Woodbury Lodging LLC v. Integrity Mutual Insurance Company

Background

Woodbury Lodging LLC, doing business as Norwood Inn & Suites, brought claims for declaratory relief, breach of contract, and unjust enrichment against Integrity Mutual Insurance Company. The dispute concerns alleged damage from hailstorms and ice dams at the Norwood Inn & Suites in Worthington, Minnesota.

Integrity issued Woodbury Lodging a commercial business owners policy covering direct physical loss or damage to covered property caused by covered causes of loss. The policy identified hail, windstorm, the weight of snow, ice, or sleet, and water damage as covered causes unless an exclusion applied. Relevant exclusions addressed failure to preserve property from further damage, wear and tear, weather conditions, and negligent work.

Expert-testimony motions

Integrity moved to exclude the opinions of Woodbury Lodging’s meteorologist, Steven Clark, and professional engineer, Brian Johnson, under Federal Rule of Evidence 702. The rule requires expert testimony to be helpful to the factfinder, based on sufficient facts or data, produced through reliable methods, and reliably applied to the case. The court explained that disputes about the factual basis of an expert’s opinion generally affect the testimony’s weight or credibility rather than its admissibility, unless the opinion is so unsupported that it could not assist a jury.

Clark offered opinions that one-inch hail hit the property on June 27, 2017; that small hail most likely fell at the property on July 4, 2018; and that ice damming occurred during the first half of March 2019. He relied on radar, surface-weather, rain-gauge, storm-report, and other weather-station data. The court found that Clark had the necessary expertise, explained his methods, and relied on data relevant to the alleged losses. It therefore denied Integrity’s motion to exclude Clark’s opinions.

Johnson offered opinions that winter weather in 2018–2019 overwhelmed and damaged the roof and that the observed damage was more likely than not caused by the alleged storm event. He relied on weather data, photographs, Clark’s report, Integrity’s consultant’s report, and other engineering materials. The court found Johnson qualified and his explanations and methodology sufficiently supported. It therefore denied Integrity’s motion to exclude Johnson’s opinions.

Summary judgment on the breach-of-contract claim

Integrity argued that Woodbury Lodging lacked evidence of weather events on the recorded loss dates, lacked evidence of direct physical loss, and could not establish that the weather caused the roof damage. Integrity also relied on policy exclusions, including wear and tear and negligent work.

The court held that hail damage to the roof was a covered cause of loss under the policy, but found material factual disputes about whether the relevant weather events occurred, what caused the roof damage, and whether exclusions applied. Woodbury Lodging presented evidence of hail during the policy period, including Clark’s opinion that hail hit the property on June 27, 2017; evidence of strong winds and one-inch hail near Worthington on July 4, 2018; and a report confirming hail about 6.4 miles from the hotel on that date. The record also contained evidence of freeze-thaw conditions in spring 2019 and Johnson’s opinion that those conditions more likely than not caused the damage.

The court noted a dispute over whether the loss dates on the claim forms were the dates when the weather events occurred or agreed-upon reported dates. The policy did not define “date of loss.” The court also found competing expert opinions about whether wear and tear or ice, snow, and meltwater caused the damage, as well as a factual dispute concerning negligent repairs. Viewing the evidence in the required light for the nonmoving party, the court found enough evidence for a reasonable jury to decide the breach-of-contract claim. It therefore denied Integrity’s motion for summary judgment as to Count II.

Summary judgment on unjust enrichment

Integrity argued that the unjust-enrichment claim was barred because the parties’ relationship was governed by the written insurance policy. The court agreed. It held that unjust enrichment is unavailable when an enforceable contract governs the relevant subject matter and that Woodbury Lodging had not identified facts distinguishing the unjust-enrichment claim from its breach-of-contract claim. The court therefore granted Integrity’s motion for summary judgment as to Count III.

Jury trial and disposition

The court held that Woodbury Lodging’s breach-of-contract claim was legal in nature and carried a right to a jury trial. The order states that Count II would be submitted to the jury and set the matter for a jury trial on August 8, 2022.

The order states that Integrity’s combined motion for summary judgment and to exclude expert testimony was granted in part and denied in part: both motions to exclude expert testimony were denied; summary judgment was denied as to Count II; and summary judgment was granted as to Count III.