Can a jury change the rules of an insurance policy? Ga. Appeals Court set to decide
While the plaintiffs had received some relief for the damages in 2017, they contended it wasn’t nearly enough to actually conduct the needed repairs and took the issue to court.
Can a jury award damages if an insurance policy says otherwise? The question was recently put before Judges Brian Rickman, Stephen Dillard and Trea Pipkin of the Georgia Court of Appeals in a disputed jury verdict favoring an unsatisfied State Farm home insurance policyholder.
Defendant-appellants, represented by Alex Mikhalevsky and Mark Dietrichs from NLJ 500 firm Swift Currie, took issue with the trial court jury award on five counts that boiled down to the plaintiff’s failure to meet their burden of proof when trying to collect an insurance claim to recover costs to fix their house after a snowstorm. While the plaintiffs had received some relief for the damages in 2017, they contended that it wasn’t nearly enough to actually conduct the needed repairs and took the issue to court. The jury agreed.
Mikhalevsky said that every one of these stipulations hinged on two critical facts: timing — of the loss and when damages should have been calculated — and the policyholder’s ability to cover replacement costs. This is because the trial court jury awarded a verdict, it did so based on damages the plaintiff calculated at the time of the trial, not at the time of the loss, as they would have been required to do in order to receive compensation under their insurance policy.
“So if the damage date is wrong, is it all game over [for the plaintiffs]?” Dillard asked.
The answer is “sort of.” If the plaintiff-appellees were wrong in the date they used to calculate damages, Mikhalevsky said that the defendant-appellant’s most critical issues would be resolved, except the separate issues they took with the plaintiff-appellee’s expert witness.
According to the defendant-appellants, it doesn’t matter if the plaintiffs weren’t able to make the repairs they needed to because their claims were denied. That’s not how the policy works —Mikhalevsky said the plaintiff appellees paid a higher premium so they could qualify for either actual cash value of a damage claim or reimbursement for repairs. Because they had the ability to recover some money already, the repair reimbursements required a higher burden of proof. Namely, the plaintiff-appellees would need to actually make the repairs and get reimbursed, and “financial inability is not an excuse.”
While Dillard agreed with plaintiff-appellees, represented by Michael Weinstein and Jason Black of Atlanta-based Weinstein & Black, on the relative unfairness of the conflict, that wasn’t the issue at hand, but rather which party was correct in their interpretation of the policy.
Weinstein contended that if this was really the case, State Farm should have played by its own rules.
“State Farm wasn’t consistent in their position that [the relief could be] only actual cash value. They paid the replacement cost. If they had not paid the replacement cost, we would be having a much different conversation,” Weinstein said. “But they did, they elected to do that knowing that the repairs weren’t completed, and as a result, once they agreed to pay the replacement cost, my expert witness said, ‘Here’s how much it cost to replace it.’ That’s what we were asking. That’s what the jury found.”
As to whether the jury can decide that an insurance company needs to pay up, Weinstein argued that “State Farm acknowledged coverage of the claim. They paid it, [but] they didn’t pay it properly.”
“I think there’s a distinction because the issue is whether or not State Farm waived the condition proceeding. The condition proceeding [is that] you have to do the repairs and if you do the repairs, then we will go ahead and pay you the replacement cost,” Weinstein said. “Our position is they waive that condition proceeding because they had already paid the replacement cost prior to the repairs being completed. They didn’t have to do that.”
To this end, Dietrichs countered that the plaintiff-appellee had received a partial claim denial shortly after the loss took place. The denial included an explanation of how to recover replacement cost benefits and that State Farm would consider them if they “determine repair or replacement costs will be incurred because repairs are substantially underway.”
“The insured got two other [repair] estimates immediately after the loss and chose not to put them in evidence, and that’s in the record,” Dietrichs said in closing. “So they had the evidence, they just chose not to introduce it.”
The case is State Farm Fire and Casualty Company v. Mohsen Nematollahi, No. A23A0673 in the Georgia Court of Appeals.
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