Cincinnati Insurance Company v. Rymer Companies, LLC

Background

Rymer Companies, LLC, also known as Rymer Companies, Inc., and Cannon Falls Mall, Inc. owned the Cannon Falls Mall and insured it under a policy issued by Cincinnati Insurance Company. The roof had a history of leaks, saturated materials, and other conditions indicating that it needed extensive repairs. After a storm, Rymer submitted a claim seeking more than $1.7 million for roof damage.

The parties later completed an appraisal under the policy. Rymer sought a full roof replacement, but the appraisal panel awarded $23,226 for localized repairs to the mall’s roof. Rymer then applied for a building permit to perform those repairs. Goodhue County denied the application because the proposed work did not comply with manufacturer requirements or the building code, which addressed the roof’s wet or deteriorated condition.

Rymer argued that the permit denial triggered the policy’s “Ordinance or Law” coverage. That provision covered certain additional losses when a covered cause of loss resulted in enforcement of an ordinance or law regulating construction or repair. Cincinnati argued that the appraisal resolved the dispute or, alternatively, that the policy did not provide the additional coverage Rymer sought.

Legal Standard and Appraisal Issues

The court applied Minnesota law because the case was based on diversity jurisdiction and the parties agreed that Minnesota law governed the policy. Under the summary-judgment standard, judgment is proper when no genuine dispute of material fact exists and the moving party is entitled to judgment as a matter of law.

The court discussed Minnesota authority holding that an appraisal panel may determine the amount and cause of an insured loss as necessary to resolve the damage question, while courts decide remaining coverage questions. The court concluded that Rymer’s Ordinance or Law claim was a coverage question that the appraisal panel could not have decided because Rymer said the claim arose only after the appraisal and the county’s permit denial.

Coverage Analysis

The court interpreted the policy’s requirement that a covered cause of loss “result[] in” enforcement of an ordinance or law as requiring a but-for causal connection. In this context, Rymer had to show that the county’s permit denial would not have occurred but for the storm.

The court held that Rymer did not meet that burden. The evidence showed that the county denied the permit because of the roof’s widespread wet condition, but Rymer did not identify evidence that the September 2018 storm caused that condition. The court also rejected Rymer’s argument that the appraisal panel’s decision caused the permit denial, explaining that this was different from showing that the storm caused the denial. The appraisal award and related evidence indicated that the panel had rejected the argument that the storm caused widespread saturation and had found that only localized repairs were warranted.

Disposition

The court denied Defendants’ Motion for Summary Judgment, granted Plaintiff’s Motion for Summary Judgment, and dismissed the action with prejudice. The court ordered that judgment be entered accordingly.