Savanna Grove Coach Homeowners' Association v. Auto-Owners Insurance Company

Background

Savanna Grove Coach Homeowners’ Association, a Minnesota nonprofit corporation representing a townhome community, sought insurance benefits from Auto-Owners Insurance Company for substantial property damage caused by a June 11, 2017 storm. The policy provided replacement-cost coverage. It required Auto-Owners to pay the lesser of the cost to replace the damaged property or the amount actually spent to repair or replace it.

The parties participated in an appraisal process under Minnesota law and the policy. The appraisal panel awarded $2,614,624.35, consisting of $1,699,505.95 in actual cash value and $915,118.40 in recoverable depreciation. After payments made before and after the lawsuit, $941,809.83 remained unpaid. Savanna Grove submitted final contractor invoices totaling $2,654,377.94, which exceeded the appraisal award by $39,753.59.

Motion and legal standard

Savanna Grove moved to confirm the appraisal award, enter judgment for the unpaid amount, award interest, and award attorneys’ fees and costs. The court treated the request for judgment as a motion for summary judgment under Federal Rule of Civil Procedure 56. Summary judgment is appropriate when no genuine dispute about a material fact exists and the moving party is entitled to judgment under the law.

Auto-Owners accepted the appraisal panel’s valuation and agreed that the repairs had been completed, but argued that Savanna Grove had not adequately established that it actually and necessarily incurred costs equal to or greater than the award. It also sought additional discovery into Lincoln Hancock’s invoices, including alleged discounts and project-management fees. The court concluded that Auto-Owners’ allegations were unsupported speculation and that its broad discovery requests did not identify specific facts essential to opposing summary judgment.

Analysis

The court explained that appraisal determines the amount of loss, but appraisers do not decide questions of insurance-policy liability. Here, however, the parties agreed that the appraisal award established the policy’s replacement-cost figure. The remaining issue was whether Savanna Grove had shown that it incurred at least that amount in necessary repair or replacement costs.

The court found that the final invoices from Solar Midwest, TC Deck, and Lincoln Hancock, together with documentation of Lincoln Hancock’s project-management work, established costs exceeding the appraisal award. Auto-Owners did not identify evidence showing that the invoices were not genuine or that the costs were unnecessary. Its request for further discovery under Rule 56(d) was denied because it did not identify specific facts that additional discovery would likely establish.

Interest

The court awarded pre-award interest under Minnesota law from June 11, 2017, when Savanna Grove gave written notice of its insurance claim, through the date of the appraisal award. The court awarded $282,072.37 in pre-award interest and credited Auto-Owners’ pre-appraisal payments of $1,336,769.79 against the amount on which interest accrued.

The court also awarded post-award interest at 10 percent on the unpaid balance of the appraisal award from the award date until entry of judgment. The order awarded $22,916.30 through August 22, 2019, plus $258.03 per day from August 23, 2019, until judgment. After judgment, federal post-judgment interest would apply under 28 U.S.C. § 1961 until the remaining balance was paid, with Auto-Owners’ post-appraisal payments of $336,044.73 credited against the award.

Disposition

The court ordered that Savanna Grove’s motion to confirm the appraisal award, enter judgment, and obtain interest, costs, and fees was GRANTED IN PART and DENIED IN PART. Specifically:

- The appraisal determinations of $1,699,505.95 in actual cash value and $2,614,624.35 in replacement cost were CONFIRMED. - Savanna Grove’s motion for summary judgment on its declaratory-judgment claim, Count I, and breach-of-contract claim, Count II, was GRANTED. - Auto-Owners’ two declaratory-judgment counterclaims were DISMISSED WITH PREJUDICE. - Savanna Grove was awarded the unpaid appraisal balance of $941,809.83. - Savanna Grove was awarded the specified pre-award, post-award, and post-judgment interest. - Savanna Grove’s request for attorneys’ fees and costs was DENIED WITHOUT PREJUDICE, allowing it to renew the request later with the required amount or a fair estimate.