INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Appraisal clarification preserves low settlement
A Goodhue County, Minnesota, mall suffered a loss when it was hit by a tornado. The mall was owned by Rymer Companies, LLC (Rymer), and the area damaged was the mall’s roof. Prior to the tornado, the roof was already described as being in poor shape. Its pre-storm condition was primarily due to water damage that had occurred over years of use. At the time of the loss, the mall was protected by a commercial property policy from Cincinnati Insurance Company (Cincinnati).
Rymer submitted a claim for replacing their mall’s entire roof, requesting a total of $1.7 million. Cincinnati held that the property policy obligation was limited to making repairs for damage resulting only from the tornado. It advised Rymer of an estimate of $10,000. Then the insurer filed an action seeking a ruling in support of its payment position.
However, the parties first had to meet the policy’s appraisal provision to decide upon the amount owed by Cincinnati. After the appraisers and the appraisal umpire were in place, they reached an agreement on the amount of $23,226 for roof repairs. All three members of the panel agreed to this award, but they provided no details on how the amount was to be applied to the loss.
A complication arose when Rymer applied for a building permit to make roof repairs. However, objecting to an attempt to only make partial repairs, Goodhue County rejected their permit application. Rather, qualifying for a permit required Rymer to address both the pre-existing and the post-tornado damage. In other words, they needed a new roof.
Rymer decided the best course of action was to continue the litigation begun with Cincinnati. Rymer relied on the belief that the insurer would have to pay for a roof replacement under their policy’s “Ordinance or Law” provision. The policyholder reasoned that, since replacement of their entire roof was mandated in order to secure a building permit from a government entity, the increased cost to do so became part of the insurer’s obligation. The lower court eventually found that no causation link existed to trigger that particular policy provision. It therefore ruled in favor of Cincinnati and Rymer appealed.
The higher court noted that the lower court determined that the appraisal panel’s decision held some ambiguity as it didn’t contain sufficient information. That court revisited the decision by sending the panel several questions for clarification. The questions, in totality, asked the panel if its award reflected any damage to the roof surface. The written response was “No” from the appraiser selected by Cincinnati and the appraisal umpire.
Rymer then asked the court for permission to depose all three appraisers. The court granted permission on the limited basis of determining whether the panel’s award decision should be vacated based on the possibility of discovering evidence of fraud or malfeasance. During deposition, the appraisal umpire stated that his decision did include repairs for a 10-foot area of the roof surface.
Rymer then requested summary judgment. It argued that, based on the one appraiser’s statement, the award should be revised. Cincinnati argued that the information did not indicate evidence of wrongdoing, so the written clarification should be enforced.
The higher court determined that the trial court decision to ask for clarification was within its discretion. It also noted that Rymer requested that the award be revised rather than vacated. Yet, permission for the deposition was limited merely to determine whether the award should be vacated. As Rymer failed to pursue a vacated award in its request for summary judgment, the lower court ruling to allow the original appraisal decision to stand was appropriate. The lower court ruling was affirmed in favor of Cincinnati.
Cincinnati Insurance Company v. Rymer Companies, LLC, also known as Rymer Companies, Inc.; Cannon Falls Mall, Inc.—United States Court of Appeals for the Eighth Circuit—No. 24-3356—March 27, 2026.
