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Oscar Batiz v. Fire Insurance Exchange

July 6, 2011

OSCAR BATIZ,
PLAINTIFF AND APPELLANT,
v.
FIRE INSURANCE EXCHANGE,
DEFENDANT AND APPELLEE.



APPEAL FROM THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT MINNEHAHA COUNTY, SOUTH DAKOTA HONORABLE DOUGLAS E. HOFFMAN Judge

The opinion of the court was delivered by: Konenkamp, Justice

CONSIDERED ON BRIEFS ON APRIL 25, 2011

[¶1.] In this declaratory judgment action, an insured disputes the amount to be paid for fire damage to his rental property. On cross motions for summary judgment, the circuit court granted judgment for the insurance company, dismissing the insured's action without prejudice. We affirm and remand.

Background

[¶2.] A fire on July 22, 2008 damaged Oscar Batiz's residential rental property. He filed a claim with his carrier, Fire Insurance Exchange. Under the Loss Settlement section, the policy states:

(1) Actual Cash Value If you do not repair or replace at the same location shown in the Declarations the damaged or destroyed dwelling or separate structure, we will pay the smallest of the following:

(a) the limit of insurance applying to the damaged or destroyed dwelling or separate structure.

(b) the actual cash value of the damaged or destroyed dwelling or separate structure.

(2) Replacement Cost. If you repair or replace at the same location shown in the Declarations the damaged or destroyed dwelling or separate structure, we will pay without deduction for depreciation the smallest of the following amounts:

(a) the limit of insurance under this policy that applies to the damaged or destroyed dwelling or separate structure;

(b) the replacement cost of that part of the dwelling or separate structure damaged with equivalent construction and for use on the same premises;

(c) the amount actually needed and spent to repair or replace the dwelling or separate structure intended for the same occupancy and use. However, if the cost to repair or replace is more than $1,000 or more than 5% of the limit of insurance on the damaged or destroyed building, whichever is less, we will pay no more than the actual cash value until repair or replacement is completed. "Actual cash value" is defined as the "replacement cost of the property at the time of the loss less depreciation."

[¶3.] After its investigation, Exchange determined that the amount to repair or replace the damaged property was $35,820.33. It tendered to Batiz $33,182.08, representing the actual cash value of the damaged property, less recoverable depreciation of $160.50, and non-recoverable depreciation of $1,477.75, and Batiz's $1,000 deductible. With this payment, Exchange advised Batiz in writing, "If for any reason your contractor indicates that they will be unable to complete the repairs for the amount [Exchange] has estimated, please call [Exchange] before the work begins. Prior approval must be obtained for additional repairs or increased costs not included in this estimate." [¶4.] Batiz disagreed with Exchange's valuation of the damage, and invoked the policy appraisal provision. The provision states: "If we [Exchange] and any insured person do not agree on the amount of loss, then we and any such insured person may agree that the issue be determined by appraisal." The policy further states that:

[E]ach party will choose an able and impartial appraiser and notify the other of the appraiser's name within 20 days. The appraisers will choose an impartial umpire. If the appraisers cannot agree upon an umpire within 15 days, you or [Exchange] can ask a judge of a court of record ...


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