Jamestown Villas Homeowners Association v. State Farm Fire and Casualty Company

Background

A severe hailstorm damaged roofs on some of the Association’s condominium buildings in August 2020. The buildings were insured by State Farm. The parties agreed that hail damaged the roof valley metals and that replacing those metals would require replacing surrounding shingles.

Under the policy, a reasonable match to the original shingles would mean coverage for a partial roof replacement. If no reasonable match existed, a full roof replacement would be covered. State Farm identified GAF Timberline HDZ shingles in Charcoal as a potential match. The Association and Jason Callais, who was handling the claim for the Association, determined that the shingles were not a reasonable match. State Farm denied the request for a full roof replacement and asked that some valley areas be repaired with the Timberline shingles before it reconsidered the issue.

The parties later disagreed about the valuation and matching issue. The Association sought appraisal under the policy and Minnesota law. The three-person appraisal panel issued an award valuing the loss replacement cost at $52,482.81 and the loss actual cash value at $47,606.23. The panel also issued clarification documents.

The Conflicting Appraisal Answers

One clarification asked whether Timberline shingles presented to the panel as samples represented a reasonable uniform appearance. The panel answered “YES.” Another asked whether Timberline shingles used in the valley repairs represented a reasonable uniform appearance. The panel answered “NO.”

The Association argued that this created an ambiguity because the samples and the shingles used in the repairs were the same type. State Farm opposed the motion and disputed whether the panel had received evidence establishing that the shingles used in the repairs were the same as the samples observed at the hearing.

Court’s Analysis

The court explained that an appraisal award is generally presumed valid, but an ambiguous award must be sent back to the appraisal panel so the panel can consider whether to modify or correct it. An award is ambiguous when it can reasonably be understood in more than one way.

The court found that the two answers concerned the same Timberline shingles but reached opposite conclusions. Because a party could reasonably argue either that the shingles did or did not reasonably match the originals, the award was ambiguous. The ambiguity was important because the matching determination affected whether the Association was entitled to a partial or full roof replacement.

The court did not resolve State Farm’s evidentiary dispute. It left that issue to the appraisal panel if the panel determined that further consideration was needed.

Order

The court granted the Association’s motion to resubmit the matter to the appraisal panel for reconsideration. It ordered the parties to submit the award to the panel for further clarification about why the two answers were contradictory and whether any further clarification affected the award. The parties must file the panel’s written response with the court when received. The court stayed the action while awaiting that clarification.