Brewer v. State Farm Fire & Cas. Co.
| Decision Date | 08 March 2022 |
| Docket Number | WD84331 |
| Court | Missouri Court of Appeals |
| Parties | PHILIP BREWER AND LORI BREWER, Respondents, v. STATE FARM FIRE AND CASUALTY COMPANY, Appellant. |
Appeal from the Circuit Court of Cass County, Missouri Honorable R Michael Wagner, Judge
Before: Alok Ahuja, P.J., Edward R. Ardini, Jr. and Janet Sutton, JJ.
This case involves a dispute between an insurer, State Farm, and its insured, Philip and Lori Brewer. The Brewers filed a claim for property damage with State Farm but the parties were unable to reach a resolution on the claim. The Brewers subsequently filed a petition and motion to appoint an umpire. The circuit court sustained the motion over State Farm's objection and appointed an umpire in the matter. State Farm appeals. We find that the dispute is properly characterized as a coverage dispute rather than a dispute about the amount of loss. Therefore, the insurance policy's appraisal provision did not apply and the appointment of an umpire was improper. We vacate the trial court's judgment and enter the judgment the circuit court should have entered and dismiss the amended petition for the appointment of an umpire without prejudice.
State Farm Fire and Casualty Company (State Farm) issued a rental dwelling insurance policy (policy) to homeowner Philip Brewer.[1] The policy covered a home in Belton Missouri, and certain personal property. While the policy was in effect, the home was damaged by a tree during a storm. As a result, the homeowners made a claim for property damage with State Farm.
State Farm sent a contractor to the home to inspect the damage and prepare an estimated cost of repair. State Farm's contractor estimated the value of the loss to be $66, 772.77. The homeowners then sent State Farm an estimate for repairs from a different contractor, Manning General Contractors (Manning) in the amount of $153, 140.16.
State Farm rejected Manning's estimate because State Farm believed it contained multiple items outside the scope of coverage. State Farm advised the homeowners that the Manning estimate could not be approved as it "include[d] many discrepancies, inconsistencies, and overcharges." State Farm provided the following specific reasons for its rejection: the estimate included code-upgrade charges that were not covered under the policy; it included "non-applicable charges" relating to "fall protection" and "tall ladder" installations for a single-story home; it included an estimate to remove and replace engineered wood flooring, a type of flooring not present in the home; it included the cost of repairing certain closets and rooms that did not sustain damage; it included the cost of repairing a closet with dimensions that were not "consistent with the dimensions of a closet"; it included the cost of replacing floor joists in certain areas of the home when an engineer found no such damage to those floor joists; it included the cost of removing and replacing all the roof rafters when an engineer had concluded that only some of the roof rafters needed replacement; and it included "duplicative" and "overlapping" charges relating to the roof repair. State Farm also pointed out that Manning's estimate differed greatly from Manning's own subcontractor's estimate with respect to interior repairs, with Manning's estimate more than double its own subcontractor's estimate.
The homeowners then submitted a request for appraisal to State Farm. State Farm denied the homeowner's request for appraisal, citing the appraisal provision of the homeowner's policy, which stated, in full:
Appraisal. If you and we fail to agree on the amount of loss, either one can demand that the amount of the loss be set by appraisal. If either makes a written demand for appraisal, each shall select a competent, independent appraiser and notify the other of the appraiser's identity within 20 days of receipt of the written demand. The two appraisers shall then select a competent, impartial umpire. If the two appraisers are unable to agree upon an umpire within 15 days, you or we can ask a judge of a court of record in the state where the residence premises is located to select an umpire. The appraisers shall then set the amount of the loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon shall be the amount of the loss. If the appraisers fail to agree within a reasonable time, they shall submit their differences to the umpire. Written agreement signed by any two of these three shall set the amount of the loss. Each appraiser shall be paid by the party selecting that appraiser. Other expenses of the appraisal and the compensation of the umpire shall be paid equally by you and us.
State Farm further indicated that "[t]he appraisal provision of your policy is to resolve differences in the price of the repairs which State Farm determined are covered.
Appraisal cannot be used to resolve differences about the scope of work to be performed or coverage provided by contract."
The homeowners subsequently filed a first amended petition for the appointment of an umpire in Cass County Circuit Court. The homeowners alleged that "[a] dispute arose as to the amount owed by State Farm as a result of the loss." The homeowners further alleged they appointed an appraiser "pursuant to the terms of the policy" but that State Farm had "failed and refused to appoint an appraiser . . . ." The homeowners requested that the circuit court appoint an umpire to resolve their disagreement.
State Farm filed a motion to dismiss and suggestions in support. State Farm argued that, under the policy, it had no obligation to repair or replace damaged items not covered, it would not pay an amount exceeding that necessary to repair or replace, and it would pay only the smallest amount necessary to cover the insured interest. State Farm characterized the dispute as a coverage disagreement, asserting that an appraisal was not appropriate to resolve coverage questions and the appointment of an umpire was "premature" until the parties resolved the coverage issues.
The circuit court held a hearing on State Farm's motion to dismiss and denied the motion.
Homeowners then filed a motion to appoint an umpire, which was identical to their first amended petition. The motion included an exhibit with proposed individuals to serve as umpires. The circuit court held a hearing on the homeowner's request for the appointment of an umpire. State Farm continued to oppose the request because the dispute was a question of coverage and not the amount of loss, and that numerous issues about coverage needed to be resolved first.[2]
The circuit court entered a judgment sustaining the homeowners' motion to appoint an umpire and named an individual to serve in that capacity. State Farm appeals.
In its sole point on appeal, State Farm asserts that the circuit court erred in sustaining the homeowners' motion to appoint an umpire because the dispute could not be resolved through the insurance policy's appraisal provision as the dispute concerned the scope of coverage rather than the value of a covered loss.
The interpretation of a contract is a question of law subject to our de novo review. Belton Chopper 58, LLC v. N Cass Dev., LLC, 496 S.W.3d 529, 532 (Mo. App. W.D. 2016). Here, in our de novo review, we are required to apply the principles of contract interpretation to the insurance policy in question. Gavan v. Bituminous Cas. Corp., 242 S.W.3d 718, 720 (Mo. banc 2008). The question of whether an insurance policy is ambiguous is a question of law. Id. When a policy is unambiguous, we must enforce the policy as it is written. Id.
Here, both State Farm and the homeowners agree that the appraisal provision in the policy is unambiguous. The policy plainly and unambiguously gives both State Farm and the homeowners the right to demand an appraisal, but only when the parties "fail to agree on the amount of the loss." The parties agree there is legitimate damage from the tree, but diverge on the proper way to determine the extent of State Farm's liability. While the appraisal provision in the policy is unambiguous, its application depends on the nature of the factual dispute between State Farm and the homeowners.
The homeowners argue that the appraisal provision is applicable because the dispute is over "the amount of the covered loss." However, State Farm contends that significant questions relating to what repairs are actually covered under the policy remain. For example, and this is not an exhaustive list of State Farm's objections, State Farm disputes the amount of damage caused to certain interior portions of the home, the extent of necessary roof repair, and the scope of necessary structural repair. Therefore, the question here is whether the circuit court properly appointed an umpire in light of these factual disputes; namely, whether the dispute is a coverage dispute or amount of loss dispute.
"[T]he interpretation of an insurance contract is generally a question of law, particularly in reference to the question of coverage." D.R. Sherry Const., Ltd. v. Am. Fam. Mut. Ins. Co., 316 S.W.3d 899, 902 (Mo. banc 2010). To that end, "appraisal provisions in an insurance policy apply only if the dispute between the parties relates to the amount of the loss and not coverage." Am. Fam. Mut. Ins. Co. v. Dixon, 450 S.W.3d 831, 836 (Mo. App. E.D. 2014) (citing Hawkinson Tread Tire Serv. Co. v. Ind. Lumbermens Mut. Ins. Co. Indianapolis, Ind., 245 S.W.2d 24, 28 (Mo. 1951)).
In Hawkinson, the parties disagreed on both the meaning of the insurance contract and its application to the facts. Hawkinson, 245 S.W.2d at 26-28. The Missouri Supreme Court stressed that value arguments...
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