Woodhams v. Allstate Fire & Cas. Co, (United States Court of Appeals For the Second Circuit, January 3, 2012)
Plaintiffs commenced a putative class-action suit against defendants, Allstate Fire and Casualty, Insurance, Indemnity and Property and Casualty Insurance Companies (Allstate), because Allstate denied plaintiffs reimbursement for repairs from fire damage that were not completed within 180 days of Allstate’s initial payment to the plaintiffs for the actual cash value of their damaged property. The Second Circuit Court upheld the District Court’s decision to dismiss the case.
The plaintiffs alleged that Allstate’s policy was inconsistent with New York law because it required repairs to be completed within 180 days. Plaintiffs claimed that this did not allow a reasonable time for repair after such loss. New York only requires an insurer to pay the lesser amount of the actual cash value of the property, the cost of repair or replacement, or an otherwise fixed limitation-on-liability amount. Because Allstate already paid the actual cash value at the time of the loss, Allstate satisfied its obligations under New York law. Therefore the Court found that the plaintiffs failed to state a claim in this regard.
The plaintiffs also alleged that Allstate’s denial of payments for repairs in excess of the damaged property’s actual cash value that were not completed within 180 days was inconsistent with the terms of the insurance policy. The policy stated that Allstate will “reimburse an insured repair costs, provided that the insured repairs, rebuilds or replaces damages, destroyed or stolen covered property within 180 days of the actual cash value payment.” The plaintiffs argued that since the word complete was missing from the policy, the policy was ambiguous as to whether their repairs should be paid for if the repairs were started but not completed within the 180 days. The court noted that the plaintiffs did not even start repairs within 180 days and therefore the absence of the word “complete” merited no discussion. The court found the rest of the language of the policy unambiguous and that the plaintiffs failed to state a claim because Allstate did not breach its policy.
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