Villas at Winding Ridge v. State Farm Fire and Casualty ( 2019 )


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  •                                In the
    United States Court of Appeals
    For the Seventh Circuit
    ____________________
    No. 19-1731
    VILLAS AT WINDING RIDGE,
    Plaintiff-Appellant,
    v.
    STATE FARM FIRE AND CASUALTY COMPANY,
    Defendant-Appellee.
    ____________________
    Appeal from the United States District Court for the
    Southern District of Indiana, Indianapolis Division.
    No. 1:16-cv-3301 — Tanya Walton Pratt, Judge.
    ____________________
    ARGUED SEPTEMBER 23, 2019 — DECIDED NOVEMBER 8, 2019
    ____________________
    Before EASTERBROOK, HAMILTON, and ST. EVE, Circuit
    Judges.
    ST. EVE, Circuit Judge. In June 2013, a storm passed over
    Villas at Winding Ridge (“Winding Ridge”), a condominium
    complex located in Indiana, causing some minor damage
    from hail. Winding Ridge did not discover the damage until
    almost a year later when a contractor inspected the property
    to estimate the cost of replacing its aging roofs. Remembering
    its one-year State Farm Fire and Casualty Company (“State
    2                                                  No. 19-1731
    Farm”) insurance policy, Winding Ridge submitted a claim to
    State Farm. Winding Ridge and State Farm inspected the
    property and exchanged estimates on the amount of the loss,
    but they could not reach an agreement. Winding Ridge sub-
    sequently demanded an appraisal under the insurance policy,
    and State Farm complied. After exchanging competing ap-
    praisals, the umpire upon whom both sides had agreed issued
    an award, which later became binding.
    Winding Ridge filed suit against State Farm alleging
    breach of contract, bad faith, and promissory estoppel. The
    parties cross-moved for summary judgment. The district
    court granted in part and denied in part Winding Ridge’s
    cross-motion for partial summary judgment and granted
    State Farm’s motion for summary judgment. Winding Ridge
    now appeals the district court’s ruling on State Farm’s motion
    for summary judgment.
    We affirm. We hold that the policy is unambiguous and
    enforceable. There is also no evidence that State Farm
    breached the policy or acted in bad faith when resolving the
    claim.
    I. Background
    Winding Ridge is a condominium complex with 32 resi-
    dential buildings and a clubhouse located in Indianapolis, In-
    diana. State Farm insured Winding Ridge under a Residential
    Community Association Policy effective between July 1, 2012
    and July 1, 2013. The policy covered “accidental direct physi-
    cal loss” to the covered property, unless the loss is subject to
    a policy exclusion.
    If the loss is covered under the policy, State Farm can
    choose one of the following loss payment options:
    No. 19-1731                                                  3
    (a) Pay the value of lost or damaged property;
    (b) Pay the cost of repairing or replacing the lost
    or damaged property;
    (c) Take all or any part of the property at an
    agreed or appraised value; or
    (d) Repair, rebuild or replace the property with
    other property of like kind and quality.
    The policy states that State Farm will determine the value
    of the covered property as follows:
    (a) At replacement cost without deduction for
    depreciation, as of the time of loss, subject to
    the following:
    i.    We will pay the cost to repair or re-
    place, after application of the deduct-
    ible and without deduction for depre-
    ciation, but not more than the least of
    the following amounts:
    …
    2) The cost to replace, on the
    described premises, the lost
    or damaged property with
    other property of compara-
    ble material, quality and
    used for the same purpose;
    ….
    If the parties disagree on the amount of the loss, either
    party may demand an appraisal.
    If we and you disagree on the value of the prop-
    erty or the amount of loss, either may make
    4                                                    No. 19-1731
    written demand for an appraisal of the loss. In
    this event, each party will select a competent
    and impartial appraiser. Each party will notify
    the other of the selected appraiser’s identity
    within 20 days after receipt of the written de-
    mand for an appraisal. The two appraisers will
    select an umpire. If the appraisers cannot agree
    upon an umpire within 15 days, either may re-
    quest 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 deci-
    sion agreed to by any two will be binding. Each
    party will:
    (1) Pay its chosen appraiser; and
    (2) 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 2014, Winding Ridge worked with Rocklane Company
    (“Rocklane”), a contractor, to assess its 9- to 16-year-old roofs.
    Rocklane inspected the roofs and identified hail damage to 7
    or 8 buildings’ roofs. Around April 18, 2014, Winding Ridge
    tendered the claim to State Farm, claiming a June 13, 2013 date
    of loss.
    Eric Meador, a State Farm claims adjuster, spoke to a
    Rocklane representative, who advised that approximately 12
    of the 32 residential buildings had sustained hail damage to
    their roofs. Meador inspected all 33 buildings at Winding
    No. 19-1731                                                  5
    Ridge in May 2014 and observed minimal hail damage. Spe-
    cifically, he found “soft metal damage, hail damage to the soft
    metal condensers of some air conditioning units, damage to
    fascia, some unrelated wind damage that took place following
    the cancellation of the policy, mechanical damage from ice re-
    moval, damage to screens, prior mismatched shingle repairs
    and golf ball dents on the golf course side of complex.” On
    May 29, 2014, Meador prepared a replacement cost estimate
    for hail damage totaling $65,713.54, which included repairs to
    soft metal, some air conditioning condensers, screens, and
    gutters and downspouts. It did not include repairs to any
    roofing shingles. State Farm subsequently paid Winding
    Ridge for the estimated repairs less depreciation.
    Winding Ridge disagreed with State Farm’s estimate and
    hired Matthew Latham, a public adjuster at Crossroads
    Claims Consulting, to provide a competing estimate. Latham
    concluded that there was hail damage to all 33 buildings and
    estimated a replacement cost of $1,975,264. This estimate in-
    cluded full replacement for all shingles, decking, metal vents,
    flashing, caps, gutters and downspouts on all 33 buildings.
    Meador reviewed Latham’s estimate and agreed to rein-
    spect the buildings. He reinspected them in April 2015 and
    hired Doug Brown, an engineer, to conduct a separate inspec-
    tion. Brown drafted a report of his findings and concluded
    that “[t]he roofing shingles throughout the neighborhood had
    not been functionally damaged by hailstone impacts.” Brown
    also found that the areas identified by Latham “exhibited
    granule loss consistent with blistering and the normal aging
    of the shingles, and were not attributable to hailstone im-
    pacts.” Lastly, he identified hail damage to soft metals,
    screens, and some air-conditioning units. Meador provided
    6                                                    No. 19-1731
    Latham with a copy of Brown’s report and confirmed that
    State Farm’s estimate included the full scope of damages cov-
    ered by the insurance policy.
    On September 9, 2015, Winding Ridge demanded an ap-
    praisal under the policy, which State Farm accepted. In doing
    so, State Farm referred to the policy’s appraisal provision and
    informed Winding Ridge that “[a]ppraisal is a process by
    which the amount of loss, if any, may be determined. Ap-
    praisal does not resolve coverage disputes. In other words, it
    is not a process by which coverage is determined for a partic-
    ular loss or item of damage.”
    Both parties complied with the policy’s appraisal provi-
    sion. State Farm and Winding Ridge each hired independent
    appraisers Michael Scott and Garrett Kurtt, respectively, and
    they reinspected the buildings. Scott estimated $79,921.80 for
    repairs to all 33 buildings, but his estimate did not include full
    shingle replacement on any building. Kurtt estimated
    $676,824.07 for repairs including full shingle replacement on
    13 buildings. Kurtt did not claim full shingle replacement for
    any of the remaining buildings.
    Again, the parties could not agree on an estimate. The
    main disagreement between the parties was whether all shin-
    gles needed to be replaced on 13 buildings. Pursuant to the
    policy’s appraisal provision, the parties’ appraisers selected
    an independent umpire, Al Kalemba with Illiana Claims Ser-
    vices. Scott, Kurtt, and Kalemba inspected the property. On
    April 30, 2016, Kalemba issued a proposed award for (1) 20%
    repair allowance for roofing shingles on 13 buildings, (2) re-
    placement costs for soft metal damage on all 33 buildings, and
    (3) replacement costs for roofing shingles around new turtle
    roof vents on all 33 buildings. Specifically, Kalemba found
    No. 19-1731                                                   7
    that “[t]he granule loss does not indicate hail damage. During
    the life of a shingle granules are constantly shedding from the
    mat as designed.” Kalemba’s proposed award totaled
    $154,391.77.
    Winding Ridge was dissatisfied with the proposed award.
    On May 20, 2016, Kurtt asked Kalemba to modify the award
    to cover full shingle replacement on 13 buildings. For the first
    time, Kurtt reported that the original shingles were discontin-
    ued, and any replacement shingles would not match the ex-
    isting shingles. During the appraisal process, Winding Ridge
    had received a letter from shingle manufacturer GAF dated
    November 18, 2015, stating that the shingles on Winding
    Ridge’s roofs are no longer available, and “GAF does not have
    a direct replacement that is compatible in color or that would
    keep the roof uniformed [sic].” Winding Ridge failed to share
    this information with Kalemba or State Farm’s appraiser be-
    fore Kalemba issued the proposed award. And Winding
    Ridge did not submit this issue as part of the disputed loss.
    Kalemba reviewed the additional information, but he did
    not amend the award.
    Our charge was to establish the existence of hail
    damage to the shingles which was in dispute.
    Per my findings clearly depicted on my award
    report there is very little if any hail damage to
    the shingles observed. I have allowed for ap-
    proximated spot repairs based upon the minor
    damage observed.…
    As to the matching argument, I would again
    state that we are establishing the presence of
    damage to the shingles and I have allowed for
    8                                                 No. 19-1731
    same as well as the replacement of shingles
    around the replacement of roof vents. In addi-
    tion, there was evidence of prior patching of
    shingles on many of the roof’s [sic] inspected.
    The case law presented here is not applicable
    and matching issues are in the realm of policy
    coverage issues which are not a part of this ap-
    praisal process.
    Therefore, my original recommended award re-
    mains.
    Both Kalemba and Scott signed the award, making it bind-
    ing, and State Farm issued payment to Winding Ridge.
    Winding Ridge filed suit against State Farm in Indiana
    state court, and State Farm removed the suit to federal court.
    The complaint alleges claims for breach of contract, bad faith,
    and promissory estoppel. At some point after Winding Ridge
    tendered the claim to State Farm, Winding Ridge inde-
    pendently took out a $1.5 million loan to replace the shingles
    on all 33 buildings. Winding Ridge now seeks damages for
    approximately $1.5 million plus the interest on the loan ($97
    per day) and prejudgment interest.
    Both parties moved for summary judgment. The district
    court granted in part and denied in part Winding Ridge’s
    cross-motion for partial summary judgment, granted State
    Farm’s motion for summary judgment, and denied as moot
    State Farm’s motion to preclude expert testimony. Winding
    Ridge now appeals the district court’s ruling on State Farm’s
    motion for summary judgment.
    No. 19-1731                                                      9
    II. Discussion
    We review the district court’s summary judgment ruling
    de novo and in the light most favorable to Winding Ridge.
    Peerless Network, Inc. v. MCI Commc’n Serv., Inc., 
    917 F.3d 538
    ,
    545 (7th Cir. 2019). Summary judgment is appropriate when
    “there is no genuine dispute as to any material fact and the
    movant is entitled to judgment as a matter of law.” Fed. R.
    Civ. P. 56(a).
    A. Breach of Contract
    Winding Ridge asserts legal and factual challenges to the
    district court’s ruling. First, it argues that the appraisal provi-
    sion is ambiguous and therefore is unenforceable. Second,
    Winding Ridge asserts that the award is not binding because
    the umpire improperly determined the scope of the loss ra-
    ther than just the amount of the loss. Third, it claims that there
    are genuine issues of material fact that State Farm breached
    the insurance policy.
    Under Indiana law, courts give unambiguous contract
    terms their plain meaning. Vesuvius USA Corp. v. Am. Commer-
    cial Lines LLC, 
    910 F.3d 331
    , 333 (7th Cir. 2018). “‘Clear and
    unambiguous terms in a contract are deemed conclusive, and
    we will not construe an unambiguous contract or look to ex-
    trinsic evidence, but will merely apply the contractual provi-
    sions.’” 
    Id.
     (quoting Brockmann v. Brockmann, 
    938 N.E.2d 831
    ,
    834 (Ind. Ct. App. 2010)).
    Indiana courts have repeatedly enforced appraisal clauses
    in insurance contracts. See, e.g., Philadelphia Indem. Ins. Co. v.
    WE Pebble Point, 
    44 F. Supp. 3d 813
    , 817 (S.D. Ind. 2014); see
    also Shifrin v. Liberty Mut. Ins., 
    991 F. Supp. 2d 1022
    , 1038 (S.D.
    Ind. 2014). And the resulting appraisal awards are binding
    10                                                    No. 19-1731
    absent exceptional circumstances, which means manifest in-
    justice, fraud, collusion, misfeasance, or unfairness. See Jupiter
    Aluminum Corp. v. Home Ins. Co., 
    225 F.3d 868
    , 872, 875 (7th
    Cir. 2000); FDL, Inc. v. Cincinnati Ins. Co., 
    135 F.3d 503
    , 505 (7th
    Cir. 1998); Atlas Const. Co., Inc. v. Indiana Ins. Co., Inc., 
    309 N.E.2d 810
    , 813–14 (Ind. Ct. App. 1974) (“When, however, the
    award is uninfected with such unfairness or injustice, it is not
    to be set aside and replaced by the subjective judgment of a
    reviewing court.”). This is particularly true when the parties
    voluntarily submit to an appraisal under the policy. See Jupiter
    Aluminum Corp., 
    225 F.3d at 875
    ; FDL, Inc., 
    135 F.3d at 505
    .
    We find that the policy’s appraisal provision is unambig-
    uous. The policy states that, if the parties “disagree on the
    value of the property or the amount of loss, either may make
    written demand for an appraisal of the loss.” Winding Ridge
    and State Farm disagreed on the amount of loss, Winding
    Ridge demanded an appraisal, and State Farm accepted the
    demand. As required, both Winding Ridge and State Farm se-
    lected appraisers. The parties’ appraisers disputed how much
    hail damage Winding Ridge had sustained. Specifically,
    Winding Ridge claimed shingle replacements were needed
    for 13 buildings. Following the appraisal provision, the ap-
    praisers selected an independent umpire and presented their
    estimates to him. Kalemba resolved the dispute by awarding
    (1) 20% repair allowance for roofing shingles on 13 buildings,
    (2) replacement costs for soft metal damage on 33 buildings,
    and (3) replacement costs for roofing shingles around new
    turtle roof vents on 33 buildings. Both Kalemba and Scott
    signed the award, and the award became binding.
    In an attempt to set aside the award, Winding Ridge ar-
    gues that the award is not binding because Kalemba
    No. 19-1731                                                   11
    mistakenly determined the scope of the loss. We disagree.
    First, Kalemba resolved the dispute that the parties presented
    to him: namely, the amount of hail damage to the roofing
    shingles on 13 buildings and to the soft metal on 33 buildings.
    Winding Ridge has not identified any exceptional circum-
    stances such as unfairness, manifest injustice, fraud, collu-
    sion, or misfeasance that would warrant setting this award
    aside. See FDL, Inc., 
    135 F.3d at 505
    . Second, the mere presence
    of coverage disputes (like matching shingles) in addition to
    an amount of loss dispute does not negate an appraisal
    award. See Philadelphia Indem. Ins. Co., 44 F. Supp. 3d at 818
    (“To hold otherwise would be to say that an appraisal is never
    in order unless there is only one conceivable cause of dam-
    age—for example, to insist that ‘appraisals can never assess
    hail damage unless a roof is brand new.’” (citation omitted)).
    Here Kalemba determined the value of the loss based on the
    disputed loss submitted by the parties’ appraisers and as re-
    quired under the policy; he did not decide the coverage is-
    sues.
    Winding Ridge also claims there are genuine issues of ma-
    terial fact regarding State Farm’s purported breach that pre-
    clude summary judgment. To state a breach of contract claim,
    a plaintiff must allege the existence of a contract, defendant’s
    breach, and damages. See, e.g., Shifrin, 991 F. Supp. 2d at 1043;
    Auto-Owners Ins. Co. v. C & J Real Estate, Inc., 
    996 N.E.2d 803
    ,
    805 (Ind. Ct. App. 2013). There is no dispute that the insurance
    policy exists. The issue is whether State Farm breached that
    policy. Winding Ridge argues that State Farm breached the
    policy by (1) failing to pay for new roofs on all 33 buildings,
    (2) applying the appraisal award to the entire claim when it
    only resolved damage on 13 buildings, and (3) failing to
    amend the award to cover matching shingles on 13 buildings.
    12                                                  No. 19-1731
    We conclude that none of these factors create an issue of ma-
    terial fact.
    State Farm did not breach the policy by declining to pay
    for new roofs on all 33 buildings. Winding Ridge’s own ap-
    praiser, Garrett Kurtt, found no hail damage to the roofing
    shingles on 20 buildings; his estimate only included full shin-
    gle replacements on 13 buildings. Both State Farm’s appraiser
    and the umpire disagreed with Kurtt’s estimate and found
    minimal hail damage on 13 buildings. The award compen-
    sated Winding Ridge for 20% shingle replacement on those
    buildings. The fact that Winding Ridge independently re-
    placed the shingles on all 33 buildings for $1.5 million while
    its claim was pending does not obligate State Farm under the
    policy or mean State Farm breached the policy.
    Further, the appraisal award plainly resolved the entire
    claim, not just the damage to 13 buildings as Winding Ridge con-
    tends. The parties submitted the disputed loss to the umpire,
    and that disputed loss did not include the replacement of the
    shingles on all buildings. The umpire resolved the parties’ dis-
    pute. Specifically, the binding award has three parts. The first
    and big-ticket item was whether the hail damaged some or all
    the shingles on 13 buildings. The umpire testified that State
    Farm’s and Winding Ridge’s appraisers agreed that there was
    no shingle damage on the other 20 buildings. Neither Scott’s es-
    timate nor Kurtt’s estimate provided for full roof replacement on
    all 33 buildings. Instead, Scott’s estimate did not include full
    shingle replacement on any building while Kurtt’s estimate in-
    cluded full shingle replacement on 13 buildings. The umpire de-
    termined that there was minor hail damage to the roofing shin-
    gles on 13 buildings and awarded 20% allowance to repair those
    shingles. Second, the award also included replacement costs for
    soft metal damage on all 33 buildings. Specifically, it provided
    No. 19-1731                                                 13
    $54,846.61 actual cash value for “roofing metals and elevation
    repairs” and noted that “the above line item reflects the York
    Appraisal estimated damage,” which itemized soft metal
    damage to the entire property. Lastly, the award covered the
    cost of replacement shingles around the new turtle roof vents
    on all 33 buildings.
    Finally, Kalemba’s decision not to amend the proposed
    award for matching shingles does not create a genuine dis-
    pute of material fact. Winding Ridge’s matching shingles ar-
    gument was untimely. It tendered the initial claim to State
    Farm in April 2014. The parties inspected the property several
    times before Winding Ridge demanded an appraisal. During
    the appraisal process, the appraisers and umpire inspected
    the property, and the umpire reached a proposed award on
    April 30, 2016. It was not until May 20, 2016 that Winding
    Ridge’s appraiser first reported that the shingle manufacturer
    discontinued the original shingles. Winding Ridge could have
    raised this issue on November 18, 2015, six months earlier,
    when it received a letter from the shingle manufacturer GAF
    stating that direct replacements are not available. It did not.
    To permit this kind of second guessing would only frustrate
    the purpose of a binding appraisal in the first place. See FDL,
    Inc., 
    135 F.3d at 505
    .
    Winding Ridge makes several, additional arguments as to
    why the district court’s ruling was improper. None of these
    have merit, but we briefly address each one in turn below.
    First, Winding Ridge argues that industry standards and
    State Farm’s policy guidelines require State Farm to cover the
    replacement cost for matching shingles on 13 buildings. These
    documents are extrinsic evidence, which we can consider
    only if the policy is ambiguous. See Vesuvius USA Corp., 910
    14                                                    No. 19-1731
    F.3d at 333. Because the provision at issue is unambiguous,
    we decline Winding Ridge’s invitation to consider extrinsic
    evidence to interpret the provision.
    Second, Winding Ridge claims that, “but for” the hail
    storm, it would have had uniform roofs with matching shin-
    gles. All 33 roofs are therefore a covered loss under the policy
    that State Farm is obligated to repair. Winding Ridge forfeited
    this argument by failing to raise it before the district court. See
    Scheidler v. Indiana, 
    914 F.3d 535
    , 540, 544 (7th Cir. 2019) (“A
    party generally forfeits issues and arguments raised for the
    first time on appeal.”).
    Third, it also argues that two cases support its position
    that the policy term “comparable material” means a reasona-
    ble color match for the entire roof. These cases are factually
    distinguishable. In Erie Insurance Exchange v. Sams, the court
    held that the entire roof, cathedral ceiling, and exterior vinyl
    siding had sustained direct physical damage from the storm.
    Erie Ins. Exch., v. Sams, 
    20 N.E.3d 182
    , 186, 190 (Ind. Ct. App.
    2014). There was also evidence that the house had a uniform
    appearance before the storm and that a mismatching roof
    slope and siding would devalue the home. 
    Id.
     In Cedar Bluffs
    Townhome Condominium Association, the appraisal panel is-
    sued an award for total replacement of the siding panels. Ce-
    dar Bluff Townhome Condo. Ass’n, Inc. v. Am. Family Mut. Ins.
    Co., 
    857 N.W.2d 290
    , 292 (Minn. 2014). Here, the umpire con-
    cluded that only some of the shingles were damaged on some
    buildings.
    Lastly, Winding Ridge argues that replacing one shingle
    requires replacing all shingles and cites Gutkowski v. Oklahoma
    Farmers Union Mutual Insurance Company, 
    176 P.3d 1232
    , 1234
    (Okla. Civ. App. 2007). We disagree. In Gutkowski, there was
    No. 19-1731                                                   15
    evidence that replacing the top layer of damaged composition
    shingles would necessarily damage the underlying wooden
    shingles. Gutkowski, 
    176 P.3d at 1234
    . Here there is no evi-
    dence that replacing the damaged shingles would harm the
    undamaged shingles. We previously analyzed similar policy
    language and stated that “[i]f one shingle at the corner of a
    slate roof is damaged and no matching replacement shingle is
    available, a building owner would not be entitled to an entire
    new roof.” See Windridge of Naperville Condo. Ass’n v. Phila. In-
    dem. Ins. Co., 
    932 F.3d 1035
    , 1042 (7th Cir. 2019). Winding
    Ridge does not present any meritorious arguments why we
    should find otherwise here.
    B. Bad Faith
    Winding Ridge argues that there is evidence that pre-
    cludes summary judgment on the bad faith claim. First, the
    award was more than State Farm’s appraiser’s initial esti-
    mate. Second, State Farm’s handling of another claim sug-
    gests that State Farm handled the Winding Ridge claim in bad
    faith.
    Under Indiana law, insurers are required to deal in good
    faith with their insureds. See Erie Ins. Co., v. Hickman, 
    622 N.E.2d 515
    , 518 (Ind. 1993). This obligation includes refrain-
    ing from “(1) making an unfounded refusal to pay policy pro-
    ceeds; (2) causing an unfounded delay in making payment;
    (3) deceiving the insured; and (4) exercising any unfair ad-
    vantage to pressure an insured into a settlement of his claim.”
    Id. at 519. This does not create a new cause of action every
    time an insurer erroneously denies a claim. Id. at 520 (“That
    insurance companies may, in good faith, dispute claims, has
    long been the rule in Indiana.”). “To prove bad faith, the
    plaintiff must establish, with clear and convincing evidence,
    16                                                   No. 19-1731
    that the insurer had knowledge that there was no legitimate
    basis for denying liability.” Freidline v. Shelby Ins. Co., 
    774 N.E.2d 37
    , 40 (Ind. 2002). Plaintiffs are also required to prove
    an insurer’s “conscious wrongdoing” or “culpable mental
    state.” See Sexson v. State Farm Fire & Cas. Co., 61 F. App’x 267,
    271 (7th Cir. 2003) (citing Colley v. Indiana Farmers Mut. Ins.
    Grp., 
    691 N.E.2d 1259
    , 1261 (Ind. Ct. App. 1998)). This is a high
    burden of proof. Inman v. State Farm Mut. Auto. Ins. Co., 
    981 N.E.2d 1202
    , 1207 (Ind. 2012).
    We conclude that State Farm did not act in bad faith. There
    is no evidence that State Farm delayed payment to Winding
    Ridge, deceived Winding Ridge, or exercised an unfair ad-
    vantage to pressure Winding Ridge to settle the claim. The
    only question is whether State Farm made an unfounded re-
    fusal to pay policy proceeds to Winding Ridge. It did not. In-
    surance companies may dispute claims in good faith. Hick-
    man, 622 N.E.2d at 518. Winding Ridge submitted a claim for
    hail damage to State Farm. State Farm investigated the claim,
    reached a claim estimate, and issued payment to Winding
    Ridge. Winding Ridge disputed the claim estimate and de-
    manded an appraisal under the policy terms. State Farm co-
    operated in the appraisal process by re-inspecting the prop-
    erty and presenting a claim estimate to the umpire and Wind-
    ing Ridge’s appraiser. The umpire reached an award, which
    State Farm’s appraiser signed. State Farm subsequently paid
    Winding Ridge what it owed under the binding award. Wind-
    ing Ridge has not shown any evidence, let alone clear and
    convincing evidence, that State Farm acted in bad faith.
    Nor is there any evidence that State Farm acted with a cul-
    pable state of mind. The mere fact that State Farm’s initial es-
    timate was less than the award does not suggest culpability.
    No. 19-1731                                                   17
    At best, it may suggest that State Farm’s first inspection was
    inadequate. But this alone does not constitute bad faith. See
    Eli Lilly & Co. v. Zurich Am. Ins. Co., 
    405 F. Supp. 2d 948
    , 958
    (S.D. Ind. 2005).
    Winding Ridge argues that State Farm’s claims adjuster
    engaged in deceitful ignorance of hail damage to Winding
    Ridge’s roofs in retaliation for another claim called Briarstone.
    Briarstone is another condominium complex that tendered a
    claim for hail damage to State Farm. State Farm evaluated the
    claim and found no hail damage. The parties agreed to arbi-
    trate the claim, but eventually settled the claim. Winding
    Ridge believes that State Farm was upset with the Briarstone
    settlement and that experience negatively influenced State
    Farm’s initial estimate of the Winding Ridge claim. The facts
    do not support Winding Ridge’s theory. Indeed, State Farm’s
    claims adjuster provided an initial estimate and submitted
    payment to Winding Ridge before Briarstone tendered its
    claim to State Farm on June 19, 2014. State Farm’s initial esti-
    mate therefore could not have been influenced by the Briar-
    stone claim.
    For the foregoing reasons, we AFFIRM the district court.