SJJ Law Wins Another Important Case Against State Farm in Minnesota

SJJ attorneys Tim Johnson and Jordan Vassel recently won an important case against State Farm.  A homeowner suffered a water line break that damaged kitchen cabinets and leaked down through the basement wall and carpet.  The replacement material would not match and the homeowner requested State Farm replace as much material as necessary to provide a reasonably matching appearance.  At an impasse, the homeowner demanded appraisal under the policy to resolve the dispute.

The panel agreed with the homeowner and awarded for matching materials.  State Farm denied the “matching” portion of the claim and further denied that appraisal panel could even consider matching, despite having sent multiple contractors to the homeowner’s property to see if they could match his cabinets.  The SJJ team brought the matter before the Court and addressed each of State Farm’s reasons for denying the claim.  The Court considered and rejected each and every single one of State Farm’s arguments.  The Court agreed that the homeowner could pursue claims of bad faith against State Farm, a rarity in the state of Minnesota.

The following is a synopsis of some of the issues addressed and the Court’s determination of them:

State Farm’s Policy provides coverage for matching:

State Farm argued that the Policy does not provide coverage for matching because its Policy does not use the term “matching” but provides for repairs with material that is of “similar construction.”  The Court noted that State Farm “attempts to distance itself from the concept of ‘matching’” but also that State Farm “does not really dispute that the Policy at issue in this case covers losses necessary for what is colloquially referred to as ‘matching.’” Accordingly, “the Court holds that the Similar Construction Clause provides coverage for a reasonable match.”

The amount of loss for “matching” is appropriately determined by appraisal:

The Court held that “if an insurance policy covers reasonably matching (as it does here), the cost to create a reasonable match is a part of the Loss.” Further, “[t]he Court holds that the Appraisal Award correctly included a factual determinants of Loss, which included costs for reasonable matching.”

An insured is not required to complete repairs prior to appraisal:

“Defendant asserts that its proposed repairs must be completed and only then are appearance-related determinations even justiciable.  The Court disagrees.”

Use of the word “matching” on the appraisal award does not indicate the panel consider an exact match standard:

“While [State Farm] argues that the Appraisal Award’s use of the term ‘matching’ conveys ‘an exact match’, this argument is not supported by the plain language of the Award.” “The Court holds that the Appraisal Award correctly included a factual determination of Loss, which included costs for reasonable matching.”

Plaintiff is permitted to add a claim of bad faith:

“Plaintiff argues that a bad faith claim may be added because State Farm has been inconsistent with its position regarding why reasonable matching coverage was denied and then refused to comply with the findings of the appraisal panel.”  “[T]he Court finds that Plaintiff has provided a prima facie basis to amend and add a bad faith claim.”

If you or someone you know is disputing with State Farm over matching or whether an appraisal panel can consider it, contact the team at SJJ Law today.