The insurer's motion for summary judgment to dismiss the insured's complaint challenging the use of Xactimate to determine the repair costs for fire damage was granted. Belotti v. State Farm Fire & Cas. Co., 2025 U.S. Dist. LEXIS 54471 (M.D. Pa. March 25, 2025).
Plaintiffs' home was damaged by fire. After submitting a claim to State Farm, a claim specialist visited the site to inspect the loss. State Farm also hired a contractor, Edward Gieda, to assist with the plaintiffs' claims. Mr, Gieda sent his initial draft estimate to State Farm. Mr. Gieda's initial draft estimate and State Farm's estimate used an estimating software tool, Xactimate. State Farm selected Xactimate's "new construction" labor efficiency for the estimate. The "new construction" tool was selected because the plaintiffs' home would not be occupied during the repair work and because once demolition was completed and the wall finishes removed, the repair would would essentially be new construction.
State Farm estimated the Replacement Cost Value (RCV) to be $172,015.39 and the Actual Cash Value (ACV) payment, after applying the policy's deductible, to be $130,852.61. State Farm sent a check of $130,852.61. The plaintiffs' public adjuster provided State Farm with a repair estimate he prepared with a RCV of $374,069.77. The public adjuster's estimate also used Xactimate, but with the application of the "Restoration/Service/Remodel" labor efficiency setting.
State Farm demanded an appraisal under the policy. The appraisal award agreed that the RCV and he ACV amounts for plaintiffs' loss were $267,382.04 and $240,643.84 respectively. The appraisal award was not prepared using Xactimate and did not use either Xactimate's "new construction" or "Restoration/Service/Remodel" labor efficiency settings. State Farm made an additional ACV payment in the amount of $66,690.45, the difference between State Farm's previously total ACV payments and the aACV amount of the award.
Plaintiffs' sued, alleging breach of contract. State Farm's policy required it to "pay the cost of repair or replacement" of the plaintiffs' losses with "similar construction." Plaintiffs did not contest that State Farm failed to pay for the cost of repair and replacement of the losses with similar construction. Instead, plaintiffs challenged State Farm's alleged failure to use a specific method of computation concerning its assessment of the plaintiffs' losses. The plaintiffs further contended that when State Farm used a "new construction" setting, rather than its required "repair/reconstruction" model, State Farm breached its contract,
State Farm moved for summary judgment, arguing it had no contractual duty to use a particular setting when estimating losses. Plaintiffs argued that the language " . . . pay the cost to repair or replace with similar construction" did not include a provision that allowed State Farm to use the "new construction" model for damages under this provision. Plaintiffs submitted that allowing State Farm to use this methodology was not provided for in the policy.
The court found that the plain language of the policy clearly and unambiguously only pertained to the required use of similar construction. The policy did not concern any method of computation or any language that required a singular method of computation. The policy provision simply bound State Farm to pay for the cost or replacement of damaged property with similar construction. The policy unambiguously imposed no contractual duty to use a particular estimate when estimating losses under the provision. Therefore, State Farm did not breach any contractual obligation in creating its estimate.
