Natureview Vista Twinhome Association v. Travelers Indemnity Company, The

Background

An August 2019 hailstorm damaged Natureview’s twenty-seven buildings. Natureview submitted an insurance claim to Travelers and later requested an appraisal after disagreeing with Travelers’ estimate. The appraisal panel issued an award in January 2022, valuing the loss at $1,210,160 in actual-cash value and $1,564,992 in replacement-cost value. Travelers paid Natureview $733,042.16, representing the appraisal award’s actual-cash value after subtracting the hail deductible and an earlier payment.

Natureview completed most of the repairs by the end of 2022 and paid its contractor roughly $1 million. It sought additional amounts for recoverable depreciation, costs associated with replacing undamaged siding on the north and east elevations, and pre-award interest. Both parties moved for summary judgment, which is judgment without a trial when no genuine dispute of material fact exists and the moving party is entitled to judgment under the law.

Recoverable Depreciation

The policy limited replacement-cost payments to the least of the policy limit, the cost to replace the damaged property, or the amount actually spent that was necessary to repair or replace it. The parties agreed that the appraisal award established the replacement cost. The court held that Natureview still had to actually spend more than the appraisal award’s actual-cash value to recover depreciation.

Natureview’s payments to Tyther totaled roughly $1 million, which was less than the appraisal panel’s $1,210,160 actual-cash-value award. The court found that Tyther’s later, unitemized invoice was not sufficient evidence of additional necessary repair costs. The invoice was issued before repairs were complete, tied the amount to the appraisal award, and did not identify the work performed. The court also rejected Natureview’s argument that the parties’ contract, affidavits, or deposition testimony established an obligation to pay the full replacement-cost amount. The court therefore granted Travelers summary judgment on the recoverable-depreciation claim.

The court also concluded that payments to Natureview’s public adjuster were expenses connected with resolving the insurance claim, not amounts necessarily spent to repair or replace damaged property. The court found that issue was not a material factual dispute.

Matching Siding

Natureview sought $502,942 described in the appraisal panel’s clarification for replacing undamaged siding on the north and east elevations. The parties disagreed about whether the panel had excluded those costs or had calculated them conditionally, in case the policy provided coverage for matching.

The court found both interpretations reasonable. The appraisal memorandum instructed the panel to consider mismatches, the itemized award included matching for the south elevation but not the north and east elevations, and the clarification stated that its dollar amounts were not part of the award. Those facts supported Travelers’ interpretation. But the clarification also stated that the remaining undamaged original siding on the east and north elevations had a replacement cost of $502,942 and emphasized that the panel had not decided coverage. Those statements supported Natureview’s interpretation.

Because the clarification was reasonably susceptible to both interpretations, the court held that it was ambiguous. The parties’ summary-judgment motions were therefore denied as to the matching issue. The court noted that the issue might be returned to the appraisal panel for clarification, or addressed through another procedure.

Pre-Award Interest

Under Minnesota Statutes section 549.09, pre-award interest may begin when the action is filed, an arbitration is demanded, or written notice of the claim is given, provided the action is filed within two years after that notice. The court held that Natureview’s August 6, 2019 report of the loss was the written notice of claim. Its later proof of loss, submitted at Travelers’ request to proceed with the appraisal, did not restart the two-year period.

Natureview filed this action on July 18, 2022, more than two years after its August 2019 notice. The court therefore held that Natureview was not entitled to pre-award or pre-judgment interest. The court also observed that Travelers had paid the appraisal award’s actual-cash-value amount before the lawsuit, while the court had rejected recovery of depreciation and had not resolved matching costs.

Order

The court ordered that:

- Travelers’ motion for summary judgment was GRANTED IN PART and DENIED IN PART. - Natureview’s motion for partial summary judgment was DENIED. - The parties had to meet and confer about how to resolve the matching issue and file a joint status report by May 6, 2024. - If they could not agree, either party could seek clarification from the appraisal panel, reopen discovery, or request other appropriate relief by May 20, 2024.

Judge Eric C. Tostrud did not enter a final ruling resolving the siding-matching dispute in this order.