BROADCASTS.com

b'

Minnesota Statute Does not Require Insurer to Pay to Bring Church  Property up to Code From Damage Predating Loss  

St. Matthews Church of God and Christ (St. Matthews) is located in St.  Paul, Minnesota sued State Farm Fire and Casualty Company (State Farm)  who insured St. Matthews. The policy provided replacement cost coverage  for damage to St. Matthews\'s buildings.  In St. Matthews Church of God and Christ v. State Farm Fire and Casualty  Company, No. A21-0240, Supreme Court of Minnesota (November 23, 2022)  St. Matthews sought payment for damaged masonry wall when covered peril  only damaged drywall covering the masonry that was cracked as a result  of old age.  

FACTS  

In June 2017, a storm damaged the property of St. Matthews, including  the building\'s drywall.  At issue is the interpretation and application of Minn. Stat. \\xa7 65A.10,  subd. 1 (2020) (\\u201cthe statute\\u201d). The statute requires replacement cost  insurance to cover the cost of repairing any "damaged property in  accordance with the minimum code as required by state or local  authorities." In "the case of a partial loss," replacement cost  insurance is required to cover only "the damaged portion of the  property."  St. Matthews\'s policy provided replacement cost coverage, meaning that,  in the event of a loss, the insurer agreed to compensate for that loss  without taking into account depreciation.    

By December 2018, State Farm paid St. Matthews $107,053, an amount that  included the cost of replacing and repairing the drywall.  St. Matthews was required to obtain a building permit from the City to  make the necessary repairs, including replacing the drywall. The City  was concerned about the defects in the existing masonry wall which  rendered the wall out of code. St. Matthews subsequently requested State  Farm to pay the cost of bringing the masonry up to code. In response,  State Farm hired a consultant to evaluate the damaged masonry and  determine the cause of damage. The consultant concluded that the  "cracked and out-of-plumb condition . . . was a longterm condition  unrelated to the storm ...."  On cross-motions for summary judgment, the district court granted  summary judgment to State Farm.  

ANALYSIS  

The parties agree that the damaged property at issue is a partial loss  and that, before the drywall can be repaired, St. Paul\'s city code  requires that the masonry be repaired sufficiently to bring it in  accordance with minimum code.  All parties agreed that the damage to the masonry was not caused or  impacted by the storm. Accordingly, the damage to the masonry was not  independently covered by State Farm\'s policy. Viewing the project from  the perspective of a drywall installer there was nothing in the  condition of the masonry that prevented the installation of new drywall.  The Supreme Court concluded that under a plain reading of the statute in  the case of a partial loss, replacement cost coverage applies only to  the damaged portion of the property covered by a cause of loss. Only the  drywall was damaged because of the storm, but the masonry was not.  Therefore, only the damaged drywall is subject to the statute\'s  code-compliance provision.