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Murphy v. Patriot Insurance Co.

Supreme Court of Vermont

August 14, 2014

Helena G. Murphy
Patriot Insurance Company

On Appeal from Superior Court, Caledonia Unit, Civil Division Howard E. Van Benthuysen and M. Kathleen Manley, JJ. (partial summary judgments) Mary Miles Teachout, J. (final judgment)

Todd C. Steadman of Davis Steadman & Ford LLC, White River Junction, for Plaintiff-Appellant.

Jeffrey S. Marlin of Primmer Piper Eggleston & Cramer PC, Montpelier, for Defendant-Appellee.

PRESENT Reiber, C.J., Dooley, Skoglund, Robinson and Crawford, JJ.


¶ 1. Plaintiff Helena Murphy appeals from a superior court judgment in favor of defendant, Patriot Insurance Company, her homeowner’s insurer. She contends that: (1) Patriot was estopped from denying coverage for the removal and replacement of a chimney on her home; and (2) the trial court erred in dismissing claims for negligence and bad faith. We affirm.

¶ 2. Except where otherwise noted, the material facts are undisputed and may be summarized as follows. In late July 2007, plaintiff reported to Patriot that a recent storm had caused damage to the flashing on her roof, allowing water to enter the house. Patriot engaged a claims adjuster to investigate the claim, who went to the property four days after the report. Plaintiff and the adjuster walked around the house inspecting the damage. The adjuster observed damage to the garage and ceiling of an enclosed porch and dampness in the finished portion of the basement. He went up on the roof, but observed “no exterior damage due to wind, ” and no damage to the flashing on the roof around the rear chimney [1] or holes in the roof. The adjuster acknowledged that he did not consider that flashing might have been torn off during the storm, nor did he inspect the front chimney. In his claims report, the adjuster acknowledged that the insured showed him certain damage from the storm, including heavy rain that had purportedly “flooded the driveway and infiltrated the foundation causing water damage to [the] contents... of the basement.”

¶ 3. In August 2007, Patriot paid plaintiff a total of $3, 553.05 [2] for wind and water damage to her home. The following month, plaintiff filed an additional claim with Patriot after a worker discovered damage from rot resulting from water infiltration near the front chimney. The adjuster returned to inspect the property, and Patriot initially paid plaintiff an additional $845 on this claim, after deducting a $500 deductible, in September 2007. In his report from the return visit, the adjuster concluded that the rot was caused at the same time in July 2007 as the damage for which Patriot had already paid plaintiff. Patriot initially disagreed with this conclusion based, in part, on the fact that plaintiff had not discovered a ceiling stain until September 2007. Nevertheless, in November 2007, Patriot refunded plaintiff the $500 deductible from the second payment and paid plaintiff an additional $10, 000—the policy limit for damage from mold or rot—based in part on the report of an independent building inspector in October 2007.

¶ 4. In that report, the inspector concluded that the cause of the damage was failed flashing near the chimneys that had allowed water to enter and produce structural damage, rot, and mold. The inspector also concluded that the water penetration was a long term problem that pre-existed the July 2007 storm. The inspector recommended demolition of a portion of the roof to determine the extent of structural damage and the possible replacement of the front chimney. Plaintiff provided a copy of the report to Patriot’s claims adjuster, who had planned—in response—to have an engineer inspect the front chimney, but plaintiff had it removed before the inspection could occur.

¶ 5. Patriot paid plaintiff an additional $1889.41 in connection with a subsequent claim in October 2008, and continued to negotiate with plaintiff over a repair estimate in excess of $56, 000 which plaintiff maintained was necessary to remediate the substantial remaining rot and mold in the home. In November 2009, Patriot paid plaintiff an additional $15, 865.44, for a total—the court found—of $32, 653.40 in payments, including cashed and uncashed checks.

¶ 6. In June 2008, while the parties remained in discussion, plaintiff filed a complaint for breach of contract. In August 2009, Patriot moved for partial summary judgment on the scope of coverage for remediation of the mold and rot and replacement of the chimney. In a November 2009 decision, the trial court ruled that the homeowner’s policy clearly and unambiguously limited damages relating to the fungi or rot to $10, 000, and that the provision providing coverage for the “collapse” of a building or part of a building did not apply to the chimney—which plaintiff had intentionally removed—but the court expressly did not consider whether other policy provisions might apply. Neither of the issues addressed in the 2009 decision are part of this appeal.

¶ 7. Plaintiff subsequently filed an amended complaint adding claims against Patriot for negligence “in inspecting and processing [the] claim and in retaining adjusters to investigate her claim, ” and “bad faith” in denying the claims with “no reasonable basis.” Patriot moved for partial summary judgment on the additional claims, asserting that its relationship with plaintiff was strictly contractual in nature and that it owed no independent tort duty to plaintiff sounding in negligence; Patriot also argued that there was no basis to conclude that it had acted unreasonably in its handling of plaintiff’s claims in violation of the covenant of good faith and fair dealing. Plaintiff opposed the motion.

¶ 8. In June 2012, the trial court issued a written decision granting Patriot’s motion. The court agreed that plaintiff had failed to “ present[ ] a basis upon [which] to establish that [Patriot] owed a clear, non-contractual duty to her, ” and further found on the facts alleged that Patriot “had a reasonable, if debatable, basis to deny [p] laintiff’s claims under the policy.” Accordingly, the court granted summary judgment for Patriot on both claims. The parties later stipulated to the entry of judgment for Patriot on the remaining breach-of-contract count, and the court issued a final judgment in favor of Patriot in May 2013. This appeal followed.

¶ 9. Plaintiff first contends that Patriot was “estopped from denying coverage for the removal and replacement” of the chimney. She relies on her own affidavit stating that Patriot’s adjuster told her that he would accept her inspector’s report that the chimney had shifted and advised her “to get the needed work performed to the chimney.” The affidavit was not submitted to the trial court, however, and therefore cannot be considered on appeal, nor was the estoppel claim raised below or addressed by the trial court. Accordingly, the argument was not properly preserved for review on appeal, and we decline to address it. See Follo v. Florindo, 2009 VT 11, ¶ 14, 185 Vt. 390, 970 A.2d 1230 (“In general, issues not raised at trial are ...

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