Court Opinion

ID: 2746409
Source: CourtListenerOpinion
Date Created: 2014-10-29 15:04:23.793553+00
Date Added: 2024-06-11T10:14:09.666299
License: Public Domain

FOR PUBLICATION

ATTORNEY FOR APPELLANT:                   ATTORNEYS FOR APPELLEE
                                          GENERAL FIRE AND CASUALTY
CHRISTINE L. ZOOK                         COMPANY:
Ferguson & Ferguson
Bloomington, Indiana                      JAMES A. GOODIN
                                          ELIZABETH J. WYSONG BERG
                                          Goodin Abernathy, LLP
                                          Indianapolis, Indiana

                                          ATTORNEYS FOR APPELLEE
                                          INDIANA INSURANCE COMPANY and
                                          PEERLESS INSURANCE COMPANY:

                                          RICK D. MEILS
                                          WILLIAM M. BERISH
                                          JOHN W. MERVILDE
                                          Meils Thompson Dietz & Berish
                                          Indianapolis, Indiana

                            IN THE
                  COURT OF APPEALS OF INDIANA
                                                                     Oct 29 2014, 10:07 am

TOM SEEBER,                               )
                                          )
     Appellant-Plaintiff,                 )
                                          )
            vs.                           )     No. 53A01-1405-PL-208
                                          )
GENERAL FIRE AND CASUALTY                 )
COMPANY, INDIANA INSURANCE                )
COMPANY, and PEERLESS INDEMNITY           )
INSURANCE COMPANY,                        )
                                          )
     Appellees-Defendants.                )

                   APPEAL FROM THE MONROE CIRCUIT COURT
                        The Honorable E. Michael Hoff, Judge
                          Cause No. 53C01-1011-PL-2790
                                     October 29, 2014

                             OPINION - FOR PUBLICATION

BRADFORD, Judge

                                   CASE SUMMARY

       In the fall of 2008, Appellant-Plaintiff Tom Seeber owned a commercial building

located on North College Avenue in Bloomington (the “Building”). The Building was leased

to Harry and Karen Kidwell, who operated Delilah’s Pet Shop. On November 3, 2008, the

Building was destroyed by fire and determined to be a total loss. At the time of the fire,

Seeber had an insurance policy for the Building that was issued by Appellee-Defendant

General Fire and Casualty Company (“General Fire & Casualty”). The Kidwells had an

insurance policy relating to their interests in the Building that was issued by Appellees-

Defendants Indiana Insurance Company and Peerless Indemnity Insurance Company

(collectively, “Indiana Insurance”). As a result of the fire, General Fire & Casualty and

Indiana Insurance (collectively, “the Insurance Companies”) agreed that the actual cash value

of the Building was $512,418.12 and the replacement cost was $650,812.70. The Insurance

Companies thereafter collectively paid Seeber the full $512,418.12 actual cash value of the

building.

       Seeber subsequently claimed that he was entitled to receive the full $650,812.70

replacement cost of the building. Seeber filed a complaint for declaratory judgment on

November 1, 2010, asking the trial court to interpret his rights under the relevant insurance

policies. On December 30, 2013, Seeber filed a motion for summary judgment, along with

                                             2
designated evidence and a memorandum in support of his motion. Also on December 30,

2013, General Fire & Casualty and Indiana Insurance each filed motions for summary

judgment, designated evidence, and supporting memoranda. The trial court conducted a

hearing on all outstanding motions on March 21, 2014. On April 17, 2014, the trial court

entered an order denying Seeber’s motion for summary judgment and granting summary

judgment in favor of the Insurance Companies.

        On appeal, Seeber contends that the trial court erred in denying his request for

summary judgment and in granting summary judgment in favor of the Insurance Companies.

Seeber specifically claims that the Insurance Companies were not entitled to an award of

summary judgment because, under the applicable policy language, he was entitled to recover

$650,812.70, the replacement cost of the building that was destroyed by fire. Concluding

that the trial court properly denied Seeber’s request for summary judgment and granted

summary judgment in favor of the Insurance Companies, we affirm.

                           FACTS AND PROCEDURAL HISTORY

                    A. Facts Relating to the Building Destroyed by Fire

        In the fall of 2008, Seeber owned the Building.1 The Building was leased to Harry and

Karen Kidwell, who operated Delilah’s Pet Shop. On November 3, 2008, the Building was

destroyed by fire and was determined to be a total loss.

        At the time of the fire, Seeber had an insurance policy for the Building that was issued

by General Fire & Casualty. The Kidwells had an insurance policy relating to their interests

        1
          Seeber owned the Building with his brother, John Seeber. John subsequently signed his interest in
the Building over to Seeber.

                                                    3
in the Building that was issued by Indiana Insurance. At some point, the Kidwells and

Seeber entered into a “settlement agreement and mutual release” that stated, in part: “The

Kidwells hereby assign to [Seeber] any and all right, title and interest the Kidwells may have

to receive additional proceeds under the [Indiana Insurance] Policy for loss or destruction of

the improvements on [the Building].” Appellant’s App. p. 67 (emphasis added). The release

further stated, however, that “[Seeber] acknowledge[s] that the Kidwells are making no

representation that any additional proceeds are available under the policy.” Appellant’s App.

p. 67.

         After the fire, the Insurance Companies agreed that the actual cash value of the

Building was $512,418.12 and the replacement cost of the Building was $650,812.70. Based

upon an unwritten, agreed upon split for the actual cash value payment, General Fire &

Casualty paid $220,339.84 and Indiana Insurance paid $292,078.39 to the insureds. These

payments totaled the full agreed actual cash value of the Building.

                B. Facts Relating to the Proposed Replacement Properties

         In December of 2008, approximately one month after the fire, Seeber purchased a

25% interest in a property located on North Walnut Street2 in Bloomington. This property is

a three-story mixed-use building, with one-third of the building devoted to retail space and

the other two-thirds devoted to residential rental space. Seeber’s interest in the building was

valued at $422,118.00.

         2
         Both the parties and the trial court sometimes refer to this property as being located on North
Washington Street.

                                                   4
       On August 12 and 27, 2010, Seeber notified Indiana Insurance of his purchase of an

interest in the North Walnut Street property and indicated that he intended to use the

purchase as a replacement property. On October 5, 2010, Seeber notified General Fire &

Casualty of the purchase of the proposed replacement property. At this time, Seeber’s

counsel was informed that General Fire & Casualty would review the replacement property

proposal. Seeber filed the underlying action before General Fire & Casualty finished their

review of the proposal.

       During the pendency of the underlying action, on January 15, 2014, Seeber purchased

four condominiums located on West Allen Street in Bloomington.                  Each of the

condominiums is a single-story residential building. The value of the condominiums was

$355,000.00.

                                  C. Procedural History

       Seeber filed a complaint for declaratory judgment on November 1, 2010, requesting

that the trial court interpret his rights under the relevant insurance policies. In making this

request, Seeber claimed that he was entitled to receive the full $650,812.70 replacement cost

of the Building. Thus, Seeber argued that he was entitled to recover an additional

$138,394.58 from the Insurance Companies.

       On December 30, 2013, Seeber filed a motion for summary judgment, along with

designated evidence and a memorandum in support of his motion. Also on December 30,

2013, General Fire & Casualty and Indiana Insurance each filed motions for summary

judgment, designated evidence, and supporting memoranda. The Insurance Companies filed

                                              5
briefs in opposition to Seeber’s motion for summary judgment, and Seeber filed a brief in

opposition to each of the Insurance Companies’ motions for summary judgment. Each party

also filed a reply memorandum in support of its motion for summary judgment.

       The trial court conducted a hearing on the competing summary judgment motions on

March 21, 2014. Following the hearing, the trial court took the matter under advisement and

ordered each party to submit a proposed summary judgment order within two weeks. On

April 17, 2014, the trial court entered an order denying Seeber’s motion for summary

judgment and granting summary judgment in favor of the Insurance Companies. This appeal

follows.

                             DISCUSSION AND DECISION

       Seeber contends that the trial court abused its discretion in denying his motion for

summary judgment and in granting summary judgment in favor of the Insurance Companies.

The Insurance Companies, for their part, contend that the trial court properly denied Seeber’s

motion for summary judgment and granted summary judgment in their favor.

                                  A. Standard of Review

               Insurance contracts are governed by the same rules of construction as
       other contracts. Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind.
       1997); see also Bowers v. Kushnick, 774 N.E.2d 884, 887 (Ind. 2002). Proper
       interpretation of an insurance policy, even if it is ambiguous, generally
       presents a question of law that is appropriate for summary judgment. Guzorek,
690 N.E.2d at 667. Clear and unambiguous policy language must be given its
       ordinary meaning. Id. However, where there is an ambiguity, insurance
       policies are to be construed strictly against the insurer. Am. States Ins. Co. v.
       Kiger, 662 N.E.2d 945, 947 (Ind. 1996), reh’g denied. “This strict construal
       against the insurer is driven by the fact that the insurer drafts the policy and
       foists its terms upon the customer.” Id. “The insurance companies write the
       policies; we buy their forms or we do not buy insurance.” Id.

                                              6
              Failure to define a term in an insurance policy does not necessarily
       make it ambiguous. Guzorek, 690 N.E.2d at 667. Rather, an insurance policy
       is ambiguous only if a provision is susceptible to more than one reasonable
       interpretation. Id. Additionally, an “ambiguity is not affirmatively established
       simply because controversy exists and one party asserts an interpretation
       contrary to that asserted by the opposing party.” Beam v. Wausau Ins. Co., 765
N.E.2d 524, 528 (Ind. 2002), reh’g denied.

Am. Home Assur. Co. v. Allen, 814 N.E.2d 662, 666-67 (Ind. Ct. App. 2004), trans.

dismissed.

       Pursuant to Rule 56(C) of the Indiana Rules of Trial Procedure, summary judgment is

appropriate when there are no genuine issues of material fact and when the moving party is

entitled to judgment as a matter of law. Heritage Dev. of Ind., Inc. v. Opportunity Options,

Inc., 773 N.E.2d 881, 887 (Ind. Ct. App. 2002).

       When reviewing the grant or denial of a motion for summary judgment “we
       stand in the shoes of the trial court.” City of Gary v. Ind. Bell Tel. Co., 732
N.E.2d 149, 153 (Ind. 2000).… “In reviewing cross-motions for summary
       judgment, we consider each motion separately.” Girl Scouts of S. Ill. v.
       Vincennes Ind. Girls, Inc., 988 N.E.2d 250, 253 (Ind. 2013). Where, as here,
       the dispute is one of law rather than fact, our standard of review is de novo.
       See Spangler v. Bechtel, 958 N.E.2d 458, 461 (Ind. 2011). Further, the trial
       court in this case entered findings of fact and conclusions of law, “neither of
       which are required nor prohibited in the summary judgment context.” City of
       Gary, 732 N.E.2d at 153. “Although specific findings aid our review of a
       summary judgment ruling, they are not binding on this Court.” Id. Finally,
       “we are not limited to reviewing the trial court’s reasons for granting or
       denying summary judgment but rather we may affirm a grant of summary
       judgment upon any theory supported by the evidence.” Wagner v. Yates, 912
N.E.2d 805, 811 (Ind. 2009).

Alva Elec., Inc. v. Evansville-Vanderburgh Sch. Corp., 7 N.E.3d 263, 267 (Ind. 2014).

               A party seeking summary judgment bears the burden to make a prima
       facie showing that there are no genuine issues of material fact and that the
       party is entitled to judgment as a matter of law. American Management, Inc. v.
       MIF Realty, L.P., 666 N.E.2d 424, 428 (Ind. Ct. App. 1996). Once the moving

                                              7
      party satisfies this burden through evidence designated to the trial court
      pursuant to Trial Rule 56, the non-moving party may not rest on its pleadings,
      but must designate specific facts demonstrating the existence of a genuine
      issue for trial. Id. A trial court’s grant of summary judgment is “clothed with
      a presumption of validity,” and the appellant bears the burden of demonstrating
      that the trial court erred. Best Homes, Inc., 714 N.E.2d at 706 (quoting Barnes
      v. Antich, 700 N.E.2d 262, 264-65 (Ind. Ct. App. 1998)).

Heritage Dev., 773 N.E.2d at 888.

                   B. Relevant Provisions of the Insurance Policies

                           1. General Fire & Casualty Policy

      The relevant portions of the General Fire & Casualty insurance policy read as follows:

      A. COVERAGES
      We will pay for direct physical loss of or damage to Covered Property at the
      premises described in the Declarations caused by or resulting from any
      Covered Cause of Loss.
                                            ****
      E. PROPERTY LOSS CONDITIONS
                                            ****
      6. Loss Payment
      In the event of loss or damage covered by this policy:
      a.     We will not pay you more than your financial interest in the Covered
             Property.
      b.     We will either:
             (1)    Pay the value of lost or damaged property, as described in
                    paragraph d. below;
             (2)    Pay the cost of repairing or replacing the lost or damaged
                    property, plus any reduction in value of repaired items;
             (3)    Take all or any part of the property at agreed or appraised value;
                    or
             (4)    Repair, rebuild or replace the property with other property of
                    like kind and quality.
      c.     We will give notice of our intentions within 30 days after we receive
             the sworn statement of loss.
      d.     We will determine the value of Covered Property as follows:
             (1)    If Replacement Cost is designated in the Declarations for
                    Buildings or Business Personal Property, loss shall be adjusted
                    on the replacement cost value of the property, except as

                                             8
                    provided in (3) through (8) below.
                    (a)   You may make a claim for loss or damage covered by
                          this insurance on an actual cash value basis instead of on
                          a replacement cost basis. In the event you elect to have
                          loss or damage settled on a actual cash value basis, you
                          may still make a claim on a replacement cost basis if you
                          notify us of your intent to do so within 180 days after the
                          loss or damage.
                    (b)   We will not pay on a replacement cost basis for any loss
                          or damage:
                          (i)     Until the lost or damaged property is actually
                                  repaired or replaced; and
                          (ii)    Unless the repairs or replacement are made as
                                  soon as reasonably possible after the loss or
                                  damage.
                    (c)   We will not pay more for loss or damage on a
                          replacement cost basis than the least of:
                          (i)     The cost to replace, on the same premises, the lost
                                  or damaged property with other property:
                                  i.     Of comparable material and quality; and
                                  ii.    Used for the same purpose; or
                          (ii)    The amount you actually spend that is necessary
                                  to repair or replace the lost or damaged property.

Appellant’s App. pp. 151, 169.

                              2. Indiana Insurance Policy

      A. Coverage
      We will pay for direct physical loss of or damage to Covered Property at the
      premises described in the Declarations caused by or resulting from any
      Covered Cause of Loss.
                                          ****
      E. Loss Conditions
                                          ****
      4. Loss Payment
      a.    In the event of loss or damage covered by this Coverage Form, at our
            option, we will either:
            (1)    Pay the value of lost or damaged property;
            (2)    Pay the cost of repairing or replacing the lost or damaged
                   property subject to b. below;
            (3)    Take all or any part of the property at an agreed or appraised

                                            9
              value; or
      (4)     Repair, rebuild or replace the property with other property of
              like kind and quality, subject to b. below.
      We will determine the value of lost or damaged property, or the cost of
      its repair or replacement, in accordance with the applicable terms of the
      Valuation Condition in this Coverage Form or any applicable provision
      which amends or supersedes the Valuation condition.
b.    The cost to repair, rebuild or replace does not include the increased cost
      attributable to enforcement of any ordinance or law regulating the
      construction, use or repair of any property.
c.    We will give notice of our intentions within 30 days after we receive
      the sworn proof of loss.
d.    We will not pay you more than your financial interest in the Covered
      Property.
e.    We may adjust losses with the owners of lost or damaged property if
      other than you. If we pay the owners, such payments will satisfy your
      claims against us for the owners’ property. We will not pay the owners
      more than their financial interest in the Covered Property.
                                      ****
G. Optional Coverages
                                      ****
3. Replacement Cost
                                      ****
d.    We will not pay on a replacement cost basis for any loss or damage:
      (1)     Until the lost or damaged property is actually repaired or
              replaced; and
      (2)     Unless the repairs or replacement are made as soon as
              reasonably possible after the loss or damage.
                                      ****
e.    We will not pay more for loss or damage on a replacement cost basis
      than the least of (1), (2) or (3), subject to f. below:
      (1)     The Limit of Insurance applicable to the lost or damaged
              property;
      (2)     The cost to replace the lost or damaged property with other
              property:
              (a)     Of comparable material and quality; and
              (b)     Used for the same purpose; or
      (3)     The amount actually spent that is necessary to repair or replace
              the lost or damaged property.
                                      ****
f.    The cost of repair or replacement does not include the increased cost
      attributable to enforcement of any ordinance or law regulating the

                                      10
              construction, use or repair of any property.

Appellant’s App. pp. 263, 271-72, 275-76.

                                         C. Analysis

       Again, Seeber contends that the trial court erred in denying his motion for summary

judgment and in granting summary judgment in favor of the Insurance Companies. For their

part, the Insurance Companies contend that the trial court properly granted their motions for

summary judgment and denied Seeber’s motion for summary judgment.

                 1. Overview of Actual Cash Value vs. Replacement Cost

               The actual cash value policy is a pure indemnity contract. Its purpose is
       to make the insured whole but never to benefit him because a fire occurred.
       Appleman on Insurance 2d § 3823 at pp. 218-219; Brand Distributors Inc. v.
       Insurance Co. of North America, (1976) 532 F.2d 352 (4th Cir.). Replacement
       cost coverage, on the other hand, reimburses the insured for the full cost of
       repairs, if he repairs or rebuilds the building, even if that results in putting the
       insured in a better position than he was before the loss.
               If a fire occurs in a new building, the actual cash value generally is
       equivalent to the cost of repairs since the full cost of repair merely restores
       what was there. It indemnifies but does no more. If an old building burns to
       the ground, the actual value is commonly established by reference to its fair
       market value less the value of the land on which the building sits. If an old
       building has only very minor fire damage, repairs probably do not result in a
       substantial betterment, and depreciation is usually ignored in adjusting the loss.
        However when the building is old or obsolescent and is seriously damaged but
       not destroyed, the actual cash value is more likely to be disputed. The courts
       uniformly hold, as did the Court of Appeals, that actual cash value insurance is
       strictly a contract of indemnity. The insured should be made whole but not be
       put in a better position than he was in before the fire. Braddock v. Memphis
       Fire Ins. Corp., (1973) Tenn., 493 S.W.2d 453.
               “A problem common to all the foregoing tests is the extent to
               which physical deterioration and obsolescence should be taken
               into account in computing loss. If the principal of indemnity be
               adhered to, depreciation must be considered in loss adjustment
               so that the insured will not receive the equivalent of a new
               building for a loss of the old one. Insurance law is not

                                               11
              concerned with the estimated depreciation charged off on the
              books of business establishment but rather with the actual
              deterioration of a structure by reason of age and physical wear
              and tear, computed at the time of the loss.” 49 Colum. L.R.,
              818, 823. The same principle is discussed at 44 Am. Jur. 2d
              549, Appleman on Insurance 2d, § 2823 at p. 226.
              A building constructed thirty years ago will have many interior features
      and structural components that are not only old and used, but of a style,
      material and color no longer available or in fashion. If damaged by a fire, they
      will be replaceable only with new components and the fire will be the occasion
      of renovation and remodeling which, if done without reference to a fire, would
      be an improvement paid for by the owner. 44 Am. Jur. 2d p. 549. In such
      event, the property is worth more and the fire loss provided the insured with an
      enhancement for the value of his assets.
              Replacement cost insurance on the other hand is not a pure indemnity
      agreement. It is an optional coverage that may be purchased and added to a
      basic fire policy by endorsement. It is more expensive because the rate of
      premiums is higher and the amount of insurance to which that rate applies is
      usually higher.
              Replacement cost coverage is available on the insurance market to meet
      the need which troubled the plaintiff. That need may be expressed this way:
              Since fire is an unwanted and unplanned for occurrence, why
              can’t the owner of an older home buy insurance to cover the full
              cost of repair even if those repairs make it a better or more
              valuable building? Since at the time of fire the homeowner may
              be least able to pay for improvements, why can’t that hazard be
              insured too? Instead of apportioning the cost of repair after a
              fire between the actual cash value, to be paid by the insurer, and
              the betterment to be paid by the insured, why can’t the
              policyholder simply pay a higher premium each year but not
              have to pay anything more to have his home fully repaired in the
              event of fire?
              When the insurance industry adopted a standard extension of coverage
      endorsement to provide replacement cost, it took into account the one great
      hazard in providing this kind of coverage: the possibility for the insured to reap
      a substantial profit, if fire occurs. See Higgins v. Insurance Co. of North
      America, (1970) 256 Or. 151, 469 P.2d 766, 66 A.L.R. 3d 871 and the
      annotation beginning at 66 A.L.R. 3d 886.

Travelers Indem. Co. v. Armstrong, 442 N.E.2d 349, 352-53 (Ind. 1982).

       2. First Proposed Replacement Building (Building on North Walnut Street)

                                             12
       Seeber argues that the first proposed replacement building, i.e., the building located on

North Walnut Street, qualified as a replacement property under both of the applicable

insurance policies, and, as a result, he was entitled to receive replacement costs for this

property. Without conceding that this property would qualify as a replacement property, the

Insurance Companies argue that Seeber is not entitled to any additional funds relating to the

purchase of this property because the $512,418.12 actual cash value that has already been

paid to Seeber was greater than the $422,118.00 Seeber spent to purchase his interest in the

property.

       With respect to replacement cost coverage provided by the applicable insurance

policies, both the General Fire & Casualty and Indiana Insurance Policy stated as follows:

       We will not pay more for loss or damage on a replacement cost basis than the
       least of …
       [(1)] The cost to replace, on the same premises, the lost or damaged property
       with other property:
               [(a)] Of comparable material and quality; and
               [(b)] Used for the same purpose; or
       [(2)] The amount you actually spend that is necessary to repair or replace the
       lost or damaged property.

Appellant’s App. pp. 169, 276. This language is not ambiguous as it clearly states that, with

respect to a claim for replacement cost coverage, the Insurance Companies will pay the least

of the cost to replace the property with other property of comparable material and quality that

is used for the same purpose or the amount one actually spends to replace the lost or damaged

property. As such, because the Insurance Companies paid Seeber an amount that was

approximately $90,000.00 greater than the amount that they would be obligated to pay under

a claim for replacement cost coverage, i.e., the $422,118.00 that Seeber actually spent to

                                              13
replace the Building, the Insurance Companies do not owe Seeber any additional funds

relating to the purchase of an interest in the building located on North Walnut Street.

    3. Second Proposed Replacement Building (Condominiums on West Allen Street)

       Seeber contends that in granting summary judgment in favor of the Insurance

Companies, the trial court erroneously determined that the second proposed replacement

building, i.e., the condominiums on West Allen Street, did not qualify as replacement

property under the terms of the applicable insurance policies. For their part, the Insurance

Companies contend that the trial court properly determined that the condominiums did not

qualify as replacement property because the condominiums were not used for the same

purpose as the Building or purchased in a timely fashion.

                  a. Whether the Condominiums Would Be Used for Same
                       Purpose as the Building Destroyed By Fire

       Seeber argues that the Building and the condominiums were used for the same

purpose, i.e., investment properties that were leased to tenants. The Insurance Companies,

for their part, argue that the condominiums, which were indisputably used for residential

purposes, were not used for the same purpose as the Building, which was used for

commercial purposes. In support of their claim that the properties were not used for the same

purpose, the Insurance Companies cite to Fitzhugh 25 Partners, L.P. v. KILN Syndicate KLN

501, 261 S.W.3d 861 (Tex. App. 2008), an opinion of the Court of Appeals of Texas.

       In Fitzhugh, the court considered whether a proposed replacement property would be

used for the same purpose as a property that had been destroyed by fire. In interpreting

similar language to that included in the insurance policies that apply in the instant matter, the

                                               14
Fitzhugh court found as follows:

       The word “replacement” is not defined in the policy. We must, therefore, give
       the term its ordinary and generally accepted meaning. See Am. Mfrs. Mut. Ins.
       Co. v. Schaefer, 124 S.W.3d 154, 158-159 (Tex. 2003). Webster’s Third New
       International Dictionary defines “replacement” as a “substitution” or “a new
       fixed asset or portion of an asset that takes the place of a discarded one.” See
       Webster’s Third New International Dictionary 1925 (1993). For something to
       be a “substitution” or “take the place of” the original, it must serve the same
       function as the original. The vast majority of cases that have examined this
       issue have concluded that the term “replacement” inherently contains the
       element of functional similarity. See, e.g., SR Int’l Bus. Ins. Co. Ltd. v. World
       Trade Ctr. Props., LLC, 445 F. Supp. 2d 320, 334 (S.D.N.Y. 2006) (for rebuilt
       property to be replacement there must be “functional similarity”); [Harrington
       v. Amica Mut. Ins. Co., 645 N.Y.S.2d 221, 226 (N.Y. App. Div. 1996)] (new
       structure did not “replace” insured’s home where insured did not live there);
       Conway v. Farmers Home Mut. Ins. Co., 26 Cal. App. 4th 1185, 31 Cal. Rptr.
2d 883 (1994) (term “replace” includes substituting an item that serves same
       function); [Huggins v. Hanover Ins. Co., 423 So. 2d 147, 150 (Ala. 1982)]
       (house was a “replacement” where it served same function as original). but see
       Ruter v. N.W. Fire & Marine Ins. Co., 72 N.J. Super. 467, 178 A.2d 640, 643
       (1962) (replacement need not be identical to original or intended for same
       occupancy and use).
261 S.W.3d at 864 (footnote omitted). The court agreed with Fitzhugh’s contention that “the

policy’s limitation on recovery of replacement costs to ‘the cost of repair or replacement with

similar materials on the same site and used for the same purpose’ is merely a method of

calculating damages and not a requirement that Fitzhugh replace the apartment complex with

substantially identical buildings at the same physical location.” Id. at 864-65. The court

disagreed, however, with Fitzhugh’s contention that it could spend the money it recovered

under a claim for replacement costs on anything it chose because “[s]uch an interpretation

reads the condition that the property be ‘replaced’ out of the policy.” Id. at 865.

       The court determined that:

                                              15
       Under the policy, Fitzhugh was permitted to replace the apartments with
       different buildings at a different site as long as the new buildings were devoted
       to the same use. For example, it could have purchased or built a larger
       apartment complex at a different location. See Davis v. Allstate Ins. Co., 781
So. 2d 1143, 1144-45 (Fla. Dist. Ct. App. 2001). The amount of Fitzhugh’s
       recovery under the policy was limited to the cost of rebuilding similar or
       comparable buildings on the same site or the amount it actually spent to
       replace the property, whichever was less. See id.; see also Republic
       Underwriters Ins. Co. v. Mex-Tex, Inc., 150 S.W.3d 423, 425 (Tex. 2004). For
       the replacement cost coverage to apply, however, Fitzhugh must have
       purchased or built a property that was functionally similar to the property that
       was destroyed. See S & S Tobacco & Candy Co., Inc. v. Greater New York
       Mut. Ins. Co., 224 Conn. 313, 617 A.2d 1388, 1390-91 (1992). If the new
       property is not functionally similar to the destroyed property, it is an unrelated
       expenditure and the destroyed property has not been “replaced.”

Id. at 865. The court concluded that a commercial office park was not “functionally similar”

to the destroyed apartment complex despite Fitzhugh’s argument that both were properties

with rent-paying tenants. Id. In reaching this conclusion, the court stated acceptance of

Fitzhugh’s argument in this regard “would expand the definition of the term ‘replacement’

far beyond its reasonable meaning” and noted that “[u]nder Fitzhugh’s analysis, any form of

property with tenants could serve as a replacement for the apartment complex.” Id. The

court further stated that

       This type of analysis would allow an insured to replace a house with an
       apartment complex because they are both “residential” or to replace an office
       building with a hospital because they both involve the rendition of professional
       services to the public. Overall, an office park, which has as its primary
       function the conduct of business, is not functionally similar to an apartment
       complex, which functions primarily as a residence for individuals and families.

Id. In light of its conclusion that the commercial office park was not functionally similar to

the destroyed apartment complex, the court concluded that the trial court correctly granted

summary judgment in favor of the insurance company because Fitzhugh did not replace the

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destroyed property covered under the policy and, therefore, did not meet the condition

precedent to its recovery of replacement costs. Id. We find the analysis and conclusions of

the Fitzhugh court to be compelling.

       Again, with regard to replacement cost coverage, the insurance policies at issue in the

instant matter state that a replacement property must be “[u]sed for the same purpose” as the

original property. Appellant’s App. pp. 169, 276. Here, the Building was a single-story

building that was leased to a tenant who used the building for commercial retail purposes.

The second proposed replacement property was four condominiums that would be used for

residential purposes. Review of the applicable insurance policies reveals that both the

General Fire & Casualty Policy and the Indiana Insurance Policy explicitly state that the

policies apply to commercial property. The language contained in the applicable insurance

policies suggests that the policies consider commercial use to be different than residential

use.

       Further, we agree with the court’s determination in Fitzhugh that it would expand the

definition of the term “replacement” far beyond its reasonable meaning if we were to accept

Seeber’s claim that the properties at issue were used for the same purpose merely because

they were investment properties which had tenants. We therefore conclude that the trial court

properly determined that the condominiums were not used for the same purpose as the

Building.3

                                         CONCLUSION

       3
          Having made this conclusion, we need not consider whether the second proposed replacement
property was purchased within a reasonable time after the destruction of the Building.

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       In sum, we conclude that (1) Seeber is not entitled to any additional funds with respect

to the first proposed replacement property and (2) the second proposed replacement property

does not qualify as a replacement property because it will not be used for the same purpose as

the Building. As such, we further conclude that the trial court properly denied Seeber’s

motion for summary judgment and granted summary judgment in favor of the Insurance

Companies.

       The judgment of the trial court is affirmed.

BARNES, J., and BROWN, J., concur.

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