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Jackson v. The Standard Fire Insurance Co.

United States District Court, D. Maryland

January 10, 2018




         Plaintiff William Jackson has brought this action against Defendant The Standard Fire Insurance Company (“Travelers”) alleging a failure to reimburse him under a homeowner's insurance policy for losses sustained from an overflowing toilet. Jackson alleges a common law breach of contract claim and a violation of Section 3-1701 of the Courts and Judicial Proceedings Article of the Maryland Code for failing to act in good faith in the processing of his claim. Presently pending before the Court is Travelers' Motion for Partial Dismissal, or in the Alternative, Motion for Partial Summary Judgment. Having reviewed the Complaint, briefs, and other submitted materials, the Court finds that no hearing is necessary. See D. Md. Local R. 105.6. For the reasons set forth below, the Motion is DENIED.


         The following facts are presented in the light most favorable to Jackson, the nonmoving party.

         I. The Insurance Claim

         Jackson owns a home in Fort Washington, Maryland (“the Property”) for which he maintained a homeowner's insurance policy issued by Travelers (“the Policy”). The Policy provides insurance coverage for all losses to the Property with certain defined exceptions, notably a $5, 000 cap on damage caused by mold.

         On October 5, 2014, Jackson returned to the Property after a business trip and discovered a significant amount of damage caused by a malfunctioning toilet. While Jackson was away, an estimated 75, 000 to 110, 000 gallons of water flowed from an upstairs toilet, through the main level of the Property and into the basement, damaging or destroying Jackson's furniture, electronics, clothing, and other personal property, warping the master bedroom floor, and causing part of the basement ceiling to collapse. Jackson promptly contacted Travelers to report the loss.

         Travelers conducted an initial evaluation of the Property on October 6, 2014. Travelers concluded that the damage to the basement ceiling, walls, and floors, including the warped floor on the main level of the Property, was due to water damage. However, Travelers sought to investigate further whether certain damage was due to water or mold. Travelers conducted a second inspection of the Property on October 22, 2014 and concluded that water damage did not account for damage to the drywall or certain contents of the basement. On October 27, 2014, Travelers issued Jackson a check for $3, 000 as an advance payment on the $5, 000 mold limit under the policy.

         Meanwhile, Travelers had instructed Jackson to retain an industrial hygienist to evaluate the damage. Jackson thus hired EFI Global (“EFI”) to conduct an inspection of the Property on October 20, 2014. On October 31, 2014, Jackson gave Travelers a copy of EFI's report, which concluded that the main level had undergone extensive water damage and that the basement sustained “extensive water damage and subsequent fungal growth.” Compl. ¶ 20, ECF No. 2. Travelers refused to reimburse Jackson for the cost of EFI's inspection. According to Travelers, EFI did not test for mold or establish a protocol for mold mitigation. Travelers then retained a different contractor, ESI Environmental Solutions, Inc. (“ESI”) to evaluate the water and mold damage to the Property.

         Travelers also retained two additional contractors, Rolyn Companies, Inc. (“Rolyn”), to estimate the damage to the house, and South River Restoration (“SRR”), to estimate the damage to Jackson's personal property. On December 8, 2014, a Rolyn representative inspected the Property and began working on a project estimate based on the damage described in the ESI report, not the EFI report. On December 29, 2014, an SRR representative arrived at the Property. According to Jackson, SRR sought to conduct an inventory of all of Jackson's personal property, regardless of whether he intended to claim that a particular item had been damaged. Jackson objected to what he called the “wholesale, unnecessary (and seemingly illegal) invasion of [his] privacy” and refused to consent to SRR's inspection. Mot. Dismiss Ex. 3 at 3, ECF No. 19-4.

         In the end, Travelers concluded that approximately 70 percent of the damage to the Property, and the majority of the damages to personal property, was due to mold rather than water damage. Because of the cap on mold damages, Jackson did not receive full reimbursement for all damages he claimed.

         II. The Administrative Complaint

         On January 19, 2015, Jackson filed a Complaint with the Maryland Insurance Administration (“MIA”) (the “MIA Complaint”). Jackson alleged a failure by Travelers to “process [his] claim in good faith, ” a “waste of policy resources, ” a failure to permit Jackson to select his own contractors in accordance with Maryland regulations and law, and “harassment.” Mot. Dismiss Ex. 4 at 2, ECF No. 19-5. Although Jackson sought to halt all consideration of his claim with Travelers while the MIA Complaint was under review, Travelers and Jackson continued to engage in discussions. On May 21, 2015, Travelers paid Jackson $21, 889.45, based on Rolyn's estimate of the cost to repair the damage to the Property, as well as $10, 409.58, based on Rolyn's water mitigation estimate. Although Travelers estimated that the full cost to remediate mold damage to the Property was $15, 780.18, Travelers paid Jackson only the remaining $2, 000 of the $5, 000 available mold limit. On June 8, 2015, Travelers paid Jackson $13, 770.44 based on SRR's estimate of the cost to pack and store Jackson's personal property. On August 6, 2015, after the MIA recommended that Travelers compensate Jackson for hiring EFI, Travelers paid Jackson $810.00, the cost for EFI's report listed on the initial invoice submitted by Jackson to Travelers. On August 31, 2015, Travelers paid $11, 385.62, out of a replacement cost of $17, 134.33, for damage to Jackson's personal property caused by water damages. This last payment represented compensation for items deemed to have been exclusively damaged by water, or initially water-damaged and then damaged by subsequent mold growth, but not personal property items that Travelers deemed to have been damaged by mold only, because the $5, 000 mold damage limit had already been reached.

         Jackson continued to dispute Travelers' handling of his claim throughout this period. In a May 29, 2015 letter to the MIA, Jackson stated that he was still dissatisfied with Travelers' handling of his claim. In a discussion with an MIA investigator on September 9, 2015, Jackson reiterated his belief that Travelers had not paid him the full amount owed under the policy, and he sent a letter on September 14, 2015 to refute Travelers' claims that certain personal property was damaged by mold only. In his September 14, 2015 letter, Jackson stated that he actually paid EFI $2, 500, not ...

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