R.R. Ave. Properties, LLC v. Acadia Ins. Co., 37 F.4th 682 (1st Cir. 2022)

The U.S. Court of Appeals for the First Circuit, applying Massachusetts law, has ruled that depreciation holdback was not recoverable where the insured failed to rebuild the damaged property within two years of the loss, as required under the policy. The insured filed suit against the insurer for breach of contract to recover additional insurance proceeds after the insured’s commercial property sustained damage from a fire. Under terms of the policy, the property had to be “actually repaired or replaced” within two years of the fire damage for the insured to recover the holdback. The court held that substantial compliance was not met by executed contracts and payments alone when the insured did not begin construction until after the two-year period had expired. Consequently, the insured was not entitled to recover the depreciation holdback when it began rebuilding more than two years after the loss.