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Park Plaza Condominium Association v. The Travelers Indemnity Company of America

United States District Court, D. Montana, Great Falls Division

November 5, 2018

PARK PLAZA CONDOMINIUM ASSOCIATION, Plaintiff,
v.
THE TRAVELERS INDEMNITY COMPANY OF AMERICA, PHOENIX INSURANCE COMPANY, THE TRAVELERS INDEMNITY COMPANY, TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, AND THE TRAVELERS COMPANIES, INC., Defendants.

          ORDER

          JOHN JOHNSTON UNITED STATES MAGISTRATE JUDGE

         INTRODUCTION

         Plaintiff, Park Plaza Condominium Association (Park Plaza), brought this action against Defendants The Travelers Indemnity Company of America, Phoenix Insurance Company, The Travelers Indemnity Company, Travelers Property Casualty Company of America, and the Travelers Companies, Inc. (collectively Travelers), asserting claims for breach of insurance contract and statutory bad faith.

         Presently before the Court are the following two motions: 1) Park Plaza's Motion for an Order Enforcing Travelers' Irrevocable Assertion of the Attorney Client Privilege; and 2) Park Plaza's Motion to Strike Travelers' Expert Rebuttal Report by Mr. Dethlefs. Travelers opposes both motions. The Court conducted a hearing on the motions on October 17, 2018. The Court is prepared to rule.

         BACKGROUND

         Park Plaza is an association of people who own 35 individual units of a condominium building in Great Falls, Montana, entitled the “Park Plaza” building. Park Plaza has insured the Park Plaza building since 2009 under an insurance policy issued by Travelers - Policy No. 680-4460N581. The concrete siding on the exterior of the Park Plaza building has cracked. Park Plaza contends that high winds, wind-driven rain, wind pressure, and story drift has caused the damage. Park Plaza submitted a notice of damage claim to Travelers on April 13, 2017, seeking coverage under Policy No. 680-4460N581. Travelers began investigating the damage claim upon receipt of the notice.

         Park Plaza filed the present lawsuit in the Montana Eighth Judicial District Court, Cascade County on September 8, 2017, while Travelers was investigating the claim. Travelers removed the case based on this Court's diversity jurisdiction.

         Park Plaza's Amended Complaint has two counts. Park Plaza asserts a claim against Travelers for breach of insurance contract, and a claim for statutory bad faith under Montana's Unfair Trade Practices Act, Mont. Code Ann. §§ 33-18-201(4), (5), and (6). Park Plaza alleges that Travelers committed bad faith: 1) by refusing to pay its claim without conducting a reasonable investigation: 2) by failing to affirm or deny coverage within a reasonable period of time; and 3) by failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement when liability was reasonably clear. Id.

         Travelers argues that the cracks in the siding panels were caused by “restrained movement of the panels” due to faulty installation. (Doc. 64 at 4; Doc. 73 at 10-11). Travelers argues that “the panels should not have been rigidly attached to the Park Plaza building.” (Doc. 73 at 11). Travelers argues that the rigid attachment prevented the panels from accommodating volume changes as the panels shrank and expanded due to changes in moisture and temperature.” Id.

         Travelers has asserted a counterclaim against Park Plaza seeking a declaration that Policy No. 680-4460N581 provides no coverage for the damage to the Park Plaza building. (Doc. 25 at 15-21). Travelers contends that no coverage exists for the following four reasons: 1) The claimed loss was already known and in progress when Policy No. 680-4460N581 took effect; 2) Park Plaza did not give Travelers prompt notice of the loss; 3) No proof exists that damage in excess of the policy deductible resulted from an event that occurred during the policy period; and 4) Coverage exclusions in Policy No. 680-4460N581 operate to bar coverage. (Doc. 63-1 at 2-3). Travelers alleges that Park Plaza's bad faith claim fails because it had a reasonable basis in both law and fact for contesting coverage. (Doc. 25 at 14).

         Travelers provided Park Plaza notice of its decision to deny coverage on August 1, 2018. (Doc. 63-1). Traveler's Executive General Adjuster, Kevin Brown sent Park Plaza's lawyer a letter explaining why Travelers was denying coverage. Id.

         DISCUSSION

         A. Park Plaza's Motion for an Order Enforcing Travelers' Irrevocable Assertion of the Attorney Client Privilege

          On April 24, 2018, Park Plaza moved the Court for an Order requiring Travelers to make an irrevocable declaration of whether it intended to invoke the attorney-client privilege with respect to the claims alleged by Park Plaza. (Doc. 46). The Court granted the motion. (Doc. 58). The Court ...


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