Carlex Glass America, LLC v. Sompo America Insurance Company

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
CARLEX GLASS AMERICA, LLC,
Plaintiff,
v.
SOMPO AMERICA INSURANCE
COMPANY,
Defendant.
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No. 3:24-cv-00695
MEMORANDUM OPINION
This case arises from a dispute between Carlex Glass America, LLC (“Carlex”) and Sompo
America Insurance Company (“Sompo”) regarding the amount Sompo is required to compensate
Carlex under the insurance contract after Carlex’s business was damaged during a tornado. Before
the Court is Sompo’s Motion for Summary Judgment (Doc. No. 65), which is fully briefed and
ripe for review (see Doc. Nos. 65-1, 66, 69–71, 74–75). 	For the reasons that follow, Sompo’s
Motion (Doc. No. 65) will be denied, and this case will proceed to trial on January 13, 2026 as
scheduled.1
1 Also, before the Court are Carlex’s objections to Sompo’s motion for summary judgment (Doc.
No. 67), asserting that: (1) Sompo’s exhibits in support of its motion are inadmissible; (2) its
statement of undisputed material facts was untimely; and (3) many of its statements of undisputed
material facts are not in compliance with the Local Rules. On the first point, Carlex’s objections
are not well-taken. 	Many of the exhibits were produced by Carlex, rendering its objections to
Sompo’s use of them on summary judgment meritless. See Churches of Christ in Christian Union
v. Evangelical Ben. Tr., 2009 WL 2146095, at *5 (S.D. Ohio July 15, 2009) (noting that, for
summary judgment purposes, it is “disingenuous for [a party] to object to copies of documents that
it produced”) (citation and quotations omitted). 	Further, Carlex’s objections to the remaining
exhibits ignore “the 2010 amendments to Rule 56, which eliminated the unequivocal requirement
that documents submitted in support of a summary judgment motion must be authenticated.”
Foreword Mag., Inc. v. OverDrive, Inc., 2011 WL 5169384, at *2 (W.D. Mich. Oct. 31, 2011).
Because Carlex does not “‘object that the material cited to support or dispute a fact cannot be
presented in a form that would be admissible in evidence[,]’” the authenticity and hearsay
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I. 	BACKGROUND AND UNDISPUTED FACTS2
Carlex is a glass manufacturer that operates a float glass line in Nashville, Tennessee.
(Doc. No. 75 ¶ 1). On March 3, 2020, Carlex’s glass manufacturing facility suffered damage from
a tornado. (Id. ¶ 2). As a result, Carlex sought compensation from its insurer, Sompo, under the
terms of their commercial property insurance agreement (“Insurance Agreement”). (Doc. No. 1-
1 ¶ 1).
The Insurance Agreement provides property coverage for Carlex’s Nashville location.
(See, e.g., Doc. No. 1-1 at 49). Under the terms of the Insurance Agreement, for each occurrence
of “the sum total of all loss or damage of the type insured, irrespective of the number of Insured
Locations involved, arising out of or caused by any one disaster, ‘accident’, loss or series of
disasters, accidents or losses, arising out of the same or similar causes, except as respects Earth
Movement[,]” Sompo provides up to $650,000,000 in coverage. 	(Id. ¶ 18). 	The tornado
constituted such an occurrence under the Insurance Agreement. (Id.).
The Insurance Agreement also provides coverage for losses related to the following, in
relevant part:
objections are rejected. Ganesh v. United States, 658 F. App’x 217, 220 (6th Cir. 2016) (quoting
Fed. R. Civ. P. 56(c)). On the second, the Court will consider Sompo’s statement of undisputed
material facts, given it was filed one business day later than required due to clerical error, which
did not substantially prejudice Carlex. See Bruce v. Walmart, Inc., 2023 WL 5986126, at *2 (E.D.
Tenn. Sept. 14, 2023) (permitting late filing given the short delay and lack of bad faith). On the
last point, the Court will not consider statements of undisputed material fact, or responses or replies
thereto, that do not comply with the Local Rules. M.D. Tenn. L.R. 56.01(e) (describing what is
appropriate to include in a response to the movant’s statement of facts); see Weil v. Neary, 278
U.S. 160, 169 (1929) (local rules have the “force of law”).
2 The undisputed facts in this section are drawn from the undisputed portions of the responses to
Sompo’s statement of facts (Doc. Nos. 71, 75), the exhibits and depositions submitted in
connection with the summary judgment briefing, and portions of the Complaint (Doc. No. 1-1)
that are not contradicted by the evidence in the record.
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III. TIME ELEMENT COVERAGES
A. 	Gross Earnings
We will pay for the actual loss of Gross Earnings sustained by the Insured due to
the necessary “suspension” of the Insured’s business activities during the Period of
Restoration. The “suspension” must be due to physical loss or damage of the type
insured against to real or personal property of the type covered, at Insured
Locations.
1. Recovery in the event of loss shall be the actual loss sustained, less charges and
expenses that do not necessarily continue during the suspension of the Insured’s
business activities. 	Consideration shall be given to the continuation of normal
charges and expenses, including payroll expense, to the extent necessary to resume
the Insured’s business activities with the same quality of service that existed
immediately preceding the loss. []
B. 	Extra Expense
We will pay for the reasonable and necessary Extra Expense incurred by the
Insured, to resume and continue as nearly as practicable in Insured’s “normal”
business activities that otherwise would be suspended, due to direct physical loss
of or damage caused by a “covered cause of loss” to property at an Insured
Location.
Extra Expense, wherever used in this policy, means that amount spent during the
Period of Restoration to continue the Insured’s business activities, over and above
the expenses the Insured would normally have incurred had there been no necessary
suspension of the Insured’s business activities.
1. Recovery in the event of loss will be the reasonable and necessary extra costs
incurred by the Insured of the following during the Period of Restoration:
a. Extra expenses to avoid or minimize the “suspension” of business and to continue
operations at the insured Location, or at replacement locations, or temporary
locations, including relocation expenses and costs to equip and operate the
replacement or temporary location; and
b. Extra costs to minimize the “suspension” of business if it is not possible to
continue operating during the Period of Restoration. [].
C. 	Rental Value
We will pay the Rental Value loss, if any, sustained by the Insured resulting directly
from necessary untenantability, caused by direct physical loss or damage of the type
insured against to property at Insured Locations.
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Rental Value means income that would have been earned or incurred as rental
income from tenant occupancy, including fair rental value of any portion of the
premises which is occupied by the Insured, and continuing “normal” operating
expenses incurred in connection with the property at the Insured Location.
1. Recovery in the event of loss is the actual loss sustained by the Insured of the
following during the Period of Restoration:
a. The fair rental value of any portion of the property occupied by the Insured;
b. The total anticipated rental income from tenant occupancy of the Insured
Location as furnished and equipped by the Insured; and
c. The rental income from the rented portions of such property according to bona
fide leases, contracts or agreements in force at the time of loss, all not to include
non-continuing charges and expenses. [].
IV. TIME ELEMENT COVERAGE EXTENSIONS
If this policy insures “Time Element” loss, as provided by the Time Element
Coverages of the policy, the Time Element Coverage Extensions apply as described
below.
C. Extended Period of Indemnity
This policy extends coverage as provided by Gross Earnings and/or Rental Value
to cover the additional length of time as would be required with the exercise of due
diligence and dispatch to restore the Insured’s business to the condition that would
have existed had no loss occurred. This coverage commences:
1. On the date the covered property that incurred the loss (except “finished stock”)
is rebuilt, repaired or replaced and business is resumed or tenant ability is restored;
and
2. Ends on the earlier of:
a. The date the Insured could restore business, with reasonable speed, to the level
which would generate the earnings amount or rents that would have existed had no
loss or damage occurred; or
b. 30 consecutive days after the date determined in C.1. above (unless otherwise
indicated in the Declarations section of the policy). [].
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28. Professional Fees
This policy covers the actual loss incurred by the Insured, for reasonable fees paid
to the Insured’s accountants, architects, auditors, engineers, or other professionals,
and the cost of using the Insured’s employees for producing and certifying any
details contained in the Insured’s books or documents, or such other proofs,
information or evidence required by us resulting from loss or damage payable under
this policy for which we have accepted liability. [].
TIME Element, cont’d
C. This policy covers expenses reasonably and necessarily incurred by the Insured
to reduce the loss otherwise payable under this section of the policy. The amount
of such recoverable expenses will not exceed the amount by which the loss has been
reduced.
(Id. ¶ 17). Pursuant to these terms, Sompo paid Carlex $17,768,200 for the property damage to
Carlex’s Nashville facility resulting from the tornado. (Doc. No. 75 ¶ 2).
More than three years later, in August 2023, Carlex submitted a spreadsheet to Sompo
setting forth a claim for property damage to the float glass line, extra expenses, and time element
expenses that it believed came from the tornado damage. (Id. ¶ 3). The claimed damage ranged
from $46,236,462 to $68,198,792. (Id.). Sompo responded to Carlex three months later, advising
Carlex that the Insurance Agreement does not provide coverage for the time element portion of its
claim. (Id. ¶ 4). In response, on February 1, 2024, Carlex sent Sompo a letter challenging Sompo’s
coverage position and submitting a Sworn Statement in Proof of Loss totaling $65,910,544,
including: (1) “Actual Cash Value” of the Carlex property that the tornado damages; and (2) time
element losses. (Id. ¶¶ 5, 7).
First, Carlex attributed $42,595,096 of its loss to “Actual Cash Value” for a rebuild of the
float line, in the following amounts:
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(Doc. No. 44-5 at 4). 	Second, Carlex claimed $23,315,448 in time element damages for lost
profits, increased costs, and professional fees. (Doc. No. 75 ¶ 7). According to Carlex’s initial
evaluation, this calculation came from lost revenue, increased costs of raw materials, outside glass,
energy, and cutlet sales, and professional fees that started in March 2020 and continued through
the reported time period. (Id. ¶¶ 11–12). Despite Carlex’s representations on its property and time
element losses, Sompo denied providing coverage under the Insurance Agreement beyond the
more than $17 million it initially awarded Carlex. (Doc. No. 1-1 ¶¶ 10–11). It is from this denial
of coverage that the instant suit and pending motion arise. (See Doc. No. 1-1).
II. 	LEGAL STANDARD
Summary judgment is appropriate only where 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
genuine dispute of material fact exists ‘if the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.’” Peffer v. Stephens, 880 F.3d 256, 262 (6th Cir. 2018) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). “The party bringing the summary
judgment motion has the initial burden of informing the Court of the basis for its motion and
identifying portions of the record that demonstrate the absence of a genuine dispute over material
facts.” 	Rodgers v. Banks, 344 F.3d 587, 595 (6th Cir. 2003) (internal citation omitted). 	“The
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moving party may satisfy this burden by presenting affirmative evidence that negates an element
of the non-moving party’s claim or by demonstrating an absence of evidence to support the non-
moving party’s case.” Id. (internal citation and quotation marks omitted). 	“In response, the
nonmoving party must present ‘significant probative evidence’ that will reveal that there is more
than ‘some metaphysical doubt as to the material facts.’” Miller v. Maddox, 866 F.3d 386, 389
(6th Cir. 2017) (quoting Moore v. Philip Morris Cos., Inc., 8 F.3d 335, 340 (6th Cir. 1993)).
In deciding a motion for summary judgment, the Court must review all the evidence, facts,
and inferences in the light most favorable to the party opposing the motion. 	Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal citation omitted). The Court
does not, however, weigh the evidence, judge the credibility of witnesses, or determine the truth
of the matter. Anderson, 477 U.S. at 249. The mere existence of a scintilla of evidence in support
of the non-moving party’s position is insufficient to survive summary judgment; rather, there must
be evidence on which a trier of fact could reasonably find for the non-moving party. Rodgers, 344
F.3d at 595.
III. 	ANALYSIS
Sompo requests summary judgment on Carlex’s breach of contract and declaratory
judgment claims. (See Doc. No. 65-1). The Court will address each claim in turn.
1. 	Count I: Breach of Contract3
In Count I, Carlex alleges that Sompo breached the Insurance Agreement by, among other
things: failing to acknowledge coverage; failing to conduct an adequate investigation of Carlex’s
3 The Court has jurisdiction over Carlex’s breach of contract claim pursuant to 28 U.S.C. § 1332(a).
Given this, it “must apply the choice-of-law rules of the forum state” to the contract claim. Stone
Surgical, LLC v. Stryker Corp., 858 F.3d 383, 389 (6th Cir. 2017); see State Farm Mut. Auto. Ins.
Co. v. Norcold, Inc., 849 F.3d 328, 331 (6th Cir. 2017) (choice-of-law rules of the forum state
determine what substantive law to apply). Because the Court agrees with the parties that Tennessee
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losses; forcing Carlex to perform its own investigation into losses; and purposely delaying its
consideration of Carlex’s claimed losses. (Doc. No. 1-1 ¶¶ 29–32). Sompo asserts that summary
judgment is warranted in its favor on this claim for two reasons: first, because the Insurance
Agreement is void due to Carlex’s purported concealment and misrepresentations of the proper
claim amount; and second, because there is no genuine dispute of material fact that Sompo did not
breach the Insurance Agreement, given Sompo does not owe the amount demanded in Carlex’s
Sworn Statement in Proof of Loss. (See Doc. No. 65-1). The Court’s analysis of each argument
finish each deficient for summary judgment.
A. Carlex’s Purported Fraud and Misrepresentations
The Court starts with Sompo’s argument that the Insurance Agreement is void. In support,
Sompo points to paragraph II of Section D of the Insurance Agreement, which provides:
This policy is void as to all Insured’s in any case of fraud by any Insured as it relates
to this policy at any time. It is also void if any Insured, at any time, intentionally
conceals or misrepresents a material fact concerning:
A. This Policy;
B. The Covered Property;
C. The Insured’s interest in the Covered Property; or
D. A claim under this Policy.
(Doc. No. 55-14 at 77). According to Sompo, because Carlex knowingly submitted a false Sworn
Statement in Proof of Loss, and intentionally misrepresented facts about its claim, it cannot now
bring a breach of contract claim under that very same policy it voided. (Doc. No. 65-1 at 11–12).
Carlex disagrees, reasoning that Sompo’s arguments fail both procedurally and substantively,
because Sompo did not properly plead this as an affirmative defense or counterclaim, and the
choice-of-law rules dictate that Tennessee law governs Carlex’s breach of contract claim, it will
apply Tennessee contract law here without further discussion.
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evidence contradicts Sompo’s position that Carlex committed any fraud or misrepresentation.
(Doc. No. 70 at 6–14).
The Court agrees with Carlex. 	As a threshold matter, Carlex’s assertion that Sompo’s
arguments are outside the scope of this case is correct, given that it has failed to affirmatively plead
them as either an affirmative defense to Carlex’s breach of contract claim, or a standalone
counterclaim. (See Doc. No. 17; see also Doc. No. 73 at 13 (Magistrate Judge denying Sompo’s
motion for leave to amend to include this theory as an affirmative defense and counterclaim)).
Nevertheless, because Carlex does little to develop this argument in its opposition, it is prudent to
address Sompo’s fraud and misrepresentation arguments on the merits. See McPherson v. Kelsey,
125 F.3d 989, 	995–96 	(6th Cir. 1997) 	(“[I]ssues adverted to in 	a perfunctory manner,
unaccompanied by some effort at developed argumentation, are deemed waived. It is not sufficient
for a party to mention a possible argument in the most skeletal way, leaving the court to . . . put
flesh on its bones.”) (quoting Citizens Awareness Network, Inc. v. United States Nuclear
Regulatory Comm’n, 59 F.3d 284, 293–94 (1st Cir. 1995)).
While not addressed by either party, before considering whether the argument that the
Insurance Agreement is void is meritorious, the Court must first interpret the terms of the Insurance
Agreement governing this question. 	Under Tennessee law, “[t]he question of the extent of
insurance coverage is a question of law involving the interpretation of contractual language[.]”
Clark v. Sputniks, LLC, 368 S.W.3d 431, 441 (Tenn. 2012). 	In interpreting the Insurance
Agreement, it is “‘subject to the same rules of construction as contracts generally,’ and in the
absence of fraud or mistake, the contractual terms ‘should be give their plain and ordinary
meaning, for the primary rule of contract interpretation is to ascertain and give effect to the intent
of the parties.’” Id. (quoting U.S. Bank, N.A. v. Tenn. Farmers Mut. Ins. Co., 277 S.W.3d 381,
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386–87 (Tenn. 2009)). Courts should construe insurance policies and their terms “as a whole in a
reasonable and logical manner,” with language being “examined in the context of the entire
agreement.” 	Garrison v. Bickford, 377 S.W.3d 659, 664 (Tenn. 2012). 	Where the contract
language is “clear and unambiguous, the literal meaning controls the outcome of the dispute.”
Cracker Barrel Old Country Store, Inc. v. Cincinnati Ins. Co., 499 F. App’x 559, 562 (6th Cir.
2012).
Here, the Insurance Agreement plainly states that it is void if there is fraud, intentional
concealment, or intentional misrepresentation of a material fact concerning a claim. (Doc. No. 55-
14 at 77). In giving these terms their plain and ordinary meaning, this provision demonstrates the
parties’ intent to exclude intentional concealment or misrepresentation of relevant facts pertaining
to the policy, the covered property, interest in the covered property, or a claim under the policy
from the Insurance Agreement’s coverage. 	(See id.). 	Because this language is clear and
unambiguous, and the parties do not dispute its meaning, the Court will apply this interpretation
to the parties’ dispute on this issue. See Cracker Barrel Old Country Store, 499 F. App’x at 562.
Based 	on 	this 	contractual 	language, 	Sompo 	argues 	Carlex 	made 	material
misrepresentations about both its property damage and its time element losses in its claim that
makes the Insurance Agreement void. 	For the reasons that follow, neither argument supports
summary judgment as a matter of law.
i. 	Property Damage
First, Sompo contends that Carlex materially misrepresented the property damage to the
float glass line stemming from the tornado. 	Specifically, Sompo maintains that Carlex’s
representations that it had to rebuild or replace almost all of its float glass line, including the batch
house, lehr, cullet/mainline, and the spur 1 prototype, are contradicted by its own corporate
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representative’s and employees’ testimony stating the opposite. 	(Doc. No. 65-1 at 12). 	In
response, Carlex does not dispute that those items were not damaged in the tornado. (Doc. No. 70
at 7). Instead, it asserts that the values attributed to those items in its Sworn Statement in Proof of
Loss were submitted as part of what Carlex “believed to be a reasonable estimate of the expected
costs to repair the tin bath and the furnace,” both of which Carlex contends were damaged in the
tornado. (Doc. No. 70 at 7).
To the extent Carlex seeks to collect for damages to the mill water, batch house, lehr,
cullet/mainline, and the spur 1 prototype, it cannot do so given its admission that such damages
are not part of Carlex’s claim under Count 1.4 (See id.). Still, there is sufficient evidence in the
record to create a genuine dispute of material fact on whether this is what Carlex sought for
reimbursement. Indeed, Carlex has presented evidence showing both that it did not misrepresent
property damage to the float glass line, and that it has a credible explanation for how costs for
repairing and replacing that line are encompassed under the Insurance Agreement.
Carlex initially points to correspondence showing that Sompo has been aware that some of
the items in the Sworn Statement in Proof of Loss did not encompass an itemized list of property
damages from the tornado. 	(Doc. No. 55-3 (counsel for Sompo stating that “Carlex’s property
damage calculation is based on a 2017 rebuild cost of $43,908,455[,]” but “Carlex did not submit
any documentation supporting this claimed rebuild cost”)). This evidence indicates that Sompo
understood Carlex’s Sworn Statement in Proof of Loss to include a global rebuild estimate, rather
than an itemized list of tornado-damaged components. (See id.). Second, Carlex has presented
evidence that if a repair solution is put in place, the items listed in the Sworn Statement in Proof
of Loss would be destroyed and rebuilt, and therefore associated costs would be credited under the
4 Accordingly, the Court need not delve into the other arguments Sompo raises on this issue.
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Insurance Agreement. (Doc. No. 71-8 at 19:20–21:1 (expert James Harris (“Harris”) discussing
damage done to the bath and furnace from the tornado), 33:15-23 (Harris testifying that he believed
the tornado to be the cause of production line damage within the furnace)). Specifically, Carlex
points to expert testimony that the tin bath and furnace were damaged by the tornado, needed
significant repairs, and those repairs would include the associated costs of replacing the listed
items. (See, e.g., id.).
To the extent that Sompo takes the position that the Insurance Agreement does not
encompass rebuild costs like the ones Carlex included in its Sworn Statement in Proof of Loss, it
fails to develop that argument through any substantive contract interpretation or analysis that
would carry Sompo’s burden at this stage. See McPherson, 125 F.3d at 995–96. Accordingly, the
Court assumes, for summary judgment purposes only, that Carlex’s interpretation of the scope of
coverage in the Insurance Agreement has merit. In doing so, and in viewing the cited evidence in
Carlex’s favor, the Court cannot conclude as a matter of law that Carlex materially misrepresented
its property damage losses encompassed under the Insurance Agreement such that it is void. (See
Doc. No. 55-14 at 77).
ii. 	Time Element Loss
The same is 	true for 	Sompo’s 	second 	argument, 	that 	Carlex 	has 	made material
misrepresentations regarding its alleged time element loss. On this issue, Sompo relies on various
pieces of evidence showing that Carlex artificially inflated its time element loss calculation,
including: (1) portions of David Rasey’s (“Rasey”) deposition testimony, Carlex’s plant controller,
stating that Carlex inflated its time element loss claim; (2) testimony that Carlex relied on “extra
expenses” in its spreadsheets that it falsely asserted already occurred; (3) Carlex’s corporate
representative’s testimony that its insurance claim included money related to Covid-19 conditions,
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not the tornado; (4) Carlex having previously submitted the same loss data to Continental Casualty
in support of an unrelated claim stemming from a June 2019 power outage at its facility; and (5)
deposition testimony countering Carlex’s representation that it lost substantial revenue due to the
tornado. (Doc. No. 65-1 at 14–16). According to Sompo, because these pieces of evidence show
that Carlex’s time element loss calculation was false in some form or another, the Insurance
Agreement is void. (See id.).
Sompo may very well be right if its representations of the record were all that existed.
However, that is not the case. Rather, when viewing the evidence in the light most favorable to
Carlex, much of the evidence in the record demonstrates that Carlex did not materially
misrepresent its time element loss amount. For instance, Carlex points to the testimony of Rasey
describing how he made the time element loss calculation on behalf of Carlex. Specifically, Rasey
stated:
Q: So I believe you said you were on a fact-finding mission; is that right?
A: Yeah, we were looking for the data, right. We’re trying to connect.
Q: To trying to increase the claim?
A: Well, no. 	I don’t think increase. 	Just report data that, here’s the operational
performance. This day on Thursday was 53 percent yield on that day.
(Doc. No. 71-5 at 51:22–52:5). 	It also relies on Rasey’s deposition testimony explaining what
Carlex instructed him to do in order to calculate the time element loss. 	On that point, Rasey
testified that:
Q: So what exactly were they asking you to do?
A: Just go into the raw -- like the float production reports, go into the records, look
and see, you know, what’s -- you know, what were the freight costs during this time
period. 	What was the float production results at this time period. 	If we were
running, what the historical yield should have been at were at. What’s that delta
between the actual yield and what the -- what it should have been.
Let’s say, you know, right before we did -- before the tornado, like before the
tornado if it was like 70 percent or 72 percent yield, and now it’s at 50; the delta is
20 base points. There was a dollar factor. We knew what it was. For every point
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of yield, there’s a dollar factor that was costing Carlex money. And we’d put it on
a spreadsheet, sent it to them, and they reviewed it.
(Id. at 54:14–55:8). Further, Carlex emphasizes Rasey’s testimony explicitly rejecting the notion
that the claim amount was fraudulent. (See id. at 61:17–62:4 (testifying that he “[n]ever felt [the
claim amount] was fraudulent[,]” but was maybe “inflated, maybe overstated”)).
To further counter Sompo’s contention that Carlex materially misrepresented its time
element losses, Carlex points to other evidence, including: (1) Teddy Woodburn’s and Pyxis’s
analysis of Carlex’s data, which Carlex used to calculate its time element loss claim (see Doc. No.
70-1); (2) Sompo corporate representative Michael Sweeney’s testimony that Carlex “would have
began production” on March 14, 2020 if the tornado had not occurred on March 3, 2020, despite
Covid-19 conditions (Doc. No. 71-9 at 98:6–9); (3) Harris’s testimony that Carlex has not
attempted to conceal the facts regarding the power outage from June 2019 (Doc. No. 71-8 at 123:9–
25 (Harris testifying that he looked at the power failure to determine whether there was “a
connection between what occurred with the power in 2019 and the bath,” and deciding he does
“not believe that the bath suffered any damage as a result of the 2019 power failure”)); and (4)
testimony from Alex Rotolo, Carlex’s Chief Financial Officer, that Carlex’s yields never got back
to pre-tornado levels (Doc. No. 71-1 at 28:4–29:19).
Viewing all of this in Carlex’s favor, a reasonable juror could conclude that Carlex relied
on credible information in calculating its time element losses and did not materially misrepresent
those losses, as defined in the Insurance Agreement. 	Cracker Barrel Old Country Store, 499 F.
App’x at 562. Given this, Carlex has presented sufficient evidence to create a genuine dispute of
material fact on this issue such that this Court cannot resolve it. Accordingly, summary judgment
will not be granted on this basis.
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B. Whether Sompo Breached the Insurance Agreement
Having determined there is at least a genuine dispute of material fact on whether Carlex’s
representations on its property damage and time element losses void the Insurance Agreement, the
Court turns to the merits of Carlex’s breach of contract claim. To establish a claim for breach of
contract under Tennessee law, Carlex must prove: “(1) the existence of an enforceable contract,
(2) the nonperformance amounting to a breach of contract, and (3) damages caused by a breach of
contract.” BancorpSouth Bank, Inc. v. Hatchel, 223 S.W.3d 223, 227 (Tenn. Ct. App. 2006); see
also Life Care Ctrs. Of Am., Inc. v. Charles Town Assocs. Ltd. P’ship, LPIMC, Inc., 79 F.3d 496,
514 (6th Cir. 1996) (reciting the elements for a breach of contract claim under Tennessee law).
Because Sompo challenges only the second element, the Court will limit its analysis to that element
as well.
Here, Sompo argues that Carlex cannot create a genuine dispute of material fact on whether
Sompo breached the Insurance Agreement because it is undisputed that Sompo does not owe the
amount demanded in Carlex’s Sworn Statement in Proof of Loss. 	(Doc. No. 65-1 at 17). 	In
support, Sompo relies on the same evidence as it does in its previously raised arguments about
Carlex’s alleged misrepresentations regarding its property damage and time element loss; as well
as other evidence on Carlex’s failure to show actual loss of gross earnings and sales from the
tornado, including inappropriate professional fees in its time element loss calculation. (See id. at
17–22). 	In response, Carlex avers that Sompo’s argument is insufficient to warrant summary
judgment. Even if Carlex’s original proof of loss overstated the amount of its covered loss, Carlex
responds that there is evidence sufficient to show that Sompo still underpaid under the Insurance
Agreement and that Sompo fails to consider the nine separate ways Carlex believes Sompo
breached the Insurance Agreement. (See Doc. No. 1-1 ¶ 31).
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The Court again agrees with Carlex. As an initial matter, for the reasons discussed above,
there is ample evidence in the record to create a genuine dispute of material fact on whether Sompo
breached the Insurance Agreement by failing to pay Carlex the entire claim amount. See supra,
Section III.1.A, B. Carlex’s second argument about Sompo failing to properly consider the scope
of its breach of contract claim is also well-taken. For example, absent from Sompo’s argument is
any discussion regarding some of the theories of breach Carlex alleges, including Sompo’s alleged
“[f]ail[ure] to conduct an adequate investigation of Carlex’s losses,” or [f]orcing Carlex to conduct
its own loss investigation,” among other alleged breaches.5 (Doc. No. 1-1 ¶ 31). 	Accordingly,
because Sompo does not carry its burden of establishing there is no genuine dispute of material
fact on its alleged breach of the Insurance Agreement, the Court will deny its motion on this claim.
2. 	Declaratory Judgment
On Count II, Carlex requests a declaration that “Sompo has a duty to indemnify Carlex for
at least $65,910,544.00 in covered loss adjustment expenses and time element and contingent time
element losses, plus interest at the legal rate and attorney’s fees.” (Doc. No. 1-1 at 34). Sompo
moves for summary judgment on this claim, again arguing that it is undisputed that Sompo does
not owe Carlex the amount in question. 	In response, Carlex again emphasizes that there are
genuine disputes of material fact on the total amount owed to Carlex, and notes that Sompo
improperly narrows Count II by construing it as related to a specific amount rather than Sompo’s
general duty to indemnify Carlex for its losses. (See Doc. No. 70 at 16).
5 To the extent the Insurance Agreement does not have terms providing for such duties, because
Sompo does not make any argument to this effect, the Court need not consider it. 	Sommer v.
Davis, 317 F.3d 686, 691 (6th Cir. 2003) (party abandons any argument not raised in opening
brief).
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The Court has no difficulty denying Sompo’s motion on Count II. Notably, both parties
fail entirely to address a threshold issue with Carlex’s declaratory judgment claim: whether this
Court should exercise its jurisdiction over it at all. See Grand Trunk W. R.R. Co. v. Consol. Rail
Co., 746 F.2d 323, 326 (6th Cir. 1984) (explaining the factors courts consider in deciding whether
to exercise jurisdiction over a declaratory judgment claim). Even so, because the declaratory claim
largely mirrors the breach of contract claim, will rise or fall with it, and will help to resolve the
legal relations between the parties, the Court will exercise its discretion to retain jurisdiction. See
id.
In doing so, it is appropriate to deny Sompo’s motion on Count I for the same reasons it
denied its motion on Count II. Specifically, the Court agrees with Carlex that Sompo’s arguments
for summary judgment are easily disposed of, given the various genuine disputes of material fact
regarding the amount of claim loss Carlex is entitled to. See supra, Section III.1.A, B. Given these
deficiencies in Sompo’s motion, it will be denied as to this claim.
IV. 	CONCLUSION
For the foregoing reasons, Sompo’s Motion for Summary Judgment (Doc. No. 65) will be
denied, and this case will proceed to trial as scheduled.
An appropriate order will enter.
____________________________________
WAVERLY D. CRENSHAW, JR.
UNITED STATES DISTRICT JUDGE
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