Cincinnati Ins. Co. v. Rymer Cos.

41 F.4th 1026

CINCINNATI INSURANCE COMPANY, Plaintiff - Appellee

v.RYMER COMPANIES, LLC, also known as Rymer Companies, Inc.; Cannon Falls Mall, Inc., Defendants - Appellants

No. 21-2259

United States Court of Appeals, Eighth Circuit.

Submitted: March 15, 2022

Filed: July 28, 2022

Jessica Kunz Allen, Anthony J. Kane, Pfefferle & Kane, Minneapolis, MN, for Plaintiff-Appellee.

Bradley K. Hammond, Alexander Michael Jadin, Smith & Jadin, Bloomington, MN, for Defendants-Appellants.

Before GRASZ, STRAS, and KOBES, Circuit Judges.

GRASZ, Circuit Judge.

Rymer Companies, LLC, and Cannon Falls Mall (collectively, "Rymer") claim their insurance policy (the "Policy") with Cincinnati Insurance Company ("Cincinnati") covers the costs of replacing the roof on a shopping mall owned by Rymer. Rymer appeals the district court's grant of summary judgment in favor of Cincinnati and its denial of Rymer's motion for summary judgment. We reverse and remand.

I. Background¹

Rymer owns and operates a shopping mall in Cannon Falls, Minnesota. Cincinnati insured the mall. After a tornado damaged the mall's roof,² Rymer submitted an insurance claim for the damage and a statement of proof of loss that included a $1.3 million estimate for total replacement of the mall's roof. Cincinnati determined the total loss to the mall was only $10,702.40, finding deterioration and water damage of the roof pre-existed the tornado. Rymer does not dispute that the roof was in a "wet" condition before the tornado but nonetheless asserts it was fully operational.

Cincinnati filed this lawsuit seeking a declaratory judgment as to its obligations under the Policy. Rymer filed counterclaims alleging breach of contract and seeking a declaratory judgment and a compelled appraisal. The parties agreed to appoint an appraisal panel to determine the scope of the damage and the amount of loss to the mall. The panel rejected Rymer's claim for full replacement and determined the tornado caused $23,226 in damages to the roof. The appraisal award did not specify how the award was calculated, but a panel member informed Rymer that the award was for "localized repairs to the areas where cap flashing was displace[d]" and "was calculated at the lineal footage of the cap flashing going into the field of the roof 10ft."

Rymer applied for a building permit to replace flashing and 100 square feet of roof within the "existing saturaturated [sic] roof system." Goodhue County denied the application, finding the proposed repairs did not satisfy the manufacturer's requirements or the Minnesota Building Code (the "Building Code").³ The County did not cite a particular provision of the Building Code, but the district court determined, based on a letter the County sent to the appraisal panel, that the denial was based on a provision of the Building Code prohibiting a "roof recover" of water-soaked roofs. See Bldg. Code § 1511.3.1.1. The provision states: "A roof recover shall not be permitted where ... the existing roof or roof covering is water soaked or has deteriorated to the point that the existing roof or roof covering is not adequate as a base for additional roofing." Id . (formatting altered). A "roof recover" is defined as the "process of installing an additional roof recovering over a prepared existing roof covering without removing the existing roof covering." Id. § 202 (formatting altered). The County determined Rymer's requested partial repairs were a roof recover.⁴

Because the County rejected Rymer's request for partial repairs, Rymer demanded Cincinnati pay to completely replace the roof. The parties filed cross-motions for summary judgment. Rymer argued the "ordinance or law" endorsement under the Policy covered total replacement of the roof. The ordinance-or-law endorsement states:

(1) If a Covered Cause of Loss occurs to a covered building or structure, resulting in the enforcement of an ordinance or law that:

...

(b) Regulates the construction or repair of the buildings or structures, or establishes building, zoning, or land use requirements at the ‘premises;’ and

(c) Is in force at the time that ‘loss’ is sustained;

[Cincinnati] will pay:

...

(c) The increased cost to:

...

2) Reconstruct or remodel undamaged portions of that building or structure whether or not demolition is required; when the increased cost is a consequence of enforcement of a building, zoning or land use ordinance or law ....

The district court granted summary judgment in favor of Cincinnati and denied Rymer's motion for summary judgment, holding the ordinance-or-law endorsement did not apply because the damage from the tornado did not "result[ ] in" enforcement of § 1511.3.1.1 of the Building Code. Rymer appeals.

II. Analysis

We review the district court's summary judgment order de novo, viewing the evidence in the light most favorable to Rymer. See Grinnell Mut. Reinsurance Co. v. Schwieger , 685 F.3d 697, 700 (8th Cir. 2012). We will affirm the district court's grant of summary judgment only if there is no genuine dispute of material fact and Cincinnati is entitled to judgment as a matter of law. See id. ; Fed. R. Civ. P. 56(a).

The parties agree this appeal revolves around a single issue: whether the Policy's ordinance-or-law endorsement covers total replacement cost for the mall's roof. It is undisputed Minnesota law governs our interpretation of the Policy. See Progressive N. Ins. Co. v. McDonough , 608 F.3d 388, 390 (8th Cir. 2010). Where Minnesota law is unclear, "[w]e must predict how the Supreme Court of Minnesota would rule[.]" Netherlands Ins. Co. v. Main St. Ingredients, LLC , 745 F.3d 909, 913 (8th Cir. 2014) (quoting Friedberg v. Chubb & Son, Inc. , 691 F.3d 948, 951 (8th Cir. 2012) ).

Under Minnesota law, the purpose of policy interpretation is to give effect to the parties’ intent. Eng'g & Constr. Innovations, Inc. v. L.H. Bolduc Co. , 825 N.W.2d 695, 704 (Minn. 2013). Unambiguous policy language must be given its plain and ordinary meaning. Henning Nelson Constr. Co. v. Fireman's Fund Am. Life Ins. Co. , 383 N.W.2d 645, 652 (Minn. 1986). Ambiguities in policy language should be resolved in favor of the insured. Gen. Cas. Co. of Wis. v. Wozniak Travel, Inc. , 762 N.W.2d 572, 575 (Minn. 2009).

We first note that where an endorsement conflicts with the body of a policy, the endorsement governs. Schwieger , 685 F.3d at 701 (citing Bobich v. Oja, 258 Minn. 287, 104 N.W.2d 19, 24 (1960) ). Thus, if the language of an applicable endorsement covers a loss, the loss is covered regardless of whether the body of the policy excludes such coverage. See id. Here, viewing the facts in the light most favorable to Rymer, we conclude the endorsement covers replacement of the roof.

Coverage under the endorsement is triggered "[i]f a Covered Cause of Loss occurs to a covered building or structure, resulting in the enforcement of an ordinance or law that" otherwise satisfies the endorsement. (emphasis added). The parties dispute the meaning of "resulting in" under the endorsement. The district court concluded "resulting in" requires at least but-for causation and insinuated it might require "something more than literal but-for causation." (quoting Capitol Indem. Corp. v. Ashanti , 28 F. Supp. 3d 877, 883 (D. Minn. 2014) ). The district court did not explain what "something more" meant but held Rymer did not carry its burden of showing but-for causation. We disagree. We hold the tornado was a but-for cause of the County's enforcement of the ordinance. We also hold that even if "resulting in" requires "something more than literal but-for causation," the endorsement still covers the cost of replacing the mall's roof.

Cincinnati relies on the fact that the tornado did not cause the roof's water-soaked condition. But a roof's water-soaked condition is simply an element of the subject ordinance. A violation of the ordinance requires both (1) a water-soaked roof and (2) a "roof recover" (i.e., partial repairs). Bldg. Code § 1511.3.1.1, § 202. The ordinance-or-law endorsement does not require the covered cause of loss (the tornado) to trigger every element of the subject ordinance. Instead, the causal relationship required by the endorsement is between the covered cause of loss and the "enforcement of an ordinance." (emphasis added).

Here, the causal link between the tornado and the enforcement of § 1511.3.1.1 is clear—the ordinance would not have been enforced "but for" the tornado. But-for causation only requires a showing that in the absence of the former event, the latter would not have occurred. See Micks v. Gurstel L. Firm, P.C. , 365 F. Supp. 3d 961, 976 (D. Minn. 2019). Without the tornado, there would have been no application for the County to deny under § 1511.3.1.1—Rymer's roof would not have been damaged and Rymer would not have filed its application for partial repairs. In other words, without the tornado, the County would not have enforced § 1511.3.1.1 against Rymer. Thus, the district court erred in concluding Rymer failed to show but-for causation between the tornado and the County's enforcement of § 1511.3.1.1.

It is possible the Minnesota Supreme Court would interpret "resulting in" here as requiring no more than but-for causation. See id. ("Where there is no textual or contextual indication to the contrary, courts regularly read phrases like ‘results from’ to require but-for causality." (quoting Burrage v. United States , 571 U.S. 204, 212, 134 S.Ct. 881, 187 L.Ed.2d 715 (2014) ); see also Eng'g & Constr. Innovations, Inc. v. W. Nat'l Mut. Ins. Co., No. A12-1785, 2013 WL 2460400, at *6 (Minn. Ct. App. June 10, 2013) (unpublished) (interpreting "resulted in" as only requiring a causal connection and not proximate cause). But even if "something more than literal but-for causation" is required, Rymer has also shown the County's enforcement of § 1511.3.1.1 was a "natural and reasonable incident or consequence" of and had a "reasonably close causal relationship" with the tornado. Dougherty v. State Farm Mut....