Daugherty v. Travelers Commercial Insurance Company

Background

Dr. David Daugherty and Dr. Barbara Daugherty brought an insurance-coverage action against Travelers Commercial Insurance Company after a May 2022 hailstorm damaged clay tiles on the roof of their home and detached garage in Rochester, Minnesota. Their homeowner’s policy covered the cost to repair or replace the hail-damaged roof, including increased costs required to comply with applicable building laws.

The Daughertys sought the cost of completely replacing the roof with new clay tiles. Travelers instead proposed a “spot repair”: removing the tiles, replacing damaged tiles and certain other materials, and reusing approximately 80 percent of the existing undamaged tiles. Travelers paid the Daughertys $408,725.76, which it agreed was owed under the policy, minus the applicable deductible. The Daughertys disputed whether that payment and repair approach satisfied Travelers’ obligations.

Testing of five existing tiles showed that they did not meet ASTM C1167’s Grade 1 requirements for severe-weather conditions. At the hearing, Travelers conceded that the existing tiles did not comply with that standard, so the court treated that fact as undisputed. Rochester’s building-code official initially indicated that the spot repair could be approved, but later concluded that the existing tiles could not be reinstalled because they failed the standard that applied when the roof was installed and under the current code.

Travelers filed a counterclaim seeking a declaratory judgment—a court declaration about the parties’ legal rights—stating that the building code allowed its spot-repair approach and did not require roof replacement. Travelers moved for partial summary judgment on that counterclaim. Summary judgment is a ruling issued when there is no genuine dispute over a fact that could affect the result and the moving party is entitled to win under the law.

Building-Code Provisions

Rochester’s residential building code incorporated the Minnesota Residential Code, which in turn incorporated the 2018 International Residential Code. The code defined roof repair and roof replacement separately and included provisions governing roof coverings and clay tiles.

The code’s reinstallation provision, IRC § R908.5, allowed existing clay tiles to be reinstalled unless they were damaged, cracked, or broken. Separately, IRC § R905.3.4 stated that clay roof tile “shall comply with ASTM C1167.” The dispute was whether the reinstallation provision allowed undamaged clay tiles to be reused even when they failed the ASTM standard.

Court’s Analysis

The court held that the Daughertys had the better interpretation. It read the two provisions together: existing clay tiles could be reinstalled if they were not damaged, cracked, or broken, but they also had to comply with ASTM C1167. The court concluded that the ASTM requirement applied to all clay roof tiles used in residential structures, including tiles used in a roof repair or replacement.

The court rejected Travelers’ argument that the ASTM requirement applied only to new tiles. Neither the ASTM provision nor the reinstallation provision expressly created such an exception. The court also found that commentary from the International Code Council did not say that noncompliant tiles could be reused. The court stated that it would not rewrite the building code to create an exception that the text did not contain.

Ruling

The court concluded that the Rochester building code did not allow Travelers to reinstall existing tiles from the Daughertys’ roof that failed ASTM C1167. It therefore denied Defendants’ motion for summary judgment. The order separately dismissed Travelers’ declaratory-judgment counterclaim with prejudice. The court did not decide the merits of the Daughertys’ separate claim concerning the insurance appraisal process; the parties agreed that appraisal would proceed after the order.