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STATE OF MINNESOTA IN COURT OF APPEALS A09-929 QBE Insurance Corporation, Appellant, vs. Twin Homes of French Ridge Homeowners Association, Respondent. Filed February 23, 2010 Affirmed Klaphake, Judge Hennepin County District Court File No. 27-CV-07-24727 Douglas R. Archibald, Megan D. Hafner, Jessica C. Kunz, Terhaar, Archibald, Pfefferle & Griebel, LLP, Minneapolis, Minnesota (for appellant) Ryan P. Myers, Christopher P. Parrington, Skjold Minnesota (for respondent) Barthel, P.A., Minneapolis,

Considered and decided by Bjorkman, Presiding Judge; Klaphake, Judge; and Halbrooks, Judge. SYLLABUS 1. An insurance appraisal panel does not exceed its authority by applying an

insurance policy`s replacement loss formula to measure the value of roof hail damage by determining the amount actually and necessarily expended to repair or replace the roofing shingles. 2. A district court does not abuse its discretion in denying a motion for a

continuance to conduct additional discovery when the issue before the court concerns

interpretation of an insurance contract and the moving party does not identify possible additional facts that would be material to the issue to be decided by the district court. OPINION KLAPHAKE, Judge Appellant QBE Insurance Corporation challenges the district court`s grant of summary judgment in its declaratory judgment action regarding hail loss damages suffered by respondent Twin Homes of French Ridge Homeowners Association. Appellant claims that the district court erroneously concluded that an insurance appraisal panel did not exceed its authority by determining the value of loss to respondent by applying a replacement loss formula provided for in the parties` insurance contract. We agree with the district court and affirm. We also conclude that the district court did not abuse its discretion by denying appellant`s motion for a continuance to conduct additional discovery. FACTS In May 2007, a hail storm damaged the roofs of respondent`s 16-building group of townhomes located in Plymouth. Appellant is respondent`s insurer, and respondent

sought coverage under the policy to repair the damage following the storm. Consistent with the policy coverage provisions, when the parties could not agree on the amount of loss, respondent made a demand for appraisal of the loss, and each party selected its own appraiser. Appellant chose Brad Langerman and respondent chose Jason Biddle. Also in accordance with the policy coverage terms, when the two appraisers could not agree on the amount of loss, the parties agreed to select Galen Luedtke as an 2

umpire in the appraisal process, and [a]n agreement by any two [appraisers] was to be binding as to the amount of the loss. The three appraisers visited the subject property on October 1, 2007. They

examined six to eight of the townhome roofs and found 8-12 hail hits per roof, per building. The panel issued an appraisal award that provides $264,154 as loss

replacement cost on the 16 buildings and states under clarifications if any that the loss is for total roof replacement. Appellant disagreed with the appraisal award and initiated a declaratory judgment action in district court to vacate the appraisal award or to correct the award to permit only direct physical loss damage. Appellant claimed that the insurance policy did not provide coverage for the damages claimed by respondent and that the appraisal panel exceeded its authority by awarding total roof replacement based on wear and tear and the unavailability of the roofing shingles that were used on the original roof. Under the coverage provisions of the contract, appellant agreed to pay for direct physical loss of or damage to covered property caused by or resulting from any COVERED CAUSE OF LOSS . . . . Coverage is also provided for covered property which is not damaged but which must be removed and replaced in order to repair covered property which is damaged by a COVERED CAUSE OF LOSS[.] The coverage for the subject buildings included valuation of guaranteed replacement cost. Guaranteed replacement cost is subject to the valuation limitations of

replacement cost, which states:

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[W]e will pay no more than the least of the following: a. The cost to repair or replace the property at the same site, regardless if repaired or replaced at the same site or another, without deduction for depreciation: (1) With comparable material; (2) With property of the same height, floor area and style; and (3) With property intended for the same purpose; b. The amount actually and necessarily expended in repairing or replacing the property at the same site; or, c. The limit of insurance. The parties proceeded with discovery, and Brad Langerman and Galen Luedtke filed affidavits. Luedtke also was deposed on February 5, 2008. Langerman stated that he did not agree with the appraisal panel award because there were a few shingles damaged on each roof and [the other two panel members] believed that the identical shingles were not available for repair and thus they believed that the law required them to award total roof replacement.` He also stated that the other appraisers made no effort to determine the availability of replacement shingles similar in function, color, and shape. Luedtke`s affidavit explained that a standard roof inspection for hail damage involves taking a representational sample and mak[ing] statistical conclusions about the amount of hail damage incurred and replacement cost based upon those inspections, when a discontinued shingle[] is involved. He also stated that the appraisal process applied was customary and had been used in other inspections involving QBE, without objection. He further stated that based on his 43 years in the roofing industry he knew that the shingles at Twin Homes were no longer manufactured (they were Certainteed4

manufactured shingles, known as Hearthstead shingles)[.] Finally, he stated that [a]t no time did Mr. Langerman disagree with the rest of the Appraisal Panel that the shingles at Twin Homes were no longer available for purchase, and he pointed out that Langerman had made no objections to them about the inspection or about the appraisal process used by the panel. In his deposition, Luedtke explained his reasoning in concluding that a total roof replacement was necessary, as follows: This--these buildings could have potentially--it`s always-- and it`s not just in these buildings. It`s always a possibility to replace some of the shingles if the severity of the-

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