|Game, Set, Match: Cedar Bluff v. American Family|
Submitted by: Tim Johnson – Roeder, Smith & Jadin, PLLC
The Minnesota Supreme Court finally weighed in on an important issue facing Minnesota homeowners and exterior contractors alike. In Cedar Bluff Townhome Condominium Association, Inc. v. American Family Mutual Insurance Company, Cedar Bluff was a small townhome association that suffered significant hail damage to its roofs and siding. The association submitted a claim to its insurance company, American Family. American Family wanted to replace only portions of the damaged siding even though there was no reasonable color match to the existing siding. Cedar Bluff demanded an appraisal, and the appraisal panel determined that Cedar Bluff was entitled to a full siding replacement since there was no color match available. American Family refused to pay the appraisal award and this issue was appealed all the way through the Minnesota Supreme Court. The Minnesota Supreme Court heard arguments from American Family and Cedar Bluff. The Court unanimously agreed with Cedar Bluff and made two important conclusions. First, Minnesota property owners with “like kind and quality” policies are legally entitled to comparable replacement products for their storm damage claims, including reasonable color match. Second, whether there exists a comparable match to a product can now be resolved by an appraisal panel without going to court. The Cedar Bluff case was a huge victory for homeowners and exterior contractors alike because it will expedite future claims, keep others out of court, and it will prevent denial of legitimate claims on the basis of matching. It will allow exterior contractors to potentially revisit old jobs where homeowners had previously been denied on the basis of matching, and it will also prevent much of the standard push back on the matching issue moving forward. As with any case, how insurance companies will react remains to be seen, but there is no doubt that it is a big step forward for Minnesota homeowners. MNAES and Roeder Smith Jadin, the firm that represented Cedar Bluff at the Minnesota Appeals and Supreme Court, will be co-hosting a free lunch and learn discussion on February 5th at 11:30AM – 1:00PM to give contractors more information about the ins and outs of this case. They will also provide pointers about how contractors can use this case to their advantage without facing sanctions from the Department of Labor. The attorney who handled the case at the Supreme Court, Tony Smith, will be the speaker. For more information, or to RSVP for this event, please call 952-388-0289.
Using The Revised Building Codes
Submitted by: Edward Beckmann – Hellmuth & Johnson, PLLC
As you know, on January 24, 2015, Minnesota adopted a revised version of the International Residential Code (“IRC”). The state is also set to adopt the International Building Code (“IBC”) for non-residential property.
See this link: http://www.dli.mn.gov/CCLD/PDF/fs_1305.pdf
The IRC and IBC, like all building codes, impact the scope of any loss. Contractors or homeowners that commission repairs that do not comply with state building code commit a misdemeanor. Minn. Stat. § 326B.081 Subd. 3; § 326B.082 Subd. 16; State v. Hardy, 2013 WL 118796 (Minn. Ct. App. 2013). Old case law defines the scope of loss to include repair required by code. A.H. Jacobson Co. v. Commercial Union Assur. Co., 83 F.Supp. 674, 677 (D. Minn. 1949), citing Larkin v. Glen Falls Ins. Co., 80 Minn. 527, 83 N.W. 409, 81 Am. St. Rep. 286 (Minn. 1900).
These cases speak to the building code setting the scope of the loss. In addition, Minn. Stat. § 65A.10 states that an insurer’s adjustment on an RCV claim may not be less than what code requires. Now is the time to review the new building codes to see if its revisions impact a property owner’s claim.
APPRAISAL 101 In the wake of Cedar Bluff v. American Family case and revisions to the building codes, I thought an Appraisal 101 might be helpful. The following is a non-exclusive list of subjects that property owners and insurance companies should resolve in appraisal:
Whether siding that did not receive a direct hit from hail and replacement siding for material that did receive a direct hit can be “matched”*.
Whether shingles that did not receive a direct hit from hail and replacement shingles for material that did receive a direct hit can be “matched”*.
Scope of repair as governed by industry standards. Scope of repair as governed by building codes. Whether a storm or construction defects caused observed damage.
The total expense of any repair job, including unique expenses not captured by Xactimate. * I quote “matched” as I use the word loosely. Usually the precise question is “like kind and quality”. Remember, the property owner or insurance company must start an appraisal by naming an appraiser in writing to the other party. The other party then has 20 days to nominate its appraiser in writing. The two appraisers have 15 days to nominate an umpire. Should the appraisers be unable to name an umpire, the parties may apply to a judge to nominate a neutral umpire.
Appraisal should be final regarding the scope of a loss. A property owner r insurer may enforce an appraisal award in court by obtaining a judgment. Interest may be added to the judgment. Some judges may award attorney fees to the person enforcing an appraisal award.