Legal precedents oblige insurers to pay for ‘workmanlike repair;’ when does that obligation shade into replacement?

Most insurance companies offer consumers the option of purchasing replacement cost coverage for their Dwelling and Building property exposures. In the standard ISO HO 03 policy’s Loss Settlement provisions the insurer promises “we will pay  the cost to repair or replace ….” This raises the question in the processing an insurance claim: When does the policy’s agreement to repair become an obligation to replace? Since the policy does not address this issue, we must look to other sources for the answer. This article is focused on the insurer’s obligation to pay for a “workmanlike repair” which, according to our research, is the foremost term used to address this topic. Merriam-Webster online dictionary defines the term as work “characterized by the skill and efficiency typical of a good workman.”

In an October 2011 case that came before the Supreme Court of Tennessee, Federal Ins. Co. v. Winters Roofing Co., 354 S.W.2d 287 (Tenn. 2011), the defendant contractor entered into a contract to replace a roof. When the newly installed roof developed leaks, the defendant hired an independent contractor to make the necessary repairs, and that contractor caused a fire. The Tennessee Supreme Court held that, “The Defendant had an implied duty to perform the services required by his contract with the Emersons in a careful, skillful, diligent, and workmanlike manner.” Id. at 295.

In Winters Roofing, the Tennessee Supreme Court cited a recent case in Tennessee, Bowling v. Jones, 300 S.W.3d 288, 291 (Tenn.Ct.App.2008), where the court of appeals made the following observation regarding the implied duties encompassed in construction contracts: “Once a builder undertakes a construction contract, the common law imposes upon him or her a duty to perform the work in a workmanlike manner, and there is an implied agreement that the building or work performed will be sufficient for the particular purpose desired or to accomplish a certain result. Thus, a failure to perform a building contract in a workmanlike manner constitutes a breach of the contract.” (Quoting 13 Am. Jur.2d Building and Construction Contracts § 10 (2000)). Other authorities recognize this implied duty as not only applicable to construction contracts, but to all service contracts. See 17A Am. Jur.2d Contracts § 612 (2011) (“[T] here is implied in every contract for work or services a duty to perform skillfully, carefully, diligently, and in a workmanlike manner.”); 23 Samuel Williston, Williston on Contracts § 63.25 (4th ed. 2011) (“Accompanying every contract is a common-law duty to perform with care, skill, and reasonable expediency the thing agreed to be done. Whether a contract for services is breached depends upon whether the service provider exercises or fails to exercise that degree of skill and knowledge normally possessed by those members of the trade.”).

The obligation of a contractor to make workmanlike repairs was adopted in Arizona in Reliable Elec. Co. v. Clinton Campbell Contractor, Inc., 10 Ariz. App. 371, 459 P.2d 98, 101 (1969) (explaining that someone who undertakes a service must perform the service in a “good workmanlike manner and in a manner befitting a skilled contractor”).

Cases from numerous jurisdictions support the principle that service contracts are inherently accompanied by an implied obligation to perform the service skillfully, carefully, diligently, and in a workmanlike manner. For example, the Supreme Court of Arkansas, in Graham Constr. Co. v. Earl, 362 Ark. 220, 208 S.W.3d 106, 110 (2005), ruled that a contractor “impliedly warrants that the work he undertakes will be done in a good and workmanlike manner and will be reasonably fit for the intended purpose.” Other state courts have similarly ruled. See, e.g., Ferrigno v. Pep Boys, 47 Conn. Supp. 580, 818 A.2d 903, 904 (Conn. Super. Ct. 2003) (“It is an implied condition of every service contract that the service will be performed in a workmanlike manner.”); Hoffman v. Simplot Aviation, Inc., 97 Idaho 32, 539 P.2d 584, 588 (1975) (opining that contracts for personal services contain an implied warranty that the services will be carried out in a workmanlike manner); in re Talbott’s Estate, 184 Kan. 501, 337 P.2d 986, 989 (1959) (“[I]t is generally recognized that when a party binds himself by contract to do a work or perform a service, in the absence of express agreement, there is an implied agreement or warranty, which the law annexes to the contract, that he will do a workmanlike job and will use reasonable and appropriate care and skill.”)(citations omitted); Aqua Pool Renovations, Inc. v. Paradise Manor Cmty. Club, Inc., 880 So.2d 875, 884 (La. App. 2004) (“Louisiana law implies that a contractor will complete the work in a good and workmanlike manner and that it will be free from defects in workmanship or materials.”); Marcus Lee S. Wilbur & Co., 588 A.2d 757, 759 (Me.1991) (“One of the implied terms of every repair contract is ‘an undertaking to perform the work in a reasonably skillful and workmanlike manner.’”) (internal quotation marks omitted); Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., 439 Mass. 387, 788 N.E.2d 522, 531 (2003) (“‘When a party binds himself by contract to do a work or to perform a service, he agrees by implication to do a workmanlike job and to use reasonable and appropriate care and skill in doing it.’”) (quoting Abrams v. Factory Mut. Liab. Ins. Co., 298 Mass. 141, 10 N.E.2d 82, 83 (1937)); Sveum v. J. Mess Plumbing, Inc., 965 S.W.2d 924, 926 (Mo. App. 1998) (explaining that all contracts carry an implicit requirement to perform the terms of the contract “in a skillful and workmanlike manner”); Mascarenas Jaramillo, 111 N.M. 410, 806 P.2d 59, 61 (1991) (recognizing an implied warranty to perform work in a skilled and workmanlike fashion); McKinley v. Brandt Constr., Inc., 168 Ohio App.3d 214, 859 N.E.2d 572, 574 (2006) (“Any contract to perform work imposes on the contractor the duty to perform the work in a workmanlike manner.”); McCool v. Hoover Equip. Co., 415 P.2d 954, 958 (Okla.1966) (“‘Where general contractor contracts to perform work for another requiring exercise of care, skill and knowledge, there is an implied warranty that work which he undertakes shall be of proper workmanship .…’”); Davis New England Pest Control Co., 576 A.2d 1240, 1242 (R.I.1990) (“[T] here is implied in every contract for work or services a duty to perform it skillfully, carefully, and diligently and in a workmanlike manner.”); Hutson Cummins Carolinas, Inc., 280 S.C. 552, 314 S.E.2d 19, 23 (App.1984) ( “[W] here a person holds himself out as specially qualified to perform work of a particular character, there is an implied warranty that the work which he undertakes to do shall be of proper workmanship and reasonably fitted for its intended purpose.”); see also Waggoner v. Midwestern Dev., Inc., 83 S.D. 57, 154 N.W.2d 803, 807 (1967) (“[W]here a person holds himself out as especially qualified to perform work of a particular character there is an implied warranty that the work shall be done in a reasonably good and workmanlike manner.”); Walker & Assocs. Surveying, Inc. v. Austin, 301 S.W.3d 909, 913, 914 (Tex. App. 2009) (“The implied warranty of good and workmanlike manner provides that a service will be performed in a skillful and workmanlike manner …. [E]ven if the parties do not agree on a specific standard, the implied warranty of good workmanship serves as a gap-filler or default warranty.”). The issue of an insurer’s obligation to repair or replace in the context of roof damages was decided in Higginbotham New Hampshire Ind. Co., 498 So. 2d 1149 (La. App. 1987), where the Court stated:

The main dispute with respect to quantum is whether the roof can be repaired as urged by the defendant or whether the severity of the damages was such that the roof cannot be repaired and must be replaced. Three expert witnesses testified, two for the plaintiffs and one for the defendant.

Plaintiffs’ first witness, Timothy Brown, a roofing contractor, testified that in his opinion the only proper way to repair the damage would be to tear off the existing roof, apply new felt, replace any broken or worn roof vents, install new valley metal, and nail down new 25 year shingles. His estimate for this job was $2,925.00 …. Plaintiffs’ second witness, Leon Guillory, testified that it is possible to spot repair a roof, but that in order to do the job and guarantee against leakage, the only proper way to repair the damage would be to replace the roof.

Defendant’s witness, Nolan Lavergne, a sheet metal and roofing contractor for thirty-two years, testified that at first he was requested by Mrs. Higginbotham to give an estimate to replace the roof. He estimated that it would cost $1,981.25 to replace the roof and one ventomatic. Lavergne further testified that he was later contacted by Pitre to give an estimate to repair the roof. Lavergne testified that he could repair the roof for $770.00. This witness offered to perform the repairs in accordance with this estimate. Lavergne agreed to repair the roof in a workmanlike manner but would not guarantee the roof from leaking. Upon further questioning Lavergne clarified his position by saying that he would guarantee that the shingles would stay, but would not guarantee that the roof would not leak. Lavergne was in agreement with the plaintiffs’ expert witnesses that in order to guarantee that the roof would not leak, the entire roof would have to be replaced.

Our examination of the record convinces us that the plaintiffs cannot be fully compensated for their damage by repairing the roof. If testimony had been elicited which would guarantee against leaks, we would be more inclined to agree with the great discretion of the trial judge. Furthermore, since a number of years have passed since the initial damage, it would be impossible for us, as reviewers of the trial court’s decision, to know whether repairs to the roof would have been sufficient to make the plaintiff whole.

Nevertheless, we do not find the trial judge’s decision so erroneous as to warrant payment for damages sustained after the storm where measures could have been taken to reasonably protect the premises from further deterioration. Brocato v. Underwriters Ins. Co. of New York, 219 La. 495, 53 So. 2d 246 (1951).

In summary, regardless of whether we are discussing a repair to a roof or another building component, the same standard of care applies. The overwhelming legal authority supports the conclusion that if a contractor is to make a repair, they must do so in a workmanlike manner that is reasonably fit for the intended purpose. The workmanlike repair doctrine is a great tool for public adjusters to use when faced with an insurer trying to avoid paying for replacement by suggesting questionable repair methods.

As published in Consumer Claims Journal – Fall/Winter 2020

Skipton and Associates, Inc.