When a Claimant Fails to Prove Value of Damaged Property Before the Incident in Question, Must Insurers Still Pay Out a Policy?

In Aziz v. Allstate Insurance Company, No. 16-3888 (8^th Cir. 2017), the United States Court of Appeals for the Eighth Circuit granted judgment as a matter of law to the defendant, Allstate.

A fire damaged Azim and Kina D. Aziz’s (“Aziz”) house. After the fire, the Azizes submitted a claim for damages to their real and personal property. They claimed they purchased everything in cash, and the fire destroyed all receipts. Allstate denied the claim.

Almost eight years later, Azim sued Allstate for breach of contract, vexatious refusal to pay, specific performance, unjust enrichment, and negligent misrepresentation. The Court dismissed all but the breach-of-contract and vexatious-refusal claims. At trial, Azim testified that he and his wife accumulated the damaged property over 10 to 15 years, and the values on their proof-of-loss list were estimates of original purchase prices. At the close of the Azizes’ evidence, the district court granted Allstate’s motion for judgment as a matter of law, finding they failed to present sufficient evidence to support their claims. The Azizes appeal.

The Azizes believe they presented sufficient evidence to support their breach-of-contract claim. Because they did not seek to repair or replace their property, Allstate was required to pay for “damage done on the property.” At trial, the Azizes presented no evidence of the real property’s value before the fire. Then the Azizes presented no evidence of its value after the fire. The policy stated that if the policy holder did not repair or replace the insured property, then the policy would pay out the cash value of that property. If the Azizes did not present any information regarding the value before the fire nor the value after the fire, then Allstate was not obligated to pay. The district court properly granted Allstate’s motion for judgment as a matter of law on the breach-of-contract claim.

In the second part of their appeal, the Azizes maintain they presented sufficient evidence to support their vexatious-refusal claim. The district court disagreed. Under Missouri law, vexatious refusal is derivative of a breach-of-contract claim. There can be no recovery for vexatious refusal where there is no judgment for the plaintiff on the insurance policy. Because there was no judgment for the plaintiff in the breach of contract claim, there cannot be the vexatious-refusal claim. The district court properly granted Allstate’s motion for judgment of a matter of law.

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