Charles Cranfield’s home was damaged by a storm. At the time of his loss, his home was covered by a State Farm Fire and Casualty Company (State Farm) dwelling policy. Cranfield and State Farm disagreed over the approach the latter used to determine damages. Cranfield, in the form of a class action of likewise situated policyholders, sued the insurer. State Farm moved the action from state court in accordance with law related to class action activity. After a district court ruled in favor of the insurer, Cranfield appealed.

The higher court spent its effort on the policy language with regard to actual cash value loss settlements (the process used by the dwelling policy) and a recent decision it made in another case involving the same provision.

In district court, the two parties argued over the applicability of depreciation, the key component in adjusting property losses under State Farm’s actual cash value loss settlement. Both Cranfield and State Farm agreed that depreciation was properly applied to the cost of materials used in making repairs to a home. However, State Farm then applied a depreciation factor to the labor costs of estimated repairs and Cranfield objected.

As did the lower court, the higher court reviewed the policy’s definitions of both actual cash value and depreciation. The higher court also considered the decision it made in Perry v. Allstate. After both the policy review and consideration of Perry, it reached a different conclusion. The court did not agree with the attempt to depreciate labor costs as, in neither this situation nor Perry, the applicable policies did not specify that labor costs were subject to depreciation. The lower court decision was reversed and remanded for rehearing.

Charles Cranfield, individually and on behalf of all other Ohio residents similarly situated, Plaintiff-Appellant, v. State Farm Fire & Casualty Company, Defendant-Appellee. USCTAPP, 6th Circuit. No. 19-3004. Filed: 03/23/2020. Reverse and Remanded.

https://www[dot]propertyinsurancecoveragelaw[dot]com/files/2020/03/Cranfield-v.-State-Farm[dot]pdf [downloaded 7/31/2020]