44 Conn. App. 415 | Conn. App. Ct. | 1997
This case arises out of a dispute over a fire loss between residential property owners and their fire insurer. The defendant, Middlesex Mutual Assurance Company, had issued a homeowner’s insurance policy to the plaintiffs, Helmut Steiner and Michelle Steiner, insuring their Westport residence against loss or damage by fire. On August 18, 1992, their residence was extensively damaged by fire. The parties were unable to agree on the value of the damages, and they, therefore, agreed to have the matter of the loss determined through an appraisal
“This memorandum by and between Helmut Steiner & Michelle Brown Steiner of the first part and the Middlesex Mutual Insurance Company of the second part:
“Witnesseth: that whereas the party of the first part claims to have sustained a loss by Fire occurring on the 18th day of August 1992 to and upon the following described property to wit: Building & Code up Grades & establish length of repair period. 249 Greens Farms Road Westport CT and
“Whereas policy # 1277049 issued by the party of the second part to the party of the first part provides as follows:
“2. Appraisal
“If the insured and the company fail to agree as to the amount of loss, each shall, on the written demand of either, made within sixty days after receipt of proof of loss by the company, select a competent and disinterested appraiser, and the appraisal shall be made at a reasonable time and place. The appraisers shall first select a competent and disinterested umpire, and failing for fifteen days to agree upon such umpire, then, on the request of the insured or the company, such umpire shall be selected by a judge of a court of record in the county and state in which such appraisal is pending. The appraisers shall then appraise the loss, stating separately the actual cash value at the time of loss and the amount of loss, and failing to agree shall submit their differences to the umpire. An award in writing of any two shall determine the amount of loss. The insured and the company shall pay his or its chosen appraiser*418 and shall bear equally the other’s expenses of the appraisal and the umpire.’ and,
“Whereas, a disagreement has arisen between the parties hereto as to the amount of such loss.
“Therefore2 This Memorandum Witnesseth: that in conformity to the terms and conditions of the policy of the party of the second part, Dallas Dodge Sr. . . . and Alan Tancreti . . . have been selected and are hereby appointed appraisers, to appraise, in accordance with the terms and conditions of said policy, the replacement value of said property and the amount of loss directly caused by said fire to and upon the same. . . .”
The two appraisers and the umpire, chosen in accordance with the insurance contract, met and, on May 3, 1993, rendered an “initial appraisal award.” That appraisal was itemized as follows: building—replacement cost value-$l,440,000; building—actual cash value-$864,000; loss—replacement cost value-$858,559.62; loss—actual cash value-$600,000.
Thereafter, the parties apparently tried to negotiate a settlement of the values for the code upgrades in the undamaged areas. They were unable to agree. As a result of that impasse, the plaintiff commenced this declaratory judgment action on August 13, 1993. After the Westport authorities determined that upgrades would be required in the undamaged portion, the parties continued with the appraisal.
On September 14,1995, the appraisers and the umpire issued a memorandum of appraisal, which stated, inter alia, that the award of May 3, 1993, “left code upgrades in undamaged areas open.”
The plaintiffs then filed a motion to confirm the appraisal award. The defendant filed a “limited” objection to the confirmation of the appraisal award, alleging that “the submission to the appraisers for the second portion of the appraisal award, which is the subject of the plaintiffs Motion to Confirm, was to determine the increased costs and for the total cost to repair and replace the damaged property taking into account the necessary code upgrades. ... In making said determination it was not necessary to determine the actual cash value of the building subsequent to its replacement and restoration and in accordance with code upgrades . . . .’’In addition, the defendant filed an application to vacate the arbitration award, which sought “an order vacating a portion of [the] arbitration award [of September 14, 1995] ... to the extent that the award . . . exceeded the submission. . . .”
In its decision, the trial court pointed out that, after the issuance of the initial appraisal award, dated May 3,1993, and the plaintiffs’ institution of their declaratory judgment action, the parties “agreed to submit the issue of the total value of code upgrades, including that in undamaged areas, for appraisal.” It further noted that, as a result, on September 14, 1995, a second appraisal was rendered, which listed the actual cash value of the building, inclusive of all code upgrades, at $991,210.62.
After stating that “[b]oth parties have essentially acknowledged that the purpose of the appraisal was only to establish figures regarding the amount of loss” (emphasis added), it concluded that “[h]aving reviewed
I
The defendant maintains that the trial court acted improperly in granting the plaintiffs’ motion to confirm the appraisal award of September 14,1995, and in denying the defendant’s motion to vacate that award. It argues that the second appraisal award should have been vacated because it exceeded the scope of the submission by redetermining the actual cash value of the property at the time of the second appraisal. The defendant claims that the matter of actual cash value of the loss, both under the policy and the submission, had been fully determined at the time of the first appraisal of May 3, 1993. It is the defendant’s position that, in determining the actual cash value, the only relevant time and the only time contemplated by the policy, is the time of the loss, i. e., the fire of August 18, 1992. That element should not have been revisited or reevaluated, argues the defendant, at the time of the second appraisal. The defendant claims that the only matter left open by the first appraisal was “the amount to be allowed of a replacement cost basis for code upgrades to the undamaged portion of the property.” Therefore, it contends there was a “limited submission” for the “supplemental award” of September 14, 1995. That award was limited not only by its submission, but also by the contract of insurance between the parties. To allow the redetermination of actual cash value in
On the other hand, the plaintiffs claim that the trial court acted properly in granting their motion to confirm and in denying the defendant’s motion to vacate the September 14,1995 appraisal award because that award conforms to the contract between the parties as well as to the submission. The submission, they claim, did not restrict the conduct, procedure and method of the appraisal that they say allowed the parties to alter the procedure and method by mutual agreement. The plaintiffs also argue that there was only one submission, that of January 26, 1993. The submission was not in any way limited, according to the plaintiffs. That is so, they argue, because the appraisal award of September 14, 1995, completes what the appraisers expressly left open in their May 3, 1993 award when they stated “code upgrade not considered in undamaged areas.” They contend that later, when authorities determined that the undamaged portion of the residence would have to be upgraded to meet the Westport building code, the appraisers reconvened by the mutual consent of both parties and issued a complete award on September 14, 1995. This award, they argue, “was not a second appraisal but a continuation of the original one.” This was necessary, the plaintiffs claim, because “the appraisers were charged with appraising the plaintiffs’ entire loss within the terms of their contract.” Further, the plaintiffs indicate that, even if this court decides to vacate the replacement cost value of $1,652,107.78 as set out in the second appraisal award, they are still entitled to an immediate payment of $391,210.62, which represents the difference between the actual cash val
II
Our Supreme Court has held that an appraisal clause in the standard form fire insurance policy as set out in General Statutes § 38a-307, such as the appraisal clause in the policy in this case, “constitutes an agreement to arbitrate and falls within the ambit of our arbitration statutes, General Statutes §§ 52-408 through 52-424. Covenant Ins. Co. v. Banks, 177 Conn. 273, 279, 413 A.2d 862 (1979).” Giulietti v. Connecticut Ins. Placement Facility, 205 Conn. 424, 432, 534 A.2d 213 (1987); Middlesex Mutual Assurance Co. v. Clinton, 38 Conn. App. 555, 564, 662 A.2d 1319, cert. denied, 235 Conn. 922, 666 A.2d 1186 (1995), cert. denied, 517 U.S. 1104 , 116 S. Ct. 1320,134 L. Ed. 2d 473 (1996). “The parties themselves, by the agreement of submission, define the powers of the arbitrator. . . . The submission constitutes the charter of the entire arbitration proceedings and defines and limits the issues to be decided. . . . When the parties have agreed to a procedure and have delineated the authority of the arbitrator, they must be bound by those limits. . . . An application to vacate or correct an award should be granted where an arbitrator has exceeded his power. In deciding whether an arbitrator has exceeded his power, [the court] need only examine the submission and the award to determine whether the award conforms to the submission.” (Citations omitted.) Bic Pen Corp. v. Local No. 134, 183 Conn. 579, 583-84, 440 A.2d 774 (1981). As noted, “[i]n determining whether a submission is unrestricted, we look to the authority of the arbitrator.” Fraulo v. Gabelli, 37 Conn. App. 708, 715, 657 A.2d 704 (1995). “The authority of an arbitrator to adjudicate the controversy is limited only if the agreement contains express language restricting the breadth of issues, reserving explicit rights, or conditioning the award on court review. In
Ill
Prior to deciding what was submitted to the appraisers, we must determine how many submissions were made. We agree with the plaintiffs that there was only one submission.
The “Revised Memorandum of Appraisal,” dated January 23,1993, is the only document in the record before us signed by the plaintiffs and the defendants submitting this dispute to the appraisal process under their insurance contract. After setting out that the plaintiffs claim that they have sustained a loss by fire on August 18, 1992, on their property, to wit “Building Code Upgrade,” the memorandum sets out the appraisal provision of their policy and that there is “a disagreement . . . between the parties ... as to the amount of such loss.”
The award of May 3, 1993, comported with the submission and made the necessary determinations as to value and loss including actual cash value. That award on its face, however, left open only the matter of code upgrades in the undamaged areas, as demonstrated by the statement placed directly under the values they had found, “code upgrade not considered in undamaged areas.” This is underscored by the “Memorandum of Appraisal” dated September 14, 1995,
This clause, after setting out that “in conformity to the terms and conditions of the policy,” the two named appraisers stated that they “have been selected and are hereby appointed appraisers, to appraise, in accordance with the terms and conditions of said policy the replacement value of said property and the amount of loss directly caused by said fire to and upon the same.” (Emphasis added.) “The terms and conditions of said policy” include, of course, the appraisal clause. The authority thus conferred on the appraisers was intended to empower them to resolve the entire matter referred to them—the matter of value and loss. This was, therefore, an unrestricted submission.
Having decided that there was only one submission and that the submission was unrestricted, we now consider whether the award conformed to the submission. In doing so, we keep in mind the defendant’s claim that the appraisers exceeded the scope of the submission by their award in their September 14,1995 memorandum in which they arrived at new figures for both actual cash value and replacement cost value rather than determining only the cost of the now required code upgrades as to the undamaged areas. The focal point of the defendant’s contention is the improper reevaluation or revisiting of the computation of actual cash value in the September 1995 award, which the defendant maintains had already been set at $864,000 in the May award.
Before deciding whether the award conformed to the submission, we should turn to the trial court’s interpretation of that award. This is necessary because the trial court’s decision stated that “the September 14, 1995 Memorandum of Decision is confirmed to the extent that it provides a determination of respective cash and
Our Supreme Court has said that “[t]he construction of a judgment is a question of law for the court. . . . As a general rule, judgments are to be construed in the same fashion as other written instruments. . . . The determinative factor is the intention of the court as gathered from all parts of the judgment. . . . The interpretation of a judgment may involve the circumstances surrounding the making of the judgment. . . . Effect must be given to that which is clearly implied as well as that which is expressed.” (Citations omitted; internal quotation marks omitted.) Lashgari v. Lashgari, 197 Conn. 189, 196-97, 496 A.2d 491 (1985); Emerick v. Emerick, 28 Conn. App. 794, 806, 613 A.2d 1351, cert. denied, 224 Conn. 915, 617 A.2d 171 (1992). In doing so, it assists a reviewing court to keep in mind the theory on which the case was tried and on which the trial court decided it. See Builders Service Corp. v. Planning & Zoning Commission, 208 Conn. 267, 299 n.19, 545 A.2d 530 (1988); Fuessenich v. DiNardo, 195 Conn. 144, 151, 487 A.2d 514 (1985).
It is a fair synthesis from what counsel said orally and in their briefs that “to the extent” was analytically not language of limitation but was regarded by them as the trial court’s granting of the plaintiffs motion to confirm and denying the defendant’s motion to vacate. We agree. With reference to the apparent omission of a word after “respective,” it was suggested at oral argument that the trial court meant “actual” and that this was borne out by the use of the plural “values” at the end of the sentence. We agree. Actually, therefore, the only new dollar values set out in the September 14, 1995 memorandum were the “total replacement value
Now, we take up the issue of whether the award as confirmed by the trial court, exceeded the submission. In doing so we keep in mind that we have already decided that the submission to the appraisers of January 26,1993, was unrestricted. The fact that the May 3,1993 report did not fully complete their charge does not make the January 26, 1993 charge any more restricted. Their May 3, 1993 report completed their original charge except by their own express reservation that “code [upgrades were] not considered in undamaged areas.” Once the Westport building authorities required code upgrades in the undamaged areas, that decision triggered the appraisers’ duty to complete what had been originally submitted to them. To do so, however, did not require anything but their determination of the “increased cost”*
In returning to do what remained to be done, the appraisers, however, did not have to revisit their earlier computation of the actual cash value of the plaintiffs’ loss as insured by the defendant under the insurance contract. In doing so they have, according to the defendant, contravened General Statutes § 52-418 (a) (4), which empowers the Superior Court to vacate an award “if the arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.”
One commentator has said that “[f]ire insurance is a contract of indemnity against actual loss sustained by the insured, in an amount not exceeding that stipulated in the policy, unless it is written as a valued policy, in which case, in the absence of fraud or other illegality, the amount of the loss, if total, is immaterial.” 1 G. Couch, Insurance (2d Ed. Rev. 1984) § 1.52. A “contract of fire insurance is a personal contract for indemnity for the insurable interest possessed by the insured at the time of the issuance of the policy, and also at the time of loss.” 4 J. Appleman & J. Appleman, Insurance Law and Practice (1969) § 2107. The Connecticut Supreme Court long ago said a “policy of fire insurance is an agreement to indemnify the insured against loss by fire . . . .” (Emphasis added.) Finch v. Great American Ins. Co., 101 Conn. 332, 337, 125 A. 628 (1924). “The contract of fire insurance is one of indemnity so far as direct loss or damage is concerned . . . .” 1 G. Richards, Insurance (1952) § 13, citing Finch v. Great American Ins. Co., supra, 332.
Against this backdrop, we point out that it has been said that “[t]he actual cash value policy is apure indem
Pursuant to the “conditions” of the policy, the “actual cash value” of the damage to the plaintiffs’ covered residence was a significant factor under the relevant “Loss Settlement” conditions.
Moreover, although the appraisers in their September 19, 1995 memorandum developed a new total replacement cost value inclusive of demolition of $1,662,017.78, as opposed to their May 3,1993 replacement cost figure of $858,559.66, the policy does provide for payment to an insured of the actual cost of the repair or replacement of a building when the actual repair or replacement is completed within a specified time.
Finally, there remains the matter of a proper order as to the appraisers’ awards in this case. We have already decided that there was one submission to the appraisers, that of January 26, 1993. The appraisers, however, approached their tasks in two steps or two “awards.” The appraisers made an award on May 3, 1993. That award has not been appealed. Their second award on September 14,1995, has been the subject of this appeal. While technically we are not presented with the issue of the severability of an award, the claims of the parties have raised the issue of whether the actions of the appraisers throughout are pursuant to one submission, as the plaintiffs claim, or two submissions, as the defendant claims. We have resolved that issue in favor of the plaintiffs. The resolution of that issue affects our remand. Where parties arbitrate pursuant to a statute, the statute itself defines the powers of the arbitrators. Caldor, Inc. v. Thornton, 191 Conn. 336, 341, 464 A.2d 785 (1983), aff'd, 472 U.S. 703, 105 S. Ct. 2914, 86 L. Ed. 2d 557 (1985). In such a case, “[a]ny deviation by the arbitrators from the statutory bounds under which they operate would indicate that they had ‘exceeded their powers,’ a basis for vacating any offending part of the award, under General Statutes § 52-418 (a) (4). Carofano v. Bridgeport, 196 Conn. 623, 627, 495 A.2d 1011 (1985).” (Emphasis added.) Chrysler Corp. v. Maiocco, 209 Conn. 579, 591, 552 A.2d 1207 (1989); see Local 63, Textile Workers Union v. Cheney Bros., 141 Conn. 606, 109 A.2d 240 (1954), cert. denied, 348 U. S. 959, 75 S. Ct. 449, 99 L. Ed. 748 (1955). In certain instances, “courts have affirmed one portion of an arbitration
As this case was presented, we do not have a problem of severability. Only the award of September 14, 1995, was appealed and is before us for determination, although it was necessary for us to address the May 3, 1993 award. While they may be interrelated for that reason, the two awards are substantively independent and differently structured. The second was intended to complete what was left open by the first. The conduct of the appraisers on the second, however, exceeded their powers under § 52-418 (a) (4). Only the cost of the code upgrades in the undamaged area of the residence was to be determined. Neither the parties nor the record before us disclose a dollar figure for such code upgrades. At oral argument it was suggested that the appraisers took that into account in arriving at the new actual cash value figure reported in the September 14, 1995 memorandum.
The judgment is reversed and the case is remanded with direction to render judgment vacating the appraisers’ award of September 14, 1995, and for further proceedings to determine the cost of the code upgrades in the undamaged areas.
In this opinion the other judges concurred.
Section 1—Conditions, 6. provides: “Appraisal. If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the residence premises is located. The appraisers will separately set the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.
Each party will:
a. pay its own appraiser; and
b. bear the other expenses of the appraisal and umpire equally.”
The word “therefore” has been described “in its ordinary acceptation as meaning ‘consequently’ and ‘for those reasons previously stated.’ Webster’s New International Dictionary, (2d ed.) p. 2621.” States v. Wines, 47 N. J. Super. 235, 240, 135 A.2d 543 (1957).
These figures appear on the back of the memorandum of appraisal signed by the parties on January 23, 1993.
The trial court found, citing the January 10,1994 affidavit of the plaintiffs’ appraiser and the September 14, 1995 “Memorandum of Appraisal” signed by both appraisers and the umpire, that the appraisers had considered code upgrades in determining the value of the damaged portion of the premises.
This statement appears on the memorandum of appraisal signed by the parties on January 23, 1993.
In their later “Memorandum of Appraisal,” dated September 14, 1995, the appraisers and the umpire also state that “the initial appraisal award was completed on May 3, 1993, which addressed the fire damages only, leaving necessary code upgrades in undamaged areas as an open entity.” (Emphasis added.)
General Statutes § 52-418, entitled “Vacating award,” provides in pertinent part: “(a) Upon the application of any party to an arbitration, the superior court ... or, when the court is not in session, any judge thereof, shall make an order vacating the award if its finds any of the following defects: (1) If the award has been procured by corruption, fraud or undue means; (2) if there has been evident partiality or corruption on the part of any arbitrator; (3) if the arbitrators have been guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown or in refusing to hear evidence pertinent and material to the controversy or of any other action by which the rights of any party have been prejudiced; or (4) if the arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made. . .
General Statutes § 52-419, entitled “Modification or correction of award,” provides in pertinent part: “(a) Upon the application of any party to an arbitration, the superior court for the judicial district in which one of the parties resides or, when the court is not in session, any judge thereof, shall make an order modifying or correcting the award if it finds any of the following defects: (1) If there has been an evident material miscalculation of figures or an evident material mistake in the description of any person, thing or property referred to in the award; (2) if the arbitrators have awarded upon a matter not submitted to them unless it is a matter not affecting the merits of the decision upon the matters submitted; or (3) if the award is imperfect in matter of form not affecting the merits of the controversy. . . . ”
The September 14, 1995 document was signed by both appraisers and the umpire.
In their September 14, 1995 memorandum, the appraisers pointed out that when the prior replacement cost value of 8858,559.62 was deducted from the new total replacement value of $1,652,017.78 that yielded the figure of $793,458.16 that represented the replacement cost value for this portion, the September 14, 1995 portion of the appraisal. They also pointed out that the actual cash value “of the building as previously developed” was $864,000 and that, as of September 14, 1995, “the actual cash value of the building inclusive of code upgrades is $991,210.62.”
This September 14, 1995 memorandum of appraisal stated that their “initial charge” was completed on May 3, 1993 and that award left code upgrades in undamaged areas open and that the subsequent charge to the appraisers was to determine the increased cost brought about by the application of building codes in completing repairs.
The September 14, 1995 “Memorandum of Appraisal” also expressly states that “the prior award [of May 3,1993] for the fire loss . . . did include necessary code upgrades in the fire damaged area. ...” (Emphasis added.)
It is well recognized that in determining the amount of a fire loss there are three tests in general use by courts and appraisers to determine actual cash value. They are (1) market value, (2) replacement or reproduction cost and (3) the so called broad evidence rule. Sullivan v. Liberty Mutual Fire Ins. Co., supra, 174 Conn. 232; see Giulietti v. Connecticut Ins. Placement Facility, Inc., supra, 205 Conn. 429; Castoldi v. Hartford County Mutual Fire Ins. Co., 21 Conn. Sup. 265, 154 A.2d 247 (1987). Courts define “actual cash value” differently in different states. O. Dykes, “ ‘Actual Cash Value’: The Magic Words—What Do They Mean?” 16 Forum 391 (1981).
Section I of the insurance contract, entitled conditions, contained the following provision:
“3. Loss Settlement. Covered property losses are settled as follows: Coverage for the property described below includes the full cost of repair or replacement, without deduction for depreciation, as follows: a. Buildings under Coverage A and B . . . .
(2) To adjust losses, under COVERAGE A - DWELLING, we shall use the smaller of the following two amounts:
(a) The replacement cost at the time of loss of the building, or of any part of the building. . . .
(b) The actual and necessary amounts spent to repair or replace the building or any part, of the building. . . .
“4. When the cost to repair or replace the damage is more than $2,500, we will pay no more than the actual cash value of the damage until actual repair or replacement is completed.” (Emphasis added.)
“10. Building Loss Caused By Enforcement of Law or Ordinance. In the event of loss to your building(s) insured under this policy caused by a Peril Insured Against:
a. we will pay for loss of the undamaged building(s) value caused by demolition which is brought about because of the enforcement of any state or municipal law or ordinance regulating the construction, repair or demolition of buildings. It is a condition that this policy be in force at the time the covered loss, which necessitates the demolition of any undamaged portions of the building, occurs; and
b. we will pay you the reasonable costs that you incur in carrying out the enforced demolition order, including the cost of the removal of debris; and c. we will pay you any increased repair cost, or increased rebuilding cost or increased construction cost that you may incur because of an enforcement of these laws, providing such repair, rebuilding or construction takes place on the same premises as the demolished building(s) and that the replacement construction is of like height, floor area, style and for like occupancy of the demolished building(s) covered under this policy.” (Emphasis added.)
The term “moral hazard” in this context has been commented upon by a number of courts. In Niagara Fire Ins. Co. v. Everett, 292 F.2d 100, 105 (5th Cir. 1961), the court stated: “Moral hazard, in insurance, is but another name for a pecuniary interest to the insured should the property burn.” See also Nemojeski v. Bubolz Mutual Town Fire Ins. Co., 271 Wis. 561, 564, 74 N.W.2d 196 (1956); Soyland v. Farmers’ Mutual Fire Ins. Co., 71 S.D. 522, 527-28, 26 N.W.2d 696 (1947). One court has said that “fire policy provisions precluding recovery of replacement cost until replacement is complete are reasonable as protection against ‘the moral hazard,’ and enforceable.” Bourne v. U.S. Fidelity & Guaranty Ins. Co., 75 Or. App. 241, 246, 707 P.2d 60 (1985); see Higgins v. Ins. Co. of North America, 256 Or. 151, 469 P.2d 766 (1970).
There is no such “moral hazard” present in this case before us under its facts or any reasonable inference from the facts.
The appraisal clause set out in General Statutes § 38a-307 provides the following: “In case the insured and this Company shall fail to agree as to the actual cash value or the amount of loss, then, on the written demand of either, each shall select a competent and disinterested appraiser and nol ify the other of the appraiser selected within twenty days of such demand. The appraisers shall first select a competent and disinterested umpire; and failing for fifteen days to agree upon such umpire, then, on request of the insured or this Company, such umpire shall be selected by a judge of a court of record in this state in which the property covered is located. The appraisers shall then appraise the loss, stating separately actual cash value and loss to each item; and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two when filed wi1h this Company shall determine the amount of actual cash value and loss. Each appraiser shall be paid by the party selecting him and the expenses of appraisal and umpire shall be paid by the parties equally.”
These arise under “Section 1—PERILS INSURED AGAINST Coverage A Dwelling & Coverage B OTHER STRUCTURES.”
Additional coverages under paragraph 10 (c) provides the following: “10. Building Loss Caused by Enforcement of Law or Ordinance. In the event of loss to your building(s) insured under this policy caused by a Peril Insured Against:
a. we will pay for loss of the undamaged building(s) value caused by demolition which is brought about because of the enforcement of any state or municipal law or ordinance regulating the construction, repair or demolition of buildings. It is a condition that this policy be in force at the time the covered loss, which necessitates the demolition of any undamaged portions of the building, occurs; and ....
c. we will pay you any increased repair cost, or increased rebuilding cost or increased construction cost that you may inc,ur because of an enforcement of these laws, providing such repair, rebuilding or construction takes
There is no evidence or claim that the cost of the code upgrades in the undamaged portion of the premises have in fact been incurred by the plaintiffs.
One commentator has pointed out that “[property insurance policies which carry indorsements to the effect that replacement cost, in excess of actual cash value, may be recovered, sometimes also contain a provision that in order for the insured to recover under such an indorsement, he must repair or replace the property within a specified or reasonable time. The courts have generally construed such a provision according to its plain meaning.” See “Construction and Effect of Provision of Property Insurance Policy Permitting Recovery of Replacement Cost of Property, in Excess of Actual Cash Value,” 66 A.L.R.3d 885, 887 (1975); see also 1 A.L.R.5th 817, 827-28 (1992).
In addition, the appraisers also violated that portion of § 52-418 (a) (4) that provides “or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.”
The actual cash value determined was $864,000 and that sum has been fully paid by the defendant to the plaintiffs.