Allemand v. State Farm Ins. Companies
248 P.3d 111
Wash. Ct. App.2011Background
- Allemands suffered a 2007 fire damage to a 1940-built home; repair costs estimated at $50,676.95 but modernization requirements forced razing due to non-compliance with building codes.
- Policy provided Coverage A to repair/replace with similar construction up to a stated limit ($89,866) and excluded increases due to enforcement of ordinances or laws, except as provided by Coverage OL.
- Coverage OL provided an additional amount equal to 10% of the Coverage A limit for costs resulting from building code enforcement.
- Allemands paid $59,663.55 from insurer (repair costs plus OL coverage) and sued for declaratory judgment/damages arguing insurer owed maximum under both Coverage A and OL.
- Trial court awarded the additional $37,001 to the insured, ruling OL did not limit Coverage A; insurer appeals.
- Issue turns on policy interpretation of Coverage A and OL limits for code upgrades; final decision limits code upgrades to OL 10% coverage, not full Coverage A increase.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Coverage A includes building-code upgrades. | Allemand using policy language for 'similar construction' to require full code-upgrade coverage. | State Farm contends OL is the sole source for code-upgrade costs and A does not cover upgrades. | No; A does not cover upgrades; upgrades limited to OL. |
| Whether OL coverage is limited to 10% of the Coverage A limit. | Allemand argues OL can exceed or supplement beyond 10%. | State Farm argues OL provides only up to 10% of A as specified. | Yes; OL is capped at 10% of the Coverage A limit. |
| Whether any ambiguity exists in OL/Declarations references. | Allemand contends 'Declarations' labeling is confusing. | State Farm asserts no ambiguity; limits are clear on the cover page. | Policy language clear; no ambiguity. |
Key Cases Cited
- Starczewski v. Unigard Insurance Group, 61 Wash.App. 267, 810 P.2d 58 (Wash. Ct. App. 1991) (code-upgrade costs not clearly contemplated by repair or replacement language; discussion treated as controlling context for earlier era)
- Roberts v. Allied Group Insurance Co., 79 Wash.App. 323, 901 P.2d 317 (Wash. Ct. App. 1995) (replacement cost with like kind; building code upgrades not included in that definition)
- Gouin v. Nw. Nat'l Ins. Co. of Milwaukee, 145 Wash. 199, 259 P.2d 387 (Wash. 1927) (code upgrades not contemplated under like kind/quality framework)
- Dombrosky v. Farmers Insurance Co. of Washington, 84 Wash.App. 245, 928 P.2d 1127 (Wash. Ct. App. 1996) (equivalent construction treated like kind/quality; Starczewski treated as dicta)
- DePhelps v. Safeco Insurance Co. of America, 116 Wash.App. 441, 65 P.3d 1234 (Wash. Ct. App. 2003) (express coverage for ordinance/law costs when defined in policy; distinguishes earlier cases)