Gibbs v. SECURA Insurance Company

U.S. District Court, District of Minnesota September 16, 2024

Trial Court Opinion

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Jeff and Christine Gibbs, File No. 24-cv-1663 (ECT/ECW)

Plaintiffs,

v. OPINION AND ORDER

SECURA Insurance Company,

Defendant.
________________________________________________________________________
Justice Ericson Lindell and Mihajlo Babovic, Greenstein Sellers PLLC, Minneapolis, MN,
for Plaintiffs Jeff and Christine Gibbs.

Jonathan L. Schwartz, Freeman Mathis & Gary, LLP, Chicago, IL, and Beth A. Jenson
Prouty, Arthur, Chapman, Kettering, Smetack & Pikala, P.A., Minneapolis, MN, for
Defendant SECURA Insurance Company.

A hailstorm damaged buildings on a farm owned by Plaintiffs Jeff and Christine
Gibbs. When the storm occurred, the property was insured under a policy issued by
Defendant SECURA Insurance Company. The Gibbses and SECURA disagree regarding
the amount of the loss, including whether some losses are covered. The Gibbses move to
compel appraisal, and the motion will be granted. Applying Minnesota law, there is no
genuine dispute that the preconditions to appraisal have occurred, and the coverage
questions SECURA has identified are generally appropriate for the appraisal panel’s
resolution.
Dispute-prompting facts. The hailstorm occurred May 11, 2022. Compl. [ECF No.
1-1] ¶ 10; Answer [ECF No. 17] ¶ 10. SECURA produced loss estimates first—in July,
August, and October 2022. See ECF No. 26-3. According to the Gibbses’ adyjustor,
SECURA’s loss estimates totaled $717,150.25. ECF No. 26-2 at 9.! SECURA does not
dispute this figure. See Def.’s Mem. in Opp’n [ECF No. 32] at 6 n.3. SECURA asserts it
has paid the Gibbses $171,933.28. Jd. at 2 (citing ECF No. 33-27), 6. The Gibbses
submitted their loss estimates in March 2023, and they totaled $2,198,755.83. ECF No.
26-2 at 9. SECURA and the Gibbses’ estimates differ for the usual reasons: SECURA and
the Gibbses disagree regarding the existence, extent, and nature of damage to buildings,
and they disagree regarding the scope and cost of repairs to damaged buildings. See ECF
Nos. 26-7, 26-9 at 1-2. These disagreements prompted the Gibbses to demand appraisal
in line with a provision in the SECURA policy.2 ECF No. 26-4. SECURA rejected the

Page cites are to ECF pagination appearing in a document’s upper right corner, not
to a document’s original pagination.
This document appears to support a slightly smaller figure. However, the Gibbses
have not disputed the number alleged by SECURA, and the precise amount of money
SECURA has paid to the Gibbses does not weigh on this decision, as there are no
allegations SECURA has paid the amount of the Gibbses’ estimate.
3 That provision reads:
7. Appraisal. If you and we fail to agree on the armnount of loss, either may demand an appraisal of the loss.
In this event, each party will choose a competent and independent appraiser within 20 days after
recelving a written request from the other. The two appralsers will choose a competent and impartial
umpire. lf they cannot agree upon an umpire within 15 days, you or we may request that the choice be
made by a judge of a court of record in the state where the “residence premises" is located. The
appraisers will separately set the amount of loss. If tha appraisers submit a written report of an
agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit
their differences to the umpire. A decision agreed to by any two will set the amount of loss.
Each party will:
a. Pay its own appraiser; and
b. Bear the other expenses of the appraisal and umpire equally.
Our request for an appraisal or examination will not waive any of our rights.
ECF No. 33-1 at 125.

Gibbses’ appraisal demand. ECF No. 26-5. In SECURA’s view, the Gibbses’ demand
implicated coverage questions that could not be resolved through an appraisal. See id. The
Parties communicated further regarding the Gibbses’ demand, but SECURA maintained

its position and refused to assent to appraisal. See ECF Nos. 26-6, 26-8, 26-9, and 33-4.
SECURA’s refusal to agree to appraisal prompted the Gibbses to file this case.4
General rules governing motions to compel appraisals. A motion to compel
appraisal is treated as a motion for partial summary judgment seeking specific
performance. McCoy v. Am. Fam. Mut. Ins. Co.,

189 F. Supp. 3d 896, 900

 (D. Minn. 2016) 

(citing Dewall v. Am. Fam. Mut. Ins. Co., No. 15-cv-1954 (ADM/HB),

2015 WL 5719143

, 
at *1 (D. Minn. Sept. 29, 2015), and St. Panteleimon Russian Orthodox Church v. Church 
Mut. Ins. Co., No. 13-cv-1977 (SRN/JJK),

2013 WL 6190400

, at *3 (D. Minn. Nov. 27, 
2013).  Summary judgment is warranted “if the movant shows that there is no genuine 
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”  

Fed. R. Civ. P. 56(a).  A fact is “material” only if its resolution “might affect the outcome 
of the suit under the governing substantive law.”  Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248

 (1986).  A dispute over a fact is “genuine” only if “the evidence is such that a 
reasonable jury could return a verdict for the nonmoving party.”

Id.

  “The evidence of the 


4    The Gibbses brought the case in Le Sueur County (Minnesota) District Court.  ECF 
No. 1 ¶ 1.  SECURA removed the case based on diversity jurisdiction under

28 U.S.C. § 1332

(a)(1).  Id. ¶ 7.  In its removal notice, SECURA alleges the Gibbses are Minnesota 
citizens.  Id. ¶ 7(a).  SECURA alleges it is incorporated under Wisconsin law and maintains 
its principal place of business there.  Id. ¶ 7(a).  There is no reason to question these 
allegations.  And measured by the difference between what SECURA has paid the Gibbses 
on their claim and the Gibbses’ estimates, § 1332(a)’s $75,000 amount-in-controversy 
threshold is satisfied.                                                   
non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.”  
Id. at 255 (citation omitted).  The Parties agree that Minnesota law governs the case, and 
there  is  no  good  reason  to  second-guess  the  Parties’  agreement  on  this 

point.  See Netherlands Ins. Co. v. Main St. Ingredients, LLC,

745 F.3d 909, 913

 (8th Cir. 
2014) (“Because the parties do not dispute the choice of Minnesota law, we assume, 
without deciding, Minnesota law applies . . . .”).  Under Minnesota law, a motion to compel 
appraisal must be granted if the undisputed material facts demonstrate (1) a valid agreement 
was made, (2) the party demanding appraisal performed all conditions precedent, and (3) 

the party opposing appraisal breached the agreement.  Silverado Park Ass’n v. Country 
Mut. Ins. Co., No. 23-cv-3687 (KMM/DLM),

2024 WL 3565792

, at *3 (D. Minn. July 29, 
2024) (citing McCoy,

189 F. Supp. 3d at 900

).  The at-issue contract must be construed as 
a whole, and unambiguous policy terms should be given their plain and ordinary meaning.

Id.

 (citing Maplebrook Ests. Homeowner’s Ass’n, Inc. v. Hartford Fire Ins. Co., No. 21-

cv-01532 (SRN/DJF),

2024 WL 869069

, at *12 (D. Minn. Feb. 29, 2024)).     
Disputed question.  SECURA does not question the policy’s validity.  It disputes 
whether the appraisal provision has been triggered.  Under the policy, a “fail[ure] to agree 
on the amount of loss” is a condition precedent to appraisal.  ECF No. 33-1 at 125.  In 
SECURA’s view, the Gibbses have not shown the Parties “fail to agree” on the amount of 

loss.  SECURA says the Parties’ disagreement concerns threshold coverage questions 
about whether the Gibbses “suffered any damage other than uncovered and excluded 
cosmetic loss” and whether, if cosmetic loss was covered, the Gibbses “submitted timely 
proof of repair or replacement of cosmetic loss, in compliance with the conditions of the 
policy.”  Def.’s Mem. in Opp’n at 1.  SECURA argues these threshold coverage questions 
must be adjudicated before any appraisal can occur, or, to put it another way, until these 
coverage questions are answered, there can be no failure to agree on the amount of loss.  

See

id.

 at 4–9.  The Gibbses argue that the Parties’ competing estimates are all that’s 
necessary to show a failure to agree on the amount of loss and that the presence of coverage 
disputes does not preclude appraisal.  Pl.’s Mem. in Supp. [ECF No. 25] at 3–9. 
Quade v. Secura Ins.,

814 N.W.2d 703

 (Minn. 2012).  The Parties’ arguments 
implicate Quade.  There, the Minnesota Supreme Court drew a line between the authority 

of appraisers on the one hand, and courts on the other, in resolving insurance disputes.  See

id.

  Quade’s basic rule is “that the phrase ‘amount of loss,’ as it relates to the authority of 
the appraiser under the policy, unambiguously permits the appraiser to determine the cause 
of the loss.”

Id. at 704

.  In other words, “in the insurance context, an appraiser’s assessment 
of the ‘amount of loss’ necessarily includes a determination of the cause of the loss, and 

the amount it would cost to repair that loss.”

Id. at 706

.  “But an appraiser’s liability 
determinations are not ‘final and conclusive.’”

Id.

 at 707 (quoting Itasca Paper Co. v. 
Niagara Fire Ins. Co.,

220 N.W. 425, 427

 (Minn. 1928)).  “Importantly, an appraisal award 
‘does not preclude the insurer from subsequently having its liability on the policy judicially 
determined.’”

Id.

 (quoting Itasca Paper Co.,

220 N.W. at 427

).  Quade’s upshot, then, is 

that  appraisers  have  authority  to  resolve  damage  questions  and  causation  questions 
necessary  to  resolving  those  damage  questions,  and  courts  have  authority  to  resolve 
coverage questions remaining after the appraisal.

Id.

 at 707–08.  Though “the line between 
liability and damage questions is not always clear,” id. at 706, “Quade tells us how to 
distinguish between the two,” Axis Surplus Ins. Co. v. Condor Corp.,

19 F.4th 1062, 1064

 
(8th Cir. 2021).  Questions “solely” concerning policy interpretation are “legal questions 
for the court.”

Id.

 (quoting Quade,

814 N.W.2d at 707

).  Questions requiring the separation 

of a covered loss from a non-covered or excluded loss are for the appraiser, certainly to 
start.  See

id.

                                                           
Applying Quade.  This case is in the latter category.  The Gibbses claim that a 
covered cause of loss—a hailstorm—caused direct physical loss to buildings on their farm.  
See ECF No. 26-2.  Beyond the amounts it has paid already, SECURA disagrees.  It says 

some buildings weren’t damaged at all.  See, e.g., ECF No. 26-7 at 1.  It disagrees regarding 
the extent of damage to other buildings.

Id.

 at 1–2.  As to other buildings, it leaves open 
whether they suffered covered damage but insists on additional proof.  Id. at 1.  It disputes 
the necessary scope of work on damaged buildings.  Id.  And SECURA disputes whether 
buildings  suffered  covered  “functional”  damage  versus  what  it  characterizes  as  non-

covered “cosmetic” damage.  Id. at 3.  These disagreements drive the Parties’ failure to 
agree on the amount of the loss, and settling them will require a fact-intensive, building-
by-building inquiry regarding the cause, extent, and nature of the loss and the amount it 
would cost to repair the loss.  Under Quade, these questions are for the appraisal panel to 
answer.  Depending on the panel’s answers, SECURA may return to court and “hav[e] its 

liability on the policy judicially determined.”  Quade,

814 N.W.2d at 707

 (quotation 
omitted).                                                                 
Remaining issues.  Two issues deserve to be addressed, if briefly.  First, SECURA 
argues that a policy provision requiring the Gibbses to furnish proof of certain repairs or 
replacements “within 365 days of the date of loss” is a condition precedent to appraisal, 
and the Gibbses did not comply with it.  Def.’s Mem. in Opp’n at 4–5; ECF No. 33-1 at 
92, 93.  This is not persuasive.  The policy’s appraisal provision identifies one condition 

precedent to its enforcement: “fail[ure] to agree on the amount of loss.”  Id. at 125.  The 
provide-proof-within-365-days provision does not reference the appraisal provision, or 
vice-versa.    And  Judge  Menendez  persuasively  rejected  a  comparable  argument  in 
Silverado Park Ass’n,

2024 WL 3565792

, at *4–5.  Whether, or precisely how, this 
provision may affect SECURA’s liability will depend on specific aspects of the appraisal 

panel’s award and perhaps additional, post-appraisal proceedings.  Second, SECURA 
argues the Gibbses have not shown that they and SECURA “fail to agree on the amount of 
loss” because they have not provided evidence specifically contesting SECURA’s assertion 
that much of the loss is cosmetic and therefore not covered.  Def.’s Mem. in Opp’n at 6–9.  
As support for this argument, SECURA cites Zulfe Enters., Inc. v. State Farm Fire and 

Cas. Co., No. A20-0063,

2020 WL 7491266

 (Minn. Ct. App. Dec. 21, 2020).  There, the 
Minnesota Court of Appeals explained that a party demanding an appraisal shows a “failure 
to agree” on the amount of loss “if the parties . . . each assert a position as to the amount 
of the loss that provides sufficient information for comparison and a determination whether 
they agree.”  Id. at *5.  As I understand the case, Zulfe involved a mere appraisal demand; 

the insured (who demanded the appraisal) provided no information to the insurer.  See id. 
(noting the insured “never provided [the insurer] proofs of loss or any other detailed 
indication of his assessment as to the cause and amount of his claimed losses”).  This case 
is materially different.  Here, the Gibbses and SECURA’s loss estimates and ensuing 
correspondence assert competing positions regarding the amount of loss and provide 
sufficient information for comparison.  They show a failure to agree in the way Zulfe 
describes.

ORDER

Therefore, based on the foregoing, and on all the files, records, and proceedings 
herein, IT IS ORDERED THAT Plaintiffs’ Motion to Compel Appraisal [ECF No. 23] is 
GRANTED.                                                                  

Date:  September 16, 2024          s/ Eric C. Tostrud                     
                              Eric C. Tostrud                        
                              United States District Court

Trial Court Opinion

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Jeff and Christine Gibbs, File No. 24-cv-1663 (ECT/ECW)

Plaintiffs,

v. OPINION AND ORDER

SECURA Insurance Company,

Jonathan L. Schwartz, Freeman Mathis & Gary, LLP, Chicago, IL, and Beth A. Jenson
Prouty, Arthur, Chapman, Kettering, Smetack & Pikala, P.A., Minneapolis, MN, for
Defendant SECURA Insurance Company.

189 F. Supp. 3d 896, 900

 (D. Minn. 2016) 

(citing Dewall v. Am. Fam. Mut. Ins. Co., No. 15-cv-1954 (ADM/HB),

2015 WL 5719143

, 
at *1 (D. Minn. Sept. 29, 2015), and St. Panteleimon Russian Orthodox Church v. Church 
Mut. Ins. Co., No. 13-cv-1977 (SRN/JJK),

2013 WL 6190400

, at *3 (D. Minn. Nov. 27, 
2013).  Summary judgment is warranted “if the movant shows that there is no genuine 
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”  

Fed. R. Civ. P. 56(a).  A fact is “material” only if its resolution “might affect the outcome 
of the suit under the governing substantive law.”  Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248

 (1986).  A dispute over a fact is “genuine” only if “the evidence is such that a 
reasonable jury could return a verdict for the nonmoving party.”

Id.

  “The evidence of the 


4    The Gibbses brought the case in Le Sueur County (Minnesota) District Court.  ECF 
No. 1 ¶ 1.  SECURA removed the case based on diversity jurisdiction under

28 U.S.C. § 1332

(a)(1).  Id. ¶ 7.  In its removal notice, SECURA alleges the Gibbses are Minnesota 
citizens.  Id. ¶ 7(a).  SECURA alleges it is incorporated under Wisconsin law and maintains 
its principal place of business there.  Id. ¶ 7(a).  There is no reason to question these 
allegations.  And measured by the difference between what SECURA has paid the Gibbses 
on their claim and the Gibbses’ estimates, § 1332(a)’s $75,000 amount-in-controversy 
threshold is satisfied.                                                   
non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.”  
Id. at 255 (citation omitted).  The Parties agree that Minnesota law governs the case, and 
there  is  no  good  reason  to  second-guess  the  Parties’  agreement  on  this 

point.  See Netherlands Ins. Co. v. Main St. Ingredients, LLC,

745 F.3d 909, 913

 (8th Cir. 
2014) (“Because the parties do not dispute the choice of Minnesota law, we assume, 
without deciding, Minnesota law applies . . . .”).  Under Minnesota law, a motion to compel 
appraisal must be granted if the undisputed material facts demonstrate (1) a valid agreement 
was made, (2) the party demanding appraisal performed all conditions precedent, and (3) 

the party opposing appraisal breached the agreement.  Silverado Park Ass’n v. Country 
Mut. Ins. Co., No. 23-cv-3687 (KMM/DLM),

2024 WL 3565792

, at *3 (D. Minn. July 29, 
2024) (citing McCoy,

189 F. Supp. 3d at 900

).  The at-issue contract must be construed as 
a whole, and unambiguous policy terms should be given their plain and ordinary meaning.

Id.

 (citing Maplebrook Ests. Homeowner’s Ass’n, Inc. v. Hartford Fire Ins. Co., No. 21-

cv-01532 (SRN/DJF),

2024 WL 869069

, at *12 (D. Minn. Feb. 29, 2024)).     
Disputed question.  SECURA does not question the policy’s validity.  It disputes 
whether the appraisal provision has been triggered.  Under the policy, a “fail[ure] to agree 
on the amount of loss” is a condition precedent to appraisal.  ECF No. 33-1 at 125.  In 
SECURA’s view, the Gibbses have not shown the Parties “fail to agree” on the amount of 

loss.  SECURA says the Parties’ disagreement concerns threshold coverage questions 
about whether the Gibbses “suffered any damage other than uncovered and excluded 
cosmetic loss” and whether, if cosmetic loss was covered, the Gibbses “submitted timely 
proof of repair or replacement of cosmetic loss, in compliance with the conditions of the 
policy.”  Def.’s Mem. in Opp’n at 1.  SECURA argues these threshold coverage questions 
must be adjudicated before any appraisal can occur, or, to put it another way, until these 
coverage questions are answered, there can be no failure to agree on the amount of loss.  

See

id.

 at 4–9.  The Gibbses argue that the Parties’ competing estimates are all that’s 
necessary to show a failure to agree on the amount of loss and that the presence of coverage 
disputes does not preclude appraisal.  Pl.’s Mem. in Supp. [ECF No. 25] at 3–9. 
Quade v. Secura Ins.,

814 N.W.2d 703

 (Minn. 2012).  The Parties’ arguments 
implicate Quade.  There, the Minnesota Supreme Court drew a line between the authority 

of appraisers on the one hand, and courts on the other, in resolving insurance disputes.  See

id.

  Quade’s basic rule is “that the phrase ‘amount of loss,’ as it relates to the authority of 
the appraiser under the policy, unambiguously permits the appraiser to determine the cause 
of the loss.”

Id. at 704

.  In other words, “in the insurance context, an appraiser’s assessment 
of the ‘amount of loss’ necessarily includes a determination of the cause of the loss, and 

the amount it would cost to repair that loss.”

Id. at 706

.  “But an appraiser’s liability 
determinations are not ‘final and conclusive.’”

Id.

 at 707 (quoting Itasca Paper Co. v. 
Niagara Fire Ins. Co.,

220 N.W. 425, 427

 (Minn. 1928)).  “Importantly, an appraisal award 
‘does not preclude the insurer from subsequently having its liability on the policy judicially 
determined.’”

Id.

 (quoting Itasca Paper Co.,

220 N.W. at 427

).  Quade’s upshot, then, is 

that  appraisers  have  authority  to  resolve  damage  questions  and  causation  questions 
necessary  to  resolving  those  damage  questions,  and  courts  have  authority  to  resolve 
coverage questions remaining after the appraisal.

Id.

 at 707–08.  Though “the line between 
liability and damage questions is not always clear,” id. at 706, “Quade tells us how to 
distinguish between the two,” Axis Surplus Ins. Co. v. Condor Corp.,

19 F.4th 1062, 1064

 
(8th Cir. 2021).  Questions “solely” concerning policy interpretation are “legal questions 
for the court.”

Id.

 (quoting Quade,

814 N.W.2d at 707

).  Questions requiring the separation 

of a covered loss from a non-covered or excluded loss are for the appraiser, certainly to 
start.  See

id.

                                                           
Applying Quade.  This case is in the latter category.  The Gibbses claim that a 
covered cause of loss—a hailstorm—caused direct physical loss to buildings on their farm.  
See ECF No. 26-2.  Beyond the amounts it has paid already, SECURA disagrees.  It says 

some buildings weren’t damaged at all.  See, e.g., ECF No. 26-7 at 1.  It disagrees regarding 
the extent of damage to other buildings.

Id.

 at 1–2.  As to other buildings, it leaves open 
whether they suffered covered damage but insists on additional proof.  Id. at 1.  It disputes 
the necessary scope of work on damaged buildings.  Id.  And SECURA disputes whether 
buildings  suffered  covered  “functional”  damage  versus  what  it  characterizes  as  non-

covered “cosmetic” damage.  Id. at 3.  These disagreements drive the Parties’ failure to 
agree on the amount of the loss, and settling them will require a fact-intensive, building-
by-building inquiry regarding the cause, extent, and nature of the loss and the amount it 
would cost to repair the loss.  Under Quade, these questions are for the appraisal panel to 
answer.  Depending on the panel’s answers, SECURA may return to court and “hav[e] its 

liability on the policy judicially determined.”  Quade,

814 N.W.2d at 707

 (quotation 
omitted).                                                                 
Remaining issues.  Two issues deserve to be addressed, if briefly.  First, SECURA 
argues that a policy provision requiring the Gibbses to furnish proof of certain repairs or 
replacements “within 365 days of the date of loss” is a condition precedent to appraisal, 
and the Gibbses did not comply with it.  Def.’s Mem. in Opp’n at 4–5; ECF No. 33-1 at 
92, 93.  This is not persuasive.  The policy’s appraisal provision identifies one condition 

precedent to its enforcement: “fail[ure] to agree on the amount of loss.”  Id. at 125.  The 
provide-proof-within-365-days provision does not reference the appraisal provision, or 
vice-versa.    And  Judge  Menendez  persuasively  rejected  a  comparable  argument  in 
Silverado Park Ass’n,

2024 WL 3565792

, at *4–5.  Whether, or precisely how, this 
provision may affect SECURA’s liability will depend on specific aspects of the appraisal 

panel’s award and perhaps additional, post-appraisal proceedings.  Second, SECURA 
argues the Gibbses have not shown that they and SECURA “fail to agree on the amount of 
loss” because they have not provided evidence specifically contesting SECURA’s assertion 
that much of the loss is cosmetic and therefore not covered.  Def.’s Mem. in Opp’n at 6–9.  
As support for this argument, SECURA cites Zulfe Enters., Inc. v. State Farm Fire and 

Cas. Co., No. A20-0063,

2020 WL 7491266

 (Minn. Ct. App. Dec. 21, 2020).  There, the 
Minnesota Court of Appeals explained that a party demanding an appraisal shows a “failure 
to agree” on the amount of loss “if the parties . . . each assert a position as to the amount 
of the loss that provides sufficient information for comparison and a determination whether 
they agree.”  Id. at *5.  As I understand the case, Zulfe involved a mere appraisal demand; 

the insured (who demanded the appraisal) provided no information to the insurer.  See id. 
(noting the insured “never provided [the insurer] proofs of loss or any other detailed 
indication of his assessment as to the cause and amount of his claimed losses”).  This case 
is materially different.  Here, the Gibbses and SECURA’s loss estimates and ensuing 
correspondence assert competing positions regarding the amount of loss and provide 
sufficient information for comparison.  They show a failure to agree in the way Zulfe 
describes.

ORDER

Therefore, based on the foregoing, and on all the files, records, and proceedings 
herein, IT IS ORDERED THAT Plaintiffs’ Motion to Compel Appraisal [ECF No. 23] is 
GRANTED.                                                                  

Date:  September 16, 2024          s/ Eric C. Tostrud                     
                              Eric C. Tostrud                        
                              United States District Court

Reference

Status: Unknown