Ware v. Metropolitan Property & Casualty Insurance Co.
220 F. Supp. 3d 1288
M.D. Ala.2016Background
- Gregory and Sharon Ware held a MetLife homeowners policy and filed an "actual cash value" (ACV) claim after fire damage; they did not perform repairs.
- Policy defines ACV as the cost to repair or replace with like kind and quality, "less allowance for physical deterioration and depreciation including obsolescence."
- MetLife estimated repair cost at $192,876.90, deducted $40,119.08 for depreciation (including labor and materials), applied a $1,000 deductible, and paid $151,756.82.
- The Wares do not dispute MetLife’s repair-cost estimate or the depreciation rate itself; they argue depreciation should apply only to materials, not labor.
- MetLife moved to dismiss for failure to state a claim, arguing the policy unambiguously permits depreciating the entire repair cost (materials and labor).
- The district court reviewed the policy text under Alabama law and considered whether the term "actual cash value" is ambiguous.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ACV calculation may depreciate labor costs | Ware: Depreciation should apply only to repair materials, not labor | MetLife: ACV definition permits depreciation of the entire cost to repair (materials + labor) | Court: Policy unambiguously allows depreciation of total estimated repair cost, including labor |
| Whether policy language is ambiguous | Ware: Implies ambiguity supporting narrower construction favorable to insured | MetLife: Language is clear; no ambiguity exists | Court: No ambiguity; apply ordinary meaning and enforce policy as written |
| Whether public policy forbids depreciating labor in ACV | Ware: Argues Alabama should bar depreciation of labor (citing other states) | MetLife: Policy governs; no Alabama authority bars such deductions | Court: Declines to adopt other states' approaches; follows policy text and precedent until Alabama law says otherwise |
| Whether dismissal is appropriate without resolving reasonableness of depreciation amount | Ware: Seeks relief based on labor-depreciation theory | MetLife: Entitled to dismissal because policy authorizes its method | Court: Grants dismissal as insured failed to state breach claim; does not decide whether MetLife’s specific depreciation calculation was reasonable |
Key Cases Cited
- Safeway Ins. Co. of Ala., Inc. v. Herrera, 912 So.2d 1140 (Ala. 2005) (unambiguous policy terms must be enforced as written)
- State Farm Fire & Cas. Co. v. Slade, 747 So.2d 293 (Ala. 1999) (term ambiguous only if reasonably susceptible to two or more constructions)
- Travelers Cas. & Sur. Co. v. Ala. Gas Corp., 117 So.3d 695 (Ala. 2012) (party disagreement does not create ambiguity)
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007) (court may consider documents incorporated by reference on a motion to dismiss)
- Redcorn v. State Farm Fire & Cas. Co., 55 P.3d 1017 (Okla. 2002) (court decision interpreting depreciation to apply to total repair cost)