David Thorne v. Member Select Insurance Company

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 17-1377
DAVID THORNE,
Plaintiff-Appellee,
v.
M EMBER S ELECT
I NSURANCE C OMPANY ,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Indiana, Hammond Division.
No. 09 C 87 — John E. Martin, Magistrate Judge.
____________________
A RGUED DECEMBER 8, 2017 — DECIDED F EBRUARY 12, 2018
____________________
Before K ANNE, and R OVNER , Circuit Judges, and DURKIN,
District Judge.*
* The Honorable Thomas M. Durkin, Northern District of Illinois, sit-
ting by designation.

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2 No. 17-1377
DURKIN , District Judge. David Thorne has a property in-
surance policy with Member Select Insurance Company.
Thorne brought suit against Member Select when it denied
his claim for coverage after his house burned down. A jury
awarded Thorne $87,000, and the district court denied
Member Select’s motion for judgment as a matter of law.
Member Select appeals from that order.
I. Background
Thorne’s house at 726 Arbogast Street in Griffith, Indiana,
burned down completely in February 2008. Thorne chose not
to rebuild the house. Member Select refused to cover the loss
because it determined that either Thorne or his brother (who
was living in the house and was the only person besides
Thorne who had a key) intentionally set the fire.
After the jury’s verdict in Thorne’s favor, Member Select
moved for judgment as a matter of law pursuant to Federal
Rule of Civil Procedure 50. Member Select argued: (1) there
was insufficient evidence for the jury to find that Thorne was
a resident of the house (as required for recovery under the
policy); and (2) there was insufficient evidence for the jury to
determine damages. Member Select appeals from the district
court’s post-trial decision in Thorne’s favor on those two is-
sues. Member Select also argues that the district court misin-
terpreted the policy’s loss coverage provision in evaluating
whether the evidence was sufficient to support the jury’s
damages award.
II. Standard of Review
We review a district court’s refusal to grant a Rule 50 mo-
tion for judgment as a matter of law de novo. See Empress Ca-
sino Joliet Corp. v. Balmoral Racing Club, Inc., 831 F.3d 815, 822

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No. 17-1377 3
(7th Cir. 2016). “Judgment as a matter of law is proper ‘if a
reasonable jury would not have a legally sufficient eviden-
tiary basis to find for the party on that issue.’” Lawson v. Sun
Microsystems, Inc., 791 F.3d 754, 761 (7th Cir. 2015) (quoting
Fed. R. Civ. P. 50(a)(1)). “We construe the trial evidence
‘strictly in favor of the party who prevailed before the jury.’”
Empress Casino, 831 F.3d at 822 (quoting Passananti v. Cook
County, 689 F.3d 655, 659 (7th Cir. 2012)). “Although we
must determine that more than ‘a mere scintilla of evidence’
supports the verdict, we do not make credibility determina-
tions or weigh the evidence.” May v. Chrysler Grp., LLC, 716
F.3d 963, 971 (7th Cir. 2013) (quoting Hossack v. Floor Cover-
ing Assoc. of Joliet, Inc., 492 F.3d 853, 859 (7th Cir. 2007)). “In
other words, our job is to decide whether a highly charitable
assessment of the evidence supports the jury’s verdict or if,
instead, the jury was irrational to reach its conclusion.” May,
716 F.3d at 971. Rule 50(b) permits us either to enter judg-
ment for the trial loser or to order a new trial.
III. Analysis
A. Residence
The policy requires the house to be Thorne’s “residence”
for him to be entitled to coverage for its loss. Member Select
argues that the evidence at trial was insufficient for the jury
to make that finding.
The parties do not dispute that the factors relevant to de-
termining residence are: (1) Thorne’s physical presence in
the house; (2) whether Thorne had a subjective intent to re-
side there; and (3) Thorne’s access to the house and its con-
tents. See Alexander v. Erie Ins. Exch., 982 F.2d 1153, 1159 (7th
Cir. 1993). The district court instructed the jury accordingly.

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4 No. 17-1377
In its decision on Member Select’s Rule 50 motion, the
district court summarized the evidence concerning Thorne’s
residence as follows:
[Thorne] testified that he intended to live at the
Property. He also testified that he kept almost
all his personal belongings at the Property, that
his mail was delivered there, and that he went
there often, even if only to pick up his mail.
Furthermore, other than his brother, who had
also lived at [the] house, [Thorne] was the only
person with keys to the house. All this tends to
show, even minimally, that the Property was
[Thorne’s] “residence” under Indiana law.
There is also significant evidence supporting a
finding that the Property was not [Thorne’s]
residence. Even though it was the middle of
winter at the time of the fire, [Thorne] did not
know that the Property’s gas or electricity had
been shut off. [Thorne’s] brother rarely saw
[Thorne] at the Property, and [Thorne] had
been sleeping almost exclusively at his ware-
house. In fact, [Thorne] had not been to the
Property in over three weeks before the fire.
Additionally, Thorne testified that in the eight months lead-
ing up to the fire, he stayed at the house overnight fewer
than 20 times. Thorne further testified that he spent minimal
time at the house because he worked extensive hours as a
millwright and on his side job as a mechanic. He ate out,
showered at work, and washed his clothes at a laundromat.

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No. 17-1377 5
Although Thorne spent significant time away from the
house—even sleeping at his workshop on a regular basis—
there was sufficient evidence for a reasonable juror to con-
clude that the house was Thorne’s “residence.” He owned it,
had free access to it, and kept personal belongings there.
While he spent significant time at his workshop, he did so
because he worked long hours. He did not cook, shower, or
clean clothes at either the house or his workshop. The evi-
dence was sufficient to demonstrate that Thorne had a “sub-
jective intent” to reside in the house. See Alexander, 982 F.2d
at 1159. The district court was right not to disturb the jury’s
verdict on this issue.
B. The Policy’s Loss Provision
Member Select also argues that the district court erred in
interpreting the meaning of the term “actual cash value” in
determining whether the jury’s damages verdict was rea-
sonable. The policy includes the following relevant provi-
sions regarding loss:
We will pay Actual Cash Value at the time of
loss in settlement of loss to: personal property.
... This includes deduction for depreciation. We
will pay not more than: the cost to repair or re-
place the damaged property with property of
like kind and quality; ...
We will pay the cost to repair or replace the
damaged part of the Dwelling ... with equiva-
lent construction and for equivalent use, with-
out deduction for depreciation if, at the time of
loss, the amount of insurance for the Dwelling
... is 80% or more of the Replacement Cost.

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6 No. 17-1377
If, at the time of loss, the amount of insurance
for the Dwelling ... is less than 80% of the Re-
placement Cost, we will pay the larger of the
following amounts:
a. the Actual Cash Value of the damaged part
of the Dwelling ... with equivalent construction
and for equivalent use; or
b. the amount of the loss multiplied by the ra-
tio of the amount of insurance multiplied by
the ratio of the amount of insurance on the
Dwelling ... to 80% of its Replacement Cost.
. ...
If the cost to repair or replace the damaged
property is more than $5,000, we will not be li-
able for Replacement Cost until actual repair or
replacement is completed with equivalent con-
struction and for equivalent use.
. ...
If you decide not to repair or replace the dam-
aged property with equivalent construction
and for equivalent use, settlement will be on an
Actual Cash Value basis; this includes deduc-
tion for depreciation.
Despite capitalizing it and using it multiple times, the policy
unhelpfully does not expressly define the term “actual cash
value.”
As one commentator has noted, “[a]lthough the term ac-
tual cash value is found in many property insurance poli-
cies,” and the “generally-accepted meaning of the term” is

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No. 17-1377 7
replacement cost less depreciation, “it is quite common for
the phrase not to be defined in [property insurance] poli-
cies.” Johnny Parker, Replacement Cost Coverage: A Legal Pri-
mer, 34 WAKE F OREST L. R EV. 295, 332 n.5 (1999). The frequent
failure of insurance companies to provide a definition of this
term in their policies has led to “much litigation regarding
how actual cash value should be determined and what it
means,” with the result that “the case law of the respective
jurisdiction should be consulted when attempting to ascer-
tain the meaning of actual cash value.” Id.
As the Indiana Supreme Court has explained, courts
around the country use four primary methods to give mean-
ing to the term “actual cash value” when it is used in an in-
surance policy but not expressly defined. Those methods
are: (1) replacement cost, without deduction for deprecia-
tion; (2) market value; (3) replacement cost with deduction
for depreciation; and (4) the broad evidence rule. See Travel-
ers Indem. Co. v. Armstrong, 442 N.E.2d 349, 355-56 (Ind.
1982). The last three all take depreciation (or decrease in val-
ue due to use and age) into account. In Travelers, the Indiana
Supreme Court adopted the broad evidence rule as the de-
fault interpretation of the term “actual cash value.” 442
N.E.2d at 352-58.
Because the policy at issue here does not contain an ex-
press definition of “actual cash value,” the district court ap-
plied the broad evidence rule to interpret that term. “Under
the broad evidence rule, ... parties [are] entitled to introduce
evidence of ‘every fact and circumstance which would logi-
cally tend to the formation of a correct estimate of the loss.’”
Travelers, 442 N.E.2d at 357 (quoting McAnarney v. Newark
Fire Ins. Co., 159 N.E. 902, 905 (N.Y. 1928)).

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8 No. 17-1377
Member Select argues, however, that the policy implicitly
defines “actual cash value” as “replacement cost less depre-
ciation,” which is a narrower formula than the broad evi-
dence rule.1 Member Select contends that its interpretation is
supported by the policy’s juxtaposition of “two separate
methods by which losses could be settled,” i.e., actual cash
value and replacement cost. The policy expressly provides
that when replacement cost is the relevant method of loss
settlement, it is calculated “without deduction for deprecia-
tion.” The policy also expressly provides that calculation of
actual cash value “includes deduction for depreciation.” On
this basis, according to Member Select, the term “actual cash
value” must mean “replacement cost less depreciation.” In
other words, Member Select asks us to interpret the policy
language “settlement will be on an Actual Cash Value basis;
this includes deduction for depreciation,” to mean “settle-
ment will be on an Actual Cash Value basis; meaning/defined
as replacement cost with deduction for depreciation.”
The problem with this argument is that the policy never
mentions “replacement cost” in conjunction with “actual
cash value.” Of course, when used in the context of property
insurance, depreciation is often applied to replacement cost.
Apparently on this basis, Member Select jumps to the con-
clusion that since the policy requires “actual cash value” to
“include” depreciation, “actual cash value” must be defined
as “replacement cost less depreciation.” But as discussed,
courts have recognized that the term “actual cash value” can
1 Curiously, this position by Member Select would result in some
cases in a higher payout, because “replacement cost less depreciation”
does not necessarily take into account obsolescence of a property while
the broad evidence rule does account for it.

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No. 17-1377 9
have a much broader connotation, even as it continues to ac-
count for depreciation. Just because “actual cash value” in-
cludes depreciation does not mean it is limited to “replace-
ment cost less depreciation.” All of the various methods
courts use to interpret the term “actual cash value”—i.e.,
“market value,” “replacement cost less depreciation,” and
the “broad evidence rule”—account for depreciation. Thus,
Member Select’s argument focusing on how the term “de-
preciation” is used in the policy is insufficient to justify the
conclusion that “actual cash value” means “replacement cost
less depreciation,” as opposed to being defined by the broad
evidence rule. Because the policy does not expressly define
“actual cash value” to mean “replacement cost less deprecia-
tion,” the district court was right to look to Indiana’s broad
evidence rule in interpreting the policy, despite the policy’s
requirement that “actual cash value” include depreciation.
Moreover, even if Member Select is correct that the policy
can be interpreted to define “actual cash value” as “replace-
ment cost less depreciation,” the term “depreciation” is itself
ambiguous. The concept of depreciation is well understood.
See In re State Farm Fire & Cas. Co., 872 F.3d 567, 574 (8th Cir.
2017) (“’Depreciation’ is a concept with a well understood
meaning—‘decline in an asset’s value because of use, wear,
obsolescence, or age.’” (quoting Black’s Law Dictionary (9th
ed. 2009)); see also Carey v. Am. Family Brokerage, Inc., 909
N.E.2d 255, 262 (Ill. App. Ct. 2009) (“Depreciation in an in-
surance context, which is different than depreciation in an
accounting context, means the decrease in the actual value of
property based on its physical condition, age, use, and other
factors that affect the remaining usefulness of the property.”
(citing Black’s Law Dictionary (8th ed. 2004)). “But the meth-
od of calculating a depreciation deduction is subject to con-

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10 No. 17-1377
flicting opinion as to the reasonableness of the resulting es-
timate.” State Farm Fire, 872 F.3d at 574 (emphasis added). As
the Eighth Circuit recently noted in addressing a case in-
volving property loss, “Black’s Law Dictionary lists no fewer
than ten different depreciation methods to estimate the de-
cline in an asset’s value over time.” Id. Thus, even following
Member Select’s interpretation of the policy in this case does
not provide a clear method for calculating loss that should
have taken precedence over the broad evidence rule.
At bottom, if Member Select wanted to define “actual
cash value” as “replacement cost less depreciation,” it easily
could have done so expressly. Member Select chose not to.
We hold the resulting ambiguity against the drafter Member
Select. See Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068
(Ind. 2006) (“[I]t is generally appropriate to construe an am-
biguous agreement against its drafter.”). The district court
was correct to use the broad evidence rule to interpret the
policy.
C. Evidence of Damages
Member Select also contends that even if the broad evi-
dence rule is the proper standard, there was insufficient evi-
dence for the jury to determine damages. We have previous-
ly recited the standard for proof of damages under Indiana
law:
Under Indiana law, a plaintiff carries the bur-
den to plead and prove damages. [Lincoln Nat’l
Life Ins. Co. v. NCR Corp., 772 F.2d 315, 320 (7th
Cir. 1985)]. Importantly, “[a] mere showing of a
breach of contract does not necessarily entitle a
plaintiff to damages.” Id. Instead, a plaintiff is

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No. 17-1377 11
limited to recovering only the losses actually
suffered from the breach, and an injured party
may not be placed in a better position than he
would have enjoyed if the breach had not oc-
curred. Fowler v. Campbell, 612 N.E.2d 596, 603
(Ind. Ct. App. 1993). Moreover, damages can-
not be based on mere speculation and conjec-
ture. Rather, a plaintiff must have adequate ev-
idence to allow a jury to determine with suffi-
cient certainty that damages in fact occurred,
and, if so, to quantify such damages with some
degree of precision. See id.; Turbines v. Thomp-
son, 684 N.E.2d 254, 258 (Ind. Ct. App. 1997);
Fowler, 612 N.E.2d at 603. Thus, “[a] damage
award must be referenced to some fairly de-
fined standard, such as cost of repair, market
value, established experience, rental value, loss
of use, loss of profits or direct inference from
known circumstances.” Fowler, 612 N.E.2d at
603.
Shepard v. State Auto. Mut. Ins. Co., 463 F.3d 742, 745 (7th Cir.
2006).
The jury was presented with the following evidence of
damages: Thorne’s brother bought the house for $86,000 in
1998; Thorne bought the house for $75,000 in 2002; around
2004 when Thorne had paid the mortgage down to $67,000,
he opened a $20,000 line of credit secured by the house; and
Thorne testified about the general condition of the house, the
improvements he made to the house, and its contents before
and after the fire. Thorne argues that the jury’s award of
$87,000 is reasonable based on adding the $20,000 line of

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12 No. 17-1377
credit to the $67,000 remaining on the mortgage in 2004, plus
an estimate of the value of his lost personal possessions.
Member Select argues that none of this is evidence of the
value of the house “at the time of loss,” as the most recent
data point (the $20,000 secured credit line) was about four
years old at the time of the fire. Member Select also argues
that the jury could not reach a reasonable verdict without
“opinion” evidence regarding the house’s value at the time
of the fire—whether from Thorne or another witness.
Addressing the second argument first, Member Select
has not cited any authority requiring “opinion” evidence for
a jury to properly decide the issue of damages in a case like
this. To the contrary, the Indiana Supreme Court has held
that under the broad evidence rule, “any . . . fact reasonably
tending to throw light upon the subject is relevant,” includ-
ing “original cost.” Travelers, 442 N.E.2d at 356 (quoting
McAnarney, 159 N.E. at 905). “‘[I]n applying the rule, a court
may take into account market value, replacement cost, and
depreciation. In addition, such factors as location and obso-
lescence may be considered.’” Gregory & Appel Ins. Agency v.
Philadelphia Indem. Ins. Co., 835 N.E.2d 1053, 1061 (Ind. Ct.
App. 2005) (quoting Ohio Cas. Ins. Co. v. Ramsey, 439 N.E.2d
1162, 1169 (Ind. Ct. App. 1982)). Thus, the purchase price
history, secured loan value and the characteristics of the
property presented to the jury in this case are all relevant to
value. See Barrett v. Prudential Prop. & Cas. Ins. Co., 790 F.2d
842, 845 (11th Cir. 1986) (applying the broad evidence rule
and holding that “[t]he original purchase price of the house,
its rental value, the proof of loss statement, and the contrac-
tor’s estimate all constituted relevant, probative evidence

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No. 17-1377 13
from which a jury could logically base a determination as to
the actual cash value of the destroyed property”).
Moreover, the Indiana Supreme Court has suggested that
“opinion” evidence is not required. In Travelers, the court
explained that the broad evidence rule “requires the fact-
finder to consider all evidence an expert would consider.”
442 N.E.2d at 357 (quoting Elberon Bathing Co., Inc. v. Ambas-
sador Ins. Co., Inc., 389 A.2d 439, 444 (N.J. 1978)). As Member
Select acknowledges, Indiana courts have held that “[a]n
owner may testify as to the value of property,” as long as
“there [is] a basis for that valuation.” Court View Centre, LLC
v. Witt, 753 N.E.2d 75, 82 (Ind. App. Ct. 2001). If a home-
owner’s testimony can be a basis for determining loss under
a property insurance policy, certainly the evidence in this
case of actual sales and secured loan amounts can also be
sufficient evidence of loss.
Further, as Member Select’s counsel conceded at oral ar-
gument, opinion evidence would not be required in the hy-
pothetical case of a house burning down the day after its
sale. In that case, the sale price would be sufficient evidence
of the value of the house even absent opinion evidence. The
question, then, is not whether opinion evidence is always
necessary to reach a reasonable verdict on the value of a
house. Rather, the question is whether the evidence present-
ed to the jury was sufficient to make a reasonable damages
determination in this case.
Member Select’s better argument is that no evidence was
presented to the jury regarding the value of the land on
which the house was constructed. This is relevant because a
property purchase price—the primary evidence of damages

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14 No. 17-1377
received by the jury in this case—pays for both the land and
the house, and the fire did not destroy the land.
But the lack of evidence regarding the value of the land
in particular did not impair the jury’s ability to quantify
damages “with some degree of precision” in this case. See
Shepard, 463 F.3d at 745. Thorne lost not just his house but
the contents of the house. Thus, even if the jury found that
the market value of the house and land together was $87,000,
they still could have reasonably offset the value of the land
with the value of the contents of the house based on
Thorne’s testimony about those contents. This is a sufficient-
ly “defined standard,” Shepard, 463 F.3d at 745, with refer-
ence to which the jury could reasonably determine damages.
Specific evidence of the land’s value was not required for the
jury’s verdict to be reasonable in this case.
In sum, as explained by the Indiana Supreme Court in
Travelers, the goal of property insurance is indemnity; i.e.,
“to make the insured whole but never to benefit him.” 442
N.E.2d at 352. The evidence presented to the jury was rea-
sonably precise evidence of what Thorne’s house and its
contents were worth, even if it was somewhat outdated. The
jury’s award tracked this evidence. The jury’s reliance on
such evidence, even absent lay or expert opinion evidence,
does not make the award unreasonable. To the extent Mem-
ber Select believed that the age of the evidence made it mis-
leading, or that additional evidence regarding the value of
the land would have made the damages verdict more accu-
rate, Member Select could have presented such evidence it-
self. It chose not to.

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No. 17-1377 15
IV. Conclusion
The denial of Member Select’s motion for judgment as a
matter of law is AFFIRMED.

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