Insurer wins siding dispute with apartment owner

A federal appeals court has ruled in favor of an insurer in a long-running dispute with an apartment complex owner over replacement siding.

C.F.L.P.1 LLC in Louisville, Kentucky, which conducts business as Arcadia Apartments, owns an apartment complex that was damaged by a 2012 hailstorm, according to Wednesday’s ruling by the 6th U.S. Circuit Court of Appeals in Louisville in The Cincinnati Specialty Underwriters Insurance Co. v. C.F. L.P.1 LLC.

Cincinnati Specialty, a unit of Cincinnati-based Cincinnati Insurance Cos., disbursed about $25,000 in repairs. But Arcadia claimed its policy required the insurer to furnish matching siding or, because it was impossible to match Arcadia’s aging siding, to replace all siding on all buildings at a cost of more than $1 million.

Both parties selected an appraiser to consider the issue, but could not agree on one, according to the ruling. In litigation in U.S. District Court in Louisville, Arcadia charged Cincinnati with bad faith and violating the Kentucky Unfair Settlement Claims Practice Act.

It also argued the insurer’s nomination of allegedly biased appraisers in the case constituted a material breach that entitled it to a jury trial.

“Over the course of four years of contentious litigation,” the district court ruled in the insurer’s favor, including reaffirming one of its selections for umpire, and refusing to instruct the appraiser umpire that cosmetic matching was required under the contract.

A unanimous three-judge appeals court panel affirmed the lower court’s rulings in the case. The “text of the policy shows that it is indeed an actual cash value policy,” in holding the insurer is not obligated to pay for the siding’s replacement and affirming the lower court’s judgment in the case.