;
(C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the custodian or another
qualified witness, or by a certification that complies with Rule 902(11) or (12)
or with a statute permitting certification; and
(E) the opponent does not show that the source of information or the method or
circumstances of preparation indicate a lack of trustworthiness.

Fed. R. Evid. 803(6). The National Property Inspections Report was prepared in the normal
course of National Property Inspections’ business as a pre-purchase inspection. (ECF No. 51-2, 1.)
There is no dispute that the report was prepared shortly after the inspection was performed, and
that it was prepared by a professional inspector. The preparation of such a report is undoubtedly a
regular practice for those who perform home and building inspections for prospective buyers.
Milia does not suggest it will challenge any techniques and/or methodologies relevant to the
report’s preparation, and the Court finds it noteworthy that Milia apparently found the information
in the National Property Inspections Report to be sufficiently trustworthy to base its decision to
purchase the Premises on its findings.
Were State Farm to call a witness to testify to all these conditions, the Court would
conclude that the National Property Inspections Report is admissible hearsay pursuant to the
business records exception. Since Milia has not argued that there would be any obstacle to State
Farm calling such a witness, it has not met its burden under Fed. R. Civ. P. 56(c)(2). With respect
to authentication, the same witness would also be able to testify that the report is what it is claimed
to be. Fed. R. Evid. 901(b)(1).

ii. The CoreLogic Wind Verification Report
Milia next seeks the exclusion of the CoreLogic Wind Verification Report on the ground
that it is inadmissible hearsay that has not been authenticated. (ECF No. 52-2, 5.) Per CoreLogic’s
website: “Wind Verification Reports are powered by a fully-automated, severe wind verification
system from CoreLogic. This system combines proprietary, three-dimensional storm models with
artificial intelligence, radar data, and real-world observations to analyze what actually happened.”4
The report is not hearsay. The hearsay rule applies only to out-of-court statements. See Fed.
R. Evid. 801(c)(1). The rule defines a “statement” as “a person's oral assertion, written assertion,
or nonverbal conduct, if the person intended it as an assertion.” Fed. R. Evid. 801(a). The
CoreLogic Report constitutes a report of raw data generated by a machine or algorithm. The

consensus among the circuit courts is that machine-generated data cannot be hearsay because it
does not constitute a statement under Fed. R. Evid. 801(a). See Lyngaas v. Curaden Ag, 992 F.3d
412, 431 (6th Cir. 2021) (collecting cases); see also 4 Federal Evidence § 8:13 (4th ed.) (“On a
mechanical level, the question whether the hearsay doctrine reaches information provided by
machines . . . is easily answered. Under Rule 801(a), a statement is ‘a person's' utterance, so
nothing ‘said’ by a machine . . . is hearsay[.]”).
Although the CoreLogic Report is not hearsay, State Farm will still bear the burden of
authenticating it. See Lyngaas, 992 F.3d at 431. Milia has not shown that it would be impossible

4 CoreLogic, Wind Verification Reports (2015), https://www.wvs.corelogic.com/pdfs/wind-verification-
report-datasheet.pdf.
for State Farm to produce proof at trial “sufficient to support a finding that the item is what the
proponent claims it is.” Fed. R. Evid. 901(a). As such, the Court declines to exclude the CoreLogic
Report in assessing State Farm’s Motion for Summary Judgment.
iii. Insurance Policy Recitation

State Farm included the relevant policy provisions in its statement of undisputed facts.
(ECF No. 51-2, 3.) Milia objects to this recitation under the best evidence rule. (ECF No. 52-2, 3.)
The best evidence rule provides that “[a]n original writing, recording, or photograph is required in
order to prove its content unless these rules or a federal statute provides otherwise.” Fed. R. Evid.
1002. “The purpose of the best evidence rule is to prevent fraud and encourage accuracy.” Slocum
v. Bear, No. 1:18-CV-423, 2021 WL 3683873, at *4 (S.D. Ohio Mar. 26, 2021), report and
recommendation adopted, No. 1:18-CV-423, 2021 WL 3683353 (S.D. Ohio Aug. 19, 2021)
(citations omitted). It is unclear why Milia takes issue with State Farm’s recitation of the relevant
Policy section. As Milia acknowledges, State Farm also provided an admissible duplicate of the
Policy in Exhibit C. (ECF No. 51-5, 7-47.) The Court declines to exclude State Farm’s policy

recitation under the best evidence rule.
B. Coverage and Exclusions
State Farm argues that it is entitled to judgment as a matter of law on Milia’s breach of contract
claim because Milia’s claimed loss is not covered under the Policy. (ECF No. 51-1, 9.) State Farm
contends that it was not required to cover the claimed loss because (1) the exclusions contained in
the Policy, including those for “wear and tear,” “deterioration,” “continuous or repeated seepage,
discharge or leakage of water… that occurs over a period of 14 days or more,” and “faulty,
inadequate, or defective … workmanship” unequivocally preclude coverage for Milia’s claimed
loss; and (2) coverage is precluded under the loss in progress doctrine. (Id. at 7-8.) The Court
handles several interpretive issues before turning to these two substantive disputes.
i. Policy Interpretation
a. Principles of Interpretation

Standard contract interpretation principles apply to insurance policies. Hudson v. Liberty Mut.
Pers. Ins. Co., No. 2:23-CV-02060-TLP-CGC, 2024 WL 4101937, at *5 (W.D. Tenn. July 24,
2024) (citations omitted). “Courts must give the insurance policy's terms their common, plain and
ordinary meaning.” Id. (citations omitted). “The plain and ordinary meaning is the meaning which
the average policy holder and insurer would attach to the policy language.” Id. (quoting Trust Ins.
Co. v. Phillips, 474 S.W.3d 660, 667 (Tenn. Ct. App. 2015) (internal quotation marks omitted).
The insurance contract “must be read as a layman” would read it. S. Trust Ins. Co., 474 S.W.3d at
667 (quoting Paul v. Ins. Co. of N. Am., 675 S.W.2d 481, 484 (Tenn. Ct. App. 1984)). Courts
should consider the contract “as a whole, ‘for one clause may modify, limit or illuminate another.’”
Id. at 670 (citation omitted).

When a Tennessee court interprets contract language, it first decides whether the language is
ambiguous. Id. (citing Planters Gin Co. v. Fed. Compress Warehouse Co., 78 S.W.3d 885, 890
(Tenn. 2002)). “If ambiguous language limits coverage, the language must be strictly construed in
favor of the insured.” Hudson, 2024 WL 4101937, at *5 (citation omitted).
b. Definition and Interpretation of Undefined Phrases
Here, the issue of whether the cited Policy exclusions apply is directly dependent upon the
meaning of two specific phrases. The Policy excludes coverage for losses “consisting of” or
“directly and immediately caused by” certain events. (See, e.g., ECF No. 51-5, 13-14.) Neither
phrase is defined in the Policy, and the briefings do not define them.5 (See ECF No. 51-1, 11.) The
only hint is that the two cannot mean the same thing, since numerous paragraphs exclude coverage
for losses “consisting of” or “directly and immediately caused by” some occurrence. (See id.)
Without a supplied technical definition, the Court turns to the dictionary and its sister courts.

Merriam-Webster provides that the phrasal verb “consist of” means “to be formed or made up of
(specified things or people).”6
As for “direct and immediate cause,” another court grappling with a similar State Farm policy
thoroughly examined the caselaw and dictionary entries, before concluding that “[w]hen there is a
chain of events leading to a loss, as here, a direct and immediate cause has been defined as the one
nearest in time to the specific event at issue.” Winders v. State Farm Fire & Cas. Co., 359 F. Supp.
3d 1274, 1279 (N.D. Ga. 2018) (providing a textual analysis and collecting cases). Keep in mind
that a cause nearest in time to an event is not necessarily the same as a proximate cause, which
refers to the primary or reasonably foreseeable cause of an injury.
ii. Do the Exclusions Apply?

State Farm contends that there does not exist a genuine dispute of material fact and that it is
entitled to judgment as a matter of law on Milia’s breach of contract claim because the Policy
excludes coverage for damage caused by or resulting from wear and tear; rust or other corrosion,
decay, deterioration, hidden or latent defect or any quality in property that causes it to damage or
destroy itself; settling, cracking, shrinking or expansion; continuous or repeated discharge or
leakage of water, or the presence of condensation of humidity, moisture or vapor, that occurs over

5 In its brief, State Farm claims that the Policy “does not provide coverage for damage caused by or
resulting from wear and tear . . . .” (ECF No. 51-1, 11 (emphasis added).) While this paraphrasing of the Paragraph 2
Exclusion suggests that State Farm believes the phrases mean “caused by or resulting from,” nothing in the record
supports that interpretation.
6 Consist of, Merriam-Webster.com (last visited June 16, 2025).
a period of 14 days or more; or faulty, inadequate or defective workmanship, repair, construction,
or maintenance. (ECF No. 51-1, 12.)
A review of the disputed and undisputed facts relevant to these exclusions guides this inquiry.
First, the roof was in poor condition before Milia purchased the Premises. The National Property

Inspections’ December 2, 2021 Pre-Purchase Inspection Report provides that: the sealant on the
joints was deteriorated, wrinkles in the material permitted pooling of water, unsecured roofing
materials would permit water intrusion, and there was evidence of water intrusion on Unit 123.
(ECF No. 51-2, 2.) Milia has not shown that this fact is in dispute.
Second, it cannot be genuinely disputed that winds did not exceed 40 MPH and hail did not
fall at the Premises on the date of the claimed loss.7 Milia’s claims that the Premises were battered
by “large circumference hail” and “high velocity wind of up to Sixty (60) MPH” on that date are
without support in the record. (ECF No. 1-2, 8.) Milia’s own experts support the Court’s
conclusion. (See ECF Nos. 51-4, 6 & 51-2, 8.)
Yet Milia points out that State Farm’s expert, ABS, confirmed its experts’ findings that wind

damaged the roofing system. (ECF No. 52-1, 3.) ABS’s report acknowledges the “failure/peel back
of the roof covering,” but states that it occurred at “relatively low wind speeds and is attributed to
poor installation and to the deteriorated condition of the roof.” (ECF No. 51-5, 245.) State Farm
never responded to Milia’s point that its own expert observed that the roof was damaged by wind,
albeit “at relatively low wind speeds.” (Id.) Nevertheless, State Farm’s position seems to be that
the excludable causes—wear and tear, deterioration, and poor maintenance of the roof—were

7 The CoreLogic Wind Verification Report provides that the “[d]ate of loss field will ignore the normal
[recording] threshold of 58 MPH within 3 miles, and will report any wind speed down to 40 MPH.” (ECF No. 51-4,
126.) Since the CoreLogic Reports are the only measure of the windspeeds in the record, and the Report provides that
“[n]o wind greater than 40 MPH [was] detected” on March 23, 2022, the Court treats the non-occurrence of winds
exceeding 40 MPH on the date of claimed loss as fact in assessing this Motion. (See id. at 125.)
responsible for the claimed loss because otherwise, the relatively slow wind speed would not have
been able to cause such severe damage. Even so, the nexus between the roof’s condition before
the Policy period commenced and the wind damage to the roof is cabined to these one-line
conclusions in ABS’s expert report. Viewing the evidence in the light most favorable to Milia,

there remains a genuine dispute of material fact as to whether there exists a causal connection
between the roof’s poor condition and the damage it incurred during the storm.
As explained below, it is not clear that the Policy exclusions apply even if it were undisputed
that the slow wind able to peel back the roof solely because of the roof’s poor condition.
a. Paragraph 2 Exclusions8
Two Paragraph 2 exclusions are at issue. First is Paragraph 2.l. which excludes coverage for
losses “consisting of” or “directly and immediately caused by” wear and tear, deterioration, and
poor maintenance of the roof, among other things. (ECF No 51-5, 13-14.) Second is Paragraph
2.p. which relates to continuous or repeated seepage that occurs over a period of 14 days.9 (Id. at
15.)

Interpreting Paragraph 2.l. with the definition outlined above, the “consisting of” provision
covers scenarios where the claimed loss itself is wear and tear, deterioration, poor maintenance, or
any of the other listed causes. Here, the claimed loss “consists of” a peeled back roof and water
infiltration. Thus, by definition, the claimed loss itself is not one of the excludable grounds set
forth in Paragraph 2.l.

8 The denial letter refers to Paragraph 1.j., an exclusion for losses involving fungi virus or bacteria growth,
proliferation, spread or presence. (ECF No. 51-5, 252-53.) However, the Court cannot find any mention of fungi,
virus, or bacteria in the parties’ filings. The denial letter also references 2.k., an exclusion for losses involving neglect
of an insured to use all reasonable means to save and preserve property from further damage at and after the time of
loss. (Id.) Again, the parties’ briefings are silent on this exclusion. It is unclear why either exclusion was invoked. The
Court finds, as a matter of law, that neither exclusion applies.
9 The denial letter erroneously places this exclusion under Paragraph 3. (See ECF No. 51-5, 253-54.)
State Farm appears to be pursuing the other provision under this exclusion, that the loss was
“directly and immediately caused by” wear and tear, deterioration, poor maintenance or one of the
other excluded causes. State Farm fares no better under this provision for two reasons.
First, the record demonstrates at minimum a factual dispute as to whether wind caused the

claimed loss. And while a jury may find that the proximate cause of the roof’s failure/peel back
was its poor condition, State Farm must show that the roof’s poor condition was “the cause nearest
in time” to the roof’s peel back. See Winders, 359 F. Supp. 3d at 1279. Viewing the evidence in
the light most favorable to Milia, the nearest cause in time to the roof’s peel back was the wind.
Hence, exclusion 2.l. may not apply to the roof failure/peel back under the “directly and
immediately caused by” provision.
Second, it seems that the Policy itself requires State Farm to cover the loss under the exact
theory it presses in its brief. The Policy provides that if an excluded cause of loss in Paragraphs
(1) through (7) under “l. Other Types of Loss” “results in an accidental direct physical loss by any
of the ‘specified causes of loss’ or by building glass breakage, we will pay for the loss caused by

that specified cause of loss’. . . .” (ECF No. 51-5, 14.) The Policy provides that “[s]pecified causes
of loss” means, among other things, windstorms. (Id. at 29.) Neither the Policy nor the parties
explain what qualifies as a windstorm. The Tennessee Supreme Court’s preferred definition, “the
aspect of a storm [ ] that is an outburst of tumultuous force[,]” is not particularly helpful either.
Lunn v. Indiana Lumbermens Mut. Ins. Co., 184 Tenn. 584, 591 (1947) (internal quotation marks
omitted) (quoting 29 American Jurisprudence, page 792, Section 1052). What’s important here is
that the classification of a weather event as a windstorm does not appear to require that winds
exceed 40 MPH—the slowest windspeed that the CoreLogic Report would record—or that winds
exceed any speed at all. Thus, the exception to this exclusion seems to obligate State Farm to cover
the claimed loss if wear and tear and deterioration resulted in a windstorm being able to peel back
the roof, allowing for water infiltration.
As for the loss pertaining to water infiltration, the Court cannot determine whether the water
infiltration occurred due to the roof peeling back, or if it occurred due to the unsecured roofing

material (which would likely satisfy one of the roof condition-related exclusions). Nothing in the
record points to either conclusion. State Farm has therefore not met its burden in showing that the
Paragraph 2.l. exclusion bars coverage for the water infiltration.
Turning to 2.p., the exclusion cited as grounds for denying coverage for the water infiltration
damage, the Court cannot find anything in the record that establishes that seepage, discharge or
leakage of water occurred over a period of 14 days or more. (ECF No. 51-1, 15.) Perhaps State
Farm is referring to the pooling of water on the roof. Even so, it is unclear how long that water
was pooling, and if that pooling of water relates to the claimed water infiltration damage. The
record is insufficient for the Court to determine if this exclusion applies.
To summarize, State Farm’s Motion is DENIED with respect to its arguments that

exclusions 1.j., 2.k., 2.l., and 2.p apply and bar coverage. The Court concludes that exclusions 1.j.
and 2.k. do not apply as a matter of law. State Farm’s defenses under exclusions 2.l. and 2.p. can
be renewed at trial.
b. Paragraph 3 Exclusions
The relevance of the Paragraph 3 exclusions is unclear. In its July 6, 2022 letter, State Farm
relied on 3.c., which excludes coverage for any loss “consisting of” faulty, inadequate, or defective
workmanship, repair, materials, and maintenance, among other things. (ECF No. 51-5, 253-54.)
Regarding 3.c., as established previously, the claimed losses themselves were not faulty,
inadequate or defective work. The claimed losses “consist of” a peeled back roof and water
infiltration. This means that the claimed losses did not “consist of” anything excluded in 3.c. So,
3.c. cannot be a ground for denying coverage.
Paragraph 3 also contains an exclusion for weather conditions. Neither party discussed this
exclusion, but it seems to bear directly on this case’s facts. This exclusion, 3.a., precludes coverage

for losses “consisting of” weather conditions but only if weather conditions contribute in any way
with a cause or event excluded in paragraphs 1 and 2 to produce the loss. (ECF No. 51-1, 15.) The
Court cannot make sense of this exclusion. What kind of claimed loss is “formed or made up of”
weather conditions?
The more pressing point is that Paragraph 3.a. provides that if “direct physical loss results
from items 3.a., 3.b., or 3.c.,” then State Farm will “pay for the resulting loss unless the loss itself
is one of the losses not insured in SECTION I.” (Id.) As stated before, the direct and immediate
cause of the roof peel back appears to be the wind. Regardless of whether the wind speed was
severe or “relatively low,” wind speed is a weather event. It would seem the Policy’s plain terms
provide coverage.

State Farm’s Motion is DENIED with respect to its argument that Paragraph 3.c. applies
and bars coverage. State Farm’s defense under this exclusion can be renewed at trial.
iii. Does the Loss in Progress Doctrine Preclude Coverage?
Notwithstanding the applicability of the exclusions, State Farm argues that the claimed loss is
not covered under the Policy because the loss in progress doctrine applies. (ECF No. 51-1, 10.)
In short, the loss in progress doctrine precludes coverage where “the insured is aware of a
threat of loss so immediate that it might fairly be said that the loss was in progress and that the
insured knew it at the time the policy was issued or applied for.” Inland Waters Pollution Control,
Inc. v. Nat'l Union Fire Ins. Co., 997 F.2d 172, 178–79 (6th Cir. 1993). As the Sixth Circuit has
explained, the loss in progress doctrine embodies “the principle that losses which exist at the time
of the insuring agreement, or which are so probable or imminent that there is insufficient ‘risk’
being transferred between the insured and the insurer, are not proper subjects of insurance.” Am.
& Foreign Ins. Co. v. Sequatchie Concrete Servs., Inc., 441 F.3d 341, 345 (6th Cir. 2006) (quoting

7 Couch on Insurance § 102.8). “[T]he doctrine is properly invoked when the insured knows about
the claimed loss before the policy is purchased.” Union Univ. v. Evanston Ins. Co., No.
120CV01254JDBJAY, 2022 WL 507666, at *10 (W.D. Tenn. Feb. 19, 2022) (quoting State Auto.
Mut. Ins. Co. v. R.H.L., Inc., No. 07-1197, 2010 WL 909073, at *4 (W.D. Tenn. Mar. 12, 2010)).
The two Sixth Circuit cases above illustrate the sort of foreknowledge an insured must have
for the rule to apply. Inland Waters involved a disposal company employed to remove and dispose
of hundreds of drums containing waste paint material. 997 F.2d at 173. The company crushed the
drums on the customer’s property and discovered that the drums contained liquids were soaking
into the soil. Id. Six years later, investigations of the property determined that these liquids
contaminated the soil and groundwater. Id. The relevant insurance policy’s coverage period

commenced after the company crushed the drums, but before the discovery of the soil and
groundwater contamination. Id. at 174. At issue was whether the loss in progress doctrine
precluded coverage for the disposal company’s liability relating to the contamination. Id. The Sixth
Circuit did not reach a conclusion, but directed the district court to consider on remand whether
“the disposal company knew or should have known at the time it obtained insurance coverage . . .
that the spill would result in damage to the groundwater or that the spill posed an immediate threat
of damage to the groundwater.” Id. at 179.
In Sequatchie Concrete Services, a general contractor was supposed to provide waterproof
blocks for a hotel’s construction. 441 F.3d at 342. During construction, the hotel complained that
the blocks were not waterproof, and leaks were occurring. Id. at 342. The contractor advised that
this was normal until the building was completed and sealed. Id. at 343. The building continued to
leak when sealed, and the hotel informed the contractor that it expected that the costs associated
with the problem would be paid for. Id. The contractor referred the matter to its corporate counsel

who informed the hotel that the contractor was not liable. Id. Afterwards, an insurance company
issued a policy to the contractor. Id. The hotel then sued the contractor. Id. The contractor sought
coverage for the loss—legal liability for providing the ineffective waterproof blocks. Id. The Sixth
Circuit concluded that the loss in progress doctrine precluded coverage because the contractor was
aware of the threat of loss before the coverage period began. Id. at 346.
State Farm contends that the loss in progress doctrine precludes coverage here because the Pre-
Purchase Inspection Report issued before the Policy’s inception put Milia on notice that roof was
in poor condition and that some water infiltration had already occurred. (ECF No. 51-1, 13.) Milia
responds that it had no knowledge that a windstorm would lift the roofing system and cause water
infiltration on the property. (ECF No. 52-1, 7.)

State Farm urges that the doctrine’s applicability does not hinge on whether Milia had
knowledge that a windstorm would cause the claimed loss. (ECF No. 53, 5.) State Farm is right in
a sense. For the doctrine to preclude coverage here, it must be shown that Milia knew that the
roof’s condition prior to the coverage period (1) made the roof’s failure/peel back imminent or
highly probable, and (2) made water infiltration imminent or highly probable. See Inland Waters,
997 F.2d at 179. State Farm has not offered any evidence in support of either of these conclusions.
The Court concludes that a reasonable jury could determine that although Milia knew that the roof
was not in good condition before the coverage period, it did not know that either of the two
scenarios described above were imminent or highly probable.
State Farm’s invocation of the loss in progress doctrine does not entitle it to judgment as a
matter of law on this basis. The Motion is DENIED with respect to this defense. However, State
Farm can renew the defense at trial.
C. Punitive Damages

Last, State Farm contends that it is entitled to judgment as a matter of law on Milia’s claim for
punitive damages notwithstanding the Court’s decision as to the merits of Milia’s breach of
contract claim because Milia has not produced any evidence that would suggest that it has acted
intentionally, fraudulently, or recklessly in denying coverage.
Tennessee law permits awarding punitive damages in only “the most egregious” breach of
contract cases where “there is clear and convincing proof that the defendant has acted either
intentionally, fraudulently, maliciously, or recklessly.” LBC Assocs. Chattanooga #1 v. Allied
Prop. & Cas. Ins. Co., No. 220CV02650SHLTMP, 2021 WL 5154245, at *6 (W.D. Tenn. Aug.
23, 2021) (internal quotation marks and citations omitted).
Is this one of the most egregious breach of contract cases? Milia urges that State Farm’s

cancellation of the February 17, 2022–February 17, 2023 policy on May 20, 2022, two months
after the March 23, 2022 claimed date of loss, amounts to malicious, willful, intentional, or
fraudulent conduct. (ECF Nos. 52-1, 9 & 52-4, 2.) The Court does not agree.
First, Milia’s response is devoid of any evidence demonstrating or even suggesting that State
Farm acted intentionally, fraudulently, maliciously, or recklessly in denying coverage. A
reasonable jury could not find for Milia on its bare, unsupported, and conclusory claim that it is
entitled to punitive damages.
Second, Milia’s demand for punitive damages appears to arise from allegations that are
unrelated to its breach of contract claim. In its Complaint, Milia sought punitive damages based
on State Farm’s conduct in denying coverage. (ECF No. 1-2, 10-11.) That denial of coverage
undergirds the breach of contract claim. Now, Milia claims to be seeking punitive damages for
State Farm’s premature cancellation of the Policy. (ECF No. 52-1, 9.) Milia makes no attempt to
explain how the policy cancellation is constitutive of the breach of contract claim. There being no

allegation that State Farm is liable for canceling the policy, Milia cannot sustain its claim for
punitive damages arising out of that cancellation. State Farm’s Motion for Summary Judgment on
Milia’s claim for punitive damages is GRANTED.
IV. CONCLUSION
Consistent with the foregoing, State Farm’s Motion for Summary Judgment is GRANTED
with respect to Milia’s claim for punitive damages but DENIED with respect to all other claims.
The Court concludes that exclusions 1.j. and 2.k. do not apply as a matter of law. The merits of all
other claims and defenses will be decided at trial.
IT IS SO ORDERED, this 3rd day of July 2025.

s/John T. Fowlkes, Jr.
` JOHN T. FOWLKES, JR.
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11089618. Public record. Not legal advice.