A federal appeals court overturned a lower court Thursday and held Cincinnati Insurance Co. must fully replace a tornado-damaged shopping mall roof.

Rymer Cos. LLC owns and operates a shopping mall in Cannon Falls, Minnesota, insured by Cincinnati Insurance Co., according to the ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in Cincinnati Insurance Co. v. Rymer Cos. LLC, also known as Rymer Cos. Inc.; Cannon Falls Mall Inc.

After a tornado damaged the mall’s roof, Rymer submitted an insurance claim for damage and a statement of proof of loss that included a $1.3 million estimate for the roof’s total replacement. Cincinnati determined the total loss to the mall was only $10,702.40, concluding deterioration and water damage to the roof pre-existed the tornado.

Cincinnati filed suit in U.S. District Court in St. Paul, Minnesota, seeking a declaratory judgment, and Rymer filed counterclaims alleging breach of contract and seeking a declaratory judgment and a compelled appraisal.

An appraisal panel agreed to by the parties rejected Rymer’s claim for full replacement and determined the tornado caused $23,226 in damages.

After the county then rejected Rymer’s request for partial repairs, Rymer demanded Cincinnati pay to completely replace the roof, and the parties filed cross motions for summary judgment.

Rymer argued that an “ordinance or law’ policy endorsement applied. This endorsement states that if a covered loss occurs to a building Cincinnati will pay the increased cost to reconstruct undamaged portions when it is a consequence of an ordinance or law’s enforcement.

The district court granted summary judgment in Cincinnati’s favor, holding the ordinance-or-law endorsement did not apply because the tornado damage did not result in enforcement of the building code.

In overturning that ruling, a three-judge appeals court panel said, “The tornado caused damage to the roof covered by the Policy. 

“When Rymer requested to repair that damage, the ordinance was triggered. The tornado left the roof in need of the very thing prohibited by the ordinance – partial repairs.

“And it was not until Rymer attempted to make such repairs that the County had grounds to enforce the ordinance.”

The case was remanded to the district court for further proceedings.

Rymer attorney Alexander M. Jadin, founding partner with Smith Jadin Johnson PLLC in Bloomington, Minnesota, said in a statement the ruling “is obviously a win for the Rymer Cos., but is also a victory for Minnesota policyholders. When the policyholder pays premiums for additional coverages for ordinance or loss it is important that they receive the benefit of the bargain when a loss occurs.”

Cincinnati Insurance’s attorney did not respond to a request for comment.