FOR PUBLICATION

ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEES:

JENNIFER E. DAVIS KEVIN W. MARSHALL

Bruce P. Clark & Associates Hobart, Indiana

St. John, Indiana

IN THE

COURT OF APPEALS OF INDIANA

WESTFIELD NATIONAL INSURANCE )

COMPANY, )

)

Appellant-Plaintiff, )

)

vs. ) No. 64A03-1108-PL-345

)

CHARLOTTE NAKOA, WARREN E. RIGG, )

STEVEN L. RIGG, and LARRY D. RIGG, )

)

Appellees-Defendants. )

APPEAL FROM THE PORTER SUPERIOR COURT

The Honorable William E. Alexa, Judge

Cause No. 64D02-0907-PL-7611

February 10, 2012

OPINION – FOR PUBLICATION

BARNES, Judge
2

Case Summary

Westfield National Insurance Company (“Westfield”) appeals the trial court‟s entry 

of judgment in favor of its insured, Charlotte Nakoa, in the amount of $233,214.57.1 

Nakoa cross-appeals the trial court‟s ruling on Westfield‟s motion to correct error that 

reduced the original judgment by $10,200.2 We affirm.

Issues

The sole restated issue raised by Westfield is whether the trial court erred in 

concluding that it had waived its right to insist that Nakoa comply with certain alleged 

conditions precedent in order to receive replacement cost coverage for the loss of her 

home, as opposed to actual cash value coverage. Nakoa cross-appeals the trial court‟s 

determination that Nakoa was not entitled to coverage for the loss of use of the home.

Facts

On January 26, 2008, fire destroyed a home in Valparaiso co-owned and occupied, 

at least part-time, by Nakoa. Westfield, which had issued a homeowner‟s policy to Nakoa 

that was effective on the date of the fire, learned of the loss and began investigating it on 

January 28, 2008. The policy‟s stated limits were $177,500 for the dwelling, $17,750 for 

other structures, $133,125 for personal property, and $71,000 for loss of use. The policy 

contained the following provisions regarding replacement of a destroyed dwelling in a 

section entitled “Conditions”:

 

1 Nakoa‟s brothers, Warren Rigg, Steven Rigg, and Larry Rigg, are also named parties in this case.

2 Nakoa does not label her claim on this point as a cross-appeal, but that is the effect of her challenge to 

the trial court‟s judgment.
3

C. Loss Settlement

* * * * *

1. The dwelling under coverage A [i.e. Nakoa‟s house]:

a. We agree to settle covered losses to the 

dwelling under Coverage A at replacement costs, 

without deduction for depreciation up to 125 percent 

of the specific limit of liability shown in the 

Declarations of the policy, if you agree to:

(1) Maintain coverage on the dwelling to 

100 percent of its full replacement cost by 

allowing us to annually adjust the Coverage A 

limit of liability reflecting any changes in the 

cost of construction for the area in which the 

residence premises is located;

(2) Notify us, within 90 days, of completion 

of any improvements to the dwelling exceeding 

$5,000 of the limit of liability shown in the 

Declarations; and

(3) Repair or replace the building with new 

material of like kind and quality within a 

reasonable time.

b. If you do not comply with a(1), (2) and (3) 

above, our limit of liability shall not exceed the limit 

shown in the Declarations of this policy.

2. Buildings under Coverage B:

a. At replacement cost without deduction for 

depreciation, however, we will pay no more than the 

smallest of the following amounts for equivalent 

construction and use:
4

(1) The amount actually and necessarily 

spent to repair or replace the building or part of 

it;

(2) The replacement cost of the building of 

any parts of it;

(3) The applicable limit of liability show in 

the Declarations of the policy.

Under 1. and 2. above, we will pay no more than the actual 

cash value of the damage until actual repair or replacement is 

completed.

* * * * *

6. You may disregard the replacement cost loss 

settlement provisions and make claim under this policy for 

loss or damage to buildings on an actual cash value basis. 

You may then make claim for any additional liability 

according to the provisions of this Condition C. Loss 

Settlement, provided you notify us of your intent to do so 

within 180 days after the date of loss.

Appellant‟s App. pp. 162-63.

On April 6, 2008, Nakoa submitted an inventory of personal property she alleged 

had been lost in the fire, totaling $25,297. On May 9, 2008, counsel for Westfield 

contacted Nakoa, requesting further proof of loss and documentation regarding the 

personal property inventory. On July 23, 2008, a contractor submitted an estimate that it 

would cost $267,368.69 to replace the home, which included demolition of the remains of 

the previous home.3

 

3 Although Westfield claims there is no evidence that it received this estimate on this date, the cover page 

of the estimate refers to Westfield, the name of the Westfield agent handling the claim, and the Westfield 

claim number.
5

On November 4, 2008, Nakoa submitted to an examination under oath (essentially 

a pre-litigation deposition) by counsel for Westfield regarding her claim. During this 

examination, Nakoa discussed the fact that she owned a second home in Valparaiso and 

that she had divided her time living between that home and the home that had burned 

down. Also, Nakoa stated that she had inherited the destroyed home in 2000 from her 

mother and that she owned it jointly with her three brothers. However, Nakoa was the 

only named insured on the Westfield policy and she was the only one who had lived there 

after their mother‟s death. Nakoa also was examined at length regarding her personal 

property claims. Additionally, counsel for Westfield noted during this examination that 

the house “has to be actually torn down and replaced, correct?” Id. at 221. On June 2, 

2009, Nakoa submitted to a second examination under oath at which the personal 

property claims were discussed at length. There was very little discussion of the value of 

the home itself during either examination, aside from counsel for Westfield noting that 

Nakoa had valued it at $183,000 on a claim form and Nakoa stating she had arrived at 

that figure after consultation with a Westfield agent.

On July 16, 2009, Westfield filed a complaint for interpleader, with Nakoa and her 

brothers as defendants. The complaint alleged that because of the joint ownership of the 

destroyed home between Nakoa and her brothers, “Westfield is potentially subject to 

multiple or inconsistent claims by any or all of the defendants seeking the proceeds or 

part of the proceeds of the policy due as a result of the destruction of the property.” 

Appellee‟s App. p. 13. The complaint further sought to deposit $180,978 with the trial 
6

court clerk as full discharge of its liability under the policy; the complaint did not identify 

how Westfield arrived at this figure. 

On July 20, 2009, Westfield filed an amended complaint for interpleader. The 

allegations of this complaint were identical to the first complaint, except that the amount 

of money that Westfield sought to deposit was $140,600. Again, there was no 

explanation as to how this figure was arrived at, nor why it was over $40,000 less than 

the original complaint. On September 29, 2009, Nakoa filed an answer to the amended 

complaint for interpleader that largely admitted the allegations in the complaint, except 

that it sought to require Westfield to deposit $399,375 with the clerk, which would 

represent the maximum policy limits. It does not appear Westfield actually deposited 

anything with the clerk, nor did it ever pay anything to Nakoa directly on her claim, aside 

from a $5,000 advance to replace some of her personal property.

On September 13, 2010, Nakoa filed a motion to amend her answer to the 

interpleader complaint to state counterclaims against Westfield for breach of contract, 

failure to maintain good faith, and bad faith. Westfield objected to permitting such an 

amendment.

On September 23, 2010, Nakoa filed a “Verified Demand for Appraisal” pursuant to 

the following provision of the Westfield policy:

If under Section I, you and we fail to agree on the amount of 

loss, either may demand an appraisal of the loss. In this 

event, each party will choose a competent and impartial 

appraiser within 20 days after receiving a written request 

from the other. The two appraisers will choose an umpire. If 
7

they cannot agree upon an umpire within 15 days, you or we 

may request that the choice be made by a judge of a court of 

record in the state where the residence premises is located. 

The appraisers will separately set the amount of loss. If the 

appraisers submit a written report of an agreement to us, the 

amount agreed upon will be the amount of loss. If they fail to 

agree, they will submit their differences to the umpire. A 

decision agreed to by any two will set the amount of loss.

1. Each party will pay its own appraiser; and

2. Bear the other expenses of the appraisal and umpire 

equally.

We do not waive any of our rights under this policy by 

agreeing to an appraisal.

Appellant‟s App. p. 163. The motion alleged that the parties disagreed on the amount of 

loss in the case, and further stated that Nakoa believed “that appraisal should resolve the 

matter in its entirety without further action on the complaint or counterclaim.” Id. at 43.

Following a hearing conducted on October 26, 2010, Westfield agreed to submit to 

the appraisal process, and the trial court ordered that it be completed within ninety days. 

Because of the agreement regarding the appraisal, Nakoa did not further pursue amending 

her answer to include the proposed counterclaims. During the appraisal process, one 

appraiser believed it was appropriate to value Nakoa‟s loss based solely upon replacement 

cost of the home and personal property, while the other appraiser also provided a figure 

for the actual cash value of the property. Ultimately, the first appraiser provided solely 

the replacement cost of the property as his appraisal, which resulted in a figure of 

$237,414.57, and did not provide an actual cash value estimate. The other appraiser‟s 
8

figure for replacement cost was identical to the first appraiser‟s, but he also provided a 

figure of $108,359.78 as the actual cash value of the lost property. 

On January 25, 2011, the umpire agreed with the first appraiser who valued the 

property at $237,414.57 based solely upon replacement cost as the amount of loss. This 

appraisal also noted that Nakoa was entitled to an additional $10,200 for loss of use of 

the property, “if Court finds coverage for this loss.” Id. at 58. It also stated that the actual 

cash value of the loss could be obtained from the second appraiser, if necessary.

On January 28, 2011, Nakoa filed a “Motion for Judgment on Appraisal Award” in 

the amount of $247,614.57 for the real and personal property and $10,200 for loss of use. 

Id. at 53. On February 15, 2011, Westfield filed a response to Nakoa‟s motion. In this 

response, Westfield claimed that Nakoa‟s loss should be valued on the basis of the actual 

cash value of $108,359.78 listed in the second apprasier‟s appraisal, with which the 

umpire had not agreed. There is no evidence that at any prior time, either in litigation or 

in communications with Nakoa, that Westfield had previously suggested the amount of 

Nakoa‟s claim should be limited to actual cash value. The basis of Westfield‟s argument 

that Nakoa‟s claim should be limited to actual cash value was that she had failed to meet 

two purported conditions precedent to an award of replacement cost: she had not actually 

completed replacement of the home, and she had not provided Westfield with notice 

within 180 days of the loss that she would seek replacement cost coverage. Westfield 

also asserted that Nakoa was not entitled to loss of use coverage because after the fire, 

she had been able to continue residing at her second home in Valparaiso. The trial court 
9

conducted a hearing on the matter on February 22, 2011, at which time Nakoa indicated 

that her brothers had signed waivers disclaiming any interest in any insurance proceeds.

On March 9, 2011, the trial court entered a judgment awarding Nakoa 

$247,614.57, the replacement cost of the property plus $10,200 for loss of use. Westfield 

filed a motion to correct error. On July 5, 2011, the trial court granted the motion to 

correct error to the extent of deducting $10,200 from the judgment for loss of use. It also 

noted that Nakoa previously had received the $5000 advance from Westfield to replace 

personal property and it further reduced the judgment by that amount. However, it 

affirmed utilizing the replacement cost as the proper basis for valuing Nakoa‟s claim, thus 

resulting in a net judgment of $233,214.57.

4

 Westfield now appeals, and Nakoa crossappeals.

Analysis

We review a trial court‟s ruling on a motion to correct error for an abuse of 

discretion. Knowledge A-Z, Inc. v. Sentry Ins., 891 N.E.2d 581, 584 (Ind. Ct. App.

2008), trans. denied. “An abuse of discretion occurs when the decision is against the logic 

and effect of the facts and circumstances before the court, and inferences that may be 

drawn therefrom.” Id. 

I. Waiver of “Conditions Precedent”

In denying Westfield‟s motion to correct error, the trial court expressly stated that 

Westfield had waived its ability to argue that Nakoa had failed to meet any conditions 

 

4 There appears to be a discrepancy of $200 when comparing the appraiser‟s report, the original judgment, 

and the modified judgment. Neither party discusses this discrepancy.
10

precedent to replacement cost coverage that may have existed in the Westfield policy. 

The sole question on this issue is whether Westfield waived the ability to assert that 

Nakoa had not complied with conditions precedent in the policy. We need not resolve

whether Nakoa in fact complied with any such conditions, nor do we need to address the 

precise scope or meaning of any such conditions.

Courts “„are not inclined to countenance the playing of games by insurance 

companies leading to policy defenses, and are prone to require a company to bring to its 

insured‟s attention any provision with which compliance is required.‟” Stewart v. Walker,

597 N.E.2d 368, 376 (Ind. Ct. App. 1992) (quoting 8C Appleman, Insurance Law and 

Practice § 5083.65 (1981)). “It is well settled that contractual provisions of an insurance 

policy may be waived or that the insurer may be estopped from asserting such provisions.” 

American Standard Ins. Co. of Wisconsin v. Rogers, 788 N.E.2d 873, 876 (Ind. Ct. App.

2003). Whether there has been waiver of a policy provision by an insurer generally is a 

question of fact. Id. at 877. Although the terms “estoppel” and “waiver” are technically 

distinct, the terms often are used synonymously with respect to insurance matters. Id. 

Waiver is an intentional relinquishment of a known right involving both knowledge of 

the existence of the right and the intent to relinquish it, while the elements of estoppel are 

the misleading of a party entitled to rely on the acts or statements in question and a 

consequent change of position to that party‟s detriment. Id.

Waiver may be implied from the acts, omissions, or conduct of one of the parties 

to the contract. Id. The conduct of an insurer inconsistent with an intention to rely on the 
11

requirements of the policy that leads the insured to believe those requirements will not be 

insisted upon may be sufficient to constitute waiver. Id. However, mere silence or 

inaction on the part of an insurer is not sufficient to constitute an express waiver. Tate v. 

Secura Ins., 587 N.E.2d 665, 671 (Ind. 1992). Estoppel or implied waiver, based on an 

insurer‟s silence, generally requires a showing of resulting prejudice to the insured. Id. 

Here, the first mention Westfield made that Nakoa failed to satisfy alleged 

conditions precedent for receipt of replacement cost coverage occurred over three years 

after the fire that destroyed her home. In the interim, Westfield paid nothing to Nakoa, 

aside from the $5,000 personal property advance. She was subjected to extensive 

investigation by Westfield and its attorneys primarily regarding her personal property 

losses, which included two extensive pre-litigation examinations under oath. An estimate 

from a contractor for replacing the home was obtained within 180 days of the fire. In 

July 2009,5 Westfield filed the interpleader complaint, amended shortly thereafter, that 

identified the value of Nakoa‟s loss as either $180,978 or $140,600, without explaining 

how those figures were arrived at, although it would finally state at the February 2011 

hearing that it was based upon its estimate of the actual cash value of Nakoa‟s losses. 

Nakoa believed her claim was worth considerably more than that based at least in part on 

the contractor‟s estimate of what it would cost to replace the home.

 

5 The interpleader, which Westfield filed because of the alleged potential for multiple liability under the 

policy due to co-ownership of the property by Nakoa‟s brothers, was filed approximately eight months 

after Westfield learned of the multiple ownership during Nakoa‟s November 2008 examination under 

oath.
12

To resolve the vast discrepancy between Westfield‟s and Nakoa‟s valuations of her 

claim, Nakoa pressed to have the value of her loss appraised as permitted by the policy. 

Westfield stood silently and idly by and acquiesced to the appraisal process without 

giving any indication to Nakoa or the trial court that its valuation of Nakoa‟s loss was 

based on actual cash value, not replacement cost. The policy provision regarding 

appraisal required Nakoa to pay the appraiser she chose and to pay one-half of the 

umpire‟s fee, which was $750.6

We conclude that Westfield‟s conduct in this case was such that it led Nakoa to 

believe that it would not insist upon the policy provisions regarding payment of 

replacement cost versus actual cash value of a loss. We acknowledge that replacement 

cost provisions in homeowner‟s policies potentially allow a “windfall” to an insured whose 

house burns down, in that they may be entitled to an insurance payment that is more than 

what their old house was worth. See Travelers Indem. Co. v. Armstrong, 442 N.E.2d 

349, 353 (Ind. 1982). Thus, insurers generally may insist that payment of replacement 

cost coverage is accompanied by assurances that the house actually is or will be rebuilt or 

repaired. Id. Still, it is clear to us in reading the Westfield policy and the declarations 

page that Nakoa was paying premiums for replacement cost coverage as the basic 

coverage to which she was entitled.

 

6 As part of its judgment, the trial court required Westfield to pay an additional $375 to Nakoa, 

representing one-half of the umpire‟s fee, which left the other $375 to come directly out of Nakoa‟s 

pocket.
13

Westfield clearly was on notice that Nakoa was seeking replacement cost coverage 

for her losses no later than when she sought to have the value of her loss appraised. Yet, 

Westfield made no mention of its current assertions that Nakoa had failed to give timely 

notice of her intent to seek replacement cost coverage or that she was not entitled to it 

because she had not actually rebuilt the house. Instead, it permitted Nakoa to incur the 

personal expense of the appraisal process and the further delay it caused to her receiving 

any payment under the policy. Such expense and delay represents tangible prejudice to 

Nakoa caused by Westfield‟s silence regarding its alleged policy defenses.

We also note, as did the trial court, that it seems unreasonable and unrealistic for 

Westfield to have expected Nakoa to begin reconstruction of her house when Westfield 

never paid anything to her towards her real property loss—not the actual cash value of the 

loss, not replacement cost, nothing at all. Nakoa might have been able to use such funds, 

even if it was just actual cash value and not full replacement cost, as “seed money” to begin 

reconstruction. See Nahmias Realty, Inc. v. Cohen, 484 N.E.2d 617, 623 (Ind. Ct. App. 

1985), trans. denied. Without any such payment, it is difficult to perceive how a 

homeowner whose home has burned to the ground could possibly be expected to rebuild 

it. See Rockford Mut. Ins. Co. v. Pirtle, 911 N.E.2d 60, 65-66 (Ind. Ct. App. 2009) 

(holding that even when a homeowner‟s policy requires actual replacement of a house 

before replacement cost coverage is paid, an insurer‟s failure to advance necessary funds 

to rebuild may excuse an insured‟s failure to rebuild and require payment of replacement 

cost coverage even if homeowner has not yet rebuilt), trans. denied.
14

In sum, we conclude Westfield waived its ability to assert that Nakoa failed to 

comply with alleged conditions precedent to replacement cost coverage by, at the very 

least, standing idly by and permitting the appraisal process to be carried out without 

mentioning that the difference between the Westfield‟s and Nakoa‟s estimates of the value 

of her loss arose because she was valuing the loss at replacement cost while it was 

valuing the loss at actual cash value. The trial court did not abuse its discretion in 

denying Westfield‟s motion to correct error to the extent it sought to limit Nakoa‟s 

recovery to the actual cash value of her loss.

II. Loss of Use

Next, we address Nakoa‟s cross-appeal that the trial court erred in granting 

Westfield‟s motion to correct error by deducting $10,200 from the original judgment. The 

trial court did so because it concluded that Nakoa was not entitled to loss of use coverage 

under the Westfield policy.

When we interpret an insurance policy, our goal is to ascertain and enforce the 

parties‟ intent as manifested in the policy. General Cas. Ins. Co. v. Bright, 885 N.E.2d 56, 

58 (Ind. Ct. App. 2008). “We construe the insurance policy as a whole and consider all of 

the provisions of the contract and not just individual words, phrases, or paragraphs.” Id.

We will give clear and unambiguous language in the policy its plain and ordinary 

meaning. Id.

The Westfield policy provision governing loss of use claims states that it will pay 

for “additional living expense” incurred due to a home becoming inhabitable, which is 
15

defined as “any necessary increase in living expenses incurred by you so that your 

household can maintain its normal standard of living.” Appellant‟s App. p. 152. Here, 

Nakoa expressly stated during one of her examinations under oath that she incurred no 

additional living expenses as a result of the fire. That is because she still possessed the 

second home in Valparaiso where she continued to live after the destruction of the 

insured home.7

Nakoa asserts that despite this evidence, she was entitled to $10,200 in loss of use 

coverage because the appraisal agreed to by the umpire said she was entitled to that 

amount for loss of use of the property and, pursuant to the policy‟s terms, “the amount 

agreed upon [in the appraisal] will be the amount of loss.” Id. at 163. However, the 

appraisal also expressly stated that Nakoa was entitled to the $10,200, “if Court finds 

coverage for this loss.” Id. at 58 (emphasis added). Thus, the appraisal did not state 

definitively that Nakoa was entitled to the $10,200, and it was not the last word on the 

subject. Rather, it left the final decision to the trial court. Given the plain and 

unambiguous language of the policy, as well as the uncontradicted evidence that Nakoa 

did not incur any additional living expenses as a result of the fire, we cannot say the trial 

court abused its discretion in granting Westfield‟s motion to correct error to the extent of 

subtracting the $10,200 for loss of use from the original judgment.

 

7 The loss of use provision of the Westfield policy also allows claims for fair rental value if part of a 

destroyed dwelling had been rented out to others. Counsel for Nakoa mentioned at the February 2011 

hearing that her nephew had been renting out part of the destroyed home. Our review of the record, 

however, namely Nakoa‟s examinations under oath, indicates that the nephew had been living at the 

second home in Valparaiso that was not destroyed.
16

Conclusion

The trial court did not abuse its discretion in denying Westfield‟s motion to correct 

error to the extent it sought to limit Nakoa‟s recovery to the actual cash value of her loss 

as opposed to replacement cost, nor did it abuse its discretion in granting that motion to 

the extent of not requiring Westfield to pay Nakoa $10,200 for alleged loss of use. We 

affirm.

Affirmed.

KIRSCH, J., and BRADFORD, J., concur.