PIERRE, S.D. (KELO) — An insurance company must pay the cost of tearing down a new home in Sioux Falls that city officials determined was too large after it had been built in the McKennan Park historic district, the South Dakota Supreme Court has ruled.
The justices publicly released the 3-2 decision Thursday. Justice Patricia DeVaney wrote the majority opinion. Justice Janine Kern and retired Chief Justice David Gilbertson concurred with it.
Justice DeVaney examined the coverage Liberty Mutual Insurance had written for Joseph Sapienza and Sarah Jones Sapienza, M.D., and found the company didn’t define the term “damages” or the phrase “legally liable.”
Pierce and Barbara McDowell, who owned the house next door, had previously won a court order that Sapienzas’ new house was too tall and too close to McDowells’ house and must be changed or removed. In 2018, the Sapienzas had their new house razed at an alleged cost of $60,000.
Liberty Mutual refused to pay the $60,000, saying those weren’t damages. The Sapienza filed a lawsuit against Liberty Mutual in federal court. But U.S. District Judge Roberto Lange said he couldn’t find a South Dakota Supreme Court decision on point, so he asked the state justices for one.
Justice DeVaney turned to dictionary definitions and also looked at decisions made by courts in other states.
“Here the circuit court’s injunction was clearly reparative and preventative as it was meant to remediate existing and continuing harm to the McDowells’ home. The only way to restore it to its original state was by reconstructing or removing the Sapienzas’ home. Therefore, the measure of ‘damages’ for which the Sapienzas became legally liable because of this property damage was the cost the Sapienzas incurred in complying with the injunction,” she wrote.
Justice Mark Salter wrote the dissent Chief Justice Steven Jensen joined. Justice Salter warned the majority’s decision “could have a broader and more enduring impact” that goes beyond the case.
“The Court reached its decision by effectively holding Liberty Mutual responsible for not defining the term damages – not by considering, in any serious way, its plain and ordinary meaning as used in these insurance policies. In my view, this exalts any possible meaning for an undefined term, over its plain and ordinary one,” he wrote.https://www.documentcloud.org/documents/20796964-sapienza-house-ruling?responsive=1&title=1