[00:00:00] Speaker 00:
Good morning and may it please the court Jesse kinetic for Susan Dow I will watch the clock with the goal of reserving four minutes

[00:00:08] Speaker 00:
Your honors, via this appeal, Susan Dow asked this court to do three things.

[00:00:14] Speaker 00:
First, conclude that an insured is entitled to the full actual cash value of their loss as calculated by Safeco, except for the disputed general contractor over at a profit.

[00:00:24] Speaker 00:
Two, reverse and vacate the district court's order granting summary judgment to Safeco.

[00:00:30] Speaker 00:
And three, reinstate the class claims and put Dow in the class where they were

[00:00:34] Speaker 00:
before the court granted summary judgment.

[00:00:37] Speaker 00:
Dow is not asking the court to conclude that Safeco is wrong when it excludes GCOP from roof-laden line items.

[00:00:45] Speaker 00:
That is a question for another day.

[00:00:47] Speaker 02:
Council, didn't Dow compensate your client for the GCOP in the bill that it paid?

[00:01:00] Speaker 00:
No, your honor.

[00:01:01] Speaker 00:
It did not.

[00:01:02] Speaker 02:
Did that set forth the GCOP for the repair company?

[00:01:09] Speaker 00:
I think it's important, there was an invoice issued.

[00:01:12] Speaker 00:
It's not clear from Safeco's expert report, which has a very comprehensive timeline of the record at SCR 97 through 99, that that had anything to do with Safeco's decisions about how it adjusted the case.

[00:01:25] Speaker 02:
The important thing- Is it your client's position that you're entitled both to the replacement, the actual necessary replacement costs, and to the estimated cost?

[00:01:37] Speaker 00:
My client's position is that the roof

[00:01:39] Speaker 00:
related GCOP is a component of the replacement value, but it must be paid at the actual cash value stage.

[00:01:46] Speaker 00:
And that is actually how Safeco handles every claim, and that's how Safeco handles Dow's claim.

[00:01:51] Speaker 00:
And I think we need to clarify something here.

[00:01:52] Speaker 00:
Reading Safeco's brief, one could be left with the impression that Dow never made

[00:01:57] Speaker 00:
an ACV claim and Safeco never issued an ACV payment.

[00:02:00] Speaker 00:
That is false.

[00:02:02] Speaker 00:
Safeco issued at least four ACV payments to Susan Dow, including an ACV payment that was based on the September 2019 estimate that Safeco now claims is irrelevant.

[00:02:16] Speaker 00:
And the way that came about is Safeco went out in late August 2019, they sent two adjusters out to try and reconcile the parties

[00:02:26] Speaker 00:
differing version of the scope of the loss.

[00:02:28] Speaker 00:
And those adjusters at first included $22,000 for the replacement value of Dow's roof, but then they realized they had made a mistake.

[00:02:37] Speaker 00:
They had under-calculated the size of Susan Dow's roof.

[00:02:40] Speaker 00:
So they increased the replacement cost estimate.

[00:02:44] Speaker 04:
But didn't that estimate account take into account or estimate based on work that was not actually performed?

[00:02:52] Speaker 00:
That's correct, Your Honor.

[00:02:54] Speaker 04:
How can the ACV ever exceed the actual cost of repair?

[00:02:59] Speaker 04:
The repairs have been completed.

[00:03:00] Speaker 04:
How can you get more money above what was done to complete the repairs?

[00:03:05] Speaker 00:
Because the policy does not subsequently reduce an insurance entitlement to the full actual cash value just because they make repairs that cost less than Safeco estimates.

[00:03:18] Speaker 04:
What do you make of this provision where it says actual cash value at the time of loss but not exceeding the amount necessary to repair or replace?

[00:03:28] Speaker 00:
That's not what the actual cash value settlement provision says, Your Honor.

[00:03:31] Speaker 00:
That's underneath the replacement cost value provision, which is totally separate.

[00:03:36] Speaker 00:
And the language you just quoted is a subheading of the replacement cost value stage.

[00:03:41] Speaker 00:
The actual cash value stage says you may disregard the replacement cost coverage, and there's no provision in there that allows Safeco to go back and reduce the amount an insured is owed at the actual cash value stage.

[00:03:54] Speaker 00:
Safeco wanted to write a policy that did that, I suppose it's possible, but that is not what the policy says here.

[00:04:00] Speaker 00:
It's also inconsistent with how Safeco handles all claims, including this claim.

[00:04:05] Speaker 00:
They issued, in September 2019, an additional actual cash value payment to Susan Dow when they realized that they had under-calculated the size of her roof by many hundred square feet.

[00:04:17] Speaker 00:
They don't say how much, but they say several squares, and a square is 100 square feet,

[00:04:23] Speaker 00:
and this is all on SER 9799.

[00:04:26] Speaker 00:
Safeco put this in the record on appeal and it shows that Safeco's argument that Dow didn't make an ACB claim is completely at odds with Safeco's own expert report.

[00:04:37] Speaker 00:
Moreover, besides the plain language of the policy, it has to be strictly construed against Safeco and any doubt about coverage must be resolved in favor of extending coverage.

[00:04:47] Speaker 00:
The idea that an insured like Susan Dow subsequently completes repairs for

[00:04:52] Speaker 00:
less than actual cash value payment doesn't affect her entitlement to the full actual cash value of her loss.

[00:04:59] Speaker 02:
Contend she's entitled to both the replacement cost, the actual necessary cost to replace the roof, and the ACV payment.

[00:05:10] Speaker 00:
Yes, Your Honor.

[00:05:11] Speaker 00:
Our position is that an insured is always entitled to the full actual cash value of their loss, regardless of how much it costs to complete repairs.

[00:05:19] Speaker 02:
They're entitled to a- This is slightly different.

[00:05:21] Speaker 02:
Then you want to answer my question, no.

[00:05:24] Speaker 02:
So she's not entitled to both.

[00:05:27] Speaker 00:
She absolutely can be entitled to both.

[00:05:29] Speaker 02:
How is that?

[00:05:31] Speaker 00:
Because the actual cash value is an estimate.

[00:05:35] Speaker 00:
So a very good example of this is the Hicks case from the 60s.

[00:05:38] Speaker 02:
So I mean both on top of each other, the estimate plus the replacement.

[00:05:42] Speaker 02:
She's not entitled to the ACB plus the cost of replacing the roof.

[00:05:48] Speaker 00:
She's an insured, Safeco automatically makes ACV payments for what it estimates the repairs will cost, deducting only depreciation, which is a difference in value from a 10-year-old roof to a new roof, right?

[00:06:04] Speaker 02:
Safeco can't- But she doesn't have to use that money to repair.

[00:06:07] Speaker 02:
No.

[00:06:07] Speaker 02:
But if she does, what is she entitled to?

[00:06:11] Speaker 00:
She's entitled to the full actual cash value, regardless of whether she makes a claim under the RCV claim later.

[00:06:17] Speaker 00:
And so her RCV claim in this case was actually including overhead on profit.

[00:06:21] Speaker 00:
What she actually was billed by her contractor at the early stages was Safeco concedes in its expert report again that its own estimate of the ACV of her roof exceeded what she was paid.

[00:06:34] Speaker 02:
Well, but it was incorrect at first, but then they did pay the full amount.

[00:06:38] Speaker 02:
In fact, didn't your client get more than the replacement value?

[00:06:43] Speaker 00:
She got more than she incurred to make the repairs, yes.

[00:06:47] Speaker 00:
But that's a common theme running through all of the GCOP cases that have, for the last 20 years, that regardless of what happens later, an insured is entitled to have the insurer correctly calculate the actual cash value of their loss

[00:07:02] Speaker 00:
Actual actual replacement cost value of their loss and then make an ACV payment based on that amount.

[00:07:08] Speaker 00:
GCP is a component of the replacement cost value but Safeco pays it at the actual cash value stage when they make an initial determination that the repairs are complex enough.

[00:07:21] Speaker 00:
to reasonably likely require the services of a general contractor.

[00:07:25] Speaker 00:
That's how they explain it to their insureds.

[00:07:27] Speaker 04:
Is the September determination an initial determination after the repairs have been completed?

[00:07:35] Speaker 00:
The timeline shows that right after, the day after Dow reported the loss in October of 2018, Safeco sent an adjuster out.

[00:07:44] Speaker 00:
The next day after the adjuster was there, he calculated the replacement cost value, and the very next day, without Dow asking for it, Safeco issued an actual cash value payment.

[00:07:55] Speaker 00:
At that time, it was only $14,000, so Safeco clearly

[00:08:00] Speaker 00:
miscalculated the overall value of the claim.

[00:08:04] Speaker 00:
And over the next 10 months, Safeco issued at least four ACV payments.

[00:08:10] Speaker 00:
And they would do it automatically when they readjusted the loss and came up with a new replacement cost value, they would send out a check for the actual cash value.

[00:08:20] Speaker 00:
And so all of the GCOP cases that we cite in our brief and all of the

[00:08:26] Speaker 00:
the same rule that ensures entitlement to the full actual cash value of their loss cannot be reduced by subsequent events regardless of they spend more than less than.

[00:08:40] Speaker 04:
But ultimately you're you're seems like you're trying to get.

[00:08:43] Speaker 04:
a percentage based on an estimate that is bogus.

[00:08:48] Speaker 04:
It's not an estimate if the work has already been done and then they come up with a number that's based on assumptions that don't reflect the work that's done.

[00:08:56] Speaker 04:
I just don't understand how that can happen.

[00:08:58] Speaker 00:
Well, the estimate that Safeco says is irrelevant is an estimate that they came up with later to actually reflect what they believed.

[00:09:04] Speaker 04:
I mean, it's crazy that they make an estimate on work that's already been done.

[00:09:08] Speaker 00:
I think, Your Honor, the issue here is that if Safeco can convince the court that an insured's entitlement to ACV goes away if they make a replacement cost value claim, if they recover any depreciation, now all of a sudden Safeco

[00:09:23] Speaker 00:
doesn't have an obligation to correctly calculate the value of their loss.

[00:09:27] Speaker 00:
I mean, all of these cases and the way Safeco handles it show that insurers get the full ACV of their loss no matter what.

[00:09:34] Speaker 04:
But it's your position that the policy does not anywhere cap the ACV at the actual cost.

[00:09:39] Speaker 00:
Correct your honor if you look at the structure of the policy in our reply brief we have you know a picture of it in context because I don't think safe go describes it in the proper context the the part about the amount actually necessarily incurred is a subheading to the replacement cost value definition.

[00:09:56] Speaker 00:
The ACV step, again, says an insurer can disregard it.

[00:10:00] Speaker 00:
It doesn't say there's no temporal limitation on it.

[00:10:03] Speaker 00:
It doesn't say unless you go and spend less in the future.

[00:10:07] Speaker 00:
Again, Safeco theoretically could write a policy that says that, but they didn't.

[00:10:13] Speaker 00:
I would like to talk about the Hicks case from the Sixth Circuit for just one moment, if I may.

[00:10:18] Speaker 00:
It's a very recent case, and it was a class action that involved labor depreciation.

[00:10:23] Speaker 00:
It's very much on point with this case because there were two plaintiffs and the insurer calculated the replacement cost value.

[00:10:32] Speaker 02:
I'm sorry, what is the name of that case again?

[00:10:34] Speaker 00:
Hicks.

[00:10:36] Speaker 00:
And there were two class members.

[00:10:38] Speaker 00:
One made a replacement cost value claim.

[00:10:40] Speaker 00:
Her repairs cost less, like less than half of what she was paid for the actual cash value of that component of her claim.

[00:10:49] Speaker 00:
She sued the insurer saying, you miscalculated my ACV because of the way you handled depreciation.

[00:10:56] Speaker 00:
The insurer made the same argument that Safeco's making here in the Sixth Circuit, said no, it doesn't matter.

[00:11:02] Speaker 00:
There's nothing in the policy that allows Safeco to reduce the insured's entitlement to the actual cash value.

[00:11:10] Speaker 00:
It doesn't matter if they make a replacement cost claim or not.

[00:11:14] Speaker 02:
OK, but in Hicks, I guess Williams did not rebuild his home.

[00:11:21] Speaker 00:
Williams did not, but the other plaintiff did.

[00:11:22] Speaker 00:
The other plaintiff, it was about screens.

[00:11:24] Speaker 00:
She was paid $700-something to repair some screens.

[00:11:28] Speaker 00:
And she repaired them for $300, recovered the withheld depreciation, and sued Safeco saying you should not have withheld labor depreciation.

[00:11:37] Speaker 00:
And the court said it doesn't matter.

[00:11:40] Speaker 00:
that she spent less later.

[00:11:42] Speaker 00:
This is the common thread running through all the GCOP cases, and it's the same arguments that the insureds always make.

[00:11:48] Speaker 00:
And they say, well, we can't treat it as a class because we may have miscalculated or something.

[00:11:53] Speaker 00:
And every court that has considered this has said, no, that's not true.

[00:11:57] Speaker 00:
And Higgins, or I'm sorry, Riggins and Goman, they're district court cases, I understand, from different circuits, but they're interpreting policy language that cannot be

[00:12:08] Speaker 00:
differentiated from the policy language here, and they reached the same conclusion that what an insurer does after they receive their ACV payment cannot reduce their opportunity to go back and challenge the insurer's calculation of their loss.

[00:12:22] Speaker 00:
And unless the court has any questions, I'd like to reserve my time.

[00:12:26] Speaker 02:
All right.

[00:12:26] Speaker 02:
Thank you, counsel.

[00:12:44] Speaker 01:
Good morning, Your Honors.

[00:12:45] Speaker 01:
May it please the court, Mark Fuller for Appellee Safecoe.

[00:12:48] Speaker 01:
The district court correctly entered summary judgment on Dow's individual claims for breach of contract and violation of the Montana UTPA.

[00:12:56] Speaker 01:
Those claims seek payment of GCOP relating to the repair of Dow's roof, but Dow has already been paid the 20% GCOP that she actually incurred in connection with that roof repair.

[00:13:08] Speaker 01:
is undisputed that the repairs to Dow's roof were completed before May 1st.

[00:13:13] Speaker 04:
If that's undisputed, why is Safeco issuing estimates in September

[00:13:21] Speaker 04:
for work that's already been done, and the estimate has assumptions that don't match what actually was done, and that have numbers that are phantom.

[00:13:31] Speaker 04:
You've created this whole problem by doing that.

[00:13:33] Speaker 04:
Why was that number generated?

[00:13:36] Speaker 04:
What does the record say about why that happened?

[00:13:40] Speaker 01:
We don't have record evidence as to why that number was generated.

[00:13:43] Speaker 01:
I would note that as to the roof, the number, which is $28,000, $628,000,

[00:13:50] Speaker 01:
623 is exact same that Safeco actually paid for the roof.

[00:13:55] Speaker 01:
And I think some of the explanation here is that today in this case, we are laser focused on just the roof repair.

[00:14:03] Speaker 01:
But this was a very complex repair project.

[00:14:06] Speaker 04:
Doesn't it have assumption about like numbers of tiles used that don't match what actually happened in that estimate?

[00:14:12] Speaker 01:
That's correct.

[00:14:13] Speaker 01:
There is a discrepancy between the number of tiles that appear in the September 2019 estimate and the number of tiles that appeared earlier.

[00:14:21] Speaker 01:
The key undisputed fact, though, is that by May 1st, 2019, the roof was totally repaired.

[00:14:29] Speaker 01:
There weren't additional tiles that still needed to be repaired.

[00:14:32] Speaker 01:
And everybody agrees to that.

[00:14:34] Speaker 01:
Dow in her deposition says, yes, there was no further work to be done.

[00:14:38] Speaker 01:
Her general contractor, John Hooley, says, yes, there was no further work to be done.

[00:14:43] Speaker 01:
The roof was completely repaired by May 1st, 2019.

[00:14:47] Speaker 01:
And that May 1st, 2019 invoice includes all of the costs.

[00:14:53] Speaker 04:
So what's the clearest policy language that, in your view, establishes that the ACV is capped at the actual cost?

[00:15:04] Speaker 01:
The ACV isn't always capped at the actual cost, but for Dow it is, and this is why.

[00:15:09] Speaker 01:
She initially receives an ACV payment.

[00:15:11] Speaker 01:
She agrees that she received an ACV payment prior to starting the roof repair.

[00:15:18] Speaker 01:
She then proceeds to the repair, and the actual repair cost exceeds the original ACV payment.

[00:15:27] Speaker 01:
So then she reaches out to Safeco.

[00:15:29] Speaker 01:
She takes the May 1st, 2019 invoice that she received from her general contractor, which was the full bill for the full repair, sends it to Safeco and testifies in deposition that that was a request that Safeco pay that.

[00:15:43] Speaker 01:
And so when she does that, what she's doing is she's asking for Safeco to pay the additional liability that she incurred in connection with the actual repairs.

[00:15:52] Speaker 01:
So that moves you from Section 5A5 of the policy, which is the reference that they made earlier on as to the actual cash value.

[00:16:01] Speaker 01:
And she goes from Step 1, which is an ACV step, to Step 2, which is the RCV stage.

[00:16:07] Speaker 02:
What policy language tells us that we move from Step 1 to Step 2?

[00:16:13] Speaker 01:
It's Section 5A5.

[00:16:15] Speaker 01:
It allows the insured to

[00:16:18] Speaker 01:
take the ACV payment and if the actual repair cost exceed... 5A what?

[00:16:25] Speaker 02:
5A5.

[00:16:28] Speaker 02:
5, okay.

[00:16:33] Speaker 01:
And so if the actual repair cost exceed that, then you can make a claim for what that section refers to as additional liability.

[00:16:41] Speaker 01:
And so Dow was asking deposition, was this a claim whenever you submitted the May 1st

[00:16:47] Speaker 01:
2019 invoice to Safeco, is this a claim for additional liability that you wanted Safeco to cover?

[00:16:53] Speaker 01:
And she said yes.

[00:16:55] Speaker 01:
And so when she does that, then she's no longer an ACV claimant, she's an RCV claimant.

[00:17:01] Speaker 01:
And as a result, she goes from 5A5 to 5A1.

[00:17:06] Speaker 01:
Those are the RCV-related provisions, and those include the cap on Safeco's liability, which is at 5A1C,

[00:17:15] Speaker 01:
which is Safeco is not obligated to pay anything beyond what Dow actually and necessarily incurred.

[00:17:22] Speaker 01:
And again, the record is undisputed, both through Dow's testimony and deposition and her general contractor's testimony and deposition, that when Safeco paid enough to cover that May 1st, 2019 invoice,

[00:17:36] Speaker 01:
it was paying more than, but at least as much as the actual, actually incurred cost.

[00:17:42] Speaker 01:
And so as a result, there's no more for Safeco to pay.

[00:17:46] Speaker 03:
So it sounds like Safeco created its own problem by what it did in September of 2019.

[00:17:51] Speaker 01:
Well, again, I think today as we are looking laser-like at this roof repair, we're losing track of the fact that this was a complex repair, there were other aspects of the repair, and there's just this single template.

[00:18:04] Speaker 01:
as the repair is ongoing, and the roof is finished several months before some of the other repairs even start.

[00:18:11] Speaker 03:
How do you distinguish the Hicks case that your opposing counsel relies on?

[00:18:16] Speaker 01:
Sure.

[00:18:16] Speaker 01:
Well, so Hicks is a Sixth Circuit decision.

[00:18:20] Speaker 01:
It's a split panel.

[00:18:22] Speaker 01:
And as to its key holding, the one that they rely on, that holding is contrary to what this court decided in the Lara case.

[00:18:32] Speaker 01:
And so let me explain.

[00:18:33] Speaker 01:
So in HICS, an insured gets an ACB payment that they claim is insufficient, but can go on and then recover at the RCB stage the amount that was withheld.

[00:18:48] Speaker 01:
Hicks views that as an issue of individualized damages and says that's not going to defeat the claim entirely and it's not going to create a predominance issue because it's just a matter of each individual class member might have a little bit different damages.

[00:19:04] Speaker 01:
That was partly because the plaintiff in Hicks made a slightly different claim in terms of what the actual damages were.

[00:19:12] Speaker 01:
Lara, though, is entirely different.

[00:19:15] Speaker 01:
Lara involves an auto insurance claim, but it also involves a challenge to the insurer's determination of actual cash value.

[00:19:25] Speaker 01:
And the theory in Lara was similar to the theory here, that at the ACV stage, you're underpaying me.

[00:19:32] Speaker 01:
But as the court recognized in Lara, this was a multi-step process.

[00:19:37] Speaker 01:
And as negotiations continued, or possibly the insured invoked the appraisal process, they could at some later stage get back the amount that they believed was illegally withheld from them.

[00:19:50] Speaker 01:
And so the Lara Court holds that that's not just an individualized damages issue, it's a no damages issue.

[00:19:56] Speaker 01:
And when you're talking about a breach of contract claim, that means you don't have a contract claim.

[00:20:02] Speaker 01:
If you can't show any damages, you don't have a contract claim.

[00:20:05] Speaker 01:
And if you can't show any injury,

[00:20:07] Speaker 01:
You don't have any claim under, in that case it was the Washington CPA, here it's the Montana UTPA, but both statutes require a showing of injury.

[00:20:16] Speaker 01:
It's notable that Dow in her reply brief and this morning doesn't reference Lara at all, relying entirely on Hicks and then in their brief, another case called Stewart.

[00:20:30] Speaker 01:
And I would just note that if you go back to the briefing in the Lara case,

[00:20:34] Speaker 01:
the plaintiff in that case also cited Hicks and Stewart, made the exact same argument, and said that for those reasons, this is not an issue that defeats the claim entirely or defeats class certification.

[00:20:46] Speaker 01:
If you look at page 32 of the plaintiff's opening brief, in Lara, they cite Hicks and Stewart, and at page 37 of their reply brief, they cite Hicks and Stewart, but that argument lost in Lara, and it should lose here for the exact same reasons.

[00:21:05] Speaker 03:
It does strike me as a little strange in a case where Dow got paid by Safeco the full amount to repair her roof that she's now claiming she didn't get paid enough.

[00:21:18] Speaker 03:
Would it increase the general contractor overhead and profit if she were able to recover here?

[00:21:24] Speaker 03:
I mean, would it add it to what she already recovered in the first part?

[00:21:30] Speaker 03:
When the second payment was made, it fully covered her roof loss?

[00:21:38] Speaker 01:
Yes, Your Honor.

[00:21:39] Speaker 01:
The general contractor would get a double dip of GCOP.

[00:21:42] Speaker 01:
So basically, the general contractor charged 20% GCOP at the May 1st, 2019 stage after the roof repair was entirely complete.

[00:21:51] Speaker 01:
And then four months later, without doing any additional work, Dow receives this estimate

[00:21:57] Speaker 01:
hands it over to her general contractor.

[00:21:59] Speaker 01:
The general contractor opportunistically makes another claim for G-COP and says, well, if this is the number, then I want another 20%.

[00:22:08] Speaker 01:
So yes, the general contractor is asking for more G-COP despite the fact that he did no additional work after May 1st, 2019.

[00:22:15] Speaker 03:
And I gather there's no evidence in the record that the general contractor actually sued Dow for that additional amount, is there?

[00:22:22] Speaker 01:
Well, the general contractor was asked in deposition

[00:22:25] Speaker 01:
Did you ever send a demand letter for this?

[00:22:28] Speaker 01:
And he said no.

[00:22:29] Speaker 01:
He was unwilling to commit to ever attempting to recover that from Dow.

[00:22:33] Speaker 01:
And so that's another reason why she has not actually incurred this amount and therefore isn't entitled to payment.

[00:22:46] Speaker 01:
Your honors, if there are no further questions on the summary judgment, then I'll move on to class certification.

[00:22:52] Speaker 01:
Lara, the case I just mentioned, is a class certification case.

[00:22:55] Speaker 01:
It was a review of the denial of a motion for class certification.

[00:23:00] Speaker 01:
And again, the same issues that this court identified in Lara, which came out in 2022, which was after the district court certified the class in this case.

[00:23:11] Speaker 01:
So the district court did not have the benefit of this court's guidance in Lara.

[00:23:15] Speaker 01:
But those same basic problems are present here.

[00:23:19] Speaker 01:
As to the fact that this is a multi-step process where you have plaintiffs who might have some, the district court considered it a technical theory of breach at the ACB stage, it's undisputed that this is a multi-step process and many of those insureds like Dow herself are going to recover

[00:23:38] Speaker 01:
that allegedly illegally withheld amount.

[00:23:41] Speaker 01:
And so as a result, have no injury, have no damages, and can't be in the class.

[00:23:46] Speaker 04:
And we would only need to reach the class certification issue if we reverse the summary judgment, is that correct?

[00:23:52] Speaker 01:
That's correct, Your Honor.

[00:23:52] Speaker 01:
So the district court, what she did was grant individual summary judgment against Dow, and then told Dow's counsel, you have 60 days to find a new plaintiff.

[00:24:04] Speaker 01:
She has no claim, so she can't be the plaintiff anymore.

[00:24:08] Speaker 01:
They were diligent.

[00:24:09] Speaker 01:
They looked for a new plaintiff.

[00:24:11] Speaker 01:
And they reported back to the district court that despite their best efforts, they were unable to find anyone who did not proceed to the RCV stage and was not fully compensated at that stage and was willing to be a class plaintiff.

[00:24:26] Speaker 01:
So at that point, the district court decertified the previously certified class.

[00:24:31] Speaker 04:
Why did they have to be someone who did not proceed to the RCV stage?

[00:24:37] Speaker 01:
Well, I mean, I think

[00:24:38] Speaker 01:
a kind of more technical description would be did not proceed to the RCV stage and recoup the additional cost.

[00:24:45] Speaker 01:
So an insurer that gets an ACV payment and then either doesn't have it, doesn't have the repairs done or has the repairs done for less than the ACV payment, they get to keep the difference.

[00:24:56] Speaker 01:
But here where you've got an insured like Dow who gets an ACV payment and then has the repairs done, but it costs more and claims those additional costs,

[00:25:06] Speaker 01:
then there's no damages, there's no injury, and so there's no viable claim.

[00:25:10] Speaker 01:
And so that's why you need a plaintiff who did not proceed to RCB and collect that additional liability that takes them into Section 5A1C of the policy.

[00:25:21] Speaker 02:
So I'm going to assume, because this was a storm that caused all this damage, that there were other people whose homes were damaged in the storm.

[00:25:35] Speaker 02:
I'm wondering if there's anything in the record about how many of those individuals were actually covered by Safeco.

[00:25:45] Speaker 01:
There's nothing in the record to answer your honor's question.

[00:25:48] Speaker 01:
But yes, this was a storm.

[00:25:50] Speaker 01:
Originally, the estimate was for about $17,000 to repair the roof.

[00:25:55] Speaker 01:
Dow, working with her general contractor almost a year later, ends up with an insurance recovery of more than $100,000.

[00:26:01] Speaker 01:
She got a new roof, she got new windows, she got all new siding, new gutters, new downspouts.

[00:26:08] Speaker 01:
She got much more than what she was originally estimated to have incurred at the ACB stage.

[00:26:14] Speaker 02:
I hope that's in the record.

[00:26:16] Speaker 01:
That is in the record.

[00:26:18] Speaker 01:
Okay.

[00:26:18] Speaker 01:
That is in the record.

[00:26:20] Speaker 01:
And then the second issue in LARA that also applies here is that at the end of the day, even if you ignore the fact that a lot of these insurers aren't going to have any damages or any injury as a result of having proceeded to RCB and collected the additional liability, the fundamental issue is whether or not at the ACV stage they're owed more money.

[00:26:44] Speaker 01:
And in Lara, there was a theory as to why the insurer was incorrectly calculating the ACV amount.

[00:26:51] Speaker 01:
And the court said, well, even if they're incorrectly calculating it on that measure, there are still other parts to the calculation which could end up making the overall ACV payment just right or too much.

[00:27:05] Speaker 01:
And so that analysis is going to be an individualized analysis.

[00:27:09] Speaker 01:
You're gonna have to look at, in that case, the car and the car's value.

[00:27:14] Speaker 01:
Here you have a similarly individualized analysis.

[00:27:17] Speaker 01:
Even under the plaintiff's theory, GCOP is only owed where it's reasonably likely that the repair project is going to require the services of a general contractor.

[00:27:28] Speaker 01:
And that determination, according to the expert evidence that was submitted at the classification stage,

[00:27:33] Speaker 01:
is that the determination is inherently fact-specific.

[00:27:37] Speaker 01:
You have to look at the complexity of the repair.

[00:27:40] Speaker 01:
You have to look at the timing of the repair in order to determine whether or not you need a general contractor and therefore whether or not G-COP must be paid.

[00:27:50] Speaker 01:
I see my time is up.

[00:27:51] Speaker 01:
If the court doesn't have any other questions, we would respectfully request that the court affirm the district court's order in all respects.

[00:27:59] Speaker 02:
Thank you, counsel.

[00:28:01] Speaker 02:
Mr. Khodadak.

[00:28:12] Speaker 00:
Thank you.

[00:28:13] Speaker 00:
This case is nothing like Laura.

[00:28:15] Speaker 00:
In Laura, the insureds challenged the way the insured reached their ACV estimate and said, we don't think you valued our car correctly.

[00:28:24] Speaker 00:
This case does not require any individualized determination as to class membership or as to liability.

[00:28:30] Speaker 00:
In fact, the

[00:28:32] Speaker 00:
The inquiry that Safeco just mentioned about whether an insured is entitled to GCOP, the class only includes insureds where Safeco already made that determination, where it made that determination and where it paid

[00:28:46] Speaker 00:
GCOP except for roof-related line items.

[00:28:49] Speaker 00:
This case is challenging Safeco's pattern and practice and systematic refusal to pay GOC at the GCOP on all roof-related line items with the ACV payment when it otherwise concludes that an insured has repairs that are going to be complex enough.

[00:29:06] Speaker 04:
What's your response to the argument that ACV is an estimate

[00:29:13] Speaker 04:
And that after being paid based on an estimate, your client then submitted a bill for actual costs and therefore shifted in paragraph five to the RCV provisions.

[00:29:26] Speaker 00:
I guess my answer to that is when Safeco issued the September 2019 estimate in the subsequent ACV payment, it was because it realized it miscalculated the size of Dow's roof.

[00:29:37] Speaker 00:
So it was fixing its own mistake.

[00:29:40] Speaker 00:
And the fact that Dow completed her repairs for less than that amount is not relevant today.

[00:29:45] Speaker 04:
proper calculation of ACV every case ACV says shall mean the cost of materials and labor that would be necessary to repair the damage so that language is conditional and suggests that the determination is being made at a time when the repairs have not been completed and that's not true with respect to the September

[00:30:03] Speaker 00:
I think the problem, Your Honor, is Safeco is backfilling what happened with what its lawyers figured out during this case.

[00:30:12] Speaker 00:
Again, if you look at the Safeco's experts reconstruction of the timeline of the payments, SCR 9799, there's no discussion about that payment.

[00:30:20] Speaker 00:
There's no claim that Safeco somehow made a mistake or shouldn't have issued the ACV payment.

[00:30:25] Speaker 00:
it just fixed its earlier mistake.

[00:30:27] Speaker 00:
And this Safeco's argument here has been addressed and rejected by every GCP case, including Salizen, Trichler, Mills, Parkway, Associates, Guilderman.

[00:30:37] Speaker 00:
All of them involve the same issue where the insured says you didn't actually incur those costs, you're not entitled to them.

[00:30:42] Speaker 00:
The class claims here

[00:30:44] Speaker 00:
are based on an objective determination that Safeco already made and the amounts that are owed can be calculated to a sum certain based on Safeco's own estimate.

[00:30:53] Speaker 00:
And we accept Safeco's calculation of the proper ACB of every class members lost except for the disputed GCOP, which is a pattern practice and policy that Safeco applies universally in Montana.

[00:31:08] Speaker 00:
Thank you.

[00:31:09] Speaker 02:
Thank you very much, Council.

[00:31:11] Speaker 02:
Dow versus Safeco Insurance will be submitted.