United States Court of Appeals for the Eighth Circuit
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1 No In the United States Court of Appeals for the Eighth Circuit WILLIAM CARROLL O NEAL AND DORIS O NEAL, Plaintiffs-Appellants, STATE FARM FIRE & CASUALTY COMPANY, Defendant-Appellee. Appeal from the United States District Court, Western District of Missouri, Western Division v. BRIEF OF APPELLEE MARK A. JOHNSON RODGER L. ECKELBERRY BAKER & HOSTETLER LLP 65 EAST STATE STREET, SUITE 2100 COLUMBUS, OHIO TELEPHONE: FACSIMILE: mjohnson@bakerlaw.com reckelberry@bakerlaw.com DALE L. BECKERMAN MIMI E. DOHERTY DEACY & DEACY, LLP 920 MAIN STREET, SUITE 1900 KANSAS CITY, MISSOURI TELEPHONE: FACSIMILE: dlb@deacylaw.com Attorneys for Appellee State Farm Fire and Casualty Company Oral Argument Requested Becker Gallagher Cincinnati, OH Washington, D.C
2 SUMMARY OF THE CASE AND REQUEST FOR ORAL ARGUMENT Appellants amended complaint was premised upon an erroneous interpretation of the International Residential Code ( IRC ). Appellants alleged that under their insurance policy, which requires payment for the increased cost of repairs caused by the enforcement of any ordinance or law, Appellee State Farm Fire and Casualty Company ( State Farm ) was required to pay to replace wood roof shakes in a manner that uses a minimum of four fasteners each, which would result in replacing all shakes on each roof slope. State Farm moved to dismiss on two grounds. First, the plain language of the IRC requires only two fasteners for each wood shingle or shake, not four. Second, the amended complaint failed to allege that Appellants incurred any increased costs caused by the enforcement of an ordinance or law a condition precedent to coverage. The District Court agreed with State Farm s legal interpretation of the IRC and granted State Farm s motion to dismiss, declining to address State Farm s second asserted basis for dismissal. State Farm agrees with Appellants that oral argument would be helpful to the Court, and that fifteen minutes each would be adequate. i
3 CORPORATE DISCLOSURE STATEMENT Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, Appellee State Farm Fire and Casualty Company submits the following corporate disclosure statement: State Farm Fire and Casualty Company is a wholly-owned subsidiary of State Farm Mutual Automobile Insurance Company. State Farm Mutual Automobile Insurance Company is a mutual company incorporated in Illinois with its principal place of business in Bloomington, Illinois. There are no publicly traded companies that have an ownership interest in State Farm Mutual Automobile Insurance Company. ii
4 TABLE OF CONTENTS SUMMARY OF THE CASE AND REQUEST FOR ORAL ARGUMENT... i CORPORATE DISCLOSURE STATEMENT... ii TABLE OF CONTENTS... iii TABLE OF AUTHORITIES... vi STATEMENT OF THE ISSUES PRESENTED FOR REVIEW... 1 I. Whether the District Court properly granted State Farm s motion to dismiss based upon its reading of the International Residential Code s express requirement of two fasteners per wood roof shake or shingle as requiring only a minimum of two fasteners per wood roof shake or shingle... 1 II. Whether the judgment of the District Court dismissing Appellants amended complaint may be affirmed on the alternative basis that the amended complaint failed to allege that Appellants suffered increased costs to repair caused by the enforcement of an ordinance or law, which is a condition precedent to coverage under the ordinance or law provision of Appellants insurance policy... 1 STATEMENT OF THE CASE... 3 STATEMENT OF FACTS... 6 A. Policy of Insurance... 6 B. Appellants Claims... 7 iii
5 C. Requirements of the International Residential Code... 9 D. The Judgment of the District Court SUMMARY OF THE ARGUMENT ARGUMENT A. Standard of Review B. The District Court Properly Analyzed The Requirements of the IRC as a Question of Law C. State Farm s Payment for Repair or Replacement of Individually Damaged Shakes or Shingles Complies with the Requirements of the IRC The Plain Language of the IRC Requires Only Two Fasteners per Shake or Shingle Appellants Interpretation of the IRC as Impliedly Requiring Four Fasteners per Shake or Shingle is Demonstrably Incorrect D. The Option-OL Coverage is Not Implicated by The Allegations in Appellants Amended Complaint because Appellants did Not Allege Loss Caused by the Enforcement of an Ordinance or Law Appellants Interpretation of the Coverage Provision Renders Words Surplusage, While State Farm s Interpretation Gives Meaning to Each Word iv
6 2. The Plain, Ordinary Meaning of the Word Enforcement Establishes that Action by a Building or Other Governmental Official is a Condition Precedent to Coverage Under the Option-OL Provision Requiring Enforcement Action as a Condition Precedent to Coverage Under the Option-OL Provision Serves a Practical Purpose CONCLUSION CERTIFICATE OF COMPLIANCE CERTIFICATE OF SERVICE AND VIRUS SCANNING ADDENDUM v
7 TABLE OF AUTHORITIES Apex Oil Co. v. Sparks, 406 F.3d 538 (8th Cir. 2005) Ashcroft v. Iqbal, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009)... 1, 13 Cedar Shake and Shingle Bureau v. City of Los Angeles, 997 F.2d 620 (9th Cir. 1993) City of Jefferson City v. Cingular Wireless, LLC, 531 F.3d 595 (8th Cir. 2008) Commonwealth Ins. Co. v. Benihana of Tokyo, Inc., No. 3:96-cv-826, 1997 U.S. Dist. LEXIS (N.D. Tex. June 19, 1997) Commonwealth Ins. Co. of Am. v. Grays Harbor Cty, 84 P.3d 304 (Wash. Ct. App. 2004)... 2, 35, 36 Davidson Hotel Co. v. St. Paul Fire and Marine Ins. Co., 136 F. Supp. 2d 901 (W.D. Tenn. 2001) DEB Assocs. v. Greater New York Mut. Ins. Co., 970 A.2d 1074 (N.J. Super. Ct. 2009) Deerbrook Pavillion, LLC v. Shalala, 235 F.3d 1100 (8th Cir. 2000) Dibben v. Shelter Ins. Co., 261 S.W.3d 553 (Mo. Ct. App. 2008)... 32, 34 Everett v. State Farm Gen. Ins. Co., 162 Cal.App. 4th 649 (2008) Farm Credit Midsouth, PCA v. Farm Fresh Catfish Co., 371 F.3d 450 (8th Cir. 2004) vi
8 Farmland Indus. v. Republic Ins. Co., 941 S.W.2d 505 (Mo. 1997)... 2, 33 Ferris, Baker Watts, Inc. v. Ernst & Young, LLP, 395 F.3d 851 (8th Cir. 2005) Florida RSA #8, LLC v. City of Chesterfield, 416 F. Supp. 2d 725 (E.D. Mo. 2006) Friends of Lake View Sch. Dist. Incorp. No. 25 of Phillips Cty. v. Beebe, 578 F.3d 753 (8th Cir. 2009) Highland Dev., Inc. v. Duchesne Cty., 505 F. Supp. 2d 1129 (D. Utah 2007) In re K-tel Int'l, Inc. Sec. Litig., 300 F.3d 881 (8th Cir. 2002) Int l Bros. of Elec. Workers, Local Union No. 52 v. City Power & Light Dept., 129 S.W.3d 384 (Mo. Ct. App. 2003) Kelly v. Camillo, No. CV S, 2006 Conn. Super. LEXIS 2776 (Conn. Super. Ct. Sept. 13, 2006) McAdams v. McCord, 584 F.3d 1111 (8th Cir. 2009) McCain v. York County Bd. of Bldg. Code Appeals, No , 1994 Va. App. LEXIS 141 (Va. Ct. App. Mar. 22, 1994) Onsite Adver. Servs., LLC v. City of Seattle, 134 F. Supp. 2d 1210, 1216 (W.D. Wash. 2001) vii
9 Owner-Operator Indep. Drivers Ass n v. United Van Lines, LLC, 556 F.3d 690 (8th Cir. 2009) Paracelsus Healthcare Corp. v. Philips Med. Sys., Nederland, B.V., 384 F.3d 492 (8th Cir. 2004)... 1, 14 Res. for Human Dev. v. Furber, 387 F. Supp. 11 (E.D. Pa. 1975) Richmond v. Higgins, 435 F.3d 825 (8th Cir. 2006) Rucci v. City of Pacific, 327 F.3d 651 (8th Cir. 2003) Space Tech Dev. Corp. v. Boeing Co., 209 Fed. Appx. 236 (4th Cir. 2006) State ex rel. Riverside Pipeline Co., L.P. v. PSC of Missouri, 215 S.W.3d 76 (Mo. 2007) Stauch v. City of Columbia Heights, 212 F.3d 425 (8th Cir. 2000) East 35 Owners Corp. v. Great American Ins. Co., No. 95-cv-2642, 1996 U.S. Dist. Lexis (S.D.N.Y. Aug. 5, 1996)... 34, 35, 36 Trinity Baptist Church v. Guideone Elite Ins. Co., No , 2009 U.S. Dist. LEXIS (W.D. Okla. Sept. 15, 2009) United States v. Maswai, 419 F.3d 822 (8th Cir. 2005) United States v. S.A., 129 F.3d 995 (8th Cir. 1997) viii
10 Webb v. Smart Document Solutions, LLC, 499 F.3d 1078 (9th Cir. 2007) Statutes International Residential Code R , 18, 38 R104.1 Commentary... 2 R , 39 R , 39 R , 3, 9, 19, 23, 27, 39 R Commentary... 20, 27 R R , 9, 19 R907.1, Commentary Figure R Figure R (1)... 10, 22, 23, 24 R.S. Mo Rules 8th Cir. R. 28A(g) Fed. Civ. P. 12(b)(6)... 3, 13, 15 Other Authorities Black s Law Dictionary (7th Ed. 1999)... 33, ix
11 STATEMENT OF THE ISSUES PRESENTED FOR REVIEW I. Whether the District Court properly granted State Farm s motion to dismiss based upon its reading of the International Residential Code s express requirement of two fasteners per wood roof shake or shingle as requiring only a minimum of two fasteners per wood roof shake or shingle. Most apposite cases and statutory provisions: 1. International Residential Code, R , R (R , ). 2. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950, 173 L. Ed. 2d 868 (2009) (In ruling upon a motion to dismiss, the court accepts as true all factual allegations, but is not bound to accept as true a legal conclusion couched as a factual allegation. ). 3. Paracelsus Healthcare Corp. v. Philips Med. Sys., Nederland, B.V., 384 F.3d 492, 495 (8th Cir. 2004) (interpretation of statute is question of law). II. Whether the judgment of the District Court dismissing Appellants amended complaint may be affirmed on the alternative basis that the amended complaint failed to allege that Appellants 1
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