Lerer Realty Corporation and Apex Supply Company v. Mfb Mutual Insurance Company

Lerer Realty Corporation and Apex Supply Company (Lerer) recovered a jury verdict in their suit on a windstorm insurance policy issued by MFB Mutual Insurance Company (MFB). On this appeal MFB contends that Lerer’s expert witnesses were not qualified to express the opinions which went to the jury; Lerer didn’t meet its burden of proving its building was damaged exclusively by wind not contributed to by rain; and, alternatively, that actual cash value, not replacement cost, was the policy measure of recovery. We affirm on witness qualification and the sufficiency of the evidence, but modify the measure and amount of damages awarded.

Lerer owned a warehouse building which was discovered in a collapsed condition following a nighttime wind and rainstorm. There were no witnesses. No adjacent buildings showed wind damage. Clogged drainage outlets in a parapet around the warehouse’s relatively flat roof could have caused an accumulation of rainwater. Lerer produced a meteorologist who testified that the storm system in the vicinity on this evening was capable of producing a tornado vortex and that his examination of the site disclosed evidence that a vortex had touched down at Lerer’s building. Lerer also sponsored one witness who was a graduate structural engineer (now engaged in business as a building contractor) and another witness who was a graduate civil engineer. They testified that neither rain nor any accumulation of rooftop water caused or contributed to the collapse. The structural engineer-building contractor further opined that a strong negative pressure force on the exterior of the building — a tornado —had caused the damage.

MFB produced the testimony of a meteorologist to the effect that no tornadic vortex had occurred on the night in question and that there was no evidence of vortex contact at the Lerer building site. MFB also obtained the testimony of a professional consulting engineer who expressed the opinion that rainwater was probably the proximate cause but certainly a contributing cause of the damage.

The determination of the qualifications of an expert witness is committed to the sound discretion of the trial judge and that discretion will not be disturbed in the absence of a clear showing of abuse. Eastburn v. Ford Motor Company, 471 F.2d 21 (5th Cir. 1972). No precedential purpose would be served by detailing the minutiae of the bases for each witness’s observations. It is sufficient to say that an examination of the record indicates no abuse of discretion in the admission of all of these expert opinions. Clearly the resulting clash of these informed beliefs created issues for jury resolution under Boeing Company v. Shipman, 411 F.2d 365 (5th Cir. 1969). It is not necessary to reach or rule on whether Lerer had the burden of proving not only that a covered loss (wind damage) occurred, but also that an exception to coverage (rain or rainwater) had not contributed.

The policy liability was limited to actual cash value, not to exceed repair or replacement cost. By endorsement MFB extended the indemnification agreement to cover the cost, as of the date of loss, of replacement in a new condition with materials of like size, kind and quality, subject to the following conditions: (1) The repair, rebuilding or replacement had to be made within a reasonable time; (2) Total liability was not to exceed (a) the cost of repair, or (b) the cost to rebuild, or (c) the actual expenditure incurred in rebuilding, repairing or replacing.1 A reading of this “Repair or Replace” endorsement in context with the primary liability proviso of the policy discloses a clear and unambiguous undertaking to pay the insured the actual cash value of the damaged property at the time of loss, less depreciation, unless the insured actually repaired, rebuilt or replaced within a reasonable time. If restoration is made, then, and only then, the liability of MFB would be calculated under the endorsement.

Pursuant to the special verdict procedure of Rule 49, Federal Rules of Civil Procedure, the jury found that: Lerer’s delay in beginning repairs, replacement or rebuilding (two and one-half years as of the time of trial) was not unreasonable under the terms of the policy; 119,400 dollars was the replacement cost of the building; 73,000 dollars was the value of the building prior to damage; and 12,000 dollars was the value of the building after damage. Acting upon an interpretation of the policy language which would permit recovery of restoration costs without regard to actually restoring the structure, the trial court entered judgment for Lerer for 119,400 dollars. Judgment should have been entered for the actual cash value of the property destroyed. Thanks to the enlightening specificity of the special verdicts, we can readily calculate the actual cash value of the property destroyed — 73,000 dollars minus 12,000 dollars — á net of 61,000 dollars. Accordingly, we direct the district court to modify the final judgment to provide that Lerer (and Apex) recover from MFB the sum of 61,000 dollars with interest calculated as initially provided, and trial court costs. As modified, the judgment is affirmed.

The costs of this appeal shall be divided between the appellant and the appel-lees.

Affirmed as modified.