Pierce v. American Family Mutual Insurance Company, S.I.
- David Doty
- 0:22-cv-00052
- U.S. District Court · District of Minnesota
- 8
In Pierce v. American Family, Judge Wright granted American Family’s motion to require appraisal of fire-loss amounts and pause the case.
Shawn Pierce and Stephanie Pierce must submit their disputes with American Family about the amounts of their covered home and personal-property losses to appraisal, and the case is paused while appraisal occurs.
What was alleged
The complaint alleges that a fire on or about July 17, 2020, caused extensive damage to the plaintiffs' home and personal property, and that the defendant accepted coverage but refused to pay the full policy limits. The complaint further alleges that during the claims process the defendant repeatedly pulled the plaintiffs' consumer credit reports without authorization — including after the plaintiffs expressly withdrew any permission — in violation of the Fair Credit Reporting Act and the Computer Fraud and Abuse Act. The plaintiffs assert three counts: breach of contract, violations of the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), and violations of the Computer Fraud and Abuse Act (18 U.S.C. § 1030). They seek money damages exceeding $50,000, punitive damages, an injunction barring further credit-report pulls, and attorney's fees.
What happened
Shawn and Stephanie Pierce sued American Family Mutual Insurance Company, S.I., over insurance benefits after a fire damaged their home and personal property. The parties disagreed about the amount of the loss, and the Pierces argued that the damage was a total loss that made appraisal unnecessary.
The court held that the home was not a total loss under Minnesota law because it remained in place, could be repaired, and was later sold and repaired. The court also held that the total-loss exception applied only to buildings, not personal property, and that the Pierces had not shown another legal reason to avoid appraisal.
Judge Wilhelmina M. Wright granted American Family’s motion for partial summary judgment, ordered appraisal of the disputes involving the home and personal property, and stayed further proceedings until appraisal was completed.
The detailed version
- Pierce v. American Family Mutual Insurance Company, S.I. · No. 0:22-cv-00052
- David Doty
- Aug. 10, 2023
Background
The Pierces insured their home through American Family under a policy covering fire damage from October 1, 2019, to October 1, 2020. A fire in July 2020 damaged the home and personal property. American Family accepted coverage, but the parties disagreed about the amount of loss. The Pierces believed the cost to repair the home was substantially higher than American Family’s estimate and also disputed the extent of damage to their personal property.
The policy contained an appraisal provision allowing either side to demand appraisal when the parties could not agree on the amount of loss. American Family demanded appraisal in April 2021. The Pierces named an appraiser but sought to delay the process until their public adjuster prepared a comprehensive estimate. After learning that the Pierces had sold the house, American Family reminded them of duties concerning evidence and preservation of personal property for appraisal. The Pierces then demanded payment of the policy limits and refused to proceed with appraisal, arguing that their claims exceeded the policy limits and therefore constituted a total loss. They later sued American Family for breach of contract based on its denial of benefits.
Analysis
The court applied Minnesota law, including the Minnesota Standard Fire Insurance Policy, which contains mandatory terms for fire-insurance policies. That statute includes an appraisal process for disputes about the actual cash value or amount of loss, but it creates an exception for a total loss of a building.
Under Minnesota law, a building is a total loss only when fire has destroyed it so extensively that no substantial part above ground remains in place and capable of being safely used to restore the building. The court found no genuine dispute of material fact on this issue. The entire home remained in place after the fire, it was capable of being repaired, and it was later sold and repaired. The record showed that structural repairs had been contemplated, and it did not show that the home met Minnesota’s definition of a total loss.
The court rejected the Pierces’ argument that the loss was a total loss merely because the value of their claims exceeded the policy limits. The court also concluded that the statutory exception referred to total loss of buildings and that the Pierces had identified no authority extending that exception to personal property.
Ruling
Judge Wilhelmina M. Wright granted American Family’s Motion for Partial Summary Judgment to Compel Appraisal and Stay the Proceedings. The court ordered the parties to resolve their disputes about the amount of loss for Coverage A, real property, and Coverage B, personal property, through the appraisal process required by the statute and policy. The court stayed further proceedings pending completion of appraisal.
Read the full 8-page opinion on CourtListener, the free public archive maintained by the Free Law Project.