Shelter Mutual Insurance Co. v. Goodner
477 S.W.3d 512
Ark.2015Background
- Shelter insured Goodners’ Texarkana home under a Mobile Homeowners Policy; policy promised actual cash value (ACV) or liability limit, whichever was less, defined as total restoration cost minus depreciation; depreciation included labor costs when calculating ACV; loss occurred July 9, 2012, with estimated restoration at $10,319.23 and depreciation of $3,397.24 resulting in ACV of $6,921.99, paid to Goodners minus a $1,000 deductible; Goodners filed for declaratory judgment alleging depreciation of labor violated Arkansas law/public policy, citing Adams v. Cameron Mutual Insurance Co.; circuit court granted summary judgment for Goodners, finding depreciation of labor against Arkansas public policy; Shelter appealed, arguing policy defined ACV including labor depreciation and Adams was distinguishable; Arkansas Supreme Court affirmed, holding labor may not be depreciated in computing ACV under indemnity policies, even where policy defines ACV and depreciation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether labor depreciation is allowed in calculating ACV under an indemnity policy | Goodners argue labor depreciation violates indemnity principle | Shelter argues policy defines ACV including labor depreciation | Labor depreciation not allowed; violates indemnity and Arkansas law |
| Whether Adams controls this case despite explicit policy language | Adams should control; ambiguity resolved in insured’s favor where ACV undefined | Adams not controlling due to explicit policy definition | Adams controls; policy language does not permit labor depreciation in ACV |
| Whether the policy’s explicit ACV definition governs outcome irrespective of public policy concerns | Policy should be interpreted to allow labor depreciation if defined | Public policy overrides contract terms that conflict with indemnity principles | Policy definition cannot override public policy; depreciation of labor is disallowed |
Key Cases Cited
- Adams v. Cameron Mutual Insurance Co., 430 S.W.3d 675 (2013 Ark.) (labor may not be depreciated when ACV is undefined; indemnity principle)
- Ark. Blue Cross & Blue Shield v. Long, 792 S.W.2d 602 (1990 Ark.) (indemnity and contract terms subject to public policy limits)
- Aetna Ins. Co. v. Smith, 568 S.W.2d 11 (1978 Ark.) (insurer may contract terms not contrary to statute or public policy)
- Ward v. Williams, 118 S.W.3d 513 (2003 Ark.) (obiter dictum not controlling; public policy considerations}]} } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } } })