Rockford Mut. Ins. Co. v. Pirtle
| Decision Date | 11 August 2009 |
| Docket Number | No. 77A01-0802-CV-94.,77A01-0802-CV-94. |
| Citation | 911 N.E.2d 60 |
| Parties | ROCKFORD MUTUAL INSURANCE COMPANY, Appellant-Defendant, v. Terrey E. PIRTLE, Appellee-Plaintiff. |
| Court | Indiana Appellate Court |
David P. Friedrich, Wilkinson, Goeller, Modesitt, Wilkinson, & Drummy, LLP, Terre Haute, IN, Attorney for Appellant.
David W. Stone IV, Stone Law Office & Legal Research, Anderson, IN, John P. Nichols, Anderson & Nichols, Terre Haute, IN, Attorneys for Appellee.
Rockford Mutual Insurance Company ("Rockford") appeals from a jury verdict in favor of Terrey E. Pirtle in his action against Rockford for breach of contract. Rockford raises the following issues for our review:
I. Whether Pirtle's recovery under the policy is limited to the actual cash value of the building because of Pirtle's failure to comply with the repair and replacement cost policy provision of his policy;
II. Whether Pirtle's suit was barred by the contractual one-year-limitation period provision in the policy; and
III. Whether Pirtle's damages can include consequential damages and amounts exceeding policy limits.
We affirm.
Pirtle purchased an historic building located at 900 Maple Avenue in Terre Haute, Indiana by obtaining a mortgage for $140,250.00 and insured the building through a policy with Rockford. The building was used as a rental property while Pirtle was restoring it. By early 1999, the historic building was valued at $165,000.00; however, it was damaged in an accidental fire on November 11, 2000.
After the fire, Pirtle made a claim under his policy, and Rockford assigned the claim to one of its claim supervisors, who hired an independent adjuster to prepare a damage estimate for the building. The independent adjuster estimated the damage to the building at $79,907.49. Rockford's claim supervisor gave the independent adjuster authority to settle the claim for $80,000.00. Pirtle rejected the claim because it was not enough to satisfy the mortgage or to repair the building. Because of the damage to the building, Pirtle was unable to continue to lease the building to tenants.
Pirtle hired a contractor, Kevin Maher, who estimated the damage to the building at $232,915.39 in 2001.1 A second Rockford claims supervisor, Andy Clark, was assigned to Pirtle's claim and accepted Maher's damage estimate after noticing that no other contractors had submitted a quote or would complete repairs using the independent adjuster's damage estimate. Clark then obtained authority to settle Pirtle's claim for up to $193,000.00, Rockford's policy limits for the dwelling.
Pirtle hired an attorney, David Bolk, who received an offer from Clark of $69,874.62, representing what Rockford considered to be the "actual cash value" of the building. Clark explained to Bolk that he arrived at this number by using Maher's estimate less depreciation. Bolk made a demand for the policy limits under Coverage A less a 10% discount. Clark informed Bolk that he could not pay the Coverage A policy limits because he was only authorized to offer the actual cash value of the building. Clark explained that, while Pirtle's policy included replacement cost coverage, Pirtle would only be entitled to payment under the replacement cost coverage once repairs or replacement of the building had been completed. Clark told Bolk that the actual cash value was an arbitrary figure used if the building was going to be repaired, and was often used as seed money to start repairs to insured buildings. Again, Clark offered what he considered to be the actual cash value of the building and proposed hiring a certified real estate appraiser to resolve the dispute over the actual cash value amount. Bolk did not respond to the offer.
The independent adjuster completed a comparative analysis in May 2001, which set the actual cash value of the building at $86,146.66. Pirtle retained other counsel2 and filed suit against Rockford on September 24, 2001. Pirtle's complaint alleged breach of contract and bad faith. The bad faith claim was dismissed with prejudice when Rockford paid $86,146.66 for the building's actual cash value, which Pirtle accepted while continuing to contest the actual cash value used.
Rockford filed a motion for summary judgment alleging that Pirtle's recovery was limited to actual cash value because the building had not been repaired or replaced. Rockford argued that Pirtle was ineligible to receive payment for replacement cost coverage because he had not repaired or rebuilt the building. The motion for summary judgment was denied.
Rockford filed a motion in limine seeking 1) to limit Pirtle's recovery to applicable policy limits and 2) to bar consequential damages. The trial court's order on the parties' motion in limine pleadings denied Rockford's attempts to limit Pirtle's recovery of consequential damages and amounts above policy limits.
At the conclusion of the jury trial, Rockford was found to be in breach of contract. The jury awarded Pirtle $124,149.55 under the insurance policy and $406,136.58 in consequential damages for an aggregate award of $524,286.13. Rockford's motion to correct error again sought to have Pirtle's award capped at policy limits. The trial court denied the motion to correct error. Rockford now appeals.
A jury is to be afforded great latitude in making damage award determinations. City of Carmel v. Leeper Elec. Servs., Inc., 805 N.E.2d 389, 393 (Ind.Ct. App.2004). A verdict will be upheld if the award falls within the bounds of the evidence. Id. On review of such an award, the appellate court will neither reweigh the evidence nor judge the credibility of the witnesses. The evidence will be looked at in a light most favorable to the judgment. Id. (quoting City of Elkhart v. No-Bi Corp., 428 N.E.2d 43, 45 (Ind.Ct.App. 1981)).
Rockford argues that Pirtle is limited to recovering only the actual cash value of the building because Pirtle failed to repair and replace the building after the fire, a condition precedent to receiving payment under that coverage. In March of 2002, Rockford paid Pirtle $86,146.66, which was Rockford's calculation of the actual cash value.
Rockford's insurance policy provided Pirtle with replacement coverage up to $193,000.00 for the building, up to $8,000.00 for personal property, and up to $19,300.00 for fair rental value. Rockford's policy further provided as follows:
5. Loss Settlement. Covered property losses are settled as follows:
(c) Buildings under coverage A or B at replacement cost without deduction for depreciation, subject to the following: (4)When the cost to repair or replace the damage is more than $1,000 or more than 5% of the amount of the insurance in this policy on the building, whichever is less, we will pay no more than the actual cash value of the damage until actual repair or replacement is completed.
Appellant's App. at 198-99. The parties appear to agree that the cost to repair or replace the building falls within the conditions of paragraph 5(c)(4) of Rockford's policy.
Rockford argues that the terms of the insurance contract are clear and unambiguous and must be given effect. Rockford urges this court to review the interpretation of this contract de novo because it is unambiguous. See Liberty Ins. Corp. v. Ferguson Steel Co., 812 N.E.2d 228, 230 (Ind.Ct.App.2004) (). Rockford claims that Pirtle received all that he was entitled to receive from Rockford because he did not follow the terms of the contract. Rockford takes issue with Pirtle's alleged failure to first seek the actual cash value of the building, and once he received payment of the actual cash value, his use of the funds to satisfy the mortgage instead of commencing to repair or replace the building.
Here, the parties disputed the actual cash value. Clark testified that when there is a dispute over actual cash value of a building, Rockford usually obtains a certified real estate appraisal to determine the actual cash value of the property. Tr. at 306-07. Rockford did not do that here. Because of the impasse, Pirtle struggled to meet his obligations under the mortgage. Pirtle was trapped in a no win situation. By the time he received the actual cash value payment in March of 2002 he was behind on the mortgage payments and had no rental income. Pirtle had little choice but to use the funds to satisfy the mortgage at a loss to the mortgage holder, which left nothing to start the repairs.
An actual cash value policy is a pure indemnity contract, the purpose of which is to make the insured whole but never to benefit him because a fire occurred. See Travelers Indem. Co. v. Armstrong, 442 N.E.2d 349, 352 (Ind.1982) (citing APPLEMAN ON INSURANCE 2d § 3823, at 218-19). "Replacement cost coverage reimburses the insured for the full cost of repairs, if the insured repairs or rebuilds the building, even if that results in putting the insured in a better position than he was before the loss." Travelers, 442 N.E.2d at 352 (emphasis in original). Replacement cost coverage is an optional coverage that may be purchased and added to a basic fire policy by endorsement and is more expensive because the rate of premiums is higher and the amount of insurance to which that rate applies is usually higher. Id. Replacement cost coverage meets the need expressed as follows:
Since fire is an unwanted and unplanned for occurrence, why can't the owner of an older home buy insurance to cover the full cost of repair even if those repairs make it a better or more valuable building? Since at the time of fire the homeowner may be least able to pay for improvements, why can't that hazard be insured too? Instead of apportioning the cost of repair after a fire between the actual cash value, to be paid by the insurer, and the betterment to be paid by the insured, why can't the policyholder simply pay a higher premium each year but not have to...
To continue reading
Request your trial
-
D & S Realty, Inc. v. Markel Ins. Co.
...whether the insurer's denial actually prevented the insureds from repairing or replacing the property. In contrast, the court in Rockford Mut. Ins. Co. v. Pirtle51 affirmed the verdict in favor of the insured when the jury had been instructed as follows: “ ‘When one party prevents the other......
-
Valley Forge Ins. Co. v. Hartford Iron & Metal, Inc.
...flows naturally and probably from the breach and was contemplated by the parties when the contract was made." Rockford Mut. Ins. Co. v. Pirtle, 911 N.E.2d 60, 67 (Ind.Ct.App. 2009) (citing Thor Elec., Inc. v. Oberle & Assocs., Inc., 741 N.E.2d 373, 381 (Ind.Ct.App. 2000)). "A damage award m......
-
Devonshire Real Estate & Asset Mgmt., LP v. Am. Ins. Co., CIVIL ACTION NO. 3:12-CV-2199-B
...it was too late for the insured, who was frequently an unsophisticated party,to make repairs. See e.g., Rockford Mut. Ins. Co. v. Pirtle, 911 N.E.2d 60, 64-65 (Ind. Ct. App. 2009) (applying doctrine where insurer refused to pay benefits until after mortgage foreclosure process had started a......
-
Stephens & Stephens Xii, LLC v. Fireman's Fund Ins. Co.
...598-599, Ward v. Merrimack Mut. Fire Ins. Co. (App.Div.2000) 332 N.J.Super. 515, 753 A.2d 1214, 1219-1221, and Rockford Mut. Ins. Co. v. Pirtle (Ind.App.2009) 911 N.E.2d 60, 66-67.)8 On the other hand, Florida courts have not excused the insured from repairing damaged property under similar......
-
What the Hail Is All the Fuss About? Indiana Hail Damage Claims In the Context of Bad Faith
...of Appeals dealt with this actual replacement issue, is inapt because that case involved only a breach of contract claim. Id. (citing 911 N.E.2d 60 (Ind. Ct. App. 2009)). Further, the jury in that case awarded plaintiff full replacement cost benefits, without the building having been actual......
-
Coverage For Rebuilding Costs Front And Center In The Wake Of The Costliest Year Ever For Natural Catastrophe Losses
...even if that results in putting the insured in a better position than he was before the loss."); Rockford Mut. Ins. Co. v. Pirtle, 911 N.E.2d 60, 65 (Ind. Ct. App. 2009) ("Any purported windfall to an insured who purchases replacement cost insurance is precisely what the insured contracted ......
-
CHAPTER 3 The Insurance Contract
...Co., 845 N.E.2d 68 (Ill. App. 2006). Indiana: Bradshaw v. Chandler, 916 N.E.2d 163 (Ind. 2009); Rockford Mutual Insurance Co. v. Pirtle, 911 N.E.2d 60 (Ind. App. 2009). Iowa: Rolf v. Nationwide Mutual Insurance Co., 766 N.W.2d 648 (Iowa. App. 2009). Louisiana: Louisiana Joint Underwriters o......
-
CHAPTER 4 First-Party Insurance
...Inc., 674 N.E.2d 473 (Ill. App. 1996), appeal denied 679 N.E.2d 379 (Ill. 1997). Indiana: Rockford Mutual Insurance Co. v. Pirtle, 911 N.E.2d 60 (Ind. App. 2009). Louisiana: Jouve v. State Farm Fire and Casualty Co., 74 So.3d 220 (La. App. 2011). Massachusetts: O’Connor v. Merrimack Mutual ......
-
Chapter 3
...Co., 845 N.E.2d 68 (Ill. App. 2006). Indiana: Bradshaw v. Chandler, 916 N.E.2d 163 (Ind. 2009); Rockford Mutual Insurance Co. v. Pirtle, 911 N.E.2d 60 (Ind. App. 2009). Iowa: Rolf v. Nationwide Mutual Insurance Co., 766 N.W.2d 648 (Iowa. App. 2009). Louisiana: Louisiana Joint Underwriters o......
-
Chapter 4
...Inc., 674 N.E.2d 473 (Ill. App. 1996), appeal denied 679 N.E.2d 379 (Ill. 1997). Indiana: Rockford Mutual Insurance Co. v. Pirtle, 911 N.E.2d 60 (Ind. App. 2009). Louisiana: Jouve v. State Farm Fire and Casualty Co., 74 So.3d 220 (La. App. 2011). Massachusetts: O’Connor v. Merrimack Mutual ......