Boardwalk Apartments, L.C. V State Farm Property and Casualty Insurance Co.

State Farm appealed the judgment for Boardwalk arguing the district court misconstrued a coinsurance provision and erred in barring evidence on the provision. The panel reversed and remanded for a new trial. The panela held that the coinsurance provision was relevant to State Farm’s defense and to explain why Boardwalk would argue for a valuation less than policy limit which is contrary to eh normal positions of an insured and there was minimal risk of prejudice or confusion as the existence of the provision did introduce complexity into the case and there was no call to relitigate issues resolved in a prior suit between the parties. It held the exclusion was prejudicial because it limited State Farm’s ability to demonstrate why Boardwalk was arguing for a lower value. The panel held the district court erred in construing the coinsurance because the appeals court in the prior litigation held the term “value” means replacement cost including the cost of complying with state and local laws under Kansas precedent and public policy and the district court was barred from giving the term a different meaning. It held the error was not harmless as it allowed the jury to set a replacement value without taking into account costs which are part of value under the policy. The panel rejected State Farm’s defenses argument as inadequately briefed and declined to reach other alleged trial errors as they may not arise at the new trial. Based on the reversal, the panel vacated an attorney fee award against State Farm.