                                                           FILED
                                                        Feb 10 2012, 9:16 am
FOR PUBLICATION
                                                                CLERK
                                                              of the supreme court,
                                                              court of appeals and
                                                                     tax court




ATTORNEY FOR APPELLANT:                       ATTORNEY FOR APPELLEES:

JENNIFER E. DAVIS                             KEVIN W. MARSHALL
Bruce P. Clark & Associates                   Hobart, Indiana
St. John, Indiana


                              IN THE
                    COURT OF APPEALS OF INDIANA

WESTFIELD NATIONAL INSURANCE                  )
COMPANY,                                      )
                                              )
       Appellant-Plaintiff,                   )
                                              )
              vs.                             )    No. 64A03-1108-PL-345
                                              )
CHARLOTTE NAKOA, WARREN E. RIGG,              )
STEVEN L. RIGG, and LARRY D. RIGG,            )
                                              )
       Appellees-Defendants.                  )


                     APPEAL FROM THE PORTER SUPERIOR COURT
                          The Honorable William E. Alexa, Judge
                             Cause No. 64D02-0907-PL-7611


                                   February 10, 2012

                              OPINION – FOR PUBLICATION

BARNES, Judge
                                             Case Summary

          Westfield National Insurance Company (
                                               “Westfield appeals the trial court‟s entry
                                                         ”)

of judgment in favor of its insured, Charlotte Nakoa, in the amount of $233,214.57.1

Nakoa cross-appeals the trial court‟s ruling on Westfield‟s motion to correct error that

reduced the original judgment by $10,200.2 We affirm.

                                                   Issues

          The sole restated issue raised by Westfield is whether the trial court erred in

concluding that it had waived its right to insist that Nakoa comply with certain alleged

conditions precedent in order to receive replacement cost coverage for the loss of her

home, as opposed to actual cash value coverage. Nakoa cross-appeals the trial court‟s

determination that Nakoa was not entitled to coverage for the loss of use of the home.

                                                   Facts

          On January 26, 2008, fire destroyed a home in Valparaiso co-owned and occupied,

at least part-time, by Nakoa. Westfield, which had issued a homeowner‟s policy to Nakoa

that was effective on the date of the fire, learned of the loss and began investigating it on

January 28, 2008. The policy‟s stated limits were $177,500 for the dwelling, $17,750 for

other structures, $133,125 for personal property, and $71,000 for loss of use. The policy

contained the following provisions regarding replacement of a destroyed dwelling in a

section entitled “Conditions
                           ”:

1
    Nakoa‟s brothers, Warren Rigg, Steven Rigg, and Larry Rigg, are also named parties in this case.
2
  Nakoa does not label her claim on this point as a cross-appeal, but that is the effect of her challenge to
the trial court‟s judgment.
                                                      2
C.   Loss Settlement

                         *****

1.   The dwelling under coverage A [i.e. Nakoa‟s house]:

     a.     We agree to settle covered losses to the
     dwelling under Coverage A at replacement costs,
     without deduction for depreciation up to 125 percent
     of the specific limit of liability shown in the
     Declarations of the policy, if you agree to:

            (1)    Maintain coverage on the dwelling to
            100 percent of its full replacement cost by
            allowing us to annually adjust the Coverage A
            limit of liability reflecting any changes in the
            cost of construction for the area in which the
            residence premises is located;

            (2)    Notify us, within 90 days, of completion
            of any improvements to the dwelling exceeding
            $5,000 of the limit of liability shown in the
            Declarations; and

            (3)    Repair or replace the building with new
            material of like kind and quality within a
            reasonable time.

     b.    If you do not comply with a(1), (2) and (3)
     above, our limit of liability shall not exceed the limit
     shown in the Declarations of this policy.

2.   Buildings under Coverage B:

     a.     At replacement cost without deduction for
     depreciation, however, we will pay no more than the
     smallest of the following amounts for equivalent
     construction and use:




                             3
                                (1)    The amount actually and necessarily
                                spent to repair or replace the building or part of
                                it;

                                (2)   The replacement cost of the building of
                                any parts of it;

                                (3)   The applicable limit of liability show in
                                the Declarations of the policy.

                Under 1. and 2. above, we will pay no more than the actual
                cash value of the damage until actual repair or replacement is
                completed.

                                                *****

                6.     You may disregard the replacement cost loss
                settlement provisions and make claim under this policy for
                loss or damage to buildings on an actual cash value basis.
                You may then make claim for any additional liability
                according to the provisions of this Condition C. Loss
                Settlement, provided you notify us of your intent to do so
                within 180 days after the date of loss.

Appellant‟s App. pp. 162-63.

        On April 6, 2008, Nakoa submitted an inventory of personal property she alleged

had been lost in the fire, totaling $25,297. On May 9, 2008, counsel for Westfield

contacted Nakoa, requesting further proof of loss and documentation regarding the

personal property inventory. On July 23, 2008, a contractor submitted an estimate that it

would cost $267,368.69 to replace the home, which included demolition of the remains of

the previous home.3


3
 Although Westfield claims there is no evidence that it received this estimate on this date, the cover page
of the estimate refers to Westfield, the name of the Westfield agent handling the claim, and the Westfield
claim number.
                                                    4
       On November 4, 2008, Nakoa submitted to an examination under oath (essentially

a pre-litigation deposition) by counsel for Westfield regarding her claim. During this

examination, Nakoa discussed the fact that she owned a second home in Valparaiso and

that she had divided her time living between that home and the home that had burned

down. Also, Nakoa stated that she had inherited the destroyed home in 2000 from her

mother and that she owned it jointly with her three brothers. However, Nakoa was the

only named insured on the Westfield policy and she was the only one who had lived there

after their mother‟s death. Nakoa also was examined at length regarding her personal

property claims. Additionally, counsel for Westfield noted during this examination that

the house “has to be actually torn down and replaced, correct? Id. at 221. On June 2,
                                                              ”

2009, Nakoa submitted to a second examination under oath at which the personal

property claims were discussed at length. There was very little discussion of the value of

the home itself during either examination, aside from counsel for Westfield noting that

Nakoa had valued it at $183,000 on a claim form and Nakoa stating she had arrived at

that figure after consultation with a Westfield agent.

       On July 16, 2009, Westfield filed a complaint for interpleader, with Nakoa and her

brothers as defendants. The complaint alleged that because of the joint ownership of the

destroyed home between Nakoa and her brothers, “Westfield is potentially subject to

multiple or inconsistent claims by any or all of the defendants seeking the proceeds or

part of the proceeds of the policy due as a result of the destruction of the property.
                                                                                     ”

Appellee‟s App. p. 13. The complaint further sought to deposit $180,978 with the trial

                                             5
court clerk as full discharge of its liability under the policy; the complaint did not identify

how Westfield arrived at this figure.

       On July 20, 2009, Westfield filed an amended complaint for interpleader. The

allegations of this complaint were identical to the first complaint, except that the amount

of money that Westfield sought to deposit was $140,600.                Again, there was no

explanation as to how this figure was arrived at, nor why it was over $40,000 less than

the original complaint. On September 29, 2009, Nakoa filed an answer to the amended

complaint for interpleader that largely admitted the allegations in the complaint, except

that it sought to require Westfield to deposit $399,375 with the clerk, which would

represent the maximum policy limits. It does not appear Westfield actually deposited

anything with the clerk, nor did it ever pay anything to Nakoa directly on her claim, aside

from a $5,000 advance to replace some of her personal property.

       On September 13, 2010, Nakoa filed a motion to amend her answer to the

interpleader complaint to state counterclaims against Westfield for breach of contract,

failure to maintain good faith, and bad faith. Westfield objected to permitting such an

amendment.

       On September 23, 2010, Nakoa filed a “Verified Demand for Appraisal pursuant to
                                                                         ”

the following provision of the Westfield policy:

              If under Section I, you and we fail to agree on the amount of
              loss, either may demand an appraisal of the loss. In this
              event, each party will choose a competent and impartial
              appraiser within 20 days after receiving a written request
              from the other. The two appraisers will choose an umpire. If

                                              6
              they cannot agree upon an umpire within 15 days, you or we
              may request that the choice be made by a judge of a court of
              record in the state where the residence premises is located.
              The appraisers will separately set the amount of loss. If the
              appraisers submit a written report of an agreement to us, the
              amount agreed upon will be the amount of loss. If they fail to
              agree, they will submit their differences to the umpire. A
              decision agreed to by any two will set the amount of loss.

              1.     Each party will pay its own appraiser; and

              2.     Bear the other expenses of the appraisal and umpire
              equally.

              We do not waive any of our rights under this policy by
              agreeing to an appraisal.

Appellant‟s App. p. 163. The motion alleged that the parties disagreed on the amount of

loss in the case, and further stated that Nakoa believed “that appraisal should resolve the

matter in its entirety without further action on the complaint or counterclaim. Id. at 43.
                                                                              ”

       Following a hearing conducted on October 26, 2010, Westfield agreed to submit to

the appraisal process, and the trial court ordered that it be completed within ninety days.

Because of the agreement regarding the appraisal, Nakoa did not further pursue amending

her answer to include the proposed counterclaims. During the appraisal process, one

appraiser believed it was appropriate to value Nakoa‟s loss based solely upon replacement

cost of the home and personal property, while the other appraiser also provided a figure

for the actual cash value of the property. Ultimately, the first appraiser provided solely

the replacement cost of the property as his appraisal, which resulted in a figure of

$237,414.57, and did not provide an actual cash value estimate. The other appraiser‟s


                                             7
figure for replacement cost was identical to the first appraiser‟s, but he also provided a

figure of $108,359.78 as the actual cash value of the lost property.

       On January 25, 2011, the umpire agreed with the first appraiser who valued the

property at $237,414.57 based solely upon replacement cost as the amount of loss. This

appraisal also noted that Nakoa was entitled to an additional $10,200 for loss of use of

the property, “if Court finds coverage for this loss. Id. at 58. It also stated that the actual
                                                    ”

cash value of the loss could be obtained from the second appraiser, if necessary.

       On January 28, 2011, Nakoa filed a “Motion for Judgment on Appraisal Award in
                                                                                 ”

the amount of $247,614.57 for the real and personal property and $10,200 for loss of use.

Id. at 53. On February 15, 2011, Westfield filed a response to Nakoa‟s motion. In this

response, Westfield claimed that Nakoa‟s loss should be valued on the basis of the actual

cash value of $108,359.78 listed in the second apprasier‟s appraisal, with which the

umpire had not agreed. There is no evidence that at any prior time, either in litigation or

in communications with Nakoa, that Westfield had previously suggested the amount of

Nakoa‟s claim should be limited to actual cash value. The basis of Westfield‟s argument

that Nakoa‟s claim should be limited to actual cash value was that she had failed to meet

two purported conditions precedent to an award of replacement cost: she had not actually

completed replacement of the home, and she had not provided Westfield with notice

within 180 days of the loss that she would seek replacement cost coverage. Westfield

also asserted that Nakoa was not entitled to loss of use coverage because after the fire,

she had been able to continue residing at her second home in Valparaiso. The trial court

                                              8
conducted a hearing on the matter on February 22, 2011, at which time Nakoa indicated

that her brothers had signed waivers disclaiming any interest in any insurance proceeds.

        On March 9, 2011, the trial court entered a judgment awarding Nakoa

$247,614.57, the replacement cost of the property plus $10,200 for loss of use. Westfield

filed a motion to correct error. On July 5, 2011, the trial court granted the motion to

correct error to the extent of deducting $10,200 from the judgment for loss of use. It also

noted that Nakoa previously had received the $5000 advance from Westfield to replace

personal property and it further reduced the judgment by that amount. However, it

affirmed utilizing the replacement cost as the proper basis for valuing Nakoa‟s claim, thus

resulting in a net judgment of $233,214.57.4 Westfield now appeals, and Nakoa cross-

appeals.

                                              Analysis

        We review a trial court‟s ruling on a motion to correct error for an abuse of

discretion. Knowledge A-Z, Inc. v. Sentry Ins., 891 N.E.2d 581, 584 (Ind. Ct. App.

2008), trans. denied. “ abuse of discretion occurs when the decision is against the logic
                       An

and effect of the facts and circumstances before the court, and inferences that may be

               ”
drawn therefrom. Id.

                             I. Waiver of “Conditions Precedent”

        In denying Westfield‟s motion to correct error, the trial court expressly stated that

Westfield had waived its ability to argue that Nakoa had failed to meet any conditions
4
 There appears to be a discrepancy of $200 when comparing the appraiser‟s report, the original judgment,
and the modified judgment. Neither party discusses this discrepancy.
                                                   9
precedent to replacement cost coverage that may have existed in the Westfield policy.

The sole question on this issue is whether Westfield waived the ability to assert that

Nakoa had not complied with conditions precedent in the policy. We need not resolve

whether Nakoa in fact complied with any such conditions, nor do we need to address the

precise scope or meaning of any such conditions.

       Courts “
              „are not inclined to countenance the playing of games by insurance

companies leading to policy defenses, and are prone to require a company to bring to its

insured‟s attention any provision with which compliance is required.‟ Stewart v. Walker,
                                                                    ”

597 N.E.2d 368, 376 (Ind. Ct. App. 1992) (quoting 8C Appleman, Insurance Law and

Practice § 5083.65 (1981)). “It is well settled that contractual provisions of an insurance

policy may be waived or that the insurer may be estopped from asserting such provisions.”

American Standard Ins. Co. of Wisconsin v. Rogers, 788 N.E.2d 873, 876 (Ind. Ct. App.

2003). Whether there has been waiver of a policy provision by an insurer generally is a

question of fact. Id. at 877. Although the terms “estoppel and “waiver are technically
                                                         ”           ”

distinct, the terms often are used synonymously with respect to insurance matters. Id.

Waiver is an intentional relinquishment of a known right involving both knowledge of

the existence of the right and the intent to relinquish it, while the elements of estoppel are

the misleading of a party entitled to rely on the acts or statements in question and a

consequent change of position to that party‟s detriment. Id.

       Waiver may be implied from the acts, omissions, or conduct of one of the parties

to the contract. Id. The conduct of an insurer inconsistent with an intention to rely on the

                                             10
requirements of the policy that leads the insured to believe those requirements will not be

insisted upon may be sufficient to constitute waiver. Id. However, mere silence or

inaction on the part of an insurer is not sufficient to constitute an express waiver. Tate v.

Secura Ins., 587 N.E.2d 665, 671 (Ind. 1992). Estoppel or implied waiver, based on an

insurer‟s silence, generally requires a showing of resulting prejudice to the insured. Id.

        Here, the first mention Westfield made that Nakoa failed to satisfy alleged

conditions precedent for receipt of replacement cost coverage occurred over three years

after the fire that destroyed her home. In the interim, Westfield paid nothing to Nakoa,

aside from the $5,000 personal property advance.                  She was subjected to extensive

investigation by Westfield and its attorneys primarily regarding her personal property

losses, which included two extensive pre-litigation examinations under oath. An estimate

from a contractor for replacing the home was obtained within 180 days of the fire. In

July 2009,5 Westfield filed the interpleader complaint, amended shortly thereafter, that

identified the value of Nakoa‟s loss as either $180,978 or $140,600, without explaining

how those figures were arrived at, although it would finally state at the February 2011

hearing that it was based upon its estimate of the actual cash value of Nakoa‟s losses.

Nakoa believed her claim was worth considerably more than that based at least in part on

the contractor‟s estimate of what it would cost to replace the home.


5
 The interpleader, which Westfield filed because of the alleged potential for multiple liability under the
policy due to co-ownership of the property by Nakoa‟s brothers, was filed approximately eight months
after Westfield learned of the multiple ownership during Nakoa‟s November 2008 examination under
oath.

                                                   11
       To resolve the vast discrepancy between Westfield‟s and Nakoa‟s valuations of her

claim, Nakoa pressed to have the value of her loss appraised as permitted by the policy.

Westfield stood silently and idly by and acquiesced to the appraisal process without

giving any indication to Nakoa or the trial court that its valuation of Nakoa‟s loss was

based on actual cash value, not replacement cost.              The policy provision regarding

appraisal required Nakoa to pay the appraiser she chose and to pay one-half of the

umpire‟s fee, which was $750.6

       We conclude that Westfield‟s conduct in this case was such that it led Nakoa to

believe that it would not insist upon the policy provisions regarding payment of

replacement cost versus actual cash value of a loss. We acknowledge that replacement

cost provisions in homeowner‟s policies potentially allow a “windfall to an insured whose
                                                                    ”

house burns down, in that they may be entitled to an insurance payment that is more than

what their old house was worth. See Travelers Indem. Co. v. Armstrong, 442 N.E.2d

349, 353 (Ind. 1982). Thus, insurers generally may insist that payment of replacement

cost coverage is accompanied by assurances that the house actually is or will be rebuilt or

repaired. Id. Still, it is clear to us in reading the Westfield policy and the declarations

page that Nakoa was paying premiums for replacement cost coverage as the basic

coverage to which she was entitled.




6
  As part of its judgment, the trial court required Westfield to pay an additional $375 to Nakoa,
representing one-half of the umpire‟s fee, which left the other $375 to come directly out of Nakoa‟s
pocket.
                                                12
       Westfield clearly was on notice that Nakoa was seeking replacement cost coverage

for her losses no later than when she sought to have the value of her loss appraised. Yet,

Westfield made no mention of its current assertions that Nakoa had failed to give timely

notice of her intent to seek replacement cost coverage or that she was not entitled to it

because she had not actually rebuilt the house. Instead, it permitted Nakoa to incur the

personal expense of the appraisal process and the further delay it caused to her receiving

any payment under the policy. Such expense and delay represents tangible prejudice to

Nakoa caused by Westfield‟s silence regarding its alleged policy defenses.

       We also note, as did the trial court, that it seems unreasonable and unrealistic for

Westfield to have expected Nakoa to begin reconstruction of her house when Westfield

                                                        —
never paid anything to her towards her real property loss not the actual cash value of the

loss, not replacement cost, nothing at all. Nakoa might have been able to use such funds,

even if it was just actual cash value and not full replacement cost, as “seed money to begin
                                                                                   ”

reconstruction. See Nahmias Realty, Inc. v. Cohen, 484 N.E.2d 617, 623 (Ind. Ct. App.

1985), trans. denied.    Without any such payment, it is difficult to perceive how a

homeowner whose home has burned to the ground could possibly be expected to rebuild

it. See Rockford Mut. Ins. Co. v. Pirtle, 911 N.E.2d 60, 65-66 (Ind. Ct. App. 2009)

(holding that even when a homeowner‟s policy requires actual replacement of a house

before replacement cost coverage is paid, an insurer‟s failure to advance necessary funds

to rebuild may excuse an insured‟s failure to rebuild and require payment of replacement

cost coverage even if homeowner has not yet rebuilt), trans. denied.

                                            13
       In sum, we conclude Westfield waived its ability to assert that Nakoa failed to

comply with alleged conditions precedent to replacement cost coverage by, at the very

least, standing idly by and permitting the appraisal process to be carried out without

mentioning that the difference between the Westfield‟s and Nakoa‟s estimates of the value

of her loss arose because she was valuing the loss at replacement cost while it was

valuing the loss at actual cash value. The trial court did not abuse its discretion in

denying Westfield‟s motion to correct error to the extent it sought to limit Nakoa‟s

recovery to the actual cash value of her loss.

                                      II. Loss of Use

       Next, we address Nakoa‟s cross-appeal that the trial court erred in granting

Westfield‟s motion to correct error by deducting $10,200 from the original judgment. The

trial court did so because it concluded that Nakoa was not entitled to loss of use coverage

under the Westfield policy.

       When we interpret an insurance policy, our goal is to ascertain and enforce the

parties‟ intent as manifested in the policy. General Cas. Ins. Co. v. Bright, 885 N.E.2d 56,

58 (Ind. Ct. App. 2008). “We construe the insurance policy as a whole and consider all of

the provisions of the contract and not just individual words, phrases, or paragraphs.” Id.

We will give clear and unambiguous language in the policy its plain and ordinary

meaning. Id.

       The Westfield policy provision governing loss of use claims states that it will pay

for “additional living expense incurred due to a home becoming inhabitable, which is
                              ”

                                             14
defined as “any necessary increase in living expenses incurred by you so that your

household can maintain its normal standard of living. Appellant‟s App. p. 152. Here,
                                                    ”

Nakoa expressly stated during one of her examinations under oath that she incurred no

additional living expenses as a result of the fire. That is because she still possessed the

second home in Valparaiso where she continued to live after the destruction of the

insured home.7

        Nakoa asserts that despite this evidence, she was entitled to $10,200 in loss of use

coverage because the appraisal agreed to by the umpire said she was entitled to that

amount for loss of use of the property and, pursuant to the policy‟s terms, “the amount

agreed upon [in the appraisal] will be the amount of loss. Id. at 163. However, the
                                                         ”

appraisal also expressly stated that Nakoa was entitled to the $10,200, “if Court finds

coverage for this loss. Id. at 58 (emphasis added). Thus, the appraisal did not state
                      ”

definitively that Nakoa was entitled to the $10,200, and it was not the last word on the

subject.    Rather, it left the final decision to the trial court.             Given the plain and

unambiguous language of the policy, as well as the uncontradicted evidence that Nakoa

did not incur any additional living expenses as a result of the fire, we cannot say the trial

court abused its discretion in granting Westfield‟s motion to correct error to the extent of

subtracting the $10,200 for loss of use from the original judgment.


7
  The loss of use provision of the Westfield policy also allows claims for fair rental value if part of a
destroyed dwelling had been rented out to others. Counsel for Nakoa mentioned at the February 2011
hearing that her nephew had been renting out part of the destroyed home. Our review of the record,
however, namely Nakoa‟s examinations under oath, indicates that the nephew had been living at the
second home in Valparaiso that was not destroyed.
                                                   15
                                          Conclusion

          The trial court did not abuse its discretion in denying Westfield‟s motion to correct

error to the extent it sought to limit Nakoa‟s recovery to the actual cash value of her loss

as opposed to replacement cost, nor did it abuse its discretion in granting that motion to

the extent of not requiring Westfield to pay Nakoa $10,200 for alleged loss of use. We

affirm.

          Affirmed.

KIRSCH, J., and BRADFORD, J., concur.




                                               16
