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Slaubaugh Farm, Inc. v. Farm Family Cas. Ins. Co.

Superior Court of Delaware

October 29, 2018

Slaubaugh Farm, Inc., et al.
v.
Farm Family Cas. Ins. Co.,

          Submitted: Date July 16, 2018

         On Defendant McGowan's Motion for Summary Judgment: GRANTED

          E. SCOTT BRADLEY JUDGE

         Dear Counsel, This my decision on Defendant Joseph C. McGowan's Motion for Summary Judgment on the Plaintiffs' claim that he negligently failed to obtain snow-ice insurance coverage for their two new chicken houses. The Plaintiffs built two new chicken houses and contacted McGowan, an insurance agent for Defendant Farm Family Casualty Insurance Company ("Farm Family"), in an effort to secure insurance from Farm Family. Farm Family issued a binder for an insurance policy on June 30, 2015. The binder did not include snow-ice coverage. However, McGowan contacted Farm Family to see if Farm Family would issue that coverage to the Plaintiffs. One of Farm Family's requirements for such coverage is that it would have to first inspect the Plaintiffs' new chicken houses. McGowan asked Farm Family to do that. Farm Family acknowledged McGowan's request and put the Plaintiffs' new chicken houses on a list to be inspected. Despite that, Farm Family never inspected the Plaintiffs' chicken houses and McGowan apparently never checked on the status of the inspection. During the weekend of January 23 and 24 of 2016, over six months after McGowan had asked Farm Family to inspect the chicken houses, a blizzard swept through Sussex County, Delaware, causing one of the Plaintiffs' new chicken houses to collapse.

         McGowan argues that (1) he had no duty to acquire snow-ice coverage for the Plaintiffs, (2) he had no duty to make sure that Farm Family inspected the Plaintiffs' new chicken houses, and (3) the Plaintiffs cannot prove proximate cause because they have not shown that snow-ice coverage was available to them. I have rejected McGowan's first two arguments and accepted his third.

         STATEMENT OF FACTS

         Plaintiffs Lambert and Sarah Slaubaugh purchased a farm in 1998 located at 13055 Judy Road, Greenwood, Delaware. At approximately the same time, Plaintiffs purchased a property insurance policy (Policy No. 0703G2213) from Farm Family through McGowan, an insurance agent for Farm Family. This policy was initially issued in the name of the Slaubaughs individually and covered all of the building structures on their farm including two existing chicken houses.

         Farm Family issued a new liability-only insurance policy (Policy No. 073G2650) in the name of Slaubaugh Farm, Inc. on June 15, 2003. Also procured through McGowan, this policy was renewed every year through June 15, 2015.

         Farm Family issued a Notice of Cancellation of the property insurance policy (Policy No. 0703G2213) on May 2, 2011, because the Plaintiffs had failed to comply with its request for an inspection of the two existing chicken houses. This notice followed the 2010 winter season in which the Delaware region experienced two large snow storms in a matter of days. During this season, Farm Family suffered large claim losses from collapses due to snow load. As a result, Farm Family non-renewed all of its chicken business outside of the Mid-Atlantic and Northeast region. In this latter region Farm Family changed its underwriting guidelines to eliminate snow-ice coverage (Peril Group 5) for all new customers, but continued to insure certain buildings owned by existing customers only under Peril Group 4 (which excludes snow-ice coverage). Farm Family required that these buildings be inspected before its underwriting department would determine, on a case-by-case basis, whether an individual building could be insured under Peril Group 5. In keeping with these underwriting changes, Farm Family required an inspection of the Plaintiffs' two existing chicken houses. Plaintiffs refused to allow the inspection and the property insurance policy was cancelled. Plaintiffs obtained replacement insurance from the Conservative Amish Mennonite ("CAM") Association.

         The Plaintiffs obtained a $900, 000 mortgage loan from Mid-Atlantic Farm Credit to build two new chicken houses on their farm on December 23, 2014. Subsequently, the Plaintiffs entered into a written contact with Kingston Construction Equipment, LLC ("Kingston'1) to construct the houses. It was the Plaintiffs' understanding that during the construction phase the builder would maintain property insurance on the houses, but that Plaintiffs would have to have their own insurance in place when the first flock of birds arrived. In late 2014 or early 2015, Mr. Slaubaugh contacted McGowan to inform him that he intended to build two new houses and requested that Farm Family insure them. McGowan in turn contacted Scott Dunkin, an underwriter for Farm Family, to inquire as to Farm Family's new underwriting guidelines because this was McGowan's first experience insuring a chicken house since the guidelines had changed. Dunkin confirmed that the new houses could be insured under Peril Group 4 but that an inspection would be needed before Farm Family could consider coverage under Peril Group 5.

         Mr. Slaubaugh called McGowan on June 25, 2015 to inform him that the construction of the two new chicken houses was almost complete. lie further informed McGowan that he needed insurance on the houses and that confirmation of the insurance coverage had to be sent to the mortgage company. Mr. Slaubaugh did not request any specific coverage. McGowan prepared an application and submitted it, together with the necessary supporting documentation, to Farm Family. McGowan submitted a binder request to Farm Family on June 30, 2015 for coverage on the two new chicken houses and related buildings. The binder request was approved by Farm Family under Peril Group 4 subject to a "truss inspection by Kruse to be considered for Peril Group 5." A copy of the coverage binder was emailed to the mortgage company as Mr. Slaubaugh had requested.

         Even though the Plaintiffs never requested any specific coverage for the two new chicken houses, McGowan assumed that they would want Peril Group 5 coverage if it was available. He therefore specifically asked Farm Family to consider Peril Group 5. At this time, Heidi Hayes, an individual in McGowan's office, was responsible for scheduling new chicken houses for inspection pursuant to a Professional Consulting Services Agreement with Farm Family. Under this independent contractor agreement Ms. Hayes scheduled chicken houses for Farm Family's employee, Brad Kruse, to inspect during his periodic trips to the Mid-Atlantic region.[1] It is undisputed that authorization had to come from Farm Family's underwriting department before a house could be placed on the inspection list.

         According to Hayes, she initiated the process for the Slaubaugh houses to be inspected. In an email to Kruse on July 23, 2015, Hayes confirmed that the Slaubaugh farm was on the list of "new risks" for inspection. Kruse responded to the email by inquiring as to the identity of the builder. On July 24, 2015, Kruse sent a separate email on the same subject to Dunkin. Despite these communications, Farm Family never inspected the two new chicken houses prior to the snow storm.

         SUMMARY JUDGMENT

         This Court will grant summary judgment only when no material issues of fact exist, and the moving party bears the burden of establishing the non-existence of material issues of fact.[2] Once the moving party meets its burden, the burden shifts to the non-moving party to establish the existence of material issues of fact.[3] The Court views the evidence in a light most favorable to the nonmoving party.[4] Where the moving party produces an affidavit or other evidence sufficient under Superior Court Civil Rule 56 in support of its motion and the burden shifts, the non-moving party may not rest on its own pleadings, but must provide evidence showing a genuine issue of material fact for trial.[5] If, after discovery, the non-moving party cannot make a sufficient showing of the existence of an essential element of the case, then summary judgment must be granted.[6] If, however, material issues of fact exist or if the Court determines that it does not have sufficient facts to enable it to apply the law to the facts before it, then summary judgment is not appropriate.[7]

         DISCUSSION

         1. McGowan's Duty to ...


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