R.R. Ave. Props., LLC v. Acadia Ins. Co.
| Decision Date | 14 June 2022 |
| Docket Number | 21-1834 |
| Parties | RAILROAD AVENUE PROPERTIES, LLC, Plaintiff, Appellant, v. ACADIA INSURANCE COMPANY, Defendant, Appellee. |
| Court | U.S. Court of Appeals — First Circuit |
James E. Grumbach, with whom Boston Law Collaborative, LLC was on brief, for appellant.
Robert J. Maselek, Jr., with whom McDonough Cohen & Maselek LLP was on brief, for appellee.
Before Lynch, Thompson, and Gelpí, Circuit Judges.
Railroad Avenue Properties, LLC ("Railroad") sued Acadia Insurance Company ("Insurance Company")1 for breach of contract to recover additional insurance proceeds for property damage sustained from a fire at one of Railroad's commercial properties ("Building"). The Insurance Company insured the Building and paid Railroad for damages arising out of the fire. Railroad argues that it is entitled to additional payment under the terms of the insurance policy ("Policy") in the form of a depreciation holdback and code upgrade coverage.
The district court granted summary judgment in favor of the Insurance Company, holding that the terms of the Policy were clear and unambiguous, Railroad did not satisfy the Policy's condition precedent for receiving the additional insurance proceeds, and Railroad's failure to perform could not be otherwise excused. R.R. Ave. Props., LLC v. Acadia Ins. Co., No. 19-40155, 2021 WL 4459692, at *4-6 (D. Mass. Sept. 29, 2021).
We affirm.
Railroad owns commercial buildings in Millbury, Massachusetts, including the Building, which was located at 11 Railroad Avenue. The Insurance Company issued a Commercial Lines Policy, No. ADV 5211789-11, to Railroad for its commercial properties; the Policy was effective from February 26, 2017 to February 26, 2018.
On November 18, 2017, the Building sustained severe fire damage. The Insurance Company retained consultants to assist its investigation of the fire loss and the potential for subrogation claims arising from the fire loss. On December 4, 2017, the Insurance Company determined that no viable subrogation claims existed because the fire was caused by an unidentified arsonist. Given the extent of damage, the building was determined to be a total loss and would need to be rebuilt. On December 11, 2017, the Insurance Company paid Railroad a $25,000 advance payment.
On February 5, 2018, the Insurance Company provided Railroad's public adjuster with an estimate of the building loss. Railroad's public adjuster agreed with the estimate and reserved the right to seek an additional $25,000 in code upgrade coverage2 arising out of the anticipated need to install sprinklers during the rebuild. On February 22, 2018, Railroad sent the Insurance Company a Proof of Loss, which Railroad unilaterally executed. The Proof of Loss stated: (1) the Replacement Cost Value ("RCV") of repair was $808,468.13; (2) the Actual Cash Value ("ACV") was $610,928.46; and (3) after the deductible amount ($10,000) and the advance payment ($25,000), the net ACV was $575,539.67. On February 26, 2018, the Insurance Company paid Railroad the net ACV payment of $575,928.46. Under the terms of the Policy, Railroad could recover the depreciation holdback (the difference between the RCV and the ACV: $197,539.67) and the code upgrade coverage ($25,000) if it completed reconstruction of the Building within two years of the property loss.
In July 2018, Railroad demolished the damaged Building. In August 2018, Railroad began meeting with a contractor, RGN Construction ("RGN"), to "review options to reconstruct the [B]uilding." In January 2019, Railroad signed a contract with RGN for architectural and structural design services. In July 2019, Railroad and RGN agreed on the scope of construction for the shell of the new building.
On November 5, 2019, Railroad requested from the Insurance Company a six-month extension to the two-year rebuild requirement under the Policy. The Insurance Company did not grant an extension. Railroad and RGN began reconstruction of the building in January 2020, more than two years after the fire.
The Building and Personal Property Coverage Form, the basic coverage form in the Policy, provides:
The Massachusetts Changes Endorsement, required under Mass. Gen. Laws ch. 175, § 47, clause 17, amends the Replacement Cost provision:
The Advantage Property Endorsement, which includes the provision covering the code upgrade coverage in the amount of $25,000, provides:
On November 13, 2019, Railroad filed suit against the Insurance Company in Massachusetts state court, alleging a single cause of action for breach of contract for failing to pay the depreciation holdback and code upgrade coverage, a sum of $222,539.67. The Insurance Company removed the case to federal court based on the diversity of the parties. See 28 U.S.C. § 1441.
On October 20, 2020, the Insurance Company filed a motion for summary judgment. After full briefing, the district court granted summary judgment in favor of the Insurance Company, holding that Railroad did not satisfy the Policy's condition precedent to recover the depreciation holdback or the code upgrade coverage because Railroad failed to replace the Building within two years of the loss, as required by the clear and unambiguous terms of the Policy. R.R. Ave. Props., 2021 WL 4459692, at *4-5. The district court also held that Railroad's failure to perform was not excused. Id.
Railroad timely appealed.
"We review de novo a district court's grant of summary judgment." See Forbes v. BB&S Acquisition Corp., 22 F.4th 22, 25 (1st Cir. 2021). Summary judgment is appropriate if "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) ; see Santos-Rodríguez v. Seastar Sols., 858 F.3d 695, 697 (1st Cir. 2017).
Railroad first argues that the Policy phrases "until the property is actually repaired or replaced" and "unless the repairs or replacement are made as soon as reasonably possible after the loss or damage, not to exceed two years" are inherently ambiguous. Railroad does not explain which words in the Policy language are ambiguous or how the language could otherwise be interpreted.
Under Massachusetts law, the "[i]nterpretation of an insurance policy is a question of law to be determined by the court." Golchin v. Liberty Mut. Ins. Co., 466 Mass. 156, 993 N.E.2d 684, 688 (2013). "Interpretation of an insurance policy is no different from interpretation of any other contract." Citation Ins. Co. v. Gomez, 426 Mass. 379, 688 N.E.2d 951, 952 (1998). Massachusetts courts construe the terms in an insurance policy in their "usual and ordinary sense." Hakim v. Mass. Insurers' Insolvency Fund, 424 Mass. 275, 675 N.E.2d 1161, 1164 (1997). "A term is ambiguous only if it is susceptible of more than one meaning and reasonably intelligent persons would differ as to which meaning is the proper one." Citation Ins., 688 N.E.2d at 953. Where policy terms are required by statute, as here,3 "the rule of construction resolving ambiguities in a policy against the insurer is inapplicable." Aquino v. United Prop. & Cas. Co., 483 Mass. 820, 143 N.E.3d 379, 386 (2020) (quoting McNeill v. Metro. Prop. & Liab. Ins. Co., 420 Mass. 587, 650 N.E.2d 793, 795 (1995) ).
Based on its "usual and ordinary" meaning, the language in the Policy is not ambiguous. A reasonably intelligent person would understand that Railroad was not entitled to the depreciation holdback or code upgrade coverage unless the damaged Building was actually4 rebuilt within two years of the fire damage. Indeed, Railroad understood as much when it asked the Insurance Company for a six-month extension to the two-year rebuild requirement on November 5, 2019, less than two weeks before the rebuild deadline.
Railroad's citations to nonbinding cases from other jurisdictions do not support its arguments.5 Those cases involve different factual situations and different policy language, such as the insured party purchasing new property as a replacement for its damaged property (rather than rebuilding), see, e.g., Pierce v. Farm Bureau Mut. Ins. Co., 548 N.W.2d 551, 552 (Iowa 1996) ; Batton-Jajuga v. Farm Bureau Gen. Ins. Co. of Mich., 322 Mich.App. 422, 913 N.W.2d 351, 353 (2017), or the definition of the term "spend," see Northrop v. Allstate Ins. Co., 247 Conn. 242, 720 A.2d 879, 882-83 (1998).
Railroad further argues that it satisfied the...
To continue reading
Request your trial