Tonn Family Ltd. Agric. P'ship v. W. Agric. Ins. Co., 120,933
| Decision Date | 19 March 2021 |
| Docket Number | No. 120,933,120,933 |
| Citation | 482 P.3d 1175 (Table) |
| Parties | TONN FAMILY LIMITED AGRICULTURAL PARTNERSHIP d/b/a Satchel Creek Ranch, Appellee/Cross-appellant, v. WESTERN AGRICULTURAL INSURANCE COMPANY, Appellant/Cross-appellee. |
| Court | Kansas Court of Appeals |
Marc A. Powell, of Powell Law Office, of Wichita, for appellant/cross-appellee.
Roarke R. Gordon, Charles M. Millsap, Lyndon W. Vix, and Nathaniel T. Martens, of Fleeson, Gooing, Coulson & Kitch, L.L.C., of Wichita, for appellee/cross-appellant.
Before Bruns, P.J., Green and Atcheson, JJ.
Western Agricultural Insurance Company (Western Ag) appeals after a jury rendered a verdict against it in a breach of contract action brought by the Tonn Family Limited Agriculture Partnership (Tonn Family) for the failure to pay a claim for hail damage under the terms of a property insurance policy. The Tonn Family also cross-appeals the district court's denial of its request for reimbursement of litigation expenses. Because we conclude the district court erred in awarding the Tonn Family prejudgment interest, we reverse on that issue and remand this case to the district court to reconsider the amount of reasonable attorney fees to be awarded in light of the reduction in the amount of the judgment. However, we affirm the district court on all of the other issues presented by Western Ag in its appeal as well as on the issue presented by the Tonn Family in its cross-appeal. Finally, we award the Tonn Family reasonable attorney fees on appeal. Thus, we affirm in part, reverse in part, and remand with directions.
Most of the underlying facts are undisputed. In particular, the parties do not dispute that the clay tiles on the roofs of the Tonn Family's residences and other structures were broken or cracked. However, the parties disagree as to what caused the damage to the roof tiles. On the one hand, the Tonn Family claims that a hailstorm caused the damage to the clay tiles. On the other hand, Western Ag suggests that the clay tiles were damaged by people walking on the roofs at some point in time prior to the alleged hailstorm.
The Tonn Family has owned the Satchel Creek Ranch in Butler County since 1984. Tiya Tonn-Oppold is the general partner of the family partnership and her four adult children are also partners. The Satchel Creek Ranch is comprised of multiple structures. These structures include two houses—the main house that Tiya lives in and another house in which her son Ty resides. In addition, there are two bunkhouses and a number of other outbuildings, including two Quonset huts, a generator shed, and a horse barn.
The roofs of the two houses and the generator shed have Ludowici clay tiles while the roofs of the other structures are made out of a variety of roofing materials. The clay tiles are described in the record as being historic and rare. At all times relevant to the issues presented in this appeal, the ranch was insured under an "AgMax" Commercial Package Policy issued by Western Ag—a Farm Bureau company—which covered the buildings located on the property and their contents. Significantly, the Western Ag policy includes coverage for losses caused by wind and hail.
Under the Western Ag policy, the insurer agreed to replace the damaged portion of the buildings with materials "of like kind and quality," to pay the actual and necessary amount spent to repair or replace the damaged portion of the buildings, or to pay the policy limits. There were also various policy restrictions. These restrictions will be discussed in the analysis portion of our opinion to the extent they are material to the issues presented on appeal.
Although the parties dispute whether the Tonn Family's ranch suffered hail damage, it is agreed that a "major" or "intense" thunderstorm struck Butler County on the night of April 2, 2015, and continued into the early morning hours of April 3, 2015. According to Tiya, she got out of bed during the middle of the night thinking that there was a tornado. Tiya testified at trial that after she arose, she observed hail hitting the property. In addition, Tiya's son testified that he went outside and observed golf-ball-sized hail on the ground.
Subsequently, Tiya notified her insurance agent that the ranch had been damaged during the storm. In response to the Tonn Family's claim, Western Ag assigned an adjustor, Darin Messerli, to inspect the damage to the ranch. Prior to inspecting the property, Messerli contacted Jack Burks from Eaton Roofing and asked him for assistance. According to Messerli, he requested Burks' assistance because he was more familiar with clay tile roofs. Also, Messerli did not want to walk on the roof himself due to his size and the possibility of breaking the clay tiles.
On May 21, 2015, Messerli and Burks met at the Satchel Creek Ranch to evaluate the damage allegedly caused by the storm. While Messerli looked at the interior of the main house, Burks examined the clay tile roofs of the two residences located on the ranch. Walking on the roof of the main house, Burks saw cracks in several of the clay tiles. Unfortunately, a few of the tiles also broke while Burks was walking on the roof.
The parties dispute what Messerli and Burks told Tiya following the inspection. However, it is undisputed that Eaton Roofing subsequently submitted an estimate to Western Ag and the Tonn Family for the replacement of the clay tile roofs on June 8, 2015. Specifically, the estimate was in the amount of $468,453.72.
Messerli also noted leaking in a couple of locations in the main house. One of the locations was between two dormer windows, which was near the personal property that the Tonn Family ultimately claimed was damaged as a result of the ongoing leaking caused by the storm. According to Messerli, he was not told about water damage to personal property at the time he performed the inspection. However, he estimated the cost to repair the damage that he noted in the main house to be $886.01.
Following the inspection, Messerli requested that Burks have a crew install tarping to protect the area between the dormer windows. This involved several men walking on the roof and removing some of the tiles in order to install a water and ice shield. Messerli told his supervisor, Leonard Boys, about some of his concerns regarding the nature and extent of the damage caused by the storm. As a result, Boys took over as the adjustor on the claim and inspected the ranch on June 17, 2015.
According to Boys, he explained to Tiya and her son that Western Ag was obligated to replace the roofs "with functionally equivalent construction using current material and not for replacing with outdated or historic type tile." On June 22, 2015, Eaton Roofing submitted another estimate to replace the clay tile roofs in the amount of $230,281.27. Eaton Roofing indicated that the reason for the reduction in the estimate was that representatives of the company had found a modern clay tile that was "exactly like the old one."
Tiya also sought estimates for the replacement of the tile roofs. These estimates included one from Douglas Fry Roofing to replace the roofs for $378,963 and one from Rhoden Roofing to replace the clay tiles for $452,436. Rhoden Roofing later submitted a lower estimate—using modern Ludowici tiles—in the amount of $211,526.
After the second inspection, Boys researched the types of roofing materials that may be available to replace the clay tile roofs at the ranch. In doing so, he confirmed that the manufacture of the original clay tiles had been discontinued. However, he found that there were a limited number of these tiles available for partial repairs. Boys also learned that Custom Tile Roofing in Colorado had similar products available. In turn, Eaton Roofing submitted a third estimate to Western Ag for a partial roof replacement at the Tonn Family ranch using the similar clay tiles from Colorado in place of all of the cracked tiles at an estimated cost of $14,628.75.
On June 23, 2015, Boys sent the Tonn Family a loss estimate for complete replacement of the two roofs—using "like kind and quality" materials—at a cost of $85,852.40. However, Boys indicated that this estimate was contingent on an engineer's inspection of the property and a determination that the damage was caused by hail. In addition, Boys sent Tiya a letter dated July 14, 2015, in which he confirmed that an engineering inspection would be required before a final decision could be made.
Western Ag retained Jonathan S. Goode, P.E., of Haag Engineering, to perform a forensic engineering consultation. On July 8, 2015, Goode came to Kansas to inspect the clay tile roofs at the Tonn Family's ranch. Following his inspection, Goode issued a report in which he opined that the clay tile roofs had not been damaged by wind or hail. Although Goode did not deny that the roofs had been affected by hail and wind over the years, he rendered the opinion that the damage he observed was not caused by hail of sufficient size or density to damage the clay tiles. In his report, Goode relied—at least in part—on a study published by his forensic engineering firm to conclude that the lateral fractures to the clay tiles were caused by "foot traffic" rather than by hail. Relying on Goode's opinion, Western Ag denied the hail loss claim.
On June 10, 2016, the Tonn Family filed this action against Western Ag. In the petition, the Tonn Family asserted claims for breach of contract and negligence. Specifically, it alleged that Western Ag breached the terms of the insurance policy by denying coverage for the damages allegedly caused by hail. The negligence claim was based on a theory that Western Ag's failure to pay the claim in a timely manner resulted in additional damages to the Tonn Family's property as well as the fact that Western Ag's representatives were negligent when making temporary repairs. In its answer, Western Ag denied that it had breached the terms of the insurance policy or committed...
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