United States District Court, D. Alaska
JEFFREY R. GREEN, Plaintiff,
ALLSTATE INSURANCE COMPANY, Defendant
For Jeffrey R. Green, Plaintiff: James M. Joyner, LEAD ATTORNEY, Law Office of J. Mitchell Joyner, Anchorage, AK.
For Allstate Insurance Company, Defendant: Rebecca J. Hozubin, LEAD ATTORNEY, Law Office of Hozubin & Moberly, Anchorage, AK.
For Allstate Insurance Company, Counter Claimant: Rebecca J. Hozubin, LEAD ATTORNEY, Law Office of Hozubin & Moberly, Anchorage, AK.
For Jeffrey R. Green, Counter Defendant: James M. Joyner, LEAD ATTORNEY, Law Office of J. Mitchell Joyner, Anchorage, AK.
MEMORANDUM OF DECISION
TIMOTHY M. BURGESS, UNITED STATES DISTRICT JUDGE.
Plaintiff Jeffrey Green (" Plaintiff" or " Green" ) is the owner of a triplex at 411 E 46th Place in Anchorage. Green had a homeowner's insurance policy with defendant Allstate Insurance Company (" Defendant" or " Allstate" ). Wells Fargo Bank (" Wells Fargo" ) is listed as the mortgagee under the policy. In October 2010, a fire damaged the top two units of the triplex--the unit where Plaintiff lived and a rental unit. On April 8, 2011, Allstate issued a letter denying Green's claim based on exclusions for loss of property due to " [i]ntentional or criminal acts of or at the direction of the insured person"  after Allstate concluded that " the fire loss
was not accidental but intentional."  In August 2011, Plaintiff filed suit against Defendant alleging breach of contract and seeking compensatory and consequential damages.
A six day jury trial was held in June 2013 to determine whether Plaintiff's loss was the result of an intentional or criminal act by Plaintiff. The Court declared a mistrial on June 24, 2013 after the jury failed to reach a verdict. A second trial was held in September 2013. The jury reached a verdict in favor of Plaintiff on September 13, 2013, and found that the value of Plaintiff's personal property lost in the fire was $80,000.
Following trial, four issues remained to be decided by the Court: (1) the cost to repair or replace Plaintiff's residence; (2) the amount that Plaintiff is entitled to receive to repair or replace his residence; (3) the amount of additional living expenses Plaintiff is entitled to receive; and (4) the amount of lost rental income Plaintiff is entitled to receive.
The Court held a one day evidentiary hearing on January 3, 2014, at which the parties presented exhibits and witness testimony. The parties subsequently submitted written responses to questions from the Court, proposed findings of fact and conclusions of law, and final summary arguments. Federal Rule of Civil Procedure 52(a) provides that " [i]n an action tried on the facts without a jury . . . the court must find the facts specially and state its conclusions of law separately." Having considered the testimony of the witnesses, exhibits admitted into evidence, and the parties' submissions, the Court makes the findings of fact and conclusions of law set forth below.
II. FINDINGS OF FACT
A. The Evidence
1. Seven witnesses testified at the hearing on January 3, 2014. Plaintiff testified on his own behalf. The Court finds that Plaintiff's testimony was generally credible; however, as discussed below, Plaintiff's testimony regarding certain issues was not corroborated by reliable evidence.
2. Plaintiff also called David Hermann, Mike Gallagher, Benjamin Oien, and Douglas Lipinski. Hermann is the owner of Action Environmental, a company that provides asbestos abatement services. Oien is a structural engineer who provides
structural inspection and design for small commercial residential buildings. Lipinski is the general manager for Taylored Restoration. The Court finds that the testimony of Hermann, Gallagher, Oien, and Lipinski was generally credible.
3. Defendant called Laurie Brummett and Richard Gerwin. Brummett is a staff claim service adjuster at Allstate Insurance Company who reviewed Plaintiff's claims file prior to testifying. Gerwin is " an estimator or project manager" at ServiceMaster of Alaska, a home restoration business. Gerwin was asked by Allstate to visit Plaintiff's property prior to the hearing to prepare an estimate for repairs. The Court finds that the testimony of Brummett and Gerwin was generally credible.
4. The Court admitted ten exhibits. Plaintiff submitted a November 22, 2013 estimate for asbestos remediation from Action Environmental for $67,168;  building plans for Plaintiff's residence;  a November 2010 estimate for the repair of Plaintiff's residence by Taylored Restoration for $244,609.74;  a November 5, 2013 estimate to demolish and rebuild Plaintiff's residence prepared by Michael Gallagher at MG Construction for $595,500;  a November 8, 2010 estimate from Action Environmental for asbestos remediation for $34,605;  and a November 1, 2010 estimate for asbestos remediation from Action Environmental for $52,355.
5. Defendant submitted Plaintiff's 2008 and 2009 tax returns;  Plaintiff's Department of Corrections Inmate Location Records;  Plaintiff's November 29, 2010 sworn statement and proof of loss;  and a January 2, 2014 estimate for repairs to Plaintiff's residence prepared by Rick Gerwin at ServiceMaster for $286,928.02.
B. Cost to Rebuild or Repair Plaintiff's Residence, Plaintiff's Lost Rental Income, and Plaintiff's Additional Living Expenses
6. The parties agree that asbestos was used in the construction of Plaintiff's residence and is therefore present in Plaintiff's home. Action Environmental provided an estimate on November 1, 2010 for asbestos remediation in the two damaged
units in Plaintiff's residence for $52,355. Action Environmental provided a revised estimate on November 8, 2010 for $34,605.00. The second estimate omitted abatement from the " common long entry hallway" and " the long garage."  Action Environmental provided an updated estimate dated November 22, 2013 for asbestos remediation throughout the entire residence for $67,168. The revised estimate states that, unlike the previous estimate, it includes all interior areas of the triplex, all three residential units, the large common entry way, hall, and long garage.
7. Craig Nelson of Taylored Restoration prepared an estimate for repair of Plaintiff's residence in October 2010. The estimate for repair was $244,609.74, including $45,997.46 for " general demolition." 
8. Michael Gallagher, a general contractor hired by Plaintiff, prepared an estimate in November 2013 to demolish and rebuild Plaintiff's residence. Gallagher's estimate to rebuild Plaintiff's residence is $595,500, which includes: $483,615 for rebuilding, and $111,885 for asbestos remediation, demolition and dump fees, and landscape and clean-up. Gallagher's estimate is based on a calculation of approximately 2,200 square feet of living space at a cost of $175 per square foot and a 963 square foot garage at a cost of $100 per square foot. The estimate obtained by Plaintiff is based solely on a price per square foot using " standard builder grade" materials. The estimate does not contain an itemized list of materials and labor or state the cost of either.
9. Rick Gerwin, an estimator and project manager at ServiceMaster of Alaska hired by Defendant, prepared an estimate to repair Plaintiff's residence in January 2014. Gerwin's total estimate for repairing Plaintiff's residence is $286,928.02. This estimate does not include costs for mold or asbestos remediation. Gerwin's estimate does contain an itemized list of labor and materials with costs for each
10. Ben Oien, a structural engineer hired by Plaintiff who inspected Plaintiff's residence on October 3, 2013, testified that the residence " had been severely water-damaged throughout . . . the framing and the foundation" ; that there was " six or eight inches" of standing water in the basement; that there is " black mold everywhere" ; that the visible exterior studs are water-damaged; that " most of the roof structure" and " a bunch of the upper walls" were damaged beyond repair; that he would not certify the foundation of Plaintiff's residence for use; and that there is no portion of the existing structure that is useable for new construction.
11. Gerwin, a project manager at ServiceMaster of Alaska, testified for Defendant that during his inspection of Plaintiff's residence in December 2013 he observed " about six inches of ice" on the bottom floor, a badly burned roof and " roof truss system," and " apparent water damage."  According to Gerwin, " everything was frozen."  Gerwin testified that he believed the structure could still be repaired because " the framing, the structure seemed to be intact," but also stated: " However, normally what we would do is actually have a structural engineer take a look at it once everything's thawed out to determine whether it was compromised or not."  Gerwin prepared an estimate for repair of Plaintiff's residence that included testing for asbestos and lead (but not removal) for $286,928.02. Gerwin's estimate includes $29,500 for " general demolition," which is described as: " Labor to remove all remaining contents, demo ceilings and walls down to the framing, and remove roof."  But Gerwin conceded that his bid could change dramatically based upon the opinion of a structural engineer, and testified that his bid did not include the cost of hiring an industrial hygienist to create a cleanup protocol for mold, or the cost of lead and asbestos remediation. Gerwin testified that ServiceMaster does not do demolition and rebuilding.
12. The Court finds that Plaintiff's residence must be demolished and rebuilt. Gerwin testified that he would need to seek the opinion of a structural engineer before he repaired Plaintiff's residence to determine whether apparent flooding in the lower level of Plaintiff's residence caused damage to the foundation. Oien, a structural engineer, testified that Plaintiff's residence could not be repaired. Defendant presented no testimony from a structural engineer. The ...