JOEL W. HARMON and KATHLEEN F. HARMON, husband and wife, Plaintiffs-Appellants,
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Respondent.
Opinion No. 43
from the District Court of the First Judicial District of the
State of Idaho, Kootenai County. Hon. Cynthia K.C. Meyer,
order of the district court is reversed in part, and the case
Bistline Law, PLLC, Coeur d'Alene, for appellants. Arthur
M. Bistline argued.
& Burke, P.A. Boise, for respondent. Jeffrey A. Thomson
Joel W. Harmon and Kathleen F. Harmon filed a claim with
their insurance company, State Farm Mutual Automobile
Insurance Co., after their motorhome was broken into and
damaged. The Harmons subsequently brought suit against State
Farm in district court, claiming that State Farm breached the
insurance agreement by failing to pay the amount required to
actually repair the vehicle or pay the cash value. The
Harmons also brought a claim for bad faith. State Farm moved
for summary judgment on both claims, which the district court
granted. The Harmons timely appealed.
FACTUAL AND PROCEDURAL BACKGROUND
Harmons owned a 2008 National Pacifica motorhome. They lived
in the motorhome in Alaska. The Harmons spent the fall of
2013 in the lower 48 states. In December 2013, they placed
the motorhome in storage at a facility in Spokane,
Washington, and planned to keep it there until spring.
December 19, 2013, the motorhome was burglarized. The
dashboard was severely damaged when the intruders removed
electrical components. The Harmons immediately filed a claim
with State Farm. State Farm acknowledged receipt of the claim
on December 22, 2013, and assigned a Claim Associate to
handle the claim. The insurance policy at issue provided
comprehensive coverage for the motorhome subject to a $500
the loss, the Harmons obtained a written repair estimate from
the facility where the motorhome had been stored. The repair
estimate which was dated January 21, 2014, contained two
separate estimates. The first estimate totaled over $184, 000
and included $155, 000 for the custom molding of a new dash
because the old dash could not be repaired and a replacement
could not be found. The second estimate was titled
"Estimate with Figures Available." This estimate
totaled $18, 491.36 and included $2, 000 for replacement of
the dash, even though a replacement unit could not be
January 2014, the Harmons were in touch with a State Farm
claim representative via telephone. Mr. Harmon stated in his
affidavit in opposition to summary judgment that "[the
claim representative] informed us that State Farm would be
totaling the coach because the dash could not be repaired,
that no existing replacement was available, and that the dash
could only be re-manufactured for a cost of approximately
$155, 000.00." State Farm did not dispute these
in April or May 2014, Mr. Harmon spoke again with the State
Farm claim representative via telephone. Mr. Harmon stated in
his affidavit that the Claim Representative informed him at
that time that State Farm did not consider the motorhome a
total loss and that State Farm would pay the repair cost
based on an estimate of the cost if a dash were actually
available. On May 29, 2014, the claim representative sent Mr.
Harmon a letter confirming their conversation and offering to
pay $18, 491.36 for the damage to the motorhome. The letter
stated in part:
The issue has been to get a replacement dash, to be able to
complete the repairs to your motorhome. After much research
by RV Northwest, it appears there is not a replacement
dash available, new or used. I have spoke [sic] with
several RV repair facilities myself. If a dash was
available I was told the price would be in the $2, 000.00
range. I have taken the parts prices, labor prices, etc from
the RV Northwest estimate and added $2, 000.00 for a
dash. These figures total up to, [sic] $18, 491.36. I
can write you a check for this amount. If there is any
additional parts needed, additional labor, or parts
increases, we will review them and handle it as a supplement.
Your motorhome is not a total loss because of an obsolete
part, or because a company goes out of business and parts are
no longer available. I am obligated to pay for what the
part would cost if it was available. In this case the
estimate for a replacement dash was $2, 000.00.
If you have any additional information, or any questions,
please give me a call. I am willing to look at any prospects
with the idea of getting your motorhome back to the way it
was prior to this incident. Thanks for your cooperation.
three weeks after receiving this letter, the Harmons filed
suit against State Farm alleging breach of contract and bad
faith. On July 21, 2014, State Farm filed an answer and moved
to stay the proceedings and compel an appraisal process that
is required when there is a disagreement between the parties
as to the cost of the repair or the actual cash value. It is
undisputed that State Farm again offered to pay the Harmons
what it estimated to be the actual cash value of the
motorhome while the motion to stay proceedings was pending.
The Harmons rejected the offer. On August 22, 2014, the
parties stipulated to entry of the stay and to participate in
the appraisal process. Thereafter, the parties traded letters
concerning what would be determined by the appraisers. The
Harmons demanded that the appraisers determine the actual
cash value of the vehicle. State Farm, on the other hand,
demanded the appraisal of both the cost of repair and the
actual cash value.
October 27, 2014, the claim representative sent the Harmons a
letter advising them of new repair options. A used
replacement dash from the previous model year had been
located. The used dash would fit the space in the
Harmon's motorhome, but was not an exact match. State
Farm also advised the Harmons that another repair specialist
had determined that their existing dash could be repaired.
The claim representative enclosed two estimates, one for
replacing the dash for $18, 994.22 and the other for
repairing the dash for $18, 252.89, both of which would be
subject to the $500 deductible. State Farm requested that the
Harmons choose between either replacing the damaged dash or
repairing it. The Harmons advised State Farm a few days later
that they wanted to discuss the feasibility of repairs with
November 10, 2014, the Harmons advised State Farm that they
chose to have the dash repaired. On November 21, 2014, State
Farm paid the Harmons $17, 752.89-the amount of the repair
estimate less the $500 deductible. On January 30, 2015, the
umpire involved in the appraisal process, issued a decision
finding that the cost of repair was $18, 252.89-the amount
State Farm had tendered previously less the $500 deductible.
State Farm tendered payment, the parties again traded letters
regarding the repairs. In February 2015, the Harmons advised
State Farm that they would have the repairs made subject to
their right to reject if the repairs were not satisfactory.
The Harmons also asked for a determination of the actual cash
value of the vehicle from the umpire so that it could be used
in the event the repairs were not successful. In May 2015,
State Farm filed a motion to lift the stay of proceedings,
arguing that the cash value of the motorhome was moot and,
alternatively, that the Harmons refused to complete the
appraisal process. The Harmons stipulated to lift the stay.
The litigation then proceeded.
Farm filed a motion for a summary judgment in June 2015. The
Harmons responded to the motion. In August of 2015, the
district court granted State Farm's motion for summary
judgment, finding no breach of contract or bad faith. The
district court dismissed the Harmons' claims and final
judgment was entered. In September 2015, the Harmons timely
filed a Motion to Alter or Amend the Judgment pursuant to
Idaho Rule of Civil Procedure 59. The Order Denying
Plaintiff's Motion to Alter or Amend the Judgment was
filed in October 2015. The Harmons timely filed their Notice
of Appeal in November 2015.
ISSUES PRESENTED ON APPEAL
Whether the district court erred when it determined that
State Farm had not breached the insurance contract.
Whether the district court erred when it dismissed the
Harmons' bad faith claim. 3. Whether the Harmons are
entitled to an award of reasonable attorney's fees and
costs on appeal.
STANDARD OF REVIEW
appellate standards of review apply even when a
contract's choice of law provision requires the
application of the law of another state. See Carroll v.
MBNA Am. Bank, 148 Idaho 261, 264, 220 P.3d 1080, 1083
(2009) (applying the Idaho standard of review when a Delaware
choice of law was at issue). In reviewing a grant of summary
judgment, this Court's standard of review is the same as
the district court's standard in ruling upon a motion.
Thomson v. Lewiston, 137 Idaho 473, 475-76, 58 P.3d
488, 490-91 (2002). "The [district] court must grant
summary judgment 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." I.R.C.P. 56(a). Courts
will consider "pleadings, depositions, and admissions on
file, together with the affidavits, if any." Kiebert
v. Goss, 144 Idaho 225, 227, 159 P.3d 862, 864 (2007)
(internal citations omitted). In making that determination,
all facts are construed in the light most favorable to the
non-moving party and all reasonable inferences that can be
drawn from the record are to be drawn in favor of the
non-moving party. Parks v. Safeco Ins. Co. of
Illinois, 160 Idaho 556, 561, 376 P.3d 760, 765 (2016).
If there is no genuine issue of material fact, only a
question of law remains, over which this Court exercises free
review. Kiebert, 144 Idaho at 227, 159 P.3d at 864.
Alaska law governs the parties' dispute.
Farm insured the motorhome under Alaska Policy Form 9802A.
There is a choice of law provision in the policy which
states: "Without regard to choice of law rules, the law
of the state of: Alaska will control . . . in the event of
any disagreement as to the interpretation and application of
any provision in this policy." This Court has previously
ruled that the law of the state chosen by the parties to
govern their contractual rights and duties will be applied.
See Ward v. Puregro Co., 128 Idaho 366, 369, 913