A federal appeals court overturned a lower court Thursday, ruling that Cincinnati Insurance Co. must completely replace a tornado-damaged mall roof.
Rymer Cos. LLC owns and operates a shopping center in Cannon Falls, Minnesota, insured by Cincinnati Insurance Co., as ordered by the 8th US Circuit Court of Appeals in St. Louis i Cincinnati Insurance Co. v. Rymer Cos. LLC, also known as Rymer Cos. Inc.; Cannon Falls Mall Inc.
After a tornado damaged the mall’s roof, Rymer filed an insurance claim for damage and a proof of loss that included a $1.3 million estimate for the roof’s total replacement. Cincinnati determined that the total loss to the mall was only $10,702.40, noting that deterioration and water damage to the roof pre-existed the tornado.
Cincinnati filed suit in US District Court in St. Paul, Minnesota, seeking a declaratory judgment, and Rymer filed a counterclaim alleging breach of contract and seeking a declaratory judgment and a forced judgment.
An adjudication panel agreed to by the parties rejected Rymer’s claim for full compensation and determined that the tornado caused $23,226 in damages.
After the county then denied Rymer’s request for partial repairs, Rymer demanded that Cincinnati pay to completely replace the roof, and the parties filed cross-motions for summary judgment.
Rymer argued that a “regulation or law” policy approval applied. This endorsement states that if a covered loss occurs to a building, Cincinnati will pay the increased cost of reconstructing undamaged portions when it is a consequence of an ordinance or law enforcement.
The district court granted summary judgment in Cincinnati’s favor, holding that the ordinance or law did not apply because the tornado damage did not result in building code compliance.
In overturning that decision, a three-judge panel of the appeals court said: “The tornado caused damage to the roof covered by the insurance.
“When Rymer sought to repair that damage, the ordinance was triggered. The tornado left the roof in need of the very thing prohibited by the ordinance — partial repairs.
“And it wasn’t until Rymer attempted to make such repairs that the county had grounds to enforce the ordinance.”
The case was referred back to the district court for further processing.
Attorneys in the case did not respond to requests for comment.