Dakota County District Court File No. 19HA-CV-11-5628
E. Curtis Roeder, Roeder Smith Jadin, PLLC, Bloomington, Minnesota (for appellant)
Mark Randall Bradford, Bassford Remele, Minneapolis, Minnesota (for respondent)
Considered and decided by Bjorkman, Presiding Judge; Peterson, Judge; and Stoneburner, Judge.
In this insurance-coverage dispute, appellant townhome association argues that the district court erred by (1) determining that an appraisal panel exceeded its authority by deciding coverage questions and (2) substituting its factual determination for that of the appraisal panel. We reverse and remand to the district court.
Appellant Cedar Bluff Townhome Condominium Association, Inc. (Cedar Bluff) is a townhome association for twenty buildings. All twenty buildings were damaged to some degree during a storm in October 2010. All of the roofs had to be replaced because of hail damage, and the siding on each building sustained relatively minor damage.
Respondent American Family Mutual Insurance Company (American Family) insured Cedar Bluff. Under the terms of the policy, American Family agreed to pay for "direct physical loss of or damage to Covered Property . . . caused by or resulting from any Covered Cause of Loss." All of Cedar Bluff's buildings are "Covered Property." Under the policy, American Family agreed, at its option, to (1) "[p]ay the value of lost or damaged property"; (2) "[p]ay the cost of repairing or replacing lost or damaged property"; (3) take damaged property at an agreed value; or (4) "[r]epair, rebuild or replace the property with other property of like kind and quality." Replacement property was to be "of comparable material and quality." If the parties were unable to agree on the amount of loss, either party could demand an appraisal of the loss.
The parties did not dispute that there was a loss or that it was caused by a covered event. But the parties could not agree on the value of the loss. The siding on the buildings was 12 to 13 years old and had faded; siding was no longer manufactured in the original color. Siding from the same manufacturer, with the same specifications, was available, but the color was "slightly darker or slightly lighter" than the color of the original siding at the time of installation. American Family proposed replacing only the damaged siding boards with the closest colors currently available from the manufacturer; Cedar Bluff asked that all siding be replaced on all of the buildings so that there would be an exact color match. The cost of replacing all of the siding was approximately double the cost of replacing only the damaged siding boards. American Family refused to pay the cost of replacing all of the siding.
Because the parties were unable to agree, the question of the value of the loss was submitted to an appraisal. The appraisal panel, consisting of two appraisers selected by the parties and an umpire selected by the two appraisers, found that the damage to the siding was relatively minor and that individual siding boards could be replaced in accordance with "normal construction practices." But a majority of the appraisal panel determined that replacing only the damaged siding "was not a repair or replacement with comparable materials of like kind and quality, " because the siding color would not match. The appraisal panel concluded that the amount of loss consisted of the cost of replacing all of the siding.
Cedar Bluff moved for partial summary judgment confirming the appraisal award. The district court denied Cedar Bluff's motion and also denied its motion for reconsideration. Several months later, Cedar Bluff again moved for partial summary judgment confirming the appraisal award, and American Family moved for summary judgment. The district court determined that American Family was responsible to pay for only direct physical damage and not for the cost of replacing undamaged siding in order to achieve a color match and granted American Family summary judgment. The district court denied Cedar Bluff's motion for partial summary ...