Villas of Winding Ridge (Winding Ridge) is a 32-unit condominium complex with a clubhouse located in Indianapolis, IN. They hired a contractor to provide an estimate for the replacement of the complex's aging roofs. The contractor reported that their property sustained hail damage. A hailstorm had occurred in the area in June 2013, nearly a year earlier.

On April 18, 2014, Winding Ridge submitted a claim to State Farm Fire and Casualty Company (State Farm), their insurance carrier at the time of loss. State Farm and Winding Ridge inspected the property damage. Winding Ridge and State Farm could not agree on a settlement. Winding Ridge requested an appraisal, which State Farm honored. One appraisal provided full shingle replacement to 13 of the 33 buildings and the other did not claim full replacement on any of the buildings. State Farm and Winding Ridge agreed to move forward with an umpire to reach a binding settlement.

An independent umpire was hired. The two appraisers and the umpire inspected the property. The umpire issued an award for repairs to the roofing shingles for the 13 buildings, soft metal damage on all 33 buildings, and replacement cost for shingles around roof vents. The umpire found that there was no indication of hail damage to the roof shingles. At this time, Winding Ridge advised the umpire of information from the roof shingle manufacturer. The manufacturer told Winding Ridge that they no longer produced the shingles needed to repair the roofs, and no comparable product existed. Winding Ridge failed to provide this information to State Farm. The umpire reviewed the manufacturer information but did not amend the award. The umpire stated there was very little, if any, hail damage to the shingles but spot repairs were included in the award. He also mentioned that many of the roofs had been patched but that issue was not considered in performing his job to determine damages. The umpire and one appraiser signed the award making it binding. State Farm issued payment to Winding Ridge.

Winding Ridge was dissatisfied with the umpire's settlement and filed suit against State Farm for breach of contract, bad faith, and promissory estoppel. The district court granted part and denied part of Winding Ridges cross motion and granted State Farm's Motion for summary judgment. Winding Ridge appealed the district court's ruling.

The higher court found that State Farm did not breach the policy when it declined to pay for new roofs on all 33 buildings and that the appraisal award resolved the entire claim.

The court found that State Farm did not act in bad faith. In its opinion, there was no evidence of delayed payment or refusal to provide payment. As well, an agreement was reached with the umpire. One appraiser and the umpire signed the award, and payment was issued. Winding Ridge failed to show any evidence that State Farm acted in bad faith or acted with a culpable state of mind.

The US Court of Appeals for the Seventh Circuit affirmed the district court.

Editor's Note: Hail Damage is displayed sporadically on a roof. It is not in formal unison and usually does not appear in a particular pattern. Wear and tear, defects, and other types of damage are commonly mistaken for hail damage on roofs.

Villas At Winding Ridge vs. State Farm Fire And Casualty Company - No. No. 19-1731 - Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:16-cv-3301

https://cases.justia.com/federal/appellate-courts/ca7/19-1731/19-1731-2019-11-08.pdf?ts=1573252221