Employers Mutual v. John Skoutaris ( 2006 )


Menu:
  •                               In the
    United States Court of Appeals
    For the Seventh Circuit
    ____________
    Nos. 04-3287 & 04-3288
    EMPLOYERS MUTUAL CASUALTY COMPANY
    and HAMILTON MUTUAL INSURANCE COMPANY,
    Plaintiffs-Appellees,
    v.
    JOHN SKOUTARIS, d/b/a OPEN FLAME RESTAURANT,
    Defendant-Appellant.
    ____________
    Appeals from the United States District Court
    for the Northern District of Indiana, Hammond Division.
    Nos. 02 C 112 & 01 C 601—Paul R. Cherry, Magistrate Judge.
    ____________
    ARGUED APRIL 12, 2005—DECIDED JULY 13, 2006
    ____________
    Before MANION, ROVNER, and WILLIAMS, Circuit Judges.
    MANION, Circuit Judge. On April 7, 2000, a fire ravaged
    the Open Flame Restaurant (“Open Flame”), a Valparaiso,
    Indiana establishment owned and operated by John
    Skoutaris. Hamilton Mutual Insurance Company (“Hamil-
    ton Mutual”), a subsidiary of Employers Mutual Casualty
    Company, insured the building, business personal property,
    and business lost income. Hamilton Mutual, an Ohio
    corporation with its principal place of business in Ohio,
    filed a declaratory judgment action in 2001 in the Northern
    District of Indiana, claiming that Skoutaris failed to abide by
    2                                     Nos. 04-3287 & 04-3288
    the insurance policy provisions governing Skoutaris’s duty
    to cooperate and duty to submit to an examination under
    oath. Skoutaris, in turn, brought claims of breach of contract
    and bad faith against Hamilton Mutual. The district court
    eventually granted Hamilton Mutual’s motion for summary
    judgment and denied Skoutaris’s motion for partial sum-
    mary judgment. Skoutaris appeals. We affirm.
    I
    A
    John Skoutaris opened the Open Flame on February 26,
    2000. He had purchased the Valparaiso building from Porter
    National Bank for $225,000 and had personally made a
    variety of improvements before opening for business.
    Skoutaris held insurance policies from both Hamilton
    Mutual and Ohio Casualty Group covering damage to the
    Open Flame, and the policies contemplated dividing any
    loss between the two insurance companies.
    As this case involves the duties and procedures under the
    Hamilton Mutual policy once a claim is filed, we examine
    the relevant policy provisions in detail. The Hamilton
    Mutual policy covered three distinct areas of loss: (1)
    building; (2) business personal property; and (3) business
    income.1 When making a claim under the Hamilton Mutual
    policy, Skoutaris had certain obligations:
    1
    The “business personal property” covered by the policy refers
    to such items as furniture, machinery, equipment, and stock. The
    policy’s lost business income coverage provided for payment of
    that income that would have been earned but for the interruption
    caused by damage to the restaurant.
    Nos. 04-3287 & 04-3288                                      3
    a.   You must see that the following are done in the
    event of loss or damage to Covered Property:
    (2) Give us prompt notice of the loss or damage.
    Include a description of the property involved.
    ...
    (5) At our request, give us complete inventories of
    the damaged and undamaged property. Include
    quantities, costs, values, and amount of loss
    claimed.
    (6) As often as may be reasonably required, permit
    us to inspect the property proving the loss or
    damage and examine your books and records.
    Also permit us to take samples of damaged and
    undamaged property for inspection, testing and
    analysis, and permit us to make copies from
    your books and records.
    ...
    (8) Cooperate with us in the investigation or settle-
    ment of the claim.
    b. We may examine any insured under oath, while not
    in the presence of any other insured and at such
    times as may be reasonably required, about any
    matter relating to this insurance or the claim, in-
    cluding an insured’s books and records. In the event
    of an examination, an insured’s answers must be
    signed.
    In addition to these provisions relating to the insured’s
    duties, the Hamilton Mutual policy also provided an
    appraisal process to determine the value of a particular loss.
    The policy did not call for the parties to automatically
    4                                     Nos. 04-3287 & 04-3288
    undergo the formal appraisal process upon the filing of
    a claim. Rather, the parties had the opportunity to con-
    duct some preliminary investigation and attempt to resolve
    the claim in a mutually agreeable fashion. However, the
    policy stated:
    If we and you disagree on the value of the property or
    the amount of loss, either may make written demand for
    an appraisal of the loss. In this event, each party will
    select a competent and impartial appraiser. The two
    appraisers will select an umpire. If they cannot agree,
    either may request that selection be made by a judge of
    a court having jurisdiction. The appraisers will state
    separately the value of the property and amount of loss.
    If they fail to agree, they will submit their differences to
    the umpire. A decision agreed to by any two will be
    binding. Each party will:
    a.   Pay its chosen appraiser; and
    b. Bear the other expenses of the appraisal and umpire
    equally.
    If there is an appraisal, we will still retain our right to
    deny the claim.
    In addition, Skoutaris elected for replacement cost
    coverage, which entitled him to receive the full replacement
    cost of the destroyed property, but only after the property
    was repaired or replaced. To allow an insured to begin
    reconstruction after a loss, one aspect of this coverage was
    that an insured could elect to receive a payment of the
    actual cash value, a depreciated portion of the full replace-
    ment cost, in advance of the full replacement cost payment.
    Having received such an actual cash value payment, an
    insured could only recover the remainder of the replace-
    ment costs after all repairs or replacements were made.
    Nos. 04-3287 & 04-3288                                     5
    B
    Open Flame turned out to be an unfortunately apt name,
    as the restaurant suffered a massive fire on April 7, 2000.
    Hamilton Mutual and Skoutaris both retained the services of
    adjusters to investigate the fire and determine the loss.
    There was no suggestion of arson.
    The two adjusters produced radically different damage
    assessments. Skoutaris’s adjuster found that the building,
    including the basement, was a complete loss, with a replace-
    ment cost value of $642,700, and concluded that the business
    personal property loss was $346,767. Hamilton Mutual
    (through its own adjuster) responded with a substantially
    lower assessment and claimed that Skoutaris’s submission
    lacked the necessary detail or documentation to support the
    figures. Hamilton Mutual also concluded that the basement
    was not a total loss. It found that the replacement value of
    the building was $310,231.21, while pegging the replace-
    ment cost value of the business personal property at
    $158,292.57. Hamilton Mutual’s adjuster explained that he
    assigned values to the business personal property items
    claimed by attempting to match the item to an invoice, or,
    if an invoice could not be found, looking up the replacement
    cost in restaurant catalogs. Hamilton Mutual offered an
    actual cash value payment of approximately $128,000 on its
    portion of the claim.2 Eventually Skoutaris accepted the
    $128,000 as the actual cash value payment under the
    Hamilton Mutual policy.
    Although Skoutaris accepted Hamilton Mutual’s payment,
    the parties continued to disagree about the replacement
    2
    As stated above, Hamilton Mutual was only responsible for
    half the loss based on the coverage provided by Ohio Casualty
    Group.
    6                                   Nos. 04-3287 & 04-3288
    value of the building and business personal property
    destroyed in the fire. For several months, the parties
    exchanged correspondence on this subject, culminating
    in a November 21, 2000, meeting. At the meeting, the parties
    made some progress towards a resolution (Hamilton Mutual
    agreed to consider the basement a complete loss and raise
    its valuation of the building loss commensurately), but
    ultimately the parties continued to have serious disagree-
    ments about the value of the business personal property.
    Specifically, Hamilton Mutual took issue with Skoutaris’s
    valuations of the business personal property because of the
    little supporting documentation and the fact that Skoutaris’s
    results conflicted with the values determined by Hamilton
    Mutual’s adjuster using catalogs and industry standards.
    Hamilton Mutual repeatedly asked for more documentation,
    as well as any response by Skoutaris or his adjuster explain-
    ing how they determined value.
    Thereafter, Hamilton Mutual received some additional
    documentation and raised the replacement cost value of the
    business personal property to approximately $196,000,
    based on the inclusion of certain items previously thought
    to be leased. Meanwhile, Skoutaris also submitted a re-
    vised business personal property replacement cost valuation
    of approximately $342,000. Although Skoutaris turned over
    further documents to Hamilton Mutual in January 2001,
    Hamilton Mutual believed most of these were bills for
    purchases of food rather than confirmation of prices for
    improvements made to the building or business personal
    property.
    C
    Given the lengthy period of investigation and the persis-
    tent gap between the parties’ estimates of the replacement
    Nos. 04-3287 & 04-3288                                       7
    cost value, Hamilton Mutual decided to proceed with
    appraisal, formally initiating the process in a January 22,
    2001 letter. Hamilton Mutual indicated in that letter that
    it would be represented by an attorney and that it needed
    Skoutaris’s examination under oath (an “EUO”). Hamilton
    Mutual appointed James Stivers as its appraiser, while
    Skoutaris retained the services of Tim Zeak. Stivers received
    from Hamilton Mutual its full file of materials, which he
    believed were the same materials given to the initial ap-
    praiser. According to Stivers, any additional materials
    should have come from Zeak, though Stivers received little
    information from him.
    While the appraisal process started out cordially, relations
    between the parties deteriorated. Hamilton Mutual, through
    its attorney, wrote Skoutaris’s attorney in February 2001,
    requesting a date for the EUO, as well as a litany of docu-
    ments, including any pre-purchase appraisals of the prop-
    erty by Porter National Bank (the previous owner) and the
    specific figures relied upon during the valuation process.
    Over the next three months, Hamilton Mutual’s attorney
    sent three additional letters asking for the responsive
    documents so that he could take Skoutaris’s EUO.
    Beginning in May 2001, the correspondence exchanged
    between the representatives of the parties began to crystal-
    lize certain positions regarding the EUO and further
    production of documents. Over the next five months,
    Hamilton Mutual consistently and repeatedly asserted
    that Hamilton Mutual had a right to take the EUO of
    Skoutaris on any and all matters and sought the docu-
    ments requested in the February letter, including a de-
    tailed list of what was destroyed in the fire. Hamilton
    Mutual felt that the initiation of the appraisal process had
    no effect on its right to receive documents or take the EUO.
    8                                   Nos. 04-3287 & 04-3288
    Hamilton Mutual also reminded Skoutaris’s representatives
    several times that failure to comply would result in the
    denial of his claim. Between May and October, Hamilton
    Mutual’s attorney sent seven letters asking for documents
    and attempting to set Skoutaris’s EUO. In response,
    Skoutaris indicated that he had previously produced all
    documents in his possession to Hamilton Mutual’s
    initial adjuster and that the documents Hamilton Mutual
    sought were either duplicative or had been destroyed.
    Skoutaris’s representatives also suggested that Hamilton
    Mutual was only entitled to documents or an EUO relating
    to the business interruption claim, and not the building
    or business personal property claims, since the parties
    were in the appraisal process.
    Even while the exchanges between the parties were
    growing testier, the appraisal process continued. As the
    parties were not able to agree upon an umpire, Hamilton
    Mutual proceeded under the appraisal clause in the
    policy, which provided that the parties could request a court
    of competent jurisdiction to appoint an umpire. Hamilton
    Mutual filed such a petition in the Porter County Superior
    Court, the Indiana state court with jurisdiction over
    Valparaiso, and that court appointed attorney Russell
    Millbranth as umpire in August 2001. Stivers felt that
    he (Stivers) did not have enough documentation for a
    meaningful appraisal process, but Millbranth continued
    nonetheless.
    By late September and early October 2001, the tension
    between the parties over Skoutaris’s cooperation boiled
    over. After several aborted attempts to set the EUO, Hamil-
    ton Mutual resolved to examine Skoutaris on October 3,
    2001. However, in a letter on September 27, 2001, Skoutaris’s
    attorney stated that Hamilton Mutual had received all
    Nos. 04-3287 & 04-3288                                     9
    documentation by November or December 2000, and
    contested whether Hamilton Mutual had a right to an EUO.
    I am completely bewildered as to your continuing
    demand to take my client’s statement when the matter
    is, at your option and election, now pending before
    an umpire. Please provide me with the authority
    which supports your legal conclusion that your client
    continues to have right to take the statement when your
    client elected to place the matter before an umpire for a
    decision.
    Hamilton Mutual’s attorney responded on October 1, 2001,
    that Hamilton Mutual had never received a complete list
    of all improvements to the property, the specific figures
    utilized by Skoutaris’s appraiser that produced the $630,000
    replacement value, a list of all items of personal property
    that were included in the purchase price of the building
    from Porter National Bank, and a list of expenses from the
    date of purchase to the date of loss. Regarding Skoutaris’s
    claim that the request for EUO was improper, Hamilton
    Mutual’s attorney stated that the policy clearly provided a
    right to take an EUO. Finally, Hamilton Mutual’s attorney
    suggested that Hamilton Mutual would be unable to make
    an appraisal submission with regard to the damage evalua-
    tion “without the documents requested and your client’s
    statement under oath.” No EUO occurred on October 3.
    In an October 11 letter, Skoutaris’s attorney replied
    that Hamilton Mutual’s letter was the first time that Hamil-
    ton Mutual had specifically stated that it was missing a
    complete list of improvements. Skoutaris’s attorney noted
    that the list of business personal property submitted by
    Skoutaris’s adjuster, as well as the various building evalua-
    tions, should have been sufficient.”It is beyond me how
    your client can now say that they do not have a list of all
    10                                  Nos. 04-3287 & 04-3288
    improvements made when they based their appraisal and
    made partial payment a year ago. . . . I have to consider
    your request as again being evidence of your client’s bad
    faith . . . .” Skoutaris’s attorney further suggested that
    Hamilton Mutual’s initial adjuster had received all docu-
    mentation in November or December 2000, and had, in fact,
    removed certain documents without authorization, which
    had never been returned. Turning to the EUO, Skoutaris’s
    attorney stated that Hamilton Mutual had met with
    Skoutaris about the building and business personal property
    claims in November 2000, and that Hamilton Mutual should
    have asked any questions at that time. Finally, Skoutaris’s
    attorney suggested that Hamilton Mutual alone was to
    blame if it did not have sufficient information to proceed
    with the appraisal.
    At a later deposition, Skoutaris admitted that he was
    aware that Hamilton Mutual wished to take his EUO for
    several months but decided not to submit based on advice
    of counsel. Moreover, Skoutaris also knew that Hamilton
    Mutual wanted further documentation, though he was
    unaware whether any further documents were produced by
    either his initial appraiser or lawyer.
    D
    On November 2, 2001, Hamilton Mutual rejected
    Skoutaris’s claim based on his failure to appear for an EUO
    and his refusal to produce either copies of requested records
    or a statement advising which documents were destroyed.
    According to Hamilton Mutual, these actions constituted a
    material breach of the insurance policy, and the company
    refused to pay any additional benefits. Three days later,
    Hamilton Mutual filed a declaratory judgment action in the
    Northern District of Indiana, seeking a judgment that
    Nos. 04-3287 & 04-3288                                      11
    Skoutaris had breached the contract and Hamilton Mutual
    was not required to pay any additional sums under the
    policy.
    Hamilton Mutual also withdrew from the appraisal
    process. Despite Hamilton Mutual’s absence, Millbranth
    proceeded with the appraisal process, which he conducted
    in stages. On November 29, 2001, Millbranth decided
    that the replacement cost of the building was $547,900, a
    decision which was filed in Porter County Superior Court
    on December 11, 2001. At that point, Ohio Casualty Group
    was still an active participant in the appraisal and was being
    represented by Stivers, who had earlier been retained by
    Hamilton Mutual. On February 14, 2002, Skoutaris’s
    attorney offered Hamilton Mutual a chance to rejoin the
    appraisal process regarding the business personal property
    and business interruption claims and offered Skoutaris for
    an EUO. Before the final stage of the appraisal concluded,
    Ohio Casualty Group settled its liability on the remaining
    issues, leaving only the portion attributable to Hamilton
    Mutual. On March 19, 2002, Millbranth determined that
    Hamilton Mutual was responsible for $172,500 in business
    personal property damage and $50,000 for the business
    income loss.3 Skoutaris eventually opened a replacement
    restaurant on September 8, 2003.
    While the appraisal process was winding down, an
    issue regarding the judgment arose before the Porter County
    Superior Court, which had appointed Millbranth. After
    Millbranth submitted the appraisal of the building replace-
    ment cost to the Porter County Superior Court, that court
    3
    To be completely clear, the record indicates that Skoutaris
    received payment in settlement of his claims from Ohio Casualty
    Group, which had contracted to pay half the claim amounts,
    as well as the $128,000 initial payment from Hamilton Mutual.
    12                                    Nos. 04-3287 & 04-3288
    indicated that it would enter judgment on the appraisal.
    Hamilton Mutual objected and asserted that the Porter
    County Superior Court had no jurisdiction to enter such an
    award, and the court agreed. On February 21, 2002,
    Skoutaris filed claims of breach of contract and bad faith
    by Hamilton Mutual in the Porter County Superior Court,
    which Hamilton Mutual subsequently removed to the
    Northern District of Indiana and designated as counter-
    claims to Hamilton Mutual’s federal declaratory judg-
    ment action. The parties subsequently consented to a federal
    magistrate judge presiding over the action.
    As part of the federal lawsuit, Skoutaris was deposed in
    2003 about the Open Flame, as well as his decisions not to
    provide further documentation or attend an EUO. During
    his deposition, Skoutaris revealed that most of the improve-
    ments made to the Open Flame were done by himself and
    that he paid cash for many items of business personal
    property and materials for building improvements. He
    further testified that he was assisted in his renovations of
    the building by two temporary employees whom he also
    paid in cash. The deposition revealed that Skoutaris had few
    details or documents supporting his valuation of different
    items in the Open Flame.
    The parties each moved for summary judgment. Hamilton
    Mutual sought a judgment that the failure to attend
    the EUO and produce the documents was a material
    breach excusing it from any further obligations under the
    policy and that it acted in good faith. Skoutaris, on the other
    hand, wanted a judgment declaring that he cooperated in
    the investigation of the claim, finding the appraisal to be
    binding, and requiring Hamilton Mutual to pay the amount
    of the appraisal. The district court granted summary
    judgment to Hamilton Mutual, finding that the breach of the
    Nos. 04-3287 & 04-3288                                      13
    EUO was a material breach that excused any further
    performance. The district court did not reach the issue of
    whether the failure to produce documents also breached the
    insurance policy. The district court further found that, since
    Hamilton Mutual was not liable to Skoutaris, Hamilton
    Mutual was neither bound by the appraisal amount nor was
    it required to pay any award resulting from the process.
    II
    We conduct de novo review of the district court’s decision
    granting Hamilton Mutual’s motion for summary judgment
    and denying Skoutaris’s partial motion for summary
    judgment. Employers Ins. of Wausau v. Stopher, 
    155 F.3d 892
    ,
    895 (7th Cir. 1998). Summary judgment is proper if the
    “pleadings, depositions, answers to interrogatories, and
    admissions on file, together with the affidavits, if any, show
    that there is no genuine issue as to any material fact and that
    the moving party is entitled to a judgment as a matter of
    law.” Fed. R. Civ. P. 56(c). As this case involved cross-
    motions for summary judgment, our review of the record
    requires that we construe all inferences in favor of the party
    against whom the motion under consideration was made.
    See Huntzinger v. Hastings Mut. Ins. Co., 
    143 F.3d 302
    , 307
    (7th Cir. 1998). Accordingly, we review the record in the
    light most favorable to Skoutaris, drawing all reasonable
    inferences from those facts in his favor, and reversing if we
    find a genuine issue concerning any fact that might affect
    the outcome of the case.
    As this case is brought under diversity jurisdiction, we
    apply the law of the forum state, Indiana, since neither party
    has challenged the district court’s choice of law. See Wausau,
    14                                    Nos. 04-3287 & 
    04-3288 155 F.3d at 895
    ; see also Wolverine Mut. Ins. v. Vance, 
    325 F.3d 939
    , 942 (7th Cir. 2003); 28 U.S.C. § 1332. “We must apply
    the law of the state as we believe the highest court of the
    state would apply it.” 
    Wolverine, 325 F.3d at 942
    ; see also
    State Farm Mut. Auto. Ins. Co. v. Pate, 
    275 F.3d 666
    , 669 (7th
    Cir. 2001).
    Skoutaris presents several issues on this appeal. First,
    he asserts that the district court used the incorrect standard
    in analyzing whether he breached the policy by refusing
    to submit to an EUO. Second, Skoutaris contends that
    the district court erred when it denied his motion for partial
    summary judgment to enforce the umpire’s decision in the
    appraisal proceeding. Third, he claims that, by conceding
    the existence of a valid claim, Hamilton Mutual waived
    strict compliance with the cooperation provisions of the
    policy. Finally, Skoutaris argues that the district court
    improperly granted summary judgment to Hamilton
    Mutual on Skoutaris’s claim of breach of the duty of good
    faith. We examine each in turn.
    A
    Skoutaris first contends that the district court misapplied
    Indiana law by failing to require that Hamilton Mutual
    show actual prejudice stemming from Skoutaris’s breach of
    the EUO clause. When arguing before this court, the parties
    properly briefed this issue in light of relevant cases from the
    Indiana Court of Appeals, since the Supreme Court of
    Indiana had not ruled on this issue previously. See 
    Wausau, 155 F.3d at 895
    . That has changed during the pendency of
    this appeal, and thus, to a large extent, subsequent events
    have overtaken the parties’ arguments. See Morris v. Econ.
    Nos. 04-3287 & 04-3288                                         15
    Fire & Cas. Co., No. 49S02-0503-CV-98, ___ N.E.2d ___, 
    2006 WL 1530026
    (Ind. June 6, 2006).4
    Skoutaris asserted that the Supreme Court of Indiana
    would treat the breach of an EUO provision in an identical
    fashion to the breach of a cooperation clause in a contract.
    Previously, the Supreme Court of Indiana clearly estab-
    lished what an insurer needs to prove in a case of a breach
    of a policy’s cooperation clause. See Miller v. Dilts, 
    463 N.E.2d 257
    , 261 (Ind. 1984). Specifically, “[a]n insurance
    company must show actual prejudice from an insured’s
    noncompliance with the policy’s cooperation clause before
    it can avoid liability under the policy.” 
    Id. Skoutaris con-
    tended that since cooperation clauses and the EUO clauses
    both allow an insurer to recover information from an
    insured, they should be subject to the same standard. The
    district court erred, according to Skoutaris, because it rested
    its decision solely on his breach of the EUO clause, and
    never considered whether that breach prejudiced Hamilton
    Mutual.
    The Supreme Court of Indiana, however, subsequently
    decided to treat EUO clauses in a different way than
    cooperation clauses. See Morris, at *2. In Morris, the Supreme
    Court of Indiana considered the failure of married insureds
    to submit to examinations under oath as expressly required
    in their insurance contract. 
    Id. at *1-2.
    The EUO provision in
    that case was contained in a portion of the contract detailing
    the insureds’ duties after a loss. 
    Id. at *2.
    The Indiana Court
    of Appeals had analyzed the breach of this EUO clause
    4
    After the Supreme Court of Indiana granted transfer in the
    Morris case, we held our consideration of the present appeal until
    after the Supreme Court of Indiana ruled, given the significant
    overlap between the major issues.
    16                                    Nos. 04-3287 & 04-3288
    using the framework developed by Indiana courts in
    cooperation clause cases, and thus required a showing of
    prejudice. Morris v. Econ. Fire & Cas. Co., 
    815 N.E.2d 129
    , 135
    (Ind. Ct. App. 2004). The Supreme Court of Indiana rejected
    this approach, stating: “[t]his case does not involve a
    ‘cooperation clause.’ ” Morris, 
    2006 WL 1530026
    , at *2. The
    Supreme Court of Indiana proceeded to expressly distin-
    guish the EUO provision from a cooperation clause, which
    it defined as a “policy provision requiring that the insured
    assist the insurer in investigating a claim.” 
    Id. (quoting Black’s
    Law Dictionary 359 (8th ed. 2004)). The EUO
    provision, on the other hand, was an “entirely separate
    provision that explicitly requires the policy holder to
    perform specific duties.” 
    Id. The insured’s
    failure to comply
    with the EUO clause resulted in a material breach of the
    contract. 
    Id. at 3.
    (“In expressly refusing to submit to
    examinations under oath until their prior recorded state-
    ments were furnished by [the insurance company], the
    [insureds] breached their policy contract.”). In such a case,
    “prejudice is not a necessary consideration.” 
    Id. at *2.
    In the
    context of a breach of an EUO clause, therefore, the Supreme
    Court of Indiana has established that an insurance company
    need only show a material breach to prevail.
    Applying this rule to the present case, Skoutaris clearly
    breached the EUO clause through his actions over a nine- or
    ten-month period. As in the Morris case, the EUO clause
    here is contained in a section of the contract setting forth the
    insured’s “Duties in the Event of Loss or Damage” and
    imposes a specific duty on the insured to submit to an
    examination under oath as reasonably required. Using
    catalogs, Hamilton Mutual initially valued the building and
    business personal property of the Open Flame several
    hundred thousand dollars less than Skoutaris. Once it
    became clear that the parties could not bridge the gap,
    Nos. 04-3287 & 04-3288                                           17
    Hamilton Mutual invoked the appraisal process and
    requested an EUO to find out exactly how Skoutaris came
    up with his figures (as most documents were ostensibly
    destroyed in the fire). Despite over ten letters from Hamil-
    ton Mutual and its attorney, including many referencing the
    specific policy provision allowing an EUO, Skoutaris would
    not submit to an EUO. Skoutaris was aware throughout that
    Hamilton Mutual wanted his EUO and nonetheless he
    refused. Although the policy never qualified the time period
    for an EUO, Skoutaris claimed, apparently without contrac-
    tual or legal support, that the EUO would be improper and
    that his off-the-record discussions in November 2000 were
    all that Hamilton Mutual was entitled to receive. The
    contract does not allow Skoutaris to ignore his express
    duties because he felt that he had done enough. See 
    id. at *2-
    3 (“[T]he contract does not provide that an insured can
    impose this prerequisite upon the insurer before complying
    with agreed duties.”). Skoutaris’s intransigence constituted
    a willful and intentional breach of the EUO clause, and the
    district court properly granted summary judgment in favor
    of Hamilton Mutual on this ground.5
    5
    The perplexing question is why exactly Skoutaris decided to
    pursue such a bizarre strategy, seemingly daring the insurance
    company to deny his claim for failure to submit to an EUO.
    Although only Skoutaris knows the answer, a partial explanation
    might be found in the deposition taken in this civil litiga-
    tion following the denial of the claim. At several points, Skoutaris
    was quite unclear about the prices he paid for different objects
    and revealed that he made several black market purchases.
    Further, Skoutaris indicated that he paid straight cash for several
    laborers who assisted him with various of the building improve-
    ments.
    18                                   Nos. 04-3287 & 04-3288
    B
    Having resolved the central issue, we now address the
    remaining arguments. First, Skoutaris asserts that Hamilton
    Mutual was bound by the appraisal despite Hamilton
    Mutual’s withdrawal from the process after Skoutaris’s
    breach of the EUO and before the award was ever deter-
    mined. Skoutaris believes that once the appraisal process
    was invoked, Hamilton Mutual could not avoid its results.
    Given our ruling that Hamilton Mutual had no further
    liability under the policy because of the material breach
    of the EUO, Hamilton Mutual obviously is not bound by the
    results of the post-breach appraisal process. Further,
    Skoutaris’s contention runs aground on the language of the
    contract. “Clear and unambiguous policy language must be
    given its ordinary meaning.” Colonial Penn Ins. Co. v.
    Guzorek, 
    690 N.E.2d 664
    , 667 (Ind. 1997). Here, the policy
    clearly states, “[i]f there is an appraisal, we [Hamilton
    Mutual] will still retain our right to deny the claim.”
    Hamilton Mutual denied the claim, as was its contractual
    right, before the appraisal was completed. Hamilton Mutual
    acted properly under the contract and was not bound by an
    appraisal on a claim it had already denied under the policy.
    Skoutaris also argues that Hamilton Mutual waived
    strict compliance with the cooperation provisions by making
    an initial offer and payment on the claim. Skoutaris bases
    his argument on venerable Indiana precedent that holds
    once an insurer undertakes its investigation and enters into
    an appraisal process, the insurer can no longer deny the
    claim based on a failure to supply a formal proof of loss. See
    Providence Wash. Ins. Co. v. Wolf, 
    80 N.E. 26
    , 28 (Ind. 1907).
    Skoutaris attempts to stretch this rather unremarkable rule
    to cover what would be a very remarkable proposi-
    tion—that once an insurance company had signaled accep-
    tance of some loss, no cooperation would be required. We
    Nos. 04-3287 & 04-3288                                     19
    decline the opportunity to contort Indiana law in such a
    fashion. Obviously, the acceptance of some claim should not
    remove the obligation of the insured to cooperate with the
    insurer, which is necessary to determine the appropriate
    loss value.
    This brings us to Skoutaris’s final argument, that Hamil-
    ton Mutual breached its duty of good faith and fair deal-
    ing. The Supreme Court of Indiana has held that the
    “obligation of good faith and fair dealing with respect to the
    discharge of the insurer’s contractual obligation includes the
    obligation to refrain from (1) making an unfounded refusal
    to pay policy proceeds; (2) causing an unfounded delay in
    making payment; (3) deceiving the insured; and (4) exercis-
    ing any unfair advantage to pressure an insured into a
    settlement of his claim.” Erie Ins. Co. v. Hickman by Smith,
    
    622 N.E.2d 515
    , 519 (Ind. 1993). “[A] good faith dispute
    about the amount of a valid claim or about whether the
    insured has a valid claim at all will not supply the grounds
    for a recovery in tort for the breach of the obligation to
    exercise good faith.” 
    Id. at 520.
    Hamilton Mutual did not
    breach its duty of good faith. Rather, Hamilton Mutual
    valued the amount of loss based on the limited information
    available to it and, during November and December 2000,
    repeatedly asked Skoutaris to explain the differences in his
    valuation. Further, once the appraisal process started,
    Hamilton Mutual offered Skoutaris repeated opportunities
    to avoid rejection of the claim. Over several months,
    Hamilton Mutual continually asked for documents neces-
    sary for an EUO, as well as the EUO itself, and warned of
    the likely consequences of Skoutaris’s litigation strategy.
    Hamilton Mutual acted reasonably and properly as it
    attempted to resolve this claim. Skoutaris is solely responsi-
    ble for this unnecessary result.
    20                                   Nos. 04-3287 & 04-3288
    III
    Skoutaris had the opportunity and obligation under his
    insurance policy to provide an examination under oath to
    Hamilton Mutual in order for the insurer to reach some
    resolution on his claim. Hamilton Mutual made almost a
    year of good faith attempts to secure this examination, but
    Skoutaris, for whatever reason, would not budge. This made
    little sense as the issues between the parties seemed ripe for
    a reasonable settlement. Nonetheless, Skoutaris’s breach of
    the examination under oath clause terminated all of Hamil-
    ton Mutual’s further liability. We therefore AFFIRM the
    judgment of the district court.
    Nos. 04-3287 & 04-3288                                    21
    A true Copy:
    Teste:
    _____________________________
    Clerk of the United States Court of
    Appeals for the Seventh Circuit
    USCA-02-C-0072—7-13-06