Case Information
*1 Before E ASTERBROOK K ANNE , H AMILTON , Circuit Judges .
H AMILTON Circuit Judge
. This appeal presents insur ance dispute between Naperville Con dominium Association Insur ance Company. On May hail wind dam aged owned Windridge. buildings insured Philadelphia Indemnity. storm physically damaged the aluminum siding on the buildings’ south and west sides. Philadelphia Indemnity contends that it re quired under the insurance policy replace the siding only on those sides. Windridge argues that siding that matches the undamaged north and east elevations no longer available, so Philadelphia Indemnity replace the siding on all four sides buildings so that all siding matches. granted summary judgment Windridge on issue. We ffi rm.
I. Factual & Procedural Background
We review factual record light reasonably most favorable Indemnity non moving party. See Anderson Liberty Lobby, Inc. U.S. 242, (1986); Yahnke Kane County 2016). For starters, parties agree insurance was e ect on May when hail and wind storm damaged Windridge’s buildings. They agree directly siding only on buildings’ south west sides. has already paid $2.1 million Windridge for damage. Windridge seeks additional money siding north east sides because longer available purchase. argues entitled repaired so that, before storm, matches sides. re fused these additional costs argues pol icy requires payment directly hit hail wind.
A. The Policy We start with text insurance Under provision, “pay for di rect ‘loss’ Covered Property caused or resulting any Covered Causes Loss.” “Covered Property … means,” among other things, “‘Buildings’ described Declarations.” “‘Buildings’ means or struc tures.” “‘Loss’ means accidental loss or damage.” The policy’s loss valuation provision provides:
7. Valuation
We will determine value Covered Prop erty event “loss” follows: a. At replacement cost (without deduction for depreciation) time “loss” … (1) We will more “loss” costs basis than least of: (a) Limit applicable lost or property; (b) cost lost dam aged other property: (i) Of comparable material quality; (ii) Used same purpose; (c) amount you actually spend necessary repair lost property. policy’s loss payment provision provides: 4. Loss Payment
a. In event “loss” Covered Property covered this Coverage form, our op tion, will either: (1) Pay value lost or property;
(2) Pay cost repairing or replacing lost or property; (3) Take or any part property an agreed appraised value; (4) Repair, rebuild prop erty other like kind quality.
B. District Court & Appraisal Proceedings After storm, Windridge submi ed claim Philadel phia Indemnity, which paid $2.1 million for losses it conceded covered Windridge brought suit un der diversity jurisdiction alleging insurance entitled an independent appraisal value damage. Windridge’s operative Second Amended Complaint asserts claim breach contract for Indem nity’s failure make full payment covered loss. complaint seeks declaratory relief. led motion compel appraisal, which granted part denied part. pol
icy’s appraisal provision states:
If you disagree on value prop ‐ erty amount “loss”, either may make wri en demand an appraisal “loss”. In event, each party will select a competent impartial appraiser. The two appraisers will select umpire. If they cannot agree, ei ‐ ther may request selection made by judge court having jurisdiction. The ap ‐ praisers will state separately value amount “loss”. If they fail to agree, they will submit their di erences umpire. A decision agreed any two will binding. court ordered Philadelphia proceed ap
praisal as damage indisputably covered policy, but claimed damage over which there gen uine dispute. Windridge Naperville Condo. Ass’n Co. WL 372308, *4 (N.D. Ill. Jan. 2017).
Windridge moved summary judgment on its declara tory judgment claim, arguing matching available anymore that, result, Indem nity on four sides buildings. court ruled could grant sum mary judgment Windridge factual question lying dispute (whether matching available market). Windridge Naperville Condo. Ass’n In demnity WL *2 (N.D. Ill. Apr. 2018). explained: submits evidence sid been discontinued match *6 6 18 ‐ 2103
exists. Doc. at ¶¶ 14 17. [Philadelphia Indem ‐ nity] responds evidence that a match does exist. Doc. at ¶¶ 17; Doc. at ¶¶ 12. The con fl icting evidence gives rise to genuine dis ‐ pute about material fact that precludes court holding summary judgment that no match presently exists.
Id. The court therefore ruled that this question should sub mi ed to appraisal. Id. *5. court gave Philadelphia In demnity until May to name an appraiser, if did not do so, court explained that Windridge could move court to appoint appraiser. Id . court then assumed that no matching siding is availa
ble answered legal question: whether re quires Philadelphia Indemnity to 18 2103 7 siding on four elevations (to ensure matching) only on physically elevations. WL 1784140 at *2–*3. The court determined that required. Id. at *4. It explained that, while Indemnity’s argument was “a ractive at fi rst glance,” it “rests on premise that phrase ‘Covered Property’ refers building on eleva tion elevation basis as opposed building as a uni ed whole.” Id. *3. court concluded that “the sensible result treat damage as having occurred build ing’s a whole”:
If [Philadelphia Indemnity] on south west eleva tions with did match undamaged north east elevations, it could possibly be said had been made whole, for it left building su ering glaring profound fl aw. Id. *4. Alternatively, court held terms are ambiguous, and, Illinois law, contract con strued favor coverage. Id. appealed.
2103
II. Discussion
We review de novo the court’s summary judgment ruling. Advance Cable Co., LLC v. Cincinnati Insurance Co. , F.3d (7th Cir. 2015). Summary judgment is appropri ‐ ate only “if movant shows there is genuine dispute as any material fact movant is entitled judgment as ma tt er of law.” Fed. R. Civ. P. 56(a).
“The interpretation an insurance policy is ma tt er state law.” West eld Co. Vandenberg 2015). Here, Illinois law controls, so look decisions Illinois Supreme Court guidance. Id. Illinois Supreme Court explained:
An insurance policy contract, gen ‐ eral rules governing interpretation other types contracts govern interpretation insurance policies. Accordingly, our primary objective ascertain give e ect in tention parties, as expressed policy language. If policy language unambigu ous, policy will be applied wri tt en, unless contravenes public Whether ambi guity exists turns whether lan guage subject more than one reasonable terpretation. Although “creative possibilities” may suggested, reasonable interpreta tions will considered.
Hobbs Hartford Midwest N.E.2d (Ill. (internal citations omi ed). Further, “to ascer tain meaning policy’s language parties’ tent, construe whole ‘take 18 2103 9 into account the type of insurance purchased, the nature of the risks involved, and the overall purpose of the contract.’” Travelers Insurance Co. v. Eljer Manufacturing, Inc. , N.E.2d (Ill. 2001), quoting American States Co. Ko ‐ loms N.E.2d (Ill. 1997). here replacement cost See FSC Paper
Corp. Sun New York (Illinois law) (“a cost policy, de fi ni tion, provides ‘make whole’ remedy” “must strive approximate situation [the insured] occupied had re occurred”). In here, Indemnity promised “pay for direct ‘loss’ Cov ered Property caused or resulting from” storm, with amount loss being “[t]he cost replace lost or dam aged property with other property … [o]f comparable mate rial quality … and … [u]sed same purpose[.]” loss payment provision o ers four di ff erent measures loss, leaving Indemnity free choose least ex pensive: pay value lost or damaged property; pay cost repairing or replacing lost or damaged property; take all or any part property agreed or appraised value; repair, rebuild or property with other property like kind quality.
As we see it, two phrases in provision the policy are potentially ambiguous as applied to facts here: (1) “direct loss” (2) “covered property.” These phrases have de fi nitions in “Loss” de fi ned as “accidental loss damage.” “Covered property” de fi ned to include, among other things, Windridge’s “buildings.” Neither de fi nition in policy answers question we face here. district court’s conclusion buildings as whole were damaged—and re placed ensure matching—is sensible construction policy language as applied these facts. Indem nity’s interpretation—pay speci c panels were directly hit hail, leading two tone buildings—is less reasonable. Regardless, unit covered consider under policy (each panel vs. each side vs. whole) ambiguous as ap plied these facts, so Illinois law, favor inter pretation leads coverage. See West American Insurance Co. v. Yorkville Nat. Bank , N.E.2d (Ill. 2010); State Auto Prop. & Cas. Co. Brumit Services, Inc. 2017).
Courts around country have confronted similar so called “matching” issues. results been mixed, noted. While several opinions are instructive, case governed language Indemnity. However, coverage, valua tion, loss payment provisions here are nearly identical those issue National Presbyterian Church, Inc. GuideOne Mut. F. Supp. 3d 57–58 (D.D.C. (applying District Columbia law). factual dispute nearly identical. Some, but all, church’s exterior limestone panels earthquake. Id. at 56. question was whether the property insurer was required under the to replace all of the limestone panels to ensure matching or just panels that directly damaged. Id.
Judge Bates’ analysis of issue persuasive. He ex plained that “the crux of issue seems to be whether policy’s damaged property refers to smallest unit possible (an individual panel, single shingle, speci fi c patch fl ooring) or to one larger (the entire façade, whole roof, continuous stretch fl ooring).” Id. at 59. court de termined was ambiguous applied to damage speci c portions building, at least where re pairs those portions leave aesthetic matching issues, so found favor insured, holding required limestone panels needed replaced. Id. 60.
We face essentially same issue same lan guage arrive same result. Put simply, required covered su ered “direct physical loss”—i.e., property been damaged. “Covered property” could inter preted mean each panel siding, mean entire sides buildings, entire buildings. As “direct loss,” makes much words “direct” “physical,” but have pre viously explained “common sense suggests” term “direct” meant exclude situations which interven force plays some role damage. Advance Cable Co., LLC Cincinnati (Wisconsin law). We explained “physical” 2103 generally refers tangible as opposed intangible damage. Id. 746–47.
Thus, while Indemnity’s position only directly hit storm covered is not indefen ‐ sible has some support in case law, language of so clear in fact favors an interpretation unit of damaged property buildings as a whole— solely each elevation or each panel of siding. As illustrated during oral argument, many hypotheticals caution against Indemnity’s interpretation. Suppose storm every other piece of on only east eleva tions of buildings. Or suppose a storm middle three feet of every piece of buildings. would have us view unit of dam aged property an individual side of a building, or individ ual panels siding, or even mere sections individual pan els siding. An interpretation left a horizontal or vertical striped e ect its would reasonable. er construction, 13 and one certainly permi ed language that is ambig uous as applied these facts, is that each building as a whole su ered direct physical loss a result storm. storm altered appearance buildings such that they were damaged. Condominium buildings mismatched are a post outcome that insured required accept cost As Judge Bates rea soned National Presbyterian Church :
Imagine that an insurance company pays re pairs one wall insured’s dining room. room’s paint color—a light blue—is no longer manufactured. If insurance company insist bright red even dark blue paint—of same quality manufacture— just single wall, one would feel insured had been made whole; repaint whole room do that. F. Supp. 3d 60. points out it does control what available market, speci cally whether company continues manufacture partic ular color siding. This risk took ‐ on Windridge has more control of the siding marketplace than Philadelphia Indemnity does. Phila delphia Indemnity seeks to leave Windridge with that two sides one color and two sides another. Just dining room hypothetical, Windridge has not yet been made whole. It not been returned to its pre storm status. Philadelphia Indemnity chose to insure Windridge’s “buildings,” which—because storm—were all dam aged. Due extent damage and lack match siding available on market, er construction ambiguous that it requires Philadelphia Indem nity on four elevations build ings. Indemnity cites several “matching” cases
that it thinks should lead us favor its position. See, e.g., Mohr American Auto. Co. WL 533475, *10– *15 (N.D. Ill. Mar. 2004) (court concluded that di ff erent pol icy language did not require “aesthetic perfection,” and that, after bench trial, insured failed prove that replacing en tire roof was necessary); Woods Apartments, LLC United States Fire WL *2 (W.D. Ky. July (hurricane parts roof plainti s’ apartment buildings; court found that, without ‐ evidence comparable material unavailable, pol ‐ icy unambiguously required insurer to repair those portions property damaged hurri cane); Ocean View Towers Ass’n, Inc. QBE Corp. WL at *10 (S.D. Fla. Dec. 2011) (court found “direct loss damage” policy language did not cover replacing undamaged property to assure matching); Harbor House Condominium Ass’n Massachuse s Bay Insur ance F. Supp. 1317–18 (N.D. Ill. (court found insureds failed prove damage one part pipe system caused damage entire system).
Our focus here speci fi c contract language used here, cases involving di ff erent contract language from di erent jurisdictions are helpful. Further, our ap proach leaves plenty room for common sense in situations involving more limited damage. If one shingle corner a slate roof damaged matching shin gle available, a building owner would be entitled entire new roof. conceded much oral argu ment. Under here, building owner instead would entitled compensation for (presumably mi nor) decrease in value building due one non match shingle. By contrast, decrease in value would sig ni cant if building were left zebra striped siding. In case, insurer almost certainly choose pay siding rather than compensate building owner reduction in value its building. Each building here su ered direct loss, which was caused resulted hail wind storm, therefore must pay return buildings their pre status—i.e., siding on all sides. Windridge seeks put back posi tion before storm. Having mismatched its same position. Since match available, Windridge’s build ings. court’s judgment favor
AFFIRMED.
[1] At oral argument, neither party’s counsel could tell us what had hap pened appraisal ordered district court determine whether matching siding is available. Supplemental briefing has not done much clarify issue. parties seem agree that no appraisal taken place following district court’s summary judgment opinion. contends that first appraisal already determined that no matching siding available. Clearly district court did think that was case, court specifically ordered this question answered second appraisal. Regardless, Philadelphia Indemnity conceded oral argument “there no longer matching available.” It appears conceded its own construction consultant determined matching was avail able only “until October 2015.” Indemnity’s contention matching available was reason there was factual dis pute submit appraisal following summary judgment ruling. Since seems abandoned contention, conclude there dispute here, parties agree sid available.
[2] district court’s decision was sufficiently final appellate juris diction. See American Int’l Specialty Lines Electronic Data Systems Corp. (“an order terminates proceedings district court final appealable, whatever called”), citing Green Tree Financial Corp. Alabama Randolph U.S. (2000). issued docket entry April serves final judgment declaring parties’ rights saying case closed. could wait any further order before appealing.
[3] While fourth option includes phrase “of like kind quality,” valuation provision applies four choices—meaning that, regardless which option chooses, ment property must “[o]f comparable material quality.” Philadel phia chosen option two: “Pay cost repairing re placing lost property.” Accordingly, cost replacing property comparable its material quality.
[4] An alteration in appearance constitutes physical, tangible damage. Illinois Supreme Court explained “the term ‘physical injury’ unambiguously connotes damage tangible causing altera tion in appearance, shape, color in other material dimension.” Travelers Co. Eljer Manufacturing, Inc. , N.E.2d (Ill. 2001). Similarly, we have acknowledged “[t]he central meaning term [physical injury] used in everyday English—the image it conjure up mind a person unschooled subtleties insur ance law—is harmful change appearance, shape, composition, some other physical dimension ‘injured’ person thing.” Eljer Man ufacturing, Inc. Liberty Mut. Co. F.2d 808–09 (Illinois law). In applying Wisconsin law, explained cosmetic damage roof caused hail covered “di rect loss” property. Advance Cable 746–47.
[5] We are persuaded Trout Brook South Condo. Ass’n Har leysville Worcester F. Supp. 2d (D. Minn. (Min nesota law). There, covered “direct physical loss” “covered property,” definition “covered property” “indicate[d] extends ‘ buildings structures .’” Id. 1042. held “the Policy suggests ‘covered property’ each Trout Brook’s individual items (such shingles siding) attached appurte nant them. And undisputed each building sustained ‘direct loss’ hail storm.” Id.
[6] contends was available after almost year half Windridge blame not acting sooner siding. cites § 7(a)(2) policy, which provides obliged replacement cost basis until actually repaired replaced repair occur “as soon reasonably pos sible.” found Windridge provided timely notice loss, agree. And face parties’ dispute, required spend money might might covered.
[7] here gave option paying value lost property. If one shingle corner roof perfectly shingle were available market, could repair minor reduction value resulting one mismatched shingle corner.