Opinion ID: 2612491
Heading Depth: 1
Heading Rank: 2

Heading: payments for repair or replacement.

Text: Transamerica asserts that the trial court should not have allowed the jury to decide whether the Garnetts were entitled to payments for the repair or replacement of the building before they had provided Transamerica with notice of the completion of the work and adequately documented the costs. Transamerica also contends that there was not sufficient evidence presented by the Garnetts to allow the issue of Transamerica's breach of contract to be presented to the jury. The essence of Transamerica's position is that the effect of two clauses of the insurance policy should have been decided as a matter of law by the trial court, rather than leaving the question for the jury to resolve. Transamerica argues that the failure of the trial court to do so tainted the entire verdict. We disagree. The first clause invoked by Transamerica is one of the general conditions of the policy: 9. Duties Of The Named Insured After A Loss. In case of loss the named insured shall: ... . (e) submit to the Company within 60 days after requested a signed, sworn statement of loss that sets forth to the best of the named insured's knowledge and belief: ... . (5) specifications of any damaged building and detailed estimates for repair of the damages; ... . The second clause is part of the Value Pacer Endorsement: In consideration of the premium charged, it is agreed that coverage under this policy shall apply without limit of liability to provide replacement cost insurance to the building described above and defined elsewhere in this policy, and without application of the coinsurance clause in this policy, subject to the following provisions: ... . 3. The Company shall not be liable under this endorsement for any loss unless and until the property is actually repaired or replaced by the insured with due diligence and dispatch. The trial court instructed the jury concerning these two clauses: INSTRUCTION NO. 15 An insurance company is entitled to demand that the insured perform all the duties required of him under the contract of insurance. There is nothing unreasonable or improper about an insurance company demanding compliance with the contract it has entered into with its insured. There can be no liability on the part of defendant Transamerica for simply requiring that plaintiffs fulfill their contractual obligations relating to proof of loss and reconstruction of the insured building. This instruction implicitly assumes that the two clauses of the policy invoked by Transamerica state duties that the Garnetts were obligated to fulfill under the policy. The only question presented for our consideration is whether there was substantial evidence to justify submitting the case to the jury. If not, the trial court should have granted a directed verdict for Transamerica. For the purpose of this determination, Transamerica admits the truth of the adverse evidence and every inference that may be legitimately drawn from it. I.R.C.P. 50(a) (1987); Smith v. Great Basin Grain Co., 98 Idaho 266, 274, 561 P.2d 1299, 1307 (1977). In reviewing the decision of the trial court not to grant a directed verdict, we apply this same standard and do not defer to the views of the trial court. Quick v. Crane, 111 Idaho 759, 764, 727 P.2d 1187, 1192 (1986). We start our analysis by noting that the two clauses in issue should be read in conjunction with another clause in the endorsement: 5. Should the insured elect not to repair or replace the property after a loss, coverage under this policy shall be limited to the Actual Cash Value of the property at the time of the loss. With regard to the duty of the Garnetts to provide Transamerica specifications of the building and a detailed estimate of the cost of the repairs within sixty days after Transamerica's request, there is evidence upon which the jury could have concluded that the Garnetts did not violate this requirement. Under the policy, payment for damage to the building is limited to its actual cash value, unless the building is repaired and the cost of repair or replacement is greater than the actual cash value. If the cost of reconstructing the building was greater than the actual cash value, there was no purpose in the Garnetts furnishing the specifications of the building and a detailed estimate of the cost of repairs. They were entitled to at least the actual cash value. Whether they were entitled to more would depend on the actual cost of reconstruction. Here, there is evidence that the Garnetts intended to repair or replace the building. Transamerica's own estimates of the cost of repairing or replacing the building exceeded the actual cash value of the building. From this evidence, the jury could have concluded that the Garnetts did not violate their duty under the policy to furnish specifications of the building and detailed estimates for repair of the damages, since any additional amount to which the Garnetts were entitled under the policy did not depend on the estimate of the cost of repairs, but on the actual cost of repairs. The more difficult question is whether the policy required the Garnetts to repair or replace the building at their own expense before being entitled to more than the actual cash value of the building. A literal reading of the value pacer endorsement might lead to that conclusion. However, the evidence indicates that even Transamerica did not interpret the endorsement this way. In February 1986, Transamerica paid the Garnetts $122,500.00 as the actual cash value of the building. Later that same month, Transamerica told the Garnetts that Transamerica was prepared to make proportional payments toward the repair of the building after the $122,500.00 had been spent and additional repairs were completed. In November 1986, before any of the repairs had been commenced, Transamerica paid the Garnetts an additional amount of $105,630.43 toward the repair of the building. This total of $228,130.43 that Transamerica paid for the repair or the building was approximately equal to the $227,354.73 that the Garnetts paid to the contractor who was reconstructing the building. However, as of February 1987, the contractor had billed the Garnetts for more than $8,000.00 for additional work on the reconstruction. In addition, the contractor was owed a holdback on the amount due of more than $4,000.00. The balance of the work to complete the reconstruction of the building, as it stood at the time of trial, was done at the expense of the Garnetts themselves. Richard Garnett testified at trial that he estimated $20,000.00 work remained to be done to complete the reconstruction of the building. From this evidence, the jury could have concluded that Transamerica did not fulfill its commitment to make proportional payments toward the cost of repairing the building as the work was completed after the payments made by Transamerica had been exhausted.