Fenske v. Integrity Property & Casualty Insurance Company

Background

Brett and Heather Fenske owned property insured by Integrity Property & Casualty Insurance Company. Their policy provided coverage for the cost of replacing damaged property with equivalent construction. A wind and hailstorm damaged part of the garage roof on August 9, 2020. The damage was covered under the policy, but the parties could not agree on the appropriate payment.

The parties participated in an appraisal on August 18, 2021. The appraisal panel stated that 7.5% of the roof tiles were damaged and listed a $20,600 lost replacement cost and a $20,600 lost actual cash value for repairing that portion. The panel also handwritten: “If matching is considered the cost of the entire roof is” $155,000 lost replacement cost and $31,000 lost actual cash value.

Integrity interpreted the award as requiring payment of $20,600 for the damaged portion. The Fenskes later claimed they were entitled to the larger award because matching tiles did not exist. The Fenskes moved for summary judgment, arguing that the appraisal award was clear and binding. They alternatively asked the court to return the award to the appraisal panel if it found the award unclear. Integrity opposed the motion, arguing that a factual dispute remained about whether equivalent matching tiles were available.

Analysis

The court explained that Minnesota treats insurance appraisal awards as arbitration awards and generally enforces them unless they resulted from fraud, misconduct, or other wrongdoing. But an appraisal award that is reasonably open to more than one interpretation should be returned to the appraisal panel for clarification rather than resolved through summary judgment.

The court found the phrase “if matching is considered” ambiguous. The Fenskes reasonably understood it to mean that the panel had considered matching and determined that no suitable match was available. Integrity reasonably understood it to mean that the panel had not decided whether matching tiles were available. Because the award did not make clear whether the panel had considered the existence and availability of matching tiles, the court returned it to the panel for clarification.

The court also found a genuine dispute of material fact—a real factual dispute that could affect the outcome—about whether comparable roof tiles existed or were available. The Fenskes had not submitted affidavits, brochures, or other documents showing that comparable tiles could not be purchased. Integrity submitted evidence that the Fenskes’ roof already had mismatched tiles and that replacing the damaged tiles with similarly mismatched tiles might be comparable.

Disposition

The court denied the Fenskes’ Motion for Summary Judgment. It ordered that the appraisal award be returned to the appraisal panel to clarify whether the panel considered the existence and availability of comparable roof tiles. If the panel had not decided that issue, it was instructed to make that determination, including whether color matching required Integrity to replace the entire roof.

The court also declined to award pre-award interest at that time and stayed any judgment on interest until the final insurance proceeds were settled. The court stated that a renewed summary-judgment motion might be appropriate after the appraisal panel’s clarification.