106 F. Supp. 3d 1039
W.D. Mo.2015Background
- On April 28, 2012, a hailstorm damaged Riggins’ roof, gutters, and downspouts; she submitted a homeowner’s claim to American Family.
- The policy allowed recovery either as actual cash value (ACV) or replacement cost; ACV was defined as “the amount it costs to repair or replace property with property of like kind and quality less depreciation for physical deterioration and obsolescence.”
- American Family paid an ACV amount after deducting depreciation applied to the entire estimated repair cost, including materials and labor.
- Riggins contended the policy language permits depreciation only for “physical deterioration and obsolescence,” not for labor; American Family moved for summary judgment defending its full depreciation approach.
- The parties agreed the policy language is unambiguous and that obsolescence was not at issue; the sole legal question became whether labor costs may be depreciated under the ACV definition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the policy’s ACV definition permits depreciation of labor in calculating ACV | Riggins: “less depreciation for physical deterioration and obsolescence” limits depreciation to those categories and excludes depreciation of labor | American Family: ACV contemplates a depreciated sum; depreciation may be applied to entire repair estimate, including labor | Court: ACV language limits depreciation to physical deterioration and obsolescence; depreciating labor was improper |
Key Cases Cited
- Victor v. Home Sav. of America, 645 F. Supp. 1486 (E.D. Mo. 1986) (summary judgment appropriate when contract interpretation is unambiguous)
- Howard v. Russell Stover Candies, Inc., 649 F.2d 620 (8th Cir. 1981) (affirming summary judgment principles in contract disputes)
- Lupo v. Shelter Mut. Ins. Co., 70 S.W.3d 16 (Mo. 2002) (insurer policy terms given ordinary meaning; ambiguity required to avoid plain reading)
- Porter v. Shelter Mut. Ins. Co., 242 S.W.3d 385 (Mo. Ct. App. 2007) (ACV understood as a depreciated sum where policy lacked an explicit ACV definition)