Jamestown Villas Homeowners Association v. State Farm Fire and Casualty Company
U.S. District Court, District of Minnesota
Jamestown Villas Homeowners Association v. State Farm Fire and Casualty Company
Trial Court Opinion
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Jamestown Villas Homeowners Civil No. 23-3475 (DWF/DLM)
Association, a Minnesota non-profit
corporation,
Plaintiff,
MEMORANDUM
v. OPINION AND ORDER
State Farm Fire and Casualty Company
an Illinois insurance company,
Defendant.
INTRODUCTION
This matter is before the Court on Plaintiff Jamestown Villas Homeowners
Association’s (“Plaintiff”) motion to resubmit the matter to the appraisal panel for
reconsideration and stay further proceedings. (Doc. No. 28.) Defendant State Farm Fire
and Casualty Company (“State Farm” or “Defendant”) opposes the motion. (Doc.
No. 35.) For the reasons set forth below, the Court grants the motion.
BACKGROUND
Plaintiff is a residential common interest community association consisting of
multiple condominium buildings in Eden Prairie, Minnesota. (Doc. No. 32 at 2.) A
severe hailstorm damaged the roofs of some of Plaintiff’s buildings in August 2020.
(Doc. No. 31 ¶ 4.) At the time, the buildings were insured by Defendant. (Id. ¶ 5.)
Plaintiff retained Gavnat and Associates to handle the claim process, who subsequently
assigned Jason Callais to the matter. (Id. ¶ 3)
After initial inspection of the damage, the parties agreed that the roof valley metals
were damaged from the hail and replacement of the metals would also require
replacement of the surrounding shingles. (Id. ¶ 9.) Under Plaintiff’s insurance policy
with Defendant, if a reasonable match to the original shingles was found, only a partial
roof replacement was covered. (Id. ¶¶ 7-11, 15.) If no match was located, a full roof
replacement would be covered. (Id.) Callais used State Farm’s Resource Locator
Service to identify potentially matching replacement shingles. (Id. ¶ 12.) The only
potential match available was “GAF Timberline HDZ” (“Timberline”) in the color
“Charcoal”. (Id.) Callais ordered a bundle of Timberline shingles to make an onsite
comparison. (Id. ¶ 13.) Callais and Plaintiff determined that the Timberline shingles
were not a reasonable match for the original shingles. (Id. ¶ 14.) Then, Callais requested
a full roof replacement, which Defendant denied. (Id. ¶ 16.) Instead, Defendant asked
Callais to repair some of the roof valleys using the Timberline shingles, after which they
would re-evaluate whether they constituted a reasonable match. (Id.) A contractor
completed the sample repairs on June 24, 2022. (Id. ¶ 17.)
After the sample repairs were completed, the parties could not agree on the
valuation or matching issue, so Plaintiff sought appraisal as required under the insurance
policy and Minnesota state law. See Minn. Stat. § 65A.26 (2023). Under Minnesota state
law, appraisal panels are used to determine the amount of loss, and the written award is
“final and conclusive.” Id. After submission of evidence by both parties, a three-person
appraisal panel held an appraisal hearing at Plaintiff’s buildings. (Doc. No. 31 ¶ 20-21.)
The appraisal panel issued its Appraisal Award on August 24, 2023, valuing the “Loss
Replacement Cost” at $52,482.81 and “Loss Actual Cash Value” at $47,606.23. (Doc.
No. 31 at 146-47.)
Along with the one-page Appraisal Award, the appraisal panel issued a few
“clarification” documents. “Clarification 1” contains the statements primarily at issue in
this case. Question 1 from Clarification 1 states: “DO THE SAMPLES PRESENTED
AND OBSERVED ON AUGUST 23, 2023 REPRESENT A REASONABLE
UNIFORM APPEARANCE? THE SAMPLES WERE VERIFIED TO BE GAF
TIMBERLINE HDZ-CHARCOAL.” (Id. at 147.) The answer is marked “YES.” (Id.)
Question 2 from Clarification 1 states: “DO THE SHINGLES USED IN THE REPAIR
OF THE VALLEYS REPRESENT A REASONABLE UNIFORM APPEARANCE?
THE CONTRACTOR’S INVOICE INDICATE [sic] GAF MN TIMERLINE HDZ
SHINGLES WERE USED TO REPAIR THE VALLEYS.” (Id.) The answer is marked
“NO.” (Id.) The panel included the replacement cost and cash value numbers again in
Clarification 1, as well as the cost to fully replace the roofs as $742,163.80, with the
actual cash value as $0. (Id. at 148.)
Plaintiff contends that this creates an ambiguity in the Appraisal Award because
the same Timberline shingles were presented to the panel as samples and used in the
sample valley repair that the panel observed. Whether the Timberline shingles create a
reasonably uniform appearance impacts whether Plaintiff is entitled to coverage of a
partial or full roof replacement under its insurance policy with Defendant.
DISCUSSION
An appraisal award is presumed valid and “will not be vacated unless it clearly
appears that it was the result of fraud . . . or wrongdoing on the part of the appraisers.”
Mork v. Eureka-Security Fire & Marine Ins. Co., 42 N.W.2d 33, 38(Minn. 1950). Separately, when an appraisal award is ambiguous, a court is required to resubmit the claim to the panel so that the panel may “consider whether to modify or correct the award.” Minn. Stat. § 572B.20(d)(3) (2024).1 “A reviewing court is ‘prohibited from ignoring the ambiguity and summarily affirming the award.’” Herll v. Auto-Owners Insurance Company,879 F.3d 293, 296
(8th Cir. 2018) (quoting Menahga Educ. Ass’n v. Menahga Indep. Sch. Dist. No. 821,568 N.W.2d 863, 869
(Minn. Ct. App. 1997)). “As in other contexts, an appraisal award is ambiguous when it is ‘reasonably susceptible of 1 In Oliver v. State Farm Fire and Casualty Insurance Co., the Minnesota Supreme Court held that fire insurance appraisals are not governed by the Minnesota Uniform Arbitration Act (“MUAA”) because they are not agreements to arbitrate. Oliver v. State Farm Fire & Cas. Ins. Co.,939 N.W.2d 749
, 753 (Minn. 2020). This has been interpreted to apply more broadly to all appraisals prescribed by insurance statutes. See Savanna Grove Coach Homeowners’ Ass’n v. Auto-Owners Ins. Co., No. 19-cv-1513 (ECT/TNL),2020 WL 3397312
, at *2-3 (D. Minn. June 19, 2020). Other judges in this district have addressed Oliver and continue to apply the MUAA provisions in cases involving the interpretation of appraisal awards because of the shared underlying policy of appraisal awards and arbitration awards. See Maplebrook Estates Homeowner’s Ass’n v. Hartford Fire Ins. Co., No. 21-cv-1532 (SRN/DJF),2023 WL 5021164
, at *10 (D. Minn. Aug. 7, 2023); Cincinnati Ins. Co. v. Rymer Cos., LLC, No. 19-cv-1025 (ECT/TNL),2023 WL 088401
, at *3 (D. Minn. June 20, 2023). The Minnesota Court of Appeals has unambiguously reiterated that the MUAA does not apply to appraisal awards but confirmed that “Oliver did not eliminate a district court’s authority to modify an appraisal award.” Blueberry Bowl, LLC v. Midwest Fam. Mut. Ins. Co., No. A23-0739,2023 WL 4043806
, at *2 (Minn. Ct. App. June 13, 2023). Taking all of this in mind, the Court will continue to apply the MUAA’s framework to review appraisal awards and determine whether resubmission to the appraisal panel for further clarification is required. more than one interpretation.’” Maplebrook Estates Homeowner’s Association, Inc. v. Hartford Fire Insurance Company, No. 21-cv-01532,2023 WL 5021164
, at *10 (D. Minn. Aug. 7, 2023) (quoting Herll,879 F.3d at 296
); Art Goebel, Inc. v. N. Suburban Agencies, Inc.,567 N.W.2d 511, 515
(Minn. 1997).
The key question in this case is whether the appraisal panel’s award is ambiguous.
The ambiguity in this case arises from Clarification 1, which is attached to the initial
Appraisal Award. Question 1 asks about the appearance of the shingles the panel
observed that were not used in the sample repair. Question 2 asks about the appearance
of the shingles that were used in the sample repair completed on the buildings in June of
2022. These shingles are the same, both the Timberline shingles, so the answer to each
question should be the same. However, the panel answered Question 1 in the affirmative
and Question 2 in the negative. Applying the ambiguity standard, a party could
reasonably argue that the Timberline shingles did represent a reasonable match to the
original shingles, or that the Timberline shingles did not represent a reasonable match to
the original shingles. Because either of these interpretations could be reasonable, the
award is ambiguous.
This ambiguity is central to the settlement of the disagreement between the parties.
The parties sought decision from the appraisal panel after they disagreed on the matching
issue which impacts the ultimate valuation of repairs. If the Timberline shingles match
the original shingles, only a partial roof replacement is required. If the Timberline
shingles do not match the original shingles, a full roof replacement is required.
Because there is an ambiguity in the Appraisal Award, the Court must remand to
the appraisal panel for clarification. The Court instructs the appraisal panel to clarify
(1) why the answers to these two questions are contradictory; and (2) whether any further
clarification on this point has any additional impact on the award.2
ORDER
Based upon the foregoing, and the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1. Plaintiff’s motion to resubmit the matter to the appraisal panel for
reconsideration (Doc. No. [28]) is GRANTED.
2. The parties shall submit the appraisal award to the appraisal panel for
further clarification consistent with this Order.
3. The parties shall file the appraisal panel’s written response with the Court
when it is received.
4. The Court STAYS this action pending the receipt of the appraisal panel’s
clarification.
Dated: September 19, 2024 s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge
2 Defendant disputes whether the appraisal panel received evidence establishing that
Timberline shingles were used in the 2022 sample repair and that those shingles were the
same kind as the uninstalled sample that the panel observed at the hearing. (See, e.g.,
Doc. No. 35 at 5–6.) The Court does not address this evidentiary dispute and leaves this
issue to the appraisal panel upon resubmission, if it deems that the issue needs to be
addressed. Trial Court Opinion
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Jamestown Villas Homeowners Civil No. 23-3475 (DWF/DLM)
Association, a Minnesota non-profit
corporation,
Plaintiff,
MEMORANDUM
v. OPINION AND ORDER
State Farm Fire and Casualty Company
an Illinois insurance company,
Defendant.
INTRODUCTION
This matter is before the Court on Plaintiff Jamestown Villas Homeowners
Association’s (“Plaintiff”) motion to resubmit the matter to the appraisal panel for
reconsideration and stay further proceedings. (Doc. No. 28.) Defendant State Farm Fire
and Casualty Company (“State Farm” or “Defendant”) opposes the motion. (Doc.
No. 35.) For the reasons set forth below, the Court grants the motion.
BACKGROUND
Plaintiff is a residential common interest community association consisting of
multiple condominium buildings in Eden Prairie, Minnesota. (Doc. No. 32 at 2.) A
severe hailstorm damaged the roofs of some of Plaintiff’s buildings in August 2020.
(Doc. No. 31 ¶ 4.) At the time, the buildings were insured by Defendant. (Id. ¶ 5.)
Plaintiff retained Gavnat and Associates to handle the claim process, who subsequently
assigned Jason Callais to the matter. (Id. ¶ 3)
After initial inspection of the damage, the parties agreed that the roof valley metals
were damaged from the hail and replacement of the metals would also require
replacement of the surrounding shingles. (Id. ¶ 9.) Under Plaintiff’s insurance policy
with Defendant, if a reasonable match to the original shingles was found, only a partial
roof replacement was covered. (Id. ¶¶ 7-11, 15.) If no match was located, a full roof
replacement would be covered. (Id.) Callais used State Farm’s Resource Locator
Service to identify potentially matching replacement shingles. (Id. ¶ 12.) The only
potential match available was “GAF Timberline HDZ” (“Timberline”) in the color
“Charcoal”. (Id.) Callais ordered a bundle of Timberline shingles to make an onsite
comparison. (Id. ¶ 13.) Callais and Plaintiff determined that the Timberline shingles
were not a reasonable match for the original shingles. (Id. ¶ 14.) Then, Callais requested
a full roof replacement, which Defendant denied. (Id. ¶ 16.) Instead, Defendant asked
Callais to repair some of the roof valleys using the Timberline shingles, after which they
would re-evaluate whether they constituted a reasonable match. (Id.) A contractor
completed the sample repairs on June 24, 2022. (Id. ¶ 17.)
After the sample repairs were completed, the parties could not agree on the
valuation or matching issue, so Plaintiff sought appraisal as required under the insurance
policy and Minnesota state law. See Minn. Stat. § 65A.26 (2023). Under Minnesota state
law, appraisal panels are used to determine the amount of loss, and the written award is
“final and conclusive.” Id. After submission of evidence by both parties, a three-person
appraisal panel held an appraisal hearing at Plaintiff’s buildings. (Doc. No. 31 ¶ 20-21.)
The appraisal panel issued its Appraisal Award on August 24, 2023, valuing the “Loss
Replacement Cost” at $52,482.81 and “Loss Actual Cash Value” at $47,606.23. (Doc.
No. 31 at 146-47.)
Along with the one-page Appraisal Award, the appraisal panel issued a few
“clarification” documents. “Clarification 1” contains the statements primarily at issue in
this case. Question 1 from Clarification 1 states: “DO THE SAMPLES PRESENTED
AND OBSERVED ON AUGUST 23, 2023 REPRESENT A REASONABLE
UNIFORM APPEARANCE? THE SAMPLES WERE VERIFIED TO BE GAF
TIMBERLINE HDZ-CHARCOAL.” (Id. at 147.) The answer is marked “YES.” (Id.)
Question 2 from Clarification 1 states: “DO THE SHINGLES USED IN THE REPAIR
OF THE VALLEYS REPRESENT A REASONABLE UNIFORM APPEARANCE?
THE CONTRACTOR’S INVOICE INDICATE [sic] GAF MN TIMERLINE HDZ
SHINGLES WERE USED TO REPAIR THE VALLEYS.” (Id.) The answer is marked
“NO.” (Id.) The panel included the replacement cost and cash value numbers again in
Clarification 1, as well as the cost to fully replace the roofs as $742,163.80, with the
actual cash value as $0. (Id. at 148.)
Plaintiff contends that this creates an ambiguity in the Appraisal Award because
the same Timberline shingles were presented to the panel as samples and used in the
sample valley repair that the panel observed. Whether the Timberline shingles create a
reasonably uniform appearance impacts whether Plaintiff is entitled to coverage of a
partial or full roof replacement under its insurance policy with Defendant.
DISCUSSION
An appraisal award is presumed valid and “will not be vacated unless it clearly
appears that it was the result of fraud . . . or wrongdoing on the part of the appraisers.”
Mork v. Eureka-Security Fire & Marine Ins. Co., 42 N.W.2d 33, 38(Minn. 1950). Separately, when an appraisal award is ambiguous, a court is required to resubmit the claim to the panel so that the panel may “consider whether to modify or correct the award.” Minn. Stat. § 572B.20(d)(3) (2024).1 “A reviewing court is ‘prohibited from ignoring the ambiguity and summarily affirming the award.’” Herll v. Auto-Owners Insurance Company,879 F.3d 293, 296
(8th Cir. 2018) (quoting Menahga Educ. Ass’n v. Menahga Indep. Sch. Dist. No. 821,568 N.W.2d 863, 869
(Minn. Ct. App. 1997)). “As in other contexts, an appraisal award is ambiguous when it is ‘reasonably susceptible of 1 In Oliver v. State Farm Fire and Casualty Insurance Co., the Minnesota Supreme Court held that fire insurance appraisals are not governed by the Minnesota Uniform Arbitration Act (“MUAA”) because they are not agreements to arbitrate. Oliver v. State Farm Fire & Cas. Ins. Co.,939 N.W.2d 749
, 753 (Minn. 2020). This has been interpreted to apply more broadly to all appraisals prescribed by insurance statutes. See Savanna Grove Coach Homeowners’ Ass’n v. Auto-Owners Ins. Co., No. 19-cv-1513 (ECT/TNL),2020 WL 3397312
, at *2-3 (D. Minn. June 19, 2020). Other judges in this district have addressed Oliver and continue to apply the MUAA provisions in cases involving the interpretation of appraisal awards because of the shared underlying policy of appraisal awards and arbitration awards. See Maplebrook Estates Homeowner’s Ass’n v. Hartford Fire Ins. Co., No. 21-cv-1532 (SRN/DJF),2023 WL 5021164
, at *10 (D. Minn. Aug. 7, 2023); Cincinnati Ins. Co. v. Rymer Cos., LLC, No. 19-cv-1025 (ECT/TNL),2023 WL 088401
, at *3 (D. Minn. June 20, 2023). The Minnesota Court of Appeals has unambiguously reiterated that the MUAA does not apply to appraisal awards but confirmed that “Oliver did not eliminate a district court’s authority to modify an appraisal award.” Blueberry Bowl, LLC v. Midwest Fam. Mut. Ins. Co., No. A23-0739,2023 WL 4043806
, at *2 (Minn. Ct. App. June 13, 2023). Taking all of this in mind, the Court will continue to apply the MUAA’s framework to review appraisal awards and determine whether resubmission to the appraisal panel for further clarification is required. more than one interpretation.’” Maplebrook Estates Homeowner’s Association, Inc. v. Hartford Fire Insurance Company, No. 21-cv-01532,2023 WL 5021164
, at *10 (D. Minn. Aug. 7, 2023) (quoting Herll,879 F.3d at 296
); Art Goebel, Inc. v. N. Suburban Agencies, Inc.,567 N.W.2d 511, 515
(Minn. 1997).
The key question in this case is whether the appraisal panel’s award is ambiguous.
The ambiguity in this case arises from Clarification 1, which is attached to the initial
Appraisal Award. Question 1 asks about the appearance of the shingles the panel
observed that were not used in the sample repair. Question 2 asks about the appearance
of the shingles that were used in the sample repair completed on the buildings in June of
2022. These shingles are the same, both the Timberline shingles, so the answer to each
question should be the same. However, the panel answered Question 1 in the affirmative
and Question 2 in the negative. Applying the ambiguity standard, a party could
reasonably argue that the Timberline shingles did represent a reasonable match to the
original shingles, or that the Timberline shingles did not represent a reasonable match to
the original shingles. Because either of these interpretations could be reasonable, the
award is ambiguous.
This ambiguity is central to the settlement of the disagreement between the parties.
The parties sought decision from the appraisal panel after they disagreed on the matching
issue which impacts the ultimate valuation of repairs. If the Timberline shingles match
the original shingles, only a partial roof replacement is required. If the Timberline
shingles do not match the original shingles, a full roof replacement is required.
Because there is an ambiguity in the Appraisal Award, the Court must remand to
the appraisal panel for clarification. The Court instructs the appraisal panel to clarify
(1) why the answers to these two questions are contradictory; and (2) whether any further
clarification on this point has any additional impact on the award.2
ORDER
Based upon the foregoing, and the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1. Plaintiff’s motion to resubmit the matter to the appraisal panel for
reconsideration (Doc. No. [28]) is GRANTED.
2. The parties shall submit the appraisal award to the appraisal panel for
further clarification consistent with this Order.
3. The parties shall file the appraisal panel’s written response with the Court
when it is received.
4. The Court STAYS this action pending the receipt of the appraisal panel’s
clarification.
Dated: September 19, 2024 s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge
2 Defendant disputes whether the appraisal panel received evidence establishing that
Timberline shingles were used in the 2022 sample repair and that those shingles were the
same kind as the uninstalled sample that the panel observed at the hearing. (See, e.g.,
Doc. No. 35 at 5–6.) The Court does not address this evidentiary dispute and leaves this
issue to the appraisal panel upon resubmission, if it deems that the issue needs to be
addressed. Reference
- Status
- Unknown