Meier v. Wadena Insurance Company, No. 23-2282 (7th Cir. 2024)
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Margrit Meier, owner of a restaurant called Hartland Inn, filed a coverage request with Wadena Insurance Company after a fire destroyed her business. The policy entitled her to the "actual cash value" of the property at the time of the fire, but the parties disagreed on how to calculate this. Wadena initially paid Meier $775,000, using a method called the "Broad Evidence Rule" to calculate actual cash value. Dissatisfied, Meier hired a third-party adjuster, who estimated a higher value. Wadena then increased its estimate and paid an additional $60,135.79. Still unsatisfied, Meier invoked the policy’s panel appraisal option.
The appraisal process was completed, and the umpire arrived at an independent estimate of the building’s actual cash value. However, Meier filed a second lawsuit, alleging breach of contract and bad faith, and sought to set aside the appraisal award as invalid under state law. The district court dismissed the action, observing that Wadena complied with the alternative dispute resolution process and paid out the binding award.
The United States Court of Appeals For the Seventh Circuit affirmed the district court's decision, stating there was no breach of contract or bad faith on Wadena's part. The court upheld that the Broad Evidence Rule was correctly applied to calculate the actual cash value of the property. The court also affirmed the district court’s denial of Wadena’s motion for sanctions under Federal Rule of Civil Procedure 11.
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