THE TOWNHOMES AT FISHERS POINTE HOMEOWNERS ASSOCIATION, INC. v. DEPOSITORS INSURANCE COMPANY

Filing 91

ORDER - ON CROSS-MOTIONS FOR SUMMARY JUDGMENT; This matter is before the Court on cross-motions for summary judgment filed pursuant to Federal Rule of Civil Procedure 56. Following a 2020 hailstorm, Plaintiff, The Townhomes at Fishers Pointe Homeown ers Association, Inc. the Court DENIES the HOA's Motion for Partial Summary Judgment Filing No. 53 , GRANTS in part and DENIES in part Depositors' Motion for Summary Judgment Filing No. 57 , and DENIES Depositors' motion to strike. Depositors' Motion for Summary Judgment is granted as to Count III (the bad faith claim), which is dismissed. Summary Judgment is denied as to Count I (the claim to supplement or set aside the appraisal award) and Count II (breach of contract ), and these claims will proceed to trial or settlement. The parties are DIRECTED to contact the Magistrate Judge to discuss whether another settlement conference might be helpful. This matter remains set for a final pretrial conference on May 28, 2025, and a jury trial to begin on June 23, 2025. *** SEE ORDER ***. Signed by Judge Tanya Walton Pratt on 3/7/2025. (CKM)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
THE TOWNHOMES AT FISHERS POINTE
HOMEOWNERS ASSOCIATION, INC.,
Plaintiff,
v.
DEPOSITORS INSURANCE COMPANY,
Defendant.

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Case No. 1:23-cv-00475-TWP-MG

ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
This matter is before the Court on cross-motions for summary judgment filed pursuant to
Federal Rule of Civil Procedure 56. Following a 2020 hailstorm, Plaintiff, The Townhomes at
Fishers Pointe Homeowners Association, Inc. ("the HOA") initiated this action seeking to
supplement or set aside an appraisal award, and alleging that the Defendant, Depositors Insurance
Company (“Depositors”) breached the insurance policy and acted in bad faith. The HOA filed a
Motion for Partial Summary Judgment against Depositors on Count II of its Complaint, Breach of
Insurance Policy Contract (Filing No. 53). Depositors then filed a Cross Motion for Summary
Judgment seeking judgment as a matter of law on all three counts of the HOA's Complaint (Filing
No. 57). For the following reasons, the Court denies the HOA's motion for partial summary
judgment, and grants in part and denies in part Depositors' cross-motion.
I.

LEGAL STANDARD

The purpose of summary judgment is to "pierce the pleadings and to assess the proof in
order to see whether there is a genuine need for trial." Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986). Federal Rule of Civil Procedure 56 provides that summary
judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, show that there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment as a matter of law." Hemsworth v.
Quotesmith.com, Inc., 476 F.3d 487, 489–90 (7th Cir. 2007). In ruling on a motion for summary
judgment, the court reviews "the record in the light most favorable to the non-moving party and
draw[s] all reasonable inferences in that party's favor." Zerante v. DeLuca, 555 F.3d 582, 584 (7th
Cir. 2009). "However, inferences that are supported by only speculation or conjecture will not
defeat a summary judgment motion." Dorsey v. Morgan Stanley, 507 F.3d 624, 627 (7th Cir. 2007)
(citation and quotation marks omitted). Additionally, "[a] party who bears the burden of proof on
a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific
factual allegations, that there is a genuine issue of material fact that requires trial." Hemsworth,
476 F.3d at 490 (citation omitted). "The opposing party cannot meet this burden with conclusory
statements or speculation, but only with appropriate citations to relevant admissible evidence."
Sink v. Knox Cnty. Hosp., 900 F. Supp. 1065, 1072 (S.D. Ind. 1995) (citations omitted).
"In much the same way that a court is not required to scour the record in search of evidence
to defeat a motion for summary judgment, nor is it permitted to conduct a paper trial on the merits
of [the] claim." Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001) (citations and quotation
marks omitted). "[N]either the mere existence of some alleged factual dispute between the parties
nor the existence of some metaphysical doubt as to the material facts is sufficient to defeat a motion
for summary judgment." Chiaramonte v. Fashion Bed Grp., Inc., 129 F.3d 391, 395 (7th Cir. 1997)
(citations and quotation marks omitted).
These same standards apply even when each side files a motion for summary judgment.
The existence of cross-motions for summary judgment does not imply that there are no genuine
issues of material fact. R.J. Corman Derailment Servs., LLC v. Int'l Union of Operating Eng'rs,

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335 F.3d 643, 647 (7th Cir. 2003). The process of taking the facts in the light most favorable to
the non-moving party, first for one side and then for the other, may reveal that neither side has
enough to prevail without a trial. Id. at 648. "With cross-motions, [the court's] review of the record
requires that [the court] construe all inferences in favor of the party against whom the motion under
consideration is made." O'Regan v. Arb. Forums, Inc., 246 F.3d 975, 983 (7th Cir. 2001) (citation
and quotation marks omitted).
II.

BACKGROUND

A. The Parties and the Policy
Plaintiff HOA is a homeowners' association for fifteen condominium buildings known as
The Townhomes at Fishers Pointe (the "Townhomes") (Filing No. 52-1 at 17–18). The HOA is a
named insured, and the Townhomes are an insured property, under a Depositors insurance policy
(the "Policy") (Filing No. 58-1). The Policy provides that Depositors "will pay for direct physical
loss of or damage to Covered Property . . . resulting from any Covered Cause of Loss." Id. at 45.
The Policy also contains the following loss payment provision:
a. At our option, we will either:
(1) Pay the value of lost or damaged property as described in e. below;
(2) Pay the cost of repairing or replacing the lost or damaged property; . . .
[or]
(4) Repair, rebuild or replace the property with other property of like kind and
quality . . . .
e. . . . [W]e will determine the value of Covered Property as follows:
(1) At replacement cost without deduction for depreciation, subject to the
following:
(a) We will pay the cost to repair or replace, . . . but not more than the
least of the following amounts . . . : . . . .
(ii) The cost to replace, on the same premises, the lost or damaged
property with other property:
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i. Of comparable material and quality; and
ii. Used for the same purpose . . . .
Id. at 72 (emphasis in original).
The Policy's appraisal provision (the "Appraisal Provision") provides that if Depositors and
the HOA "disagree on the amount of loss," then either may make a written demand "for an appraisal
of the loss." Id. at 71. Each party may select an appraiser to "state separately the value of the
property and the amount of loss." Id. If the two appraisers cannot agree, then they must submit the
dispute to an umpire who is selected by the appraisers, or, if the appraisers cannot agree, a judge.
"A decision agreed to by any two [of the umpire and appraisers] will be binding." Id.
B. The Claim Dispute
In April 2020, the Townhomes sustained damage from a hailstorm. The HOA submitted a
claim to Depositors, and Depositors inspected the Townhomes to evaluate the cause and scope of
the damage (Filing No. 58-4 at 36–38). In June 2020, Depositors issued an estimate of $101,626.67
for the replacement cost value of loss to the Townhomes and paid the HOA pursuant to that
estimate (Filing No. 52-5 at 37–67; Filing No. 58-3). Depositors' initial estimate did not note hail
damage to the Townhomes' roof shingles. Id. at 70.
Meanwhile, the HOA retained a roof consultant, Alliance Consulting & Testing Inc.
("Alliance"), and a roofing contractor, Rocklane Company, LLC ("Rocklane"), to prepare their
own reports and an estimate. Rocklane prepared a replacement cost value estimate totaling
$964,904.76, which found hail damage to shingles and provided for complete roof replacements
on all fifteen Townhomes buildings (Filing No. 58-8). Alliance's report was consistent with
Rocklane's (Filing No. 52-4 at 126–40). Rocklane also took a sample shingle from one of the
damaged Townhomes buildings and submitted it to an independent lab, ITEL Laboratories, Inc.
("ITEL"), to determine if a matching shingle was available to use for repairs. ITEL prepared a
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report (the "ITEL Report") finding that no shingle on the market is "similar" in color to the sample
(Filing No. 52-10).
In June 2020, the HOA emailed Depositors disagreeing with its estimate of $101,626.67,
demanding appraisal, and selecting an appraiser (Filing No. 52-7 at 17:20–18:7). In response,
Depositors asked the HOA to provide its own estimate for comparison (Filing No. 58-2 at 17:18–
18:11). On July 13, 2020, the HOA emailed Depositors the Rocklane estimate of $964,904.76 but
did not send the ITEL Report (Filing No. 58-8). Depositors responded later that day, stating that
the claim was not yet appropriate for appraisal, "as there appears to be a dispute in the damage and
not the amount of the claim." (Filing No. 58-5 at 2). Depositors also stated it had contacted EES
Group, Inc. ("EES"), to perform an additional inspection of the Townhomes. Id.
In August 2020, EES, accompanied by Alliance, inspected the Townhomes and prepared a
report (the "EES Report") (Filing No. 58-6). The EES Report noted hail damage to ten Townhomes
buildings. Id. at 7–10. On October 2020, Depositors issued an updated replacement cost value
estimate of $130,470.22 based on the EES Report (the "October 2020 Estimate") (Filing No. 587), which accounted for partial roof replacements for nine buildings and a full roof replacement
for one. Depositors then made a supplemental payment to the HOA (Filing No. 58-2 at 42:1–14).
C. The Appraisal
A few days before Depositors issued the October 2020 Estimate, the HOA sued Depositors
to compel appraisal. Townhomes at Fishers Pointe Homeowners Ass'n, Inc. v. Depositors Ins. Co.,
No. 20-cv-02788 (S.D. Ind. Oct. 28, 2020) ("Townhomes I"). Depositors initially opposed the
request for appraisal by arguing, as it did in its July 13, 2020 letter, that the parties "dispute whether
the additional damage claimed by [the HOA] is covered under the terms and conditions of the
Depositors Policy," which "does not fall within the scope of the appraisal provision." Answer and
Affirmative Defenses at 7, Townhomes I, No. 1:20-cv-02788 (S.D. Ind. Nov. 4, 2020). However,
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Depositors later agreed to appraisal, "[d]espite the existence of substantial outstanding liability and
coverage issues which need to be addressed." Brief in Support of Motion to Dismiss at 1, 9,
Townhomes I, No. 1:20-cv-02788 (S.D. Ind. Dec. 29, 2020).
The HOA selected Matthew Latham ("Mr. Latham") as its appraiser, and Depositors
selected William Norman ("Mr. Norman."). The appraisers could not agree on an umpire, so the
Court

appointed

Jeffrey

Button

("Umpire

Button").

Order Adopting

Reports

and

Recommendations, Townhomes I, No. 1:20-cv-0788 (S.D. Ind. July 15, 2021). The parties then
stipulated to dismissal of the lawsuit without raising or resolving any outstanding coverage
disputes. Joint Stipulation of Dismissal, Townhomes I, No. 1:20-cv-0788 (S.D. Ind. Aug. 10, 2021).
Mr. Latham and Mr. Norman each submitted an appraisal package to Umpire Button. Mr.
Latham submitted the ITEL Report with his package (Filing No. 52-4 at 214–19), along with a
copy of Indiana caselaw and letters from attorneys regarding the shingle matching dispute. Id. at
218–19, 319–54. Whether Umpire Button considered the ITEL Report during his appraisal is in
dispute. In August 2022, Umpire Button inspected the Townhomes and prepared a repair estimate
"to return the property to its pre-loss condition using like kind and quality materials" (the "Award
Estimate") (Filing No. 52-4 at 3). The Award Estimate totaled $477,133.88 in replacement cost
value and $160,028.97 in depreciation. Id at 26. It found that eleven Townhomes buildings had
sufficient hail damage to allow for shingle replacement on the north and west slopes, but it did not
provide for any full roof replacements. Id. at 3–26.
In November 2022, Umpire Button issued an appraisal award (the "Appraisal Award")
consistent with the Award Estimate (Filing No. 58-11 at 2). The Appraisal Award was signed by
Umpire Button and Mr. Norman. Id. at 3. Depositors then made a supplemental payment to the
HOA based on the Appraisal Award (Filing No. 58-12).

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D. Subsequent Estimates, Repairs, and Litigation
In late December 2022, Kevin Kortzendorf ("Mr. Kortzendorf") from Rocklane prepared
an estimate of $307,676.39 to replace the undamaged roof slopes of the eleven damaged buildings
(Filing No. 52-2 at 31). In February 2023, the HOA initiated this lawsuit in state court, seeking to
supplement or set aside the Appraisal Award and recover the outstanding amounts needed to
complete full roof replacements (Filing No. 6-1 at 8–14). Depositors removed the action to federal
court and filed a Motion to Dismiss, which the Court later denied (Filing No. 23).
In July 2023, Gregory Burkert ("Mr. Burkert") from Rocklane prepared an estimate of
$306,239.94 to replace the undamaged roof slopes, and Rocklane replaced the roofs of the eleven
damaged buildings (Filing No. 52-9 at 19). Once Depositors received notice that the HOA had
completed repairs, Depositors issued a check for depreciation in the amount of $160,028.97
pursuant to the Appraisal Award (Filing No. 58-11 at 2; Filing No. 58-13). In spring of 2024, the
parties filed their cross-motions for summary judgment, which are now ripe for the Court's review.
III.

DISCUSSION

HOA initiated this action by filing a Complaint alleging three claims: Count I, Claim to
Supplement or Set Aside the Appraisal Award; Count II, Breach of Insurance Policy Contract; and
Count III, Bad Faith Insurance Claim Handling. (Filing No. 6-1 at 10- 14). The HOA moves for
summary judgment on only Count II; asserting that its Policy coverage is broader than the
Appraisal Award (“Award”) cost of repair, therefore, its Motion for Partial Summary Judgment on
the issue of breach of Policy contract should be granted. Depositors move for summary judgment
on all of the HOA's claims. Depositors argue that it paid the HOA’s claim pursuant to an appraisal
award that binds both parties, it has not breached the contract, and that at every stage it has acted
in good faith to investigate and adjust the HOA’s loss. (Filing No. 59 at 5). The Court will discuss
each claim in turn.
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A.

Count I: Request to Supplement or Set Aside Appraisal
Depositors argues that Count I should be dismissed because the Appraisal Award is binding,

and the HOA fails to cite an adequate reason to set it aside. The HOA contends that the Appraisal
Award may be set aside because it is based on a coverage determination—namely, that
mismatching is not a type of loss covered under the Policy. To determine whether the Appraisal
Award may be supplemented or set aside, the Court will address four issues: (1) whether under
Indiana law an appraisal award may be set aside if the appraiser makes a coverage determination;
(2) whether the HOA has identified a coverage determination allegedly made by Umpire Button;
(3) whether Umpire Button made a coverage determination; and (4) assuming the Appraisal Award
is not binding, whether the HOA is entitled to additional compensation under the Policy (i.e.,
whether Umpire Button's alleged error is harmless). The Court will then turn to Depositors'
concerns regarding the broader implications of this decision.
1. Whether an Appraisal Award Making Coverage Determinations May Be Set Aside
Under Indiana law, appraisal awards are binding "except in exceptional circumstances."
Atlas Constr. Co., Inc. v. Ind. Ins. Co., Inc., 309 N.E.2d 810, 813 (Ind. Ct. App. 1974). It is well
established that "an appraisal award will not be disturbed unless manifestly unjust or is infected
with fraud, collusion, misfeasance or the like." Id. at 814. "A court will not substitute its judgment
for that of the appraisers or set aside an award for inadequacy or excessiveness unless it is so
palpably wrong as to indicate corruption or bias on the part of the appraisers.'" Id. at 813–14
(quoting Lakewood Mfg. Co. v. Home Ins. Co. of N.Y., 422 F.2d 796, 798 (6th Cir. 1970), cert.
denied, 400 U.S. 827 (1970)).

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One question that Indiana courts have not yet squarely addressed is whether an appraisal
award may be set aside if the appraiser makes a coverage determination. 1 Although the Seventh
Circuit recently decided two "matching" cases—Windridge of Naperville Condominium
Association v. Philadelphia Indemnity Insurance Co. ("Windridge") and Villas at Winding Ridge v.
State Farm Fire & Casualty Company ("Villas")—neither case decided whether an improper
coverage determination is adequate cause to set aside an appraisal award under Indiana law.
In Windridge, a hailstorm damaged the aluminum siding on condominiums, and the insurer
moved to compel appraisal. Windridge of Naperville Condo. Assoc. v. Phila. Indem. Ins. Co., 932
F.3d 1035 (7th Cir. 2019) ("Windridge II"); Windridge of Naperville Condo. Assoc. v. Phila. Indem.
Ins. Co., No. 16 C 3860, 2018 WL 1784140 (N.D. Ill. Apr. 13, 2018) ("Windridge I"). The parties
disputed whether the insurer was required to replace all of the siding to ensure matching. The
district court ordered the parties to proceed with appraisal "as to the damage indisputably covered
by the policy, but not as to the claimed damage over which there was a genuine coverage dispute."
Windridge II, 932 F.3d at 1037. So the umpire in Windridge did not make any coverage
determinations, and the Windridge court did not decide whether a coverage determination would
warrant setting aside an appraisal award.
In Villas, a hailstorm damaged the roofs of a condominium complex, and the parties
submitted their disputes to appraisal. Villas at Winding Ridge v. State Farm Fire & Cas. Co., 942
F.3d 824, 824 (7th Cir. 2019) ("Villas II"); Villas at Winding Ridge v. State Farm Fire & Cas. Co.,
No. 16-cv-3301, 2019 WL 1434220 (S.D. Ind. Mar. 29, 2019) ("Villas I"). The appraisal award
allowed partial roof replacements, but the insured wanted full replacements to ensure matching.
The insured argued that the umpire "mistakenly determined the scope of loss" by failing to account
When referring to "coverage determinations," the Court does not mean causation determinations, which are
appropriate for appraisal. See Phila. Indem. Ins. Co. v. WE Pebble Point, 44 F. Supp. 3d 813, 817 (S.D. Ind. 2014).
1

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for loss resulting from mismatched slopes, so the award should be set aside. Villas II, 942 F.3d at
831. But the Villas insured, unlike the HOA, failed to present the matching issue to the umpire
during the appraisal. Id. The Seventh Circuit explained that because the umpire resolved all
disputes "that the parties presented to him," the award was binding as to the entire amount of loss
recoverable under the policy. Id. at 831–32 ("The parties submitted the disputed loss to the umpire,
and that disputed loss did not include the replacement of the shingles on all buildings. The umpire
resolved the parties' dispute. . . . Winding Ridge's matching shingles argument was untimely.").
Villas therefore did not decide whether an award may be set aside if an umpire does make a
coverage determination, although this Court's dicta in Villas I suggests that it may be:
There are instances when one of the parties contests an umpire's award for proper
reasons, such as an allegation that the umpire has improperly considered the scope
of coverage. Winding Ridge makes such an argument here, alleging the umpire
improperly concluded that cosmetic damage to shingles was not included in
Winding Ridge's policy, and thus he did not include it in his "amount of loss"
calculation. . . . Those arguments are appropriate—they recognize that appraisers
are experts at determining how much damage a property has sustained but insurance
adjusters, attorneys, and courts are better-suited to resolve the contractual language,
which determines how much of that loss is covered by the policy.
Villas I, 2019 WL 1434220, at *8 (ultimately finding appraiser did consider cosmetic damage).
Further, although Indiana courts have not defined "mistake or misfeasance" in the context
of appraisal awards, their common definitions indicate that an appraiser commits a "mistake or
misfeasance" by improperly making a coverage determination. Mistake, Merriam-Webster.com
Dictionary, https://www.merriam-webster.com/dictionary/mistake (last visited Feb. 27, 2025)
(defining mistake as "a wrong action or statement proceeding from faulty judgment, inadequate
knowledge, or inattention"); Mistake, Black's Law Dictionary (12th ed. 2024) (defining mistake
as "[a]n error, misconception, or misunderstanding; an erroneous belief"); Misfeasance, MerriamWebster.com Dictionary, https://www.merriam-webster.com/dictionary/misfeasance (last visited
Feb. 27, 2025) (defining misfeasance as "the performance of a lawful action in an . . . improper
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manner"); Misfeasance, Black's Law Dictionary (12th ed. 2024) (defining misfeasance as "[a]
lawful act performed in a wrongful manner").
More fundamentally, it would be unfair to bind parties to legal determinations made by
appraisers because neither appraisers nor the appraisal process is well-suited to making those
determinations. The Indiana Court of Appeals in Atlas Construction Co. v. Indiana Insurance Co.
explained the distinction between appraisals and arbitrations and highlighted why legal
determinations should be left to the courts:
In matters of strict appraisal, as here, it is only the amount of the loss which is fixed.
Other possible issues such as liability are not determined. . . .
'[A]rbitration presupposes the existence of a dispute or controversy to be tried and
determined in a quasi judicial manner, whereas appraisement is an agreed method
of ascertaining value or amount of damage, stipulated in advance . . . . Liability is
not fixed by means of an appraisal; there is only a finding of value, price, or amount
of loss or damage. The investigation of arbitrators is in the nature of a judicial
inquiry and involves, ordinarily, a hearing and all that is thereby implied.
Appraisers, on the other hand, . . . are generally expected to act upon their own
knowledge and investigation, without notice of hearings, are not required to hear
evidence or to receive the statements of the parties, and are allowed a wide
discretion as to the mode of procedure and sources of information.'
309 N.E.2d at 37 (quoting Hartford Fire Ins. Co. v. Jones, 108 So.2d 571, 572 (Miss. 1959)); see
Hahn v. Allstate Ins. Co., No. 22-cv-2016, 2024 WL 1012952, at *2 (S.D. Ind. Mar. 7, 2024)
("Determining coverage cannot be resolved by an appraiser and is an issue for the Court.");
Weidman v. Erie Ins. Grp., 745 N.E.2d 292, 297–98 (Ind. Ct. App. 2001) (clarifying that an
appraisal determines amount of loss, not liability); accord Hartfold Lloyd's Ins. Co. v. Teachworth,
898 F.2d 1058, 1061–62 (5th Cir. 1990) (noting "significant differences" between appraisal and
arbitration); In re Delmar Box Co., 127 N.E.2d 808, 811 (N.Y. 1955) ("An agreement for arbitration
ordinarily encompasses the disposition of the entire controversy between the parties . . . while the
agreement for appraisal extends merely to the resolution of the specific issues of actual cash value
and the amount of loss, all other issues being reserved for determination in a plenary action.").
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It would also be manifestly unfair to bind the parties to legal determinations made by an
appraiser where the parties did not agree to delegate those determinations to appraisers. The
Appraisal Provision here, like many others, allowed the umpire to determine only the amount of
loss. By upholding an award that makes coverage determinations, the Court would be
inappropriately altering the terms of the Appraisal Provision. See, e.g., Gen. Motors Corp. v.
Northrop Corp., 685 N.E.2d 127, 135 (Ind. Ct. App. 1997) ("Courts do not have the power to create
for the parties a contract which they did not make, nor to insert language into a contract which was
not inserted by the parties . . . ."); see also Mesco Mfg., LLC v. Motorists Mut. Ins. Co., No. 19-cv4875, 2020 WL 6400764, at *5 (S.D. Ind. Oct. 30, 2020) ("The award necessarily binds the parties
within its scope: deciding the amount of loss."); Merchant v. Allstate Fire & Cas. Ins. Co., No. 21cv-5099, 2023 WL 6518866, at *13 (N.D. Ga. Sept. 20, 2023) ("Appraisers can only resolve
matters of value, so without other evidence or [the insurer's] consent, its appraiser cannot bind it,
and the appraisal award specifically indicates that Allstate can reject the award.").
Only a few courts have addressed cases in which appraisers are alleged to have made
coverage determinations. The Texas Court of Appeals is one of those courts. In Tippett v. Safeco
Insurance Company of Indiana, the insured, Tippett, submitted a claim to her insurer, Safeco, after
a hailstorm damaged the roof of her home. No. 02-19-00152-CV, 2020 WL 827143, at *1 (Tex.
App. Feb. 20, 2020). The parties exchanged estimates, but they disagreed as to whether certain
losses were "cosmetic" and thus excluded under the policy. Tippett sued for breach of contract and
bad faith, and Safeco invoked the policy's appraisal provision. Id. at *2. An umpire later issued an
appraisal award stating, in relevant part: "It is my opinion that hail did not damage the . . . roof in
a manner that caused or contributed to any interior leaking. . . . My opinion is that this hail denting
will not cause a loss of the intended water-shedding functionality of the [roof]." Id. (capitalization

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omitted). Based on the appraisal award, Safeco prepared a revised estimate, paid Tippett, and
moved for summary judgment, "arguing that it had paid the full amount owed under the Appraisal
Award and thus conclusively negated" Tippett's claims. Id. Tippett argued that the appraisal award
was not binding because the umpire made a coverage determination regarding cosmetic damages.
The Texas Court of Appeals described how under Texas law, like Indiana law, appraisal
awards are "binding and enforceable in the absence of fraud, accident, or mistake." Id. at *5 (citing
State Farm Lloyds v. Johnson, 290 S.W.3d 886, 888 (Tex. 2009)). Nevertheless, the court held that
the appraisal award was not binding because the umpire made a coverage determination. Id. at *9–
12 ("Appraisal awards may be disregarded when they do not comply with policy terms . . . ."). The
parties' dispute "about whether any of the damage, the cause of which is undisputed, are purely
cosmetic" was a legal determination, not a causation determination. Id. at *12. "The policy [did]
not define 'cosmetic' damage or provide any standard for 'functionality' of a metal roof. . . . For the
appraiser to make any findings about whether any damage was cosmetic or functional, they
necessarily had to construe (or rewrite) the policy," which appraisers cannot do. Id. at *13. The
Texas Court of Appeals therefore held that Safeco's payment under the appraisal award did not bar
Tippett's claims. Id. at *17.
The Northern District of Iowa also addressed a similar situation in Yogeshwar, Inc. v.
Society Insurance. In that case, the insured, Yogeshwar, filed a claim with its insurer, Society, after
a storm damaged the roof and interior of its building. 739 F. Supp. 3d 714, 720 (N.D. Iowa 2024).
Society denied the claim, and Yogeshwar invoked the policy's appraisal provision. The resulting
appraisal award provided for the replacement of only one roof slope, but it did not mention the
interior damage or Iowa's "line of sight rule," which requires that repairs result in a reasonably

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uniform appearance within the line of sight. Id. at 721–22. Both parties' appraisers and the umpire
agreed on the award, and Society issued a check to Yogeshwar based on the award. Id. at 722.
Yogeshwar later sued Society and argued that the appraisal award should be set aside. The
parties disputed whether the appraisal panel made coverage determinations by failing to consider
interior damage and the line of sight rule. Society argued that the panel did consider those types of
losses but valued them at zero dollars. Id. at 721. Society cited testimony from its appraiser that
the interior damage "'had been there for quite some time,'" and because the interior damage "'was
not on the date of loss, the appraisal panel unanimously agreed not to consider it in their award.'"
Id. As to line of sight, Society's appraiser testified that the building used "'a pretty generic colored
shingle, and there's going to be shingles available on the market that are going to represent a
reasonable match anyhow. So there is never a line of sight debate at all of really substantial
discussion with the appraisal panel.'" Id. at 732. Yogeshwar argued that the panel did not consider
interior damage, relying on its own appraiser's testimony that Society's appraiser stated, "the
appraisal panel could not readjust the claim and it would be considered by Society separate and
apart from the appraisal." Id. at 721. Yogeshwar's appraiser also testified that he was told that
Yogeshwar's contractor would need to bring up the line of sight issue with Society for
supplementation of the award. Id. at 722.
The parties cross-moved for summary judgment. The Yogeshwar court applied Iowa law,
which, like Indiana and Texas, will not set aside appraisal awards absent "fraud, mistake or
misfeasance on the part of an appraiser or umpire." Id. at 731 (quoting Walnut Creek Townhome
Assoc. v. Depositors Ins. Co., 913 N.W.2d 80, 87 (Iowa 2018)). The district court denied both
cross-motions because there were "clearly factual disputes regarding (1) whether the appraisal
panel considered interior damage and application of the line of sight rule and decided not to include

14

either in the appraisal award and (2) whether [Society's appraiser] precluded consideration of these
matters by statements he made to [Yogeshwar's appraiser]." Id. at 732–33. But the court stated that
if the jury sided with Yogeshwar, then the appraisal award could be set aside. Id.
The analyses in Tippett and Yogeshwar are well reasoned and consistent with decades of
caselaw reiterating that appraisers may not make coverage determinations. Based on these
persuasive decisions 2 and the wealth of Indiana precedent regarding the role of appraisers, the
Court finds that under Indiana law, if an appraiser makes a coverage determination in an appraisal
award, then the award may be supplemented or set aside. To hold otherwise would erase the crucial
distinction between appraisals and arbitrations and improperly alter the parties' contract.
2. Whether the HOA Has Identified a Coverage Determination Made in the Award
Depositors also argues that the shingle matching dispute raised by the HOA is not a
coverage dispute, and is instead a dispute about the method of valuation. FDL, Inc. v. Cincinnati
Ins. Co., 135 F.3d 503, 505 (7th Cir. 1998). "The HOA contends that replacement cost means the
cost to achieve uniformity, while Depositors advocates for a valuation of replacement cost based
on the cost of 'comparable material and quality' pursuant to the Policy." (Filing No. 59 at 14–15).
In response, the HOA clarifies it is not disputing how Umpire Button valued the HOA's losses, but
rather how Umpire Button decided the scope of losses to be valued (Filing No. 68 at 12).
The Court finds that the matching dispute relates to coverage, not valuation. The "method
of valuation" is the process or approach the appraiser uses to measure or monetarily value a loss
(e.g., actual cash value, fair market value, replacement cost). "Method of valuation" determinations
do not include determinations about the scope of loss to be valued. Depositors' caselaw is therefore

The Tippett court relied heavily on the Texas Supreme Court's decision in State Farm Lloyds v. Johnson, 290 S.W.3d
886 (Tex. 2009). This Court has previously found Johnson persuasive in interpreting Indiana law, Shifrin v. Liberty
Mut. Ins., 991 F. Supp. 2d 1022, 1038–39 (S.D. Ind. 2014), and again finds Johnson and its progeny persuasive.
2

15

inapposite, and its attempt to characterize the parties' dispute as one about the "method of
valuation" is unpersuasive.
The HOA plainly identifies a "question [of] coverage: whether this mismatch is a 'loss'
within the meaning of the policy." Windridge of Naperville Condos. Assoc. v. Phila. Indem. Ins.
Co., No. 16 C 3860, 2017 WL 372308, at *2 (N.D. Ill. Jan. 26, 2017) (granting in part and denying
in part motion to compel appraisal). The district court and appellate court in Windridge held that
the question of whether a policy requires an insurer to replace undamaged property to achieve
visual consistency is a coverage question for a court to decide. Windridge I, 2018 WL 1784140, at
*1–2 ("The parties proceeded to litigate that coverage dispute, which concerns the extent of [the
insurer's] obligation to replace the building's aluminum siding. . . . Thus, the court will limit its
discussion to the legal question underlying the parties' dispute: Assuming no matching siding is
available, whether the policy requires [the insurer] to replace or pay to replace the siding on all
four elevations or only the physically damaged . . . elevations."); Windridge II, 932 F. 3d 1035,
1036 ("This appeal presents an insurance coverage dispute . . . ."). The Seventh Circuit again
recognized that matching disputes are coverage disputes in Villas II. 942 F.3d at 831 ("[T]he mere
presence of coverage disputes (like matching disputes) . . . does not negate an appraisal award.").
Other courts nationwide agree that the question of whether a policy requires replacement
of undamaged property to achieve matching is a coverage question. See, e.g., Windridge I, 2018
WL 1784140, at *3 (listing cases); Culvey v. Auto-Owners Ins. Co., 670 F. Supp. 3d 657, 663 (N.D.
Ill. 2023) ("The question of whether the Policy 'requires replacement of undamaged property to
achieve matching is not appropriate for appraisal.'" (quoting Runaway Bay Condo. Ass'n, 262 F.
Supp. 3d 599, 603 (N.D. Ill. 2017))); Merchant, 2023 WL 6518866, at *13 ("[T]he Court must find
that it is a coverage issue, not a value issue, whether to replace only damaged pieces in a hardwood

16

floor or replace the entire floors or whether to redo an[] entire wall or replace only damaged
portions of a wall . . . ."); Auto-Owners Ins. Co. v. Summit Park Townhome Assoc., 100 F. Supp.
3d 1099, 1104 (D. Colo. 2015) ("Summit Park contends the appraisal process may determine
whether the policy requires Auto-Owners to pay to replace undamaged property in order to achieve
visual consistency. I disagree. This is a clear example of a coverage issue beyond the scope of
appraisal."); Lam v. Allstate Indem. Co., 755 S.E.2d 544, 545–46 (Ga. Ct. App. 2014) (affirming
dismissal of action to compel appraisal because dispute as to whether insurer was required to
replace some or all roof shingles was a coverage dispute and "not a proper basis for an appraisal");
see also Cedar Bluff Townhome Condos. Ass'n, Inc. v. Am. Family Mut. Ins. Co., 857 N.W.2d 290,
294–95 (Minn. 2014) (interpreting "comparable material and quality"; restating that appraisers
may not construe policies but affirming award construing "comparable" to mean a "reasonable"
color match because appraisal panel "applied the correct legal standard"); Walnut Creek, 913
N.W.2d at 91 (citing cases holding that coverage determinations are reserved for courts).
The HOA has therefore identified a coverage determination that, if made by Umpire
Button, would warrant supplementing or setting aside the Appraisal Award.
3. Whether Umpire Button Made a Coverage Determination
Depositors insists that Umpire Button did not make a coverage determination, based on his
testimony that he has no opinion as to Depositors' liability under the Policy, did not review the
legal authority in Mr. Latham's appraisal package, and did not intend to "wade into th[e] legal
thicket of case law." (Filing No. 52-6 at 37:18–22). These statements are not dispositive, though,
since Umpire Button could have made a coverage determination despite not meaning to.
Depositors contends that nothing in Umpire Button's testimony suggests that the Appraisal
Award was based on an interpretation of the Policy (Filing No. 75 at 8). The Court disagrees. In
response to several questions, Umpire Button stated that he did not believe he needed to consider
17

the visual uniformity of the roofs when estimating the cost of restoring the Townhomes to their
pre-loss condition, which necessarily involved a determination as to the scope of loss recoverable
under the Policy.
Q.
. . . . Whether or not your view of the esthetics of shingle repair matches the
standard for esthetics in the insurance policy is it correct you have no opinion on
that?
A.
. . . . My opinion was I did a reasonable estimate to restore the building to
the pre-loss condition without regard to whether or not all the shingles on all the
buildings were of a uniform appearance. . . .
(Filing No. 52-6 at 35:18–36:13).
Q.
All right. Do I understand you when you use the phrase "like, kind, and
quality materials" that has nothing to do with the color of the materials.
A.

No, it doesn't have anything to do with...

Q.

With what?

A.

With the color. . . .

Id. at 48:16–49:1.
Q.
. . . . [I]s there any reason why replacing one slope would require you to like
functionally replace the other slope?
A.
I don't believe there's any -- there wouldn't be any consideration other than,
you know, the two slopes wouldn't look the same.
Q.
So in your estimate you don't distinguish between functional and cosmetic
damage; is that correct?
A.

Of the shingles?

Q.

Of anything, but yes.

A.

No, I didn't . . . .

Id. at 107:20–108:10.
Q.
On your estimate, the one you came up with, so Award Estimate in
Deposition Exhibits, the first sentence says "The following repair estimate is to
return the property to its pre-loss condition using like, kind, and quality materials."
18

What is the pre-loss condition in this case?
A.
. . . . [I]n the case of the shingles, it would be shingles that don't have
granular loss. And in a few cases maybe some bruising that wasn't there prior to the
date of the loss event.
Id. at 107:20–109:9.
Umpire Button also testified that if matching had been part of his appraisal, then he would
have investigated whether a reasonable match existed. The fact that he did not consider the ITEL
Report or conduct any investigation supports the HOA's claim that he did not consider matching:
Q.
Did you investigate whether there was a shingle on the market that would
provide a uniform appearance even if you're only replacing one slope of a building?
A.

I didn't investigate . . . .

Id. at 21:2–6.
Q.

Did you consider the ITEL report in your analysis?

A.
In my analysis I was doing complete slopes, so I wasn't necessarily -- if I
was trying to do individual shingle replacements, it would have been a
consideration. But since I was doing slopes, I didn't really consider the ITEL report.
Id. at 28:13–19.
Q.
. . . . How did the ITEL report submitted by Mr. Latham weigh into your
analysis in this case?
A.
It didn't really -- it would have weighed in if I was trying to do individual
shingle replacements, but since I wasn't doing that it didn't really affect my award.
Id. at 109:17–110:1.
Q.
So did you make any independent observations that replacing one slope on
each roof would change the esthetic of the roof?
A.
No, I didn't make any, I didn't make any independent thought that it would
affect the perception from the ground one way or the other.
Id. at 110:13–18.
Q.
As far as your statement that you believe from your experience there are
shingles in the market similar to the old ones at the property, am I correct that you
did no specific investigation to support that statement?
19

A.

I did not do any specific investigation.

Id. at 122:20–123:1.
Q.
On the issue of current market shingles having color considered similar, you
would not defer to the opinion of [the ITEL] laboratory whose business it is to make
such identifications?
A.

In this case I probably would try to do my own investigation.

Q.

Which you didn't do; correct?

A.

Which I did not do.

Id. at 125:15–22.
Based on this testimony, and drawing all reasonable inferences in favor of the HOA, a
reasonable jury could conclude that Umpire Button made a coverage determination by failing to
consider losses due to mismatched slopes. See Yogeshwar, 739 F. Supp. 3d at 731–33. The Court
thus cannot find, as a matter of law, that Umpire Button did not make a coverage determination.
4. Whether the HOA is Entitled to Additional Compensation Under the Policy
Depositors lastly argues that the "Appraisal Award notwithstanding, the evidence in this
case demonstrates that Depositors paid the HOA for the cost to replace the damaged portion of its
buildings with shingles of 'comparable material and quality.'" (Filing No. 59 at 15). Stated
differently, the HOA is not entitled to any additional compensation under the Policy, so Umpire
Button's alleged error is harmless, and the Appraisal Award should be enforced. Travelers Prop.
Cas. Co. of Am. v. Marion T, LLC, No. 07-cv-1384, 2010 WL 1936165, at *8 (S.D. Ind. May 12,
2010) (finding appraisers' error in failing to consider certain damages was "harmless" because
insurer was not entitled to those damages); see also Cedar Bluff, 857 N.W.2d at 293–94 (affirming
appraisal award notwithstanding coverage determination because appraisal panel "applied the
correct legal standard"). Depositors specifically argues: (a) the HOA's caselaw is inapplicable, and

20

the Policy does not require an exact shingle match; and (b) the HOA has no evidence supporting
its claim for additional compensation to ensure matching.
a. HOA's Caselaw and the Policy Language
The HOA argues that two cases, Erie Insurance Exchange v. Sams, 20 N.E.3d 182 (Ind. Ct.
App. 2014), and Windridge II, 932 F.3d 1035, show that Depositors is required to pay for full roof
replacements under the Policy (Filing No. 54 at 1, 12). In Erie, a storm damaged one side of a
home's siding and roof, but siding and shingles matching the originals were unavailable. The policy
provision at issue stated "[p]ayment will not exceed the smallest of . . . the replacement cost of that
part of the dwelling damaged for equivalent construction and use on the same premises." 20 N.E.3d
at 191. The parties disputed whether "that part of the dwelling" meant individual roof slopes and
elevations of siding or the entire roof and all siding. Because the court's decision in Erie was based
on different policy language, it is largely inapplicable. Windridge, however, is persuasive. As
Depositors acknowledges, "the insurance policy language in Windridge appears comparable to that
in the Policy." (Filing No. 59 at 18). Under the policy in Windridge, like the Policy here, the insurer
promised to "'pay for direct physical "loss" to Covered Property caused by or resulting from'" the
storm, with the amount of loss being "'[t]he cost to replace the lost or damaged property with other
property . . . [o]f comparable material and quality . . . and . . . [u]sed for the same purpose[.]'"
Windridge II, 932 F.3d at 1039 (alterations and omissions in original); (Filing No. 58-1 at 45, 72).
The material facts of Windridge are also similar to the facts of this case. In both cases, only a
portion of the covered property was physically damaged, and the insured alleged that no available
replacement material would match the original material.
Depositors asks the Court to distinguish Windridge because the insured buildings in
Windridge had uniform siding on all elevations before the storm and because "the mismatched
siding described in Windridge involves more of a visual discrepancy than can be claimed here"
21

since the Townhomes roofs' cannot be inspected "from ground level." (Filing No. 59 at 18–19).
These distinctions are immaterial. The Windridge II court held that under the replacement-cost
policy at issue, the insurer was required to return the insured property to its pre-loss state. 932 F.3d
at 1042. The Seventh Circuit never stated that the insurer would be released from this obligation
if the insured property had "less than perfect pre-loss uniformity" or if the non-uniformity was not
readily noticeable (Filing No. 68 at 14). In situations involving "more limited damage"—perhaps
where few shingles were damaged, the insured building had very little pre-loss uniformity, or a
reasonable match is available—"common sense" dictates that the insured would instead be entitled
to "the (presumably minor) decrease in value of the building." Windridge II, 932 F.3d at 1042. But
in Windridge and in this case, the insurers chose to pay to repair the damaged property, which may
require the replacement of undamaged property to ensure matching, even if those repairs leave the
insured in a better position than before the loss. "When the insurance industry adopted a standard
extension of coverage endorsement to provide replacement cost, it took into account the one great
hazard in providing this kind of coverage: the possibility for the insured to reap a substantial profit,
if [a loss] occurs." Travelers Indem. Co. v. Armstrong, 442 N.E.2d 349, 352 (Ind. 1982); see Sams,
20 N.E.3d at 190; Rockford Mut. Ins. Co. v. Pirtle, 911 N.E.2d 60, 65 (Ind. Ct. App. 2009) ("Any
purported windfall to an insured who purchases replacement cost insurance is precisely what the
insured contracted to receive in the event of a loss."). Windridge is therefore applicable and
persuasive, despite the fact that the Townhomes may not have had perfect pre-loss uniformity and
the mismatch between slopes may not be readily apparent.
Depositors also argues that Windridge is distinguishable because it applied Illinois law, but
Illinois and Indiana apply the same principles when interpreting insurance policies. See Phila.
Indem. Ins. Co. v. Flippen Flyers Track Club, No. 20 C 1753, 2023 WL 1766489, at *4–5 (N.D.

22

Ill. Feb. 3, 2023). Just as the Windridge II court relied on decisions applying Minnesota and District
of Columbia law, 932 F.3d at 1041 & n.5, this Court may rely on a decision applying Illinois law.
Given the factual and legal similarities between Windridge and this case, the Court sees no
reason to depart from the Seventh Circuit's reasoning. In Windridge and in this case, "the unit of
covered property to consider under the policy (each panel of siding [or each shingle] vs. each side
[or each slope] vs. the building as a whole) is ambiguous." Id. at 1040. Under Indiana law,
ambiguities in insurance contracts must be construed in favor of coverage. See, e.g., Auto-Owners
Inc. Co. v. Benko, 964 N.E.2d 886, 890 (Ind. Ct. App. 2012). This Court therefore adopts the
Seventh Circuit's well-reasoned interpretation of the same policy language:
The better construction, and one certainly permitted by policy language that is
ambiguous as applied to these facts, is that each building as a whole suffered direct
physical loss as a result of the storm. The storm altered the appearance of the
buildings such that they were damaged. Condominium buildings with mismatched
[roof slopes] are not the post-storm outcome that the insured was required to accept
under this replacement-cost policy. . . .
[Depositors] seeks to leave [the HOA] with buildings that have [one slope] in one
color and [one slope] in another. . . . [The HOA] has not yet been made whole. It
has not been returned to its pre-storm status. [Depositors] chose to insure [the
HOA's] 'buildings,' which—because of the storm—were all damaged.
Windridge II, 932 F.3d at 1041–42. If the Appraisal Award is not binding, and no available
replacement shingle can restore the Townhomes to its pre-storm condition, then the Policy may
require Depositors to pay for full roof replacements.
b. Evidence of Additional Compensation Owed
Depositors next argues that the HOA's expert affidavits are inadmissible to show the extent
of the Townhomes' pre-loss uniformity, and the ITEL Report fails to show that no "comparable"
shingles are available. Depositors contends that because the HOA cannot establish the pre-loss
condition of the Townhomes or the unavailability of a comparable repair shingle, the HOA cannot
show it is entitled to new roofs. The Court again disagrees with Depositors.
23

In its opening brief, the HOA cites affidavits from Mr. Kortzendorf and Mr. Burkert to
show that the Townhomes had between ninety-nine and one-hundred percent uniform appearances
before the hailstorm (Filing No. 54 at 5–6). Depositors moves to strike these affidavits because the
HOA did not timely disclose Mr. Kortzendorf and Mr. Burkert as experts, but Depositors does not
explain what portions of their affidavits constitute expert opinions (Filing No. 59 at 15–16, 18 &
n.4). The HOA responds that Mr. Kortzendorf and Mr. Burkert's assertions are based solely on
their personal knowledge and constitute admissible lay testimony. Depositors replies, in a single
footnote, that their statements are "made based on their respective 'employment, position, and
credentials,'" and "leverages 'technical, or other specialized knowledge' to aid the understanding
of the evidence." (Filing No. 75 at 15–16 n.2). Regardless of Mr. Kortzendorf and Mr. Burkert's
potential specialized knowledge, their affidavits appear to contain only factual assertions based on
first-hand observations. See United States v. York, 572 F.3d 415, 420 (7th Cir. 2009). To the extent
Depositors specifically takes issue with Mr. Kortzendorf and Mr. Burkert's calculations of the
Townhomes' level of pre-loss uniformity, copious photographs of the Townhomes serve to prove
the same point (Filing No. 68 at 6). Depositors does not challenge the admissibility or authenticity
of these photographs, and the photographs alone are sufficient to create a genuine dispute as to
whether the Townhomes' roofs had sufficient pre-loss uniformity to require full roof replacements.
The Court therefore denies Depositors' motion to strike. 3
Depositors also argues that the ITEL Report does not show that comparable replacement
shingles are unavailable because ITEL Report searched for "similar" shingles, not "comparable"
shingles (Filing No. 59 at 19). However, Depositors does not assert what it believes "comparable"
means or explain how it differs from "similar." Cf., e.g., Cedar Bluff, 857 N.W.2d at 293–94 ("[O]n
Depositors' Objections to Plaintiff's Expert Testimony (Filing No. 76) remains pending and if appropriate, can be
ruled on in a separate entry before trial.
3

24

the spectrum of resemblance, 'comparable material and quality' requires something less than an
identical color match, but a reasonable color match nonetheless."); Maplebrook Ests. Homeowner's
Assoc., Inc. v. Hartford Fire Ins. Co., No. 21-cv-01532, 2024 WL 869069, at *13 (D. Minn. Feb.
29, 2024) (finding that appraisers appropriately determined whether replacement siding was "of
'like kind and quality[,]' a functionally synonymous phrase to 'comparable material and quality'"
(alteration in original)); Republic Underwriters Ins. Co. v. Mex-Tex, Inc., 150 S.W.3d 423, 425
(Tex. 2004) (stating that "comparable material and quality" allows "more leeway" than
"identical"). Depositors asserts that "'comparable' appears to be the standard Rocklane applied for
shingle repairs to the Townhomes prior to the date of loss" (Filing No. 59 at 19), but there is no
evidence that Rocklane considered the non-matching repair shingles to be "comparable." (Filing
No. 58-16 at 13:11–16:1). Moreover, Rocklane's understanding of "comparable" is irrelevant to
the interpretation of that term under Indiana law.
Depositors contends that "the Umpire already considered and accounted for the ITEL
Report" (Filing No. 59 at 20), but this argument is contradicted by designated evidence. Umpire
Button stated several times that he did not consider the ITEL Report in preparing the Appraisal
Award (Filing No. 52-6 at 28:13–19, 109:17–110:1). Depositors further contends the ITEL Report
is "unreliable" and "problematic" because the HOA cannot identify which building the sample
shingle came from, ITEL cannot identify the sample shingle manufacturer, and the sample shingle
did not have a "shadow mark" like other shingles on the Townhomes' roofs (Filing No. 59 at 20).
These arguments speak to the weight of the ITEL Report (Filing No. 68 at 18). A reasonable jury
could still accept the ITEL Report, conclude that the Townhomes cannot be returned to their preloss appearance using any existing shingle on the market, and, assuming the Appraisal Award is
not binding, find that the HOA is entitled to additional compensation under the Policy.

25

Depositors has not shown, based on the undisputed material facts, that the Appraisal Award
cannot be supplemented or set aside or that, notwithstanding the Appraisal Award, HOA is not
entitled to additional compensation under the Policy. Depositors' Motion for Summary Judgment
is therefore denied as to Count I. 4
5. Public Policy Concerns
Depositors cautions the Court that "[s]etting aside or supplementing the Appraisal Award
in this case frustrates the purpose of the Policy's appraisal provision" and may "reverberate beyond
this lawsuit, create undue uncertainty across the property insurance industry, and lead to increased
consumer costs." (Filing No. 75 at 12). The Court acknowledges the importance of appraisals but
disagrees that this decision will "subvert [their] very purpose." Id. By holding that the Appraisal
Award may be set aside if Umpire Button made a coverage determination, the Court is merely
applying the Appraisal Provision as written and reaffirming the numerous courts that have held
that appraisers may not make coverage determinations, that matching disputes are coverage
disputes, and that appraisal awards making coverage determinations are ultra vires and manifestly
unfair. Further, there is no reason to anticipate that this decision will encourage unnecessary
litigation or allow insureds to "'short-circuit the appraisal process.'" Id. (quoting FDL, 135 F.3d at
505). This decision is limited to its unique facts and Policy language. Its broader effect, if any, may
be to encourage parties to distinguish between outstanding coverage disputes and valuation
disputes before proceeding to appraisal and to discourage insurers from exploiting the appraisal
process by attempting to enforce appraisal awards that exclude losses based on improper coverage
determinations. See Tippett, 2020 WL 827143, at *14 ("Safeco could not invest the appraisers with

Because Depositors' Motion is denied as to Count I because of genuine disputes about whether Umpire Button
considered matching, the Court need not, and does not, reach the HOA's additional arguments that Umpire Button's
failed to consider ice and water shield repairs in the Appraisal Award (Filing No. 68 at 11).
4

26

the power to make judicial determinations by invoking the appraisal process and obtaining a
finding on the applicability of the cosmetic-damage exclusion.").
This case may also serve to inspire cooperation between insureds and insurers facing
similar "matching" disputes. Before the appraisal inspection in this case, Mr. Latham suggested a
"dual column award" that would set out the award for "actual damages" caused by hail in one
column, and the award for the amount of a full roof replacement in another. Other courts have
encouraged a similar approach. See Summit Park, 100 F. Supp. 3d at 1104 ("The appraisals should
separately calculate and identify disputed costs so that the Court can either include or exclude them
once it has determined whether the policy provides coverage for them. Counsel should work
collaboratively to ensure that the appraisals provide sufficient detail to enable the Court to do this.
Following this course will enable the parties to avoid unnecessary discovery or additional
appraisals."); see also Lee v. Cal. Cap. Ins. Co., 188 Cal. Rptr. 3d 753, 767 (Cal. Ct. App. 2015)
("[I]nstead of simply placing a 'zero' next to certain items of loss, thus leaving open to debate
whether the panel based its decision upon an improper coverage determination, the panel could . .
. clarify in its notes accompanying the award that items assigned a loss value of zero were not
damaged or did not exist at the property."); Maplebrook, 2024 WL 869069, at *12 ("'[T]he panel
made no determination on whether the policy covered matching and separated out the number[s]
so the parties could interface the policy coverage with the award.'" (second alteration in original));
Mr. Norman unfortunately declined the offer to use a dual column format based on a prior bad
experience (Filing No. 52-4 at 49). Had he agreed, the parties and the Court may have been spared
some of the substantial time and resources already expended in this litigation.
In sum, the Court's decision will not subvert the purpose of appraisals or erode parties'
confidence in them, and neither will a potential jury verdict setting aside the Appraisal Award.

27

B. Count II: Breach of Contract
Both parties move for summary judgment on the HOA's breach of contract claim. The
Court will discuss each motion in turn.
1. Depositors' Motion for Summary Judgment
Depositors argues the Policy does not require it to "match replacement shingles with
existing shingles," so it did not breach the Policy by failing to pay for full roof replacements (Filing
No. 59 at 21). Depositors relies on Villas I, in which the Court held that the policy at issue did not
require the insurer to exactly match replacement shingles to existing shingles and only required
replacement shingles of a "comparable material and quality." Id. However, Villas is distinguishable
in three important ways.
First, the insured in Villas specifically argued that the policy required replacement shingles
to exactly match the old shingles. Villas I, 2019 WL 1434220, at *15 (finding that policy
unambiguously did not require exact matching). In this case, the HOA does not seek an exact
match; it seeks any shingle that can return the Townhomes to its pre-loss condition and argues that
no such shingle exists on the market. Second, in Villas, the insured argued that under the policy,
"replacing one shingle requires replacing all shingles," Villas II, 942 F.3d at 833, and the Court
held the insured was not entitled to a new roof "simply because a few replacement shingles could
not be matched." Villas I, 2019 WL 1434220, at *15. Here, the HOA does not argue that a new
roof is needed just because a few replacement shingles cannot be matched. Instead, it argues that
due to the extent of damage and unavailability of a similar shingle, only a full roof replacement
can restore the Townhomes to its pre-storm condition. (Filing No. 54 at 12); see Windridge II, 932
F.3d at 1041. Third, and most importantly, the appraisal award in Villas was binding as to all
replacement costs owed under the policy. As a result, the Villas insured could not argue that the
insurer was required to pay for a new roof as part of its obligation to pay replacement costs, like
28

the HOA does in this case. The Villas insured instead argued, without "cit[ing] any language from
the Policy," that the insurer was required to provide matching shingles, independent of its
obligation to cover replacement costs. 2019 WL 1434220, at *15.
Villas therefore shows only that the Policy does not require Depositors to match shingles
exactly; provide a new roof whenever a few replacement shingles cannot be matched; or ensure
visual uniformity, independent of its obligation to pay all replacement costs. However, as explained
above, a reasonable jury could find that the Appraisal Award is not binding and that additional
replacement costs are owed under the Policy. Because Depositors refuses to pay those additional
costs, a reasonable jury could also find that Depositors breached the Policy. Depositors' Motion
for Summary Judgment is therefore denied as to Count II.
2. The HOA's Motion for Partial Summary Judgment
The HOA cross-moves for summary judgment on Count II. Although the Court has held
that genuine disputes of material fact preclude judgment in favor of Depositors on this claim,
genuine disputes of material fact likewise preclude judgment in favor of the HOA. Portions of
Umpire Button's testimony indicate that he did consider the matching issue and valued that loss at
zero dollars. In that event, there would be no basis to disturb the Appraisal Award. See Lee, 188
Cal. Rptr. 3d at 767 ("[A]n appraisal panel does not necessarily exceed its authority by assigning
a value of zero to items of loss submitted to it for consideration."); Johnson, 290 S.W.3d at 894
("[W]hen the parties disagree whether there has been any loss at all, nothing prevents the appraisers
from finding '$0' if that is how much damage they find.").
Specifically, Umpire Button testified that he believed that the Townhomes' repaired roofs
would appear uniform because both slopes cannot be seen from the ground and a reasonable
shingle match would be available on the market:

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Q.
. . . . [W]as it a concern to you that each of these building would have the
extent of uniform appearance that they had before the loss?
A.
. . . . So I was generally doing an entire slope and. If [sic] you do an entire
slope, I think it generally doesn't affect the appearance because you can't see, you
can't see multiple slopes from any particular view.
Q.
So from your architectural perspective, it doesn't concern you that one slope
of the building would have one color shingles and another slope of the building
would have different color shingles?
A.
I mean if it was -- in my opinion it still creates a uniform appearance if
you're doing an entire slope. If I was doing spot repairs, it would be, in my opinion,
a different situation.
Q.
Did you investigate whether there was a shingle on the market that would
provide a uniform appearance even if you're only replacing one slope of a building?
A.
I didn't investigate, but I know just from general experience that there's all
different colored shingles that are similar in type. And if you were going to do an
entire slope, my opinion was it would relatively -- you could find something that
would relatively match.
(Filing No. 52-6 at 20:1–21:11).
Q.
I think you said . . . that you just felt as a matter of experience, not of any
particular investigation, that there were repair shingles on the market which would
provide or restore the uniform appearance of both slopes of each building?
....
A.
I thought there would be a reasonable, not an ITEL match, but some form
of shingle of the same type that would reasonably match what was there.
Id. at 20:1–21:14.
Q.
. . . . [A]m I correct that you did no specific investigation to support that
statement?
A.

I did not do any specific investigation.

Q.

Would it be fair to characterize that statement as an unverified hunch?

A.
My experience is there's just such a wide variety of colors of shingles that
you'd be able to find something that was relatively close. I didn't any additional
research or bring any shingles up with me. Yeah, it's not a verified statement I guess.
Id. at 122:20–123:12.
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Q.

. . . . You didn't consider how [the roof] would look from the ground?

A.
I didn't -- I just -- from my perspective, there was enough hail damage on
the sides of the roof that got impacted by the date of loss event that if I was replacing
the whole slope it wouldn't be noticeable because I'm doing the whole slope.
Q.
And is it your knowledge based on your experience in this industry that
there should be shingles available that are close enough to where if you run to the
back of the condo and look up and then you run to the front of the condo and look
up, they look pretty much, they look similar?
A.

I would think from the ground you could find something that looked similar.

Id. at 110:20–111:13.
Umpire Button also testified that the Townhomes roofs were not of a uniform appearance
before the storm:
Q.
. . . . Whether or not your view of the esthetics of shingle repair matches the
standard for esthetics in the insurance policy is it correct that you have no opinion
on that?
A.
. . . . My opinion was I did a reasonable estimate to restore the building to
the pre-loss condition without regard to whether or not all the shingles on all the
buildings were of a uniform appearance. Partially I thought my stance was
reasonable because there were previous repairs on buildings that already didn't
match and I was doing complete slopes. So I thought it was reasonable.
Id. at 36:1–13 .
Based on the above testimony, when drawing all reasonable inferences in Depositors' favor,
a reasonable jury could find that Umpire Button did consider mismatching and assigned a zerodollar value to that type of loss. Absent any improper coverage determinations, the Appraisal
Award would be binding, and Depositors' failure to pay any additional amounts would not form
the basis for a breach of contract claim. See Villas I, 2019 WL 1434220, at *10 (holding that the
insurer had no independent duty to ensure matching). The HOA's Motion for Partial Summary
Judgment is therefore denied.

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C. Count III: Bad Faith
Depositors lastly moves for summary judgment on the HOA's bad faith claim. The HOA
alleges that Depositors acted in bad faith by "making an unfounded refusal to pay Policy proceeds
after the Award with no rational, principled basis for doing so and causing an unfounded delay in
making payment by delaying appraisal and refusing further claim payment after the award." (Filing
No. 6-1 ¶ 38). Depositors responds that it fulfilled its obligations to act in good faith by engaging
independent professionals to inspect the Townhomes, participating in appraisal, and promptly
issuing payments based on the inspections and Appraisal Award (Filing No. 59 at 25).
In Indiana, an insurer has a duty to deal with its insured in good faith. Erie Ins. Co. v.
Hickman by Smith, 622 N.E.2d 515, 518–19 (Ind. 1993). This duty includes "the obligation to
refrain from making an unfounded refusal to pay policy proceeds, causing an unfounded delay in
making payment, deceiving the insured, or exercising any unfair advantage to pressure the insured
into settlement of his claim." Johnston v. State Farm Mut. Auto Ins. Co., 667 N.E.2d 802, 804 (Ind.
Ct. App. 1996). However, "a good faith dispute about the amount of a claim will not supply the
basis for recovery." Id. Likewise, "[p]oor judgment or negligence do not amount to bad faith; the
additional element of wrongdoing must also be present." Colley v. Ind. Farmers Mut. Ins. Grp.,
691 N.E.2d 1259, 1261 (Ind. Ct. App. 1998). "'[A] finding of bad faith requires evidence of a state
of mind reflecting dishonest purpose, moral obliquity, furtive design, or ill will.'" Monroe Guar.
Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 977 (Ind. 2005) (quoting Colley, 691 N.E.2d at 1261).
"To prove bad faith, the plaintiff must establish, with clear and convincing evidence, that the
insurer had knowledge that there was no legitimate basis for denying liability." Freidline v. Shelby
Ins. Co., 774 N.E.2d 37, 40 (Ind. 2002).
In response, the HOA cites several facts purportedly showing that Depositors' "claim
handling in this case was purposely slanted to be self-serving and not fair dealing with its insured."
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(Filing No. 68 at 30). As an initial matter, "neither the Indiana Supreme Court nor the Indiana
Court of Appeals has recognized a claim for bad faith claims handling." Telamon Corp. v. Charter
Oak Fire Ins. Co., 179 F. Supp. 3d 851, 856 (S.D. Ind. 2016); see Brandell v. Secura Ins., 173
N.E.3d 279, 288 (Ind. Ct. App. 2021) (stating Indiana courts have not recognized a claim for bad
faith claim handling and analyzing bad faith under Hickman obligations). The HOA provides no
authority or argument as to the viability of a claim for bad faith claims handling, so the Court will
analyze the HOA's claim under the four obligations articulated by the Indiana Supreme Court: the
obligations to refrain from (1) making an unfounded refusal to pay policy proceeds; (2) causing an
unfounded delay in making payment; (3) deceiving the insured; and (4) exercising an unfair
advantage to pressure an insured into settlement of its claim. Hickman, 622 N.E.2d at 519.
To start, the HOA notes that Depositors' October 2020 Estimate was substantially lower
than the Appraisal Award, and that the EES Report, like the Appraisal Award, found evidence of
hail damage to several Townhomes buildings but only allowed for a roof replacement of one
building (Filing No. 68 at 27–28). The fact that EES and Depositors made different findings,
allowed for different repairs, or estimated the HOA's loss lower than the Appraisal Award does not
show bad faith. The HOA does not argue that the EES Report or Depositors' reliance on it are
unfounded or unreasonable, and it is well established that insurers have the right to dispute claims.
See Hickman, 622 N.E.2d at 520.
The HOA relatedly notes that the EES Report "found hail damage on only the north and
west slope[s] of Building 12," but "Depositors replaced all slopes on Building 12 (72.33 squares
of shingles) contrary to its coverage position denying full replacement when half roofs are hail
damaged." (Filing No. 68 at 27). However, the EES Report and October 2020 Estimate provided

33

for a full roof replacement, "(72.33 squares of shingles)," for Building 7, not Building 12. 5 Id. This
distinction is important because the EES Report did not just find hail damage to the north and west
slopes of Building 7; it also found missing shingles on the west and east slopes, which are
connected to Building 7's south slope. 6 So according to the EES Report, Building 7 was the only
building with damage to, or connected to, all four slopes. 7 Depositors' decision to allow a full roof
replacement for Building 7 is therefore not contrary to its current position that no full replacements
are required "when half roofs are hail damaged." (Filing No. 68 at 27).
The HOA next points out that Depositors did not obtain the report prepared by Alliance,
even though Alliance accompanied EES on its inspection; and that Depositors did not "accept" the
ITEL Report, even though ITEL is one of Depositors' approved vendors. Id. at 28. These
allegations relate to Depositors' handling of the HOA's claim, and not any of the four obligations
announced in Hickman, so they cannot form an action for bad faith. See Telamon, 179 F. Supp. 3d
at 856; see RAP Indy, LLC v. Zurich Am. Ins. Co., No. 19-cv-04657, 2021 WL 2416740, at *9 (S.D.
Ind. June 14, 2021) (stating that the insured's "alleged suspicion . . . that the claims were an 'inside
job'" does not "amount to conscious wrongdoing" by the insurer because Indiana does not
recognize a claim for bad faith claims handling); Fetter v. State Farm Fire & Cas. Co., No. 22-cv00486, 2024 WL 4880891, at *13 (S.D. Ind. Sept. 19, 2024) (dismissing claim alleging that insurer

The HOA appears to have confused Building 12 (8246–8266 Caroline Ln., mistakenly identified as 8246–8266
Katrina Way in the October 2020 Estimate) and Building 7 (8249–8269 Katrina Way). Depositors allowed for a full
roof replacement (72.33 SQ; replacement cost value of $27,796.16) for "8249 to 8269 Katrina Way," which is Building
7 (Filing No. 58-6 at 5, 10; Filing No. 58-7 at 6–7).
5

As shown in an arial photograph of the Townhomes (Filing No. 58-6 at 4), the buildings at issue have two primary
roof slopes—one facing north and one facing south—and each building has gables/dormers on either its north or south
façade, with the east/west dormer roof slopes connected to the respective façade. Building 7 has dormers on its south
façade, so the east/west dormer roofs are connected to the south roof slope.
6

The EES Report also notes missing shingles on the east dormer roof slopes of Buildings 8 and 12, but Building 8
and 12's dormers are on the north façades, so the east/west dormer slopes are connected to the north roof slopes.
7

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conducted fire damage investigation in bad faith by "searching for evidence of motive and
opportunity before it had evidence the fire was incendiary"). Although an insurer's intentional
failure to conduct any investigation might show bad faith, Depositors' failure to consider two
reports does not rise to that level. Compare Gooch v. State Farm Mut. Auto. Ins. Co., 712 N.E.2d
38, 41 (Ind. Ct. App. 1999), with Atlanta Gas Light Co. v. Navigators Ins. Co., No. 20-cv-02441,
2023 WL 9058615, at *7 (S.D. Ind. Sept. 22, 2023) (describing insurer's conduct in Gooch as
"malicious[] fail[ure] to investigate"); Lummis v. State Harm Fire & Cas. Co., No. 04CV0080,
2005 WL 1417053, at *10–11 (S.D. Ind. June 16, 2005) ("[P]laintiffs' speculative hypotheses . . .
are not comparable to the 'compelling' factual evidence confronting the insurer in Gooch. At most,
plaintiffs' speculation might support a claim of negligence, not bad faith."); and McClain v.
Madison Nat'l Life Ins. Co., No. 11-CV-377, 2014 WL 4377458, at *25 (N.D. Ind. Sept. 4, 2014)
("The failure to get raw data . . . at most, shows negligence.").
The HOA further alleges that "Depositors obdurately and without cause resisted appraisal."
(Filing No. 68 at 28). However, the designated evidence shows that Depositors had a rational basis
for initially resisting appraisal. When the HOA first demanded appraisal, Depositors believed that
the parties' dispute related to the extent of the damage rather than its value, so the claim was not
appropriate for appraisal (Filing No. 52-7 at 24:6–28:6, 45:20–46:4). Depositors reasserted this
position after the HOA filed suit to compel appraisal. Answer and Affirmative Defenses ¶ 7(c),
Townhomes I, No. 1:20-cv-02788 (S.D. Ind. Nov. 4, 2020). The HOA next contends that Depositors
has litigated this action in bad faith by asserting a Policy limitations defense in its Motion to
Dismiss and by "relying on its interpretation of Policy language already found ambiguous and
strictly construed against the insurer in Windridge which is controlling." (Filing No. 68 at 29). The

35

fact that Depositors' Policy limitations defense and interpretation of the Policy language were
unsuccessful does not make them unreasonable.
The HOA lastly argues that "Depositors has failed to pay the depreciation . . . in its October
2020 claim estimate upon the HOA's completion of entire roof replacement on all 11 subject
buildings in 2023." Id. However, the undisputed evidence shows that Depositors promptly paid the
amount of depreciation in the Appraisal Award upon completion of the HOA's roof repairs (Filing
No. 58-12; Filing No. 58-13). The HOA cites no Policy language or caselaw stating that Depositors
was required to pay the depreciation any sooner (Filing No. 68 at 29 (citing, without elaboration,
Windridge II, 932 F.3d at 1042 n.6, stating only that the insured could still recover replacement
costs despite waiting to repair roofs until coverage disputes were resolved)).
The HOA has not shown that Depositors made an unfounded refusal to pay policy proceeds,
caused an unfounded delay in payment, deceived the HOA, or unfairly pressured the HOA into
settling its claim. Nor has the HOA shown that Depositors acted with a "state of mind reflecting
dishonest purpose, moral obliquity, furtive design, or ill will." Magwerks, 829 N.E.2d at 977; see
Wilson v. Am. Fam. Mut. Ins. Co., 683 F. Supp. 2d 886, 889 (S.D. Ind. 2010) ("[S]ummary
judgment for the insurer has been affirmed when the insurer had a good faith legal argument for
disputing the claim, when the insurer misread a report and misconstrued case law without
conscious wrongdoing, and when the insured presented no evidence that the insurer had a culpable
mental state." (internal citations omitted)). Even when viewing the facts in the light most favorable
to the HOA, no reasonable jury could find, based on clear and convincing evidence, that Depositors
acted in bad faith. Depositors' Motion for Summary Judgment is therefore granted as to Count III.
IV.

CONCLUSION

For the reasons explained above, the Court DENIES the HOA's Motion for Partial
Summary Judgment (Filing No. 53), GRANTS in part and DENIES in part Depositors' Motion
36

for Summary Judgment (Filing No. 57), and DENIES Depositors' motion to strike. Depositors'
Motion for Summary Judgment is granted as to Count III (the bad faith claim), which is
dismissed. Summary Judgment is denied as to Count I (the claim to supplement or set aside the
appraisal award) and Count II (breach of contract), and these claims will proceed to trial or
settlement.
The parties are DIRECTED to contact the Magistrate Judge to discuss whether another
settlement conference might be helpful. This matter remains set for a final pretrial conference on
May 28, 2025, and a jury trial to begin on June 23, 2025.
SO ORDERED.
Date:

3/7/2025

Distribution:
Donald D. Levenhagen
Donald D. Levenhagen, Attorney
[e-mail]
Natalie M. Limber
Dentons US LLP
[e-mail]
Sulema Medrano Novak
Dentons US LLP
[e-mail]
Emily Steeb
Dentons US LLP
[e-mail]

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