Court Opinion

ID: 3037093
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:55:39.405891+00
Date Added: 2024-06-11T07:37:53.025696
License: Public Domain

United States Court of Appeals
                              FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 04-1774
                                    ___________

Assurance Company of America,            *
                                         *
      Plaintiff - Appellee,              * Appeal from the United States
                                         * District Court for the
      v.                                 * Eastern District of Missouri.
                                         *
Adbar, L.C.,                             *      [UNPUBLISHED]
                                         *
      Defendant - Appellant.             *
                                    ___________

                               Submitted: January 14, 2005
                                  Filed: April 29, 2005
                                   ___________

Before LOKEN, Chief Judge, HANSEN and MORRIS SHEPPARD ARNOLD,
      Circuit Judges.
                            ___________

PER CURIAM.

      The Missouri “valued policy” statute provides that an insurer of property
damaged by fire “shall not be permitted to deny that the property insured thereby was
worth at the time of the issuing of the policy the full amount insured.” MO. ANN.
STAT. § 379.140. A “builders risk” policy is a common form of fire insurance for
buildings under construction in which the policy declares the completed value of the
building but the insured pays a reduced premium in exchange for lesser amounts of
coverage prior to completion. It is settled that the Missouri courts do not construe
§ 379.140 as requiring a builders risk insurer to pay the declared completed value if
the policy obligates the insurer to pay only a lesser amount for a fire loss that occurs
prior to completion. See American Family Mut. Ins. Co. v. Doug Rose, Inc., 841
S.W.2d 698, 700 (Mo. App. 1992).

       In this case Adbar, L.C., purchased a building for $40,000 intending to replace
or renovate it. Assurance Company of America issued Adbar a commercial fire
policy insuring the building. The policy’s declarations listed the coverage for any one
structure as $450,000, subject to the policy’s Builders Risk Coverage Form. The
building was damaged by fire before Adbar began improvements. Assurance
commenced this diversity action to resolve a coverage dispute. Adbar contends it is
entitled to recover $450,000, the declared value of the building, under § 379.140, the
valued policy statute. Assurance contends that the builders risk provisions limit
Adbar’s covered loss to $40,000, the purchase price of the unimproved building. The
district court1 concluded that the policy “falls within the builders risk exception to the
valued policy statute” and entered judgment decreeing that Assurance is liable to
Adbar for the purchase price, $40,000. Adbar appeals. We affirm.

       Adbar argues that the policy “does not contain the disclosures necessary to
trigger the builders risk exception.” We reject this contention as contrary to the plain
language of the policy. The declarations page states that the Builders Risk Coverage
Form is “Applicable To All Parts” of the policy. The certificate of insurance issued
to Adbar’s mortgage lender states that $450,000 is the “Amount of Coverage Per
Building (Completed Value).” An endorsement to Section E, Paragraph 6 of the
Builders Risk Coverage Form provides:

      The most we will pay for any loss to the existing building(s) or
      structure(s) will be:

      1
       The HONORABLE CHARLES A. SHAW, United States District Judge for
the Eastern District of Missouri.

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      1.     The amount you actually spend to repair the damaged or
             destroyed property . . .;

      2.     Actual cash value . . . as of the time of loss;

      3.     The amount you paid for the existing building(s) . . . plus the
             replacement cost of the improvements made by you . . .;

      4.     The reported value for that location

      whichever is less.

(Emphasis added.) Adbar argues that this provision appears in the “valuation” part
of the policy and does not effectively qualify the $450,000 limit of liability that
defined Adbar’s insurable interest in the property. But no Missouri case has held that
the builders risk coverage limitations must appear in any particular provision of the
policy or be reflected in any particular policy language. On the undisputed facts
presented to the district court, the above-quoted provision plainly limited Assurance’s
liability for this loss to the amount Adbar paid for the property, $40,000.

        For these reasons and the reasons stated by the district court in its
Memorandum and Order dated February 24, 2004, the judgment of the district court
is affirmed.
                      ______________________________

                                          -3-