However, when State Farm's claim specialist inspected the property six days after the fire, he found that a remediation company hired by Ms. Chen had completely gutted areas of the property to the wood-framing studs.

State Farm later advised Ms. Chen that, despite the public adjuster's replacement value of $80,312.07 to restore the property to its original condition, it only would pay her $37,907.02 on an actual cost basis (replacement cost less depreciation) for the property damage and remediation work.

State Farm asserted that due to the limited inspection its claim specialist was able to conduct after Ms. Chen had extensive remediation work done on the property, it could not assess the extent of the damage that had been caused by the fire.

Unsatisfied with the $37,907.02 she had been paid, Ms. Chen filed suit, alleging that State Farm had breached the insurance policy. She demanded additional compensation for damage to her property.

Following discovery and unsuccessful arbitration, State Farm was granted summary judgment; the motion court dismissed Ms. Chen's suit with prejudice because it found that she had failed to satisfy her evidentiary burden as to damages because she had remediation work performed on the property prior to State Farm's inspection.

Ms. Chen appealed.

She argued that she had complied with the insurance policy's terms that required her to mitigate damages to the property after the fire by having a remediation company clean up and make repairs to the property to prevent further damage. Yet, she argued, under State Farm's interpretation of the insurance policy, the policy provision requiring mitigation of damage was “in direct conflict with [her] obligation to exhibit the damage after a loss.”

She asserted that the photos of the pre-remediation fire damage that she had given to State Farm's claim specialist had complied with the policy requirements that she document the property's fire damage, which, contrary to State Farm's contention, enabled it to determine the scope of the property's damage.

In Ms. Chen's view, the trial court had erred by determining that the claim specialist's conclusion that the remediation had prevented an assessment of the fire damage was credible, and it did not view the evidence of her photos in the light most favorable to her.

The Appellate Court's Decision

The appellate court reversed and remanded for trial.

In its decision, the appellate court reasoned that summary judgment should not have been granted because there was a “material dispute regarding the damage” to Ms. Chen's property.

The appellate court pointed out that, under her policy, Ms. Chen “had a duty to exhibit” the damaged portion of her property to State Farm so that it “could make a reasoned analysis of” the damage. The appellate court found, however, that the trial court had exceeded its authority by dismissing Ms. Chen's complaint when it found that she had failed “to satisfy her evidentiary burden.” In reaching this finding, the appellate court ruled, the trial court had accepted State Farm's determination that it could not assess the fire damage prior to the property's remediation over Ms. Chen's contention that the photos taken after the fire and prior to remediation were sufficient to enable the insurer to assess the damage.

Weighing the parties' credibility was “the duty of the jury as the fact-finder at trial” and was “beyond the court's purview in deciding summary judgment,” according to the appellate court.

At trial, the appellate court concluded, the jury should determine the amount of compensation, if any, that Ms. Chen was entitled to receive for fire damage to the property under her State Farm insurance policy.

The case is Chen v. State Farm Fire and Casualty Co., No. A-2814-16T1 (N.J. Super.Ct. July 31, 2018). Attorneys involved include: Daniel W. Ballard argued the cause for appellant (Zenstein Ballard, PC, attorneys; Daniel W. Ballard, on the brief). William H. Hofmann argued the cause for respondent (Bennett, Bricklin & Saltzburg, LLC, attorneys; William H. Hofmann, on the brief).