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River Farm Realty Trust v. Farm Family Casualty Insurance Co.

United States Court of Appeals, First Circuit

November 19, 2019



          James T. Hargrove, with whom Brooks & DeRensis PC was on brief, for appellants.

          William A. Schneider, with whom Morrison Mahoney LLP was on brief, for appellee.

          Before Torruella, Lynch, and Kayatta, Circuit Judges.


         River Farm Realty Trust, Paul DeRensis, and Linda DeRensis ("River Farm") sued their home insurer, Farm Family Casualty Insurance Company ("FFI"), alleging breach of contract and violations of Massachusetts General Laws chapters 93A and 176D in how the insurer handled their claim for residential property damage. The district court entered summary judgment for the insurer, concluding that, on this record, no reasonable jury could find that FFI violated chapter 176D or was in breach of the policy. We affirm.

         I. A. Facts

         Because we are reviewing the grant of summary judgment, we take all inferences from the facts in favor of River Farm. Carlson v. Univ. of New Eng., 899 F.3d 36, 43 (1st Cir. 2018). We add that there are no material facts in dispute.

         River Farm is a realty trust which holds title to 262 South Main Street in Sherborn, Massachusetts. Paul and Linda DeRensis reside on this property. In October 2014, FFI issued Special Farm Package "10" to River Farm Realty Trust for the policy period of November 15, 2014, to November 15, 2015.[1]

         The policy provides that, in the event of a covered property loss, FFI would pay the least of the following:

(a) the applicable limit of liability; (b) an amount not greater than [the insured's] interest in the property; (c) the cost of repairing or replacing the property with materials of equivalent kind and quality to the extent practicable; (d) the amount computed after applying the deductible or other limitation applicable to the loss; or (e) the ACTUAL CASH VALUE of the property at the time of loss (except as provided under the Replacement Cost Provision, if applicable).

         The policy defines "actual cash value" as "the amount it would currently cost to repair or replace the covered property with new material of like kind and quality, less allowance for physical deterioration and depreciation, including obsolescence."[2] The liability limit under the policy was $1, 263, 807 in total, and $729, 987 was the limit of liability for the River Farm residence at 262 South Main Street.

         The policy also contained an amendment that was specific to Massachusetts. Under this amendment, the insured must provide the insurer with a "signed, sworn statement in proof of loss." That proof of loss triggers the obligation of the insurer, within thirty days of the insured submitting this statement, to "either pay the amount for which it shall be liable, which amount if not agreed upon, shall be ascertained by award of referees . . . or replace the property with other of the same kind and goodness." If the insurer fails to comply with the policy within thirty days of receiving the statement of loss, it is liable for "the payment of interest to the [insured] at a rate of one percent over the prime interest rate on the agreed figure."

         The Massachusetts amendment to the policy also allowed each of the insured and the insurer to seek a "Reference" if they disagreed as to the amount of loss. Massachusetts law requires insurance contracts to include this procedure. See Mass. Gen. Laws ch. 175, § 99.[3] The award selected by a majority of the referees "shall be conclusive and final upon the parties as to the amount of loss or damage."

         In February 2015, ice dams formed at the River Farm property. Due to the thawing and refreezing of the ice dams through February and early March, water leaked into the residence. The DeRensises first contacted FFI by phone on an unspecified date around March 3, 2015, to notify it of the damage to the River Farm residence but kept no documentation of the call. FFI asserts that it has no formal record of such a call but acknowledges that notice of damage to the residence was given.

         On April 27, 2015, Paul DeRensis emailed FFI about a separate open claim that River Farm had filed with FFI. That same day, Paul DeRensis received an email from Mark Chilton, an adjuster from FFI who handled claims made by the DeRensises under different FFI policies.[4] The email stated:

I must apologize. Unfortunately when your claims arrived at Farm Family they were set up as one singular claim where in fact there are two separate and distinct claims being asserted. Once I had recognized the issue of two claims and separated them a record keeping issue came to light. . . . [T]he independent claim numbers became interchanged. As you can see one minor issue led to a number of problems. . . . I will work to see you receive our coverage determination ASAP. Again, I apologize for the confusion and delay.

         Within a week, on May 4, 2015, FFI assigned Scott Howard, a Senior Claim Representative, to the River Farm property damage claim. That same day, Howard sent Paul DeRensis a letter acknowledging receipt of the claim and asking Paul DeRensis to give him a call if he had any concerns. Also on the same day, Howard selected Dineley Claims Services, a Massachusetts adjustment company that he had used in the past, to handle the estimates needed. Dineley Claims Services assigned adjuster Mark Whidden to the claim. Howard told Paul DeRensis that FFI would be sending a representative to the property.

         On May 20, 2015, Whidden inspected the residence in the presence of Paul DeRensis. Whidden prepared an estimate[5] of the damage and mailed it to the DeRensises in June 2015. Whidden estimated that the loss to the River Farm residence, less the deductible and depreciation, was $17, 825.95.[6] Both River Farm and the insurer were given a copy of this estimate. The estimate included a statement that the adjuster had "reached an agreement of scope for the repairs with the insured as viewed at [the] inspection."

         River Farm did not immediately notify the insurer or adjuster that it disputed this estimate in whole or in part. Nor did River Farm inform either the insurer or the insurer's appraiser that River Farm intended to contact contractors to get independent estimates. Neither the insurer nor its adjuster received any response to Whidden's estimate for close to five months.

         On November 13, 2015, Linda DeRensis faxed a letter to Whidden, stating that the DeRensises had consulted with three local contractors, each of whom examined different aspects of the damage, and "discovered that the estimate [Whidden] provided [was] not consistent with local contractors' estimates." That letter contained estimates of a total loss of $154, 769.93.[7] This letter was the first notice of any disagreement by River Farm as to the insurer's estimate of the recoverable loss.[8]

         The insureds do not allege that Howard ever told them to go hire these contractors. At deposition, Linda DeRensis stated that she had not invited either Whidden or Howard to the property to accompany the contractors.

         It appears that Dineley Claims Services' records show receipt of the DeRensises' letter around November 16, 2015. When Whidden had not immediately replied to the letter, Linda DeRensis called Whidden on an unspecified date between November 13 and November 24.[9]

         FFI received the November 13 letter on November 24 and Howard immediately attempted to contact the DeRensises. That same day, Howard emailed Paul DeRensis that (1) he had received the contractor estimates in the November 13 letter, (2) he had tried unsuccessfully to reach Paul DeRensis by phone earlier that day and left him voicemail messages, and (3) he requested a call to "see what we can do to get this resolved for you." Paul DeRensis replied by email on that same day stating:

Given how badly this claim handling has been botched, I am consulting an attorney this morning, not withstanding the requests from the adjuster to "start over" and forget the past. . . . Every contractor we had to on our own find to provide real estimates of this loss told us that the adjusters were not acting in good faith, and from recent conversations with them they present as basically scam men. . . . I understand that in Massachusetts we may be entitled to treble damages arising out of the bad faith botch up, plus legal fees, so your exposure is well over a half million and rising fast.

         This was the first written notice to the insurer of any claim that its adjuster had acted in bad faith. Thereafter, the insurer communicated with River Farm's attorney. On November 24, Attorney James Hargrove emailed Howard to inform him that he would be representing the DeRensises and stated that he hoped to speak about the matter the following week.

         On November 23, Linda DeRensis sent an email to Richard Dineley thanking him for taking her call, reiterating her dissatisfaction with Whidden, and stating that Whidden's estimate did not reflect the damage done to the River Farm residence. Within two days, at the request of Linda DeRensis, on November 25, 2015, Dineley assigned the DeRensises' claim to a new adjuster. On December 1, 2015, Dineley sent another email to Linda DeRensis asking her to contact an adjuster named "Paul." But then, on December 2, 2015, Dineley explained he had made a mistake and confused her claim with the claim of a different "Linda," and told her that he had assigned Bryan Grandmont to the River Farm claim.[10]A few minutes later, Grandmont emailed Linda DeRensis that he was waiting for her attorney's contact information to proceed with the claim.

         River Farm does not dispute that between November 24, 2015, and February 16, 2016, Attorney Hargrove corresponded with Howard, and vice versa, mostly via email and phone. The plaintiffs say that their claim was not resolved during this period from November to February because FFI asked them to get a new estimate of the loss to the River Farm residence.

         The emails reveal that on December 3, 2015, Attorney Hargrove told Howard that he was waiting on a new estimate from a local contractor. Howard replied the same day and told Attorney Hargrove to contact him whenever he was ready to discuss the claim. Howard and Attorney Hargrove then set up a phone conversation on December 4, 2015. On December 17, 2015, Howard emailed Attorney Hargrove to follow up on their phone conversation and to ask if the plaintiffs had received the new estimate. Attorney Hargrove responded via email the same day and stated that he had not yet received the estimate. Howard again followed up via email on January 29, 2016, to check on the status of the new estimate.

         No new estimate was sent to Howard until February 16, 2016, when Attorney Hargrove emailed Howard a "preliminary statement of loss and associated estimates," which claimed the loss was $236, 438.[11] This was a $81, 668.07 increase over the insured's estimate of loss of $154, 769.93 three months before.

         That same day, Howard acknowledged receipt of the estimate and then contacted Attorney Hargrove on February 24, 2016, to set up a time to discuss the claim. Given the increase in the insured's estimate, FFI requested that its estimator reinspect the River Farm residence. On February 29, 2016, Howard confirmed that his independent adjuster, Grandmont, would be present at the second inspection.

         The second inspection by the insurer's agent took place on March 2, 2016, within fifteen days of the date of Attorney Hargrove's new estimate. Present at this inspection were Howard, Grandmont, Linda DeRensis, Attorney Hargrove, and contractor Lincoln Barber.

         On March 18, 2016, FFI received and sent to Attorney Hargrove Grandmont's new, increased estimate for FFI, which determined that the loss to River Farm (but not including the roof damage), [12] less the deductible and depreciation, was $28, 005.21. FFI then issued payment to the DeRensises for $28, 005.21. The DeRensises disagreed with this amount and on March 28, 2016, Attorney Hargrove sent a letter to ...

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