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Henn v. American Family Mutual Insurance Co.

United States District Court, D. Nebraska

June 7, 2016

ROSEMARY HENN, individually and on behalf of all others similarly situated; Plaintiff,
v.
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant.

          CERTIFICATE FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA TO THE SUPREME COURT OF THE STATE OF NEBRASKA, PURSUANT TO NEB. REV. STAT. § 24-219

          JOSEPH F. BATAILLON SENIOR UNITED STATES DISTRICT JUDGE

         To the Supreme Court of the State of Nebraska and the Honorable Justices of the Court:

         It appears to the United States District Court for the District of Nebraska that the above-filed case in this court involves a question or proposition of the law of the State of Nebraska which is determinative of the cause before the court, and there appear to be no clear, controlling precedents on the issue in the decisions of the Supreme Court of the State of Nebraska.[1] Pursuant to Neb. Rev. Stat. § 24-221, the court states as follows:

         1. Statement of Facts

         This is a putative class action. The plaintiff seeks to represent a class of insureds whose payments for "actual cash value" were reduced by American Family through depreciation of costs for labor from June 1, 2005 through the date of trial of this action.

         The defendant, American Family Mutual Insurance Company issued a homeowners’ insurance policy, American Family’s Nebraska Homeowners Policy Goldstar Special Deluxe Form No. 26-BE4992-01 ("the Policy") to the plaintiff, Rosemary Henn, in 2011. The policy is a replacement cost policy. The plaintiff reported to American Family that a hail storm damaged portions of her home and later made a claim for the damage under the Policy.

         The Policy provides, in relevant part, that an insured may recover, following a covered loss, "the cost to repair the damaged portion or replace the damaged building, provide repairs to the damaged portion or replacement of the damaged building are completed" or "if at the time of loss, . . . the building is not repaired or replaced, we will pay the actual cash value at the time of loss of the damaged portion of the building up to the limit applying to the building." The policy does not define "actual cash value" or depreciation or describe the methods employed to calculate "actual cash value."

         As relevant to the case before the court, a claims adjuster employed by American Family met with the plaintiff at her home and observed the damage from the storm to the roof vent caps, guttering, siding, fascia, screens, deck, and the home’s electric/AC. The adjuster determined that Henn suffered a covered loss in the amount of $3, 252.60 for all damages to the property. That amount reflected the replacement cost value, based on common prices for labor and materials in the area.

         In calculating its payment obligations under the Policy, American Family subtracted from the adjuster’s replacement cost estimate the $1, 000 deductible provided for in the Policy. American Family also subtracted $276.67 in depreciation, and paid Henn an actual cash value payment of $1, 975.93. The depreciation amount included labor costs. At issue herein is whether labor as well as materials can be depreciated. The plaintiff alleges that "hundreds if not thousands" of Nebraska insureds have been similarly damaged by the defendant's actions.

         2. Question of Law to be Answered

         May an insurer, in determining the "actual cash value" of a covered loss, depreciate the cost of labor when the terms "actual cash value" and "depreciation" are not defined in the policy and the policy does not explicitly state that labor costs will be depreciated?

         IT IS ORDERED that:

         1. The United States District Court for the District of Nebraska certifies the question of law set out above to the Supreme Court of the State of Nebraska for instructions concerning said question of law, based on the facts recited, pursuant to Neb. Rev. Stat. §§ 24-219 to 24-225.

         2. Pursuant to Neb. Rev. Stat. § 24-222, the clerk of this court is hereby directed to transmit this certification request to the Nebraska Supreme Court under the official seal of the United ...


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