Boardwalk Apartments v. State Auto Property

Boardwalk Apartments, L.C. sued State Auto Property and Casualty Insurance Co. for breach of an insurance policy, contending that State Auto had underpaid on the policy after one of Boardwalk’s eight apartment buildings (Building 1) was destroyed in a fire. In district court, State Auto contended that Boardwalk was underinsured under the policy’s coinsurance provision. Under this provision, Boardwalk’s insurance benefits were reduced if the value of the Boardwalk apartment complex exceeded the policy limit. Before trial, the district court issued two rulings: (1) for purposes of the policy’s coinsurance provision, the value of the apartment complex did not include the cost of complying with laws and ordinances regulating the construction and repair of buildings ("law-and-ordinance costs"); and (2) the district court excluded reference at trial to either the coinsurance provision or the possibility that Boardwalk was underinsured. At trial, the jury valued the Boardwalk complex below the policy limit. Based on this valuation, the district court concluded that Boardwalk was not underinsured under the coinsurance provision. In addition to valuing the apartment complex, the jury found that State Auto had underpaid for the loss of Building 1. As a result, the court awarded damages to Boardwalk. State Auto appealed. After review, the Tenth Circuit concluded: (1) the district court abused its discretion by excluding reference to the coinsurance provision; and (2) incorrectly construed the coinsurance provision. In light of these errors, the Court reversed and remanded for a new trial. View "Boardwalk Apartments v. State Auto Property" on Justia Law