373 N.C. 292
N.C.2020Background
- Homeowner (Accardi) sustained hail damage to roof, siding, and garage; insurer (Hartford) inspected and estimated $10,287.28 in repair costs (materials, labor, sales tax).
- Policy was a hybrid: insurer pays Actual Cash Value (ACV) initially, then pays Replacement Cost Value (RCV) after repair; ACV not defined in base policy but a roof endorsement defined ACV for roof losses as "deduct[ing] depreciation from the cost to repair or replace the damaged roof."
- Hartford calculated ACV by deducting depreciation for both materials and labor (and a $500 deductible), issuing an ACV payment of $6,743.36.
- Accardi sued, arguing the policy is ambiguous and that labor costs should not be depreciated when calculating ACV; sought class certification for others similarly paid ACV with labor depreciation.
- Business Court granted Hartford's Rule 12(b)(6) dismissal, holding ACV unambiguously permits depreciation of labor and materials and that the roof endorsement’s definition applies in harmony with the policy.
- The North Carolina Supreme Court affirmed, holding "ACV" and "depreciation" unambiguous and that ACV includes depreciation of labor costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "ACV" and "depreciation" in the policy permit deducting depreciation on labor when calculating ACV | ACV ambiguous; policy does not define depreciation and insurer may not deduct labor depreciation — labor should not be depreciated | ACV unambiguously means repair/replacement cost minus depreciation; endorsement definition of ACV applies and supports depreciating labor and materials | Court held ACV unambiguous and includes depreciation of both labor and materials; endorsement definition read in harmony with the policy |
Key Cases Cited
- Wachovia Bank & Tr. Co. v. Westchester Fire Ins. Co., 276 N.C. 348, 172 S.E.2d 518 (sets NC rules for insurance policy interpretation)
- Rouse v. Williams Realty Bldg. Co., 143 N.C. App. 67, 544 S.E.2d 609 (definition in one policy section applies throughout unless context requires otherwise)
- Peirson v. Am. Hardware Mut. Ins. Co., 249 N.C. 580, 107 S.E.2d 137 (undefined policy terms receive ordinary meaning consistent with context)
- Williams v. Nationwide Mut. Ins. Co., 269 N.C. 235, 152 S.E.2d 102 (if no ambiguity exists, courts must enforce policy terms as written)