Brent R. Wilcox v. State Farm Fire and Casualty Company, Defendant/Respondent., 2016 Minn. LEXIS 50

Homeowners (Brent and Leah Wilcox) sued State Farm after hail damage, alleging breach for State Farm’s method of calculating "actual cash value" (ACV) by depreciating embedded labor in repair/replacement estimates.
State Farm’s policy paid ACV until repair/replacement, then paid full replacement cost; the policy did not define "actual cash value" or specify a calculation method.
State Farm’s estimate combined material and labor for items (e.g., siding) and applied depreciation to the combined removal-and-replacement cost for some items; embedded labor costs were not separately identified.
Wilcoxes moved to enforce a rule prohibiting depreciation of embedded labor when ACV is undefined; State Farm relied on Minnesota precedent (Brooks Realty) permitting the trier of fact wide discretion under the broad evidence rule.
The federal district court certified the legal question to the Minnesota Supreme Court, which reformulated the question to ask whether the trier of fact may consider labor-cost depreciation when ACV is undefined.
The Minnesota Supreme Court held that, absent policy language specifying an ACV method, whether embedded labor is depreciable is a factual question for the appraisal panel or jury under the broad evidence rule.

Issue	Plaintiff's Argument	Defendant's Argument	Held
May an insurer depreciate embedded labor costs when the policy does not define "actual cash value"?	Wilcox: No; policy ambiguous and embedded labor should not be depreciable as a matter of law.	State Farm: Yes; Brooks Realty allows trier of fact to use methods that include labor depreciation.	Yes; trier of fact may consider embedded-labor depreciation under the broad evidence rule.
Is the term "actual cash value" ambiguous here?	Wilcox: Ambiguous based on extrinsic authority and divergent practices; ambiguity favors insured.	State Farm: Term is a known legal term of art referring to actual loss; not ambiguous.	No; "actual cash value" is not ambiguous as a matter of law.
Who decides whether embedded labor depreciation is "logical"/appropriate?	Wilcox: Court should prohibit or define depreciation practice.	State Farm: Appraisers/jury should decide under Brooks Realty.	The question is one of fact for an appraisal panel or jury; court will not impose a categorical rule.

Brooks Realty, Inc. v. Aetna Ins. Co., 276 Minn. 245, 149 N.W.2d 494 (Minn. 1967) (adopts the broad evidence rule—trier of fact weighs multiple factors to determine actual cash value)
McAnarney v. Newark Fire Ins. Co., 159 N.E. 902 (N.Y. 1928) (quoted formulation: consider every fact which "logically tend[s] to the formation of a correct estimate of the loss")
Orren v. Phoenix Ins. Co., 288 Minn. 225, 179 N.W.2d 166 (Minn. 1970) (discusses use of extrinsic evidence and contract ambiguity)