Meineke v. Twin City Fire Ins. Co.
| Decision Date | 20 September 1994 |
| Docket Number | No. 1,CA-CV,1 |
| Citation | 181 Ariz. 576,892 P.2d 1365 |
| Parties | George MEINEKE and Elizabeth Meineke, husband and wife, Plaintiffs-Appellees, v. TWIN CITY FIRE INSURANCE COMPANY, an Indiana corporation, Defendant-Appellant. 92-0134. |
| Court | Arizona Court of Appeals |
In this appeal, Twin City Fire Insurance Company ("Twin City") challenges the trial court's denial of its motion to compel an appraisal to determine the value of appellees' (Meinekes) fire loss claim. We conclude that Twin City waived the insurance policy appraisal provision and its demand for an appraisal was unreasonably delayed under the circumstances. Accordingly, we affirm the trial court.
On December 1, 1989, a fire destroyed the Prescott home of George and Elizabeth Meineke. The house was built over a period of four decades by George Meineke himself. After the house was built in 1956, they made a number of additions to the dwelling, and at the time of the fire, the house contained more than 6,200 square feet with 24 rooms and 6 baths.
The Meinekes had an insurance policy issued by Twin City that contained limits of liability of $132,000 for the dwelling, $13,200 for other structures, $92,400 for personal property, and $26,400 for loss of use. However, riders to the policy provided that the limits of liability were increased to equal the current replacement costs of the dwelling and personal property.
A few days after the fire, Twin City's local adjuster inspected the premises and gave a $5,000 advance to the Meinekes. On December 29, 1989, the Meinekes met with a contractor who had been hired by Twin City to estimate the replacement value of the home. In February 1990, the Meinekes gave the contractor scale drawings and an index of the structural components of the house. Based on that information, the contractor estimated that the house could be rebuilt for $342,922.78. The same contractor subsequently revised his estimates, arriving at a figure of $446,146.98 on the second estimate, $459,965.10 on the third estimate, and $368,994.65 on the fourth estimate. The fourth estimate figure, according to the contractor, represented the actual cost to the Meinekes in constructing the house and not the actual present cost of replacing the home. The contractor told Twin City he could not rebuild the home for $368,994.65 but believed he could rebuild it for the amount of his third estimate--$459,965.10.
In April 1990, Twin City advanced another $5,000 to the Meinekes. In July, 1990, the Meinekes offered to settle the structural loss for $687,085.30, which they calculated by using a $110 per square foot cost for the 6,246.23 square feet of the house. On July 27, 1990, Twin City paid to the Meinekes $132,000 on their structural claim and $92,400 on their personal property loss. In September 1990, Twin City paid to the Meinekes $4,842.22 for architectural plans and blueprints.
In October 1990, the Meinekes offered to settle their structural damage claim for $824,340. They also requested $26,400 for loss of use and $13,950 for damage to their covered walkway and trees and shrubs. Based on the contractor's fourth estimate ($368,994.65) and subtracting depreciation and the amount already paid, Twin City paid to the Meinekes an additional $192,370.32 for replacement of the house. It also paid an additional $34,713.86 for loss of personal property. In its October 10, 1990, letter setting forth these amounts Twin City did not mention the appraisal procedure.
Following further negotiations, Twin City wrote to the Meinekes on November 6, 1990, noting that the Meinekes had represented that they were seeking another estimate from the contractor as well as estimates from two other builders. Twin City stated that if those estimates did not clarify the discrepancies in value for replacement of the house, Twin City would invoke the appraisal provision of the policy. This was Twin City's first mention of the clause. That clause provided:
If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If 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 the 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.
Loss was payable 60 days after Twin City received the insured's proof of loss and it either reached agreement with the insured, a final judgment was entered, or an appraisal award was filed with Twin City. Under the policy, the insured could not sue Twin City unless the policy provisions had been complied with and the action was started within one year after the date of loss.
In a November 27, 1990, letter from the Meinekes to Twin City, the Meinekes enclosed a builder's estimate that totaled $983,880. They also noted that Twin City could not invoke the appraisal clause until the parties had reached differing values for replacement of the house and that Twin City had not yet stated what it believed the replacement value was, although the Meinekes had made two offers of settlement and provided several contractors' estimates. Previously on September 19, 1990, the Meinekes' attorney had written to Twin City's attorney asking why it had not tendered a sum equal to the value of the insurance company's position. In the letter of November 27, 1990, the Meinekes' attorney wrote to Twin City's counsel saying,
On November 28, 1990, the Meinekes filed a complaint against Twin City in order to protect their rights under the one year limitation clause. However, they did not serve the complaint nor advise Twin City that they had filed an action against it. Negotiations continued, and on January 23, 1991, Twin City paid to the Meinekes $6,200 for damage to their trees and shrubs. In February 1991, Twin City paid $3,128 for damage to the covered walkway. By letter dated January 29, 1991, the Meinekes advised Twin City that the contractor had not done an updated bid and another builder decided not to submit any bid, so they were relying on the $938,880 bid as the replacement value of the house.
On March 7, 1991, the Meinekes filed an amended complaint which they served on Twin City. On April 19, 1991, Twin City filed a notice of removal of the action to federal district court and its answer. Twin City filed an answer asserting that the complaint was untimely filed because the insurance policy required the parties to arbitrate and that by filing the answer it did not waive reliance on those policy provisions. Twin City subsequently withdrew its notice of removal, and on May 31, 1991, the federal district court entered an order remanding the matter to the superior court.
In the meantime, by letter dated April 29, 1991, Twin City demanded compliance with the appraisal procedure of the policy and named its appraiser. The Meinekes refused to comply with Twin City's demand to submit the valuation dispute to appraisers on the ground that the demand was untimely. On June 10, 1991, Twin City filed a motion to stay the litigation and for an order compelling submission of the Meinekes' claim to arbitration. Twin City noted that it had already paid the Meinekes more than $470,000 on their claim, and it sought compliance with the appraisal provision to determine the value of the claim.
In response, the Meinekes argued that the appraisal clause was optional, not mandatory, and that Twin City had waived its right to demand appraisal because it had waited more than a year after the loss and more than six months after it was clear a dispute in valuation existed to make its demand. The Meinekes also asserted that Twin City had repudiated the appraisal option by filing a notice of removal to federal court and its answer in the suit.
The trial court denied the motion to compel arbitration without comment. Twin City filed a timely notice of appeal from the order denying its motion. We have jurisdiction pursuant to Ariz.Rev.Stat.Ann. ("A.R.S.") section 12-2101.01(A)(1) (1994). See also U.S. Insulation, Inc. v. Hilro Constr. Co., 146 Ariz. 250, 253, 705 P.2d 490, 493 (App.1985) ().
The parties are in dispute as to the standard of review applicable to the issue of this appeal.
Twin City argues that because the facts are undisputed and the question is one of law, our standard of review is de novo. Twin City cites U.S. Insulation, 146 Ariz. at 256, 705 P.2d at 496, to support its position. The Meinekes claim that because the facts are disputed we must accept as fact the evidence that supports the trial court's ruling therefrom in a light most favorable to sustaining the trial court's decision. Davis v. Tucson Ariz. Boys Choir Soc'y, 137 Ariz. 228, 229, 669 P.2d 1005, 1006 (App.1983).
Because we view the issue as: whether the facts regarding Twin City's conduct satisfy the...
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