After the leased commercial building was destroyed by a tornado, a dispute arose over inadequate coverage under a policy that the tenant was obligated to provide. Fort Worth Partners, LLC v. Nilfisk, Inc., 2025 U.S. App. LEXIS 27000 (8th Cir. Oct. 17, 2025).

Nilfisk leased a warehouse building from Fort Worth Partners under the terms of a lease. The warehouse was a 200,000 square foot building comprised of two 100,000 square foot structures. A tornado destroyed the building. All 100,000 square feet of one building and approximately 40,000 square fee of the second building were damaged beyond repair. Nilfisk vacated the building prior to the expiration of the lease.

Under the lease, Nilfisk was responsible for all property-related expenses, including taxes, insurance, maintenance, and repairs. Nilfisk was to maintain property insurance covering the full replacement cost of the building in the event of a loss. The lease further provided that if Nilfisk failed to obtain adequate insurance, Fort Worth could terminate the tenancy and recover whatever was owed due to Nilfisk’s failure to perform its obligations.

Neither Forth Worth nor Nilfisk attempted to determine the full replacement cost of the building. The appraised value ranged between $10.5 and $11.1 million. Nilfisk never carried more than $10 million in full replacement cost coverage. At the time of the tornado, Nilfisk carried only $5,149,999.00 in full replacement cost property insurance.

Each year when Nilfisk renewed its policy, in provided Fort With with Certificates of insurance showed the amount of coverage. Fort Worth, however, never purchased additional full replacement cost coverage and charged the cost to Nilfisk as permitted under the lease.

After the tornado, Fort Worth sued Nilfisk for breach of contract, seeking to recover the full replacement cost of the building it would have received had Nilfisk been adequately insured.

The district court granted Fort Worth’s motion for summary judgment, in part, finding that Nilfisk’s coverage was below the requirements of the lease. But because there was disagreement among the parties’ experts on the replacement cost of the building, the court declined to determine the replacment cost on summary judgment and proceeded to a bench trial on the issue of damages. At trial, the district court determined the full replacement cost of the building net of Nilfisk’s insurance proceeds was $12,870,528.74, portions of which were unrebutted by Nilfisk.

Nilfisk appealed. It first argued that Fort Worth’s claim was barred by the statute of limitations because its cause of action accrued when Nilfisk first provided it with a deficient certificate of insurance in 2016. The Arkansas statute of limitations to enforce obligations under written agreements was five years.

Nilfisk procured multiple separate one-year policies. Each year, Nilfisk obtained a policy bearing a different policy number and for a different coverage amount. While the statutory period had expired for the policy procured in 2016, the statutory period had not expired for the policy it obtained in 2021. Fort Worth’s cause of action accrued in April 2021 when the operative policy was obtained. Therefore, the suit was timely.

Nilfisk next argued that the doctrine of avoidable consequences barred Fort Worth from recovering damages because Fort Worth could have avoided harm if it had exercised its right to purchase additional insurance. Nilfisk, however, did not raise the issue at trial and only raised the issue in its post-trial brief. Even then, Nilfisk did not introduce any evidence to meet its burden of proving how Forth Worth might have avoided its damages. The appellate court refused to review the district court’s denial of Nilfisk’s motion for summary judgment on the doctrine of avoidable consequences.

The Eighth Circuit, however, reversed and remanded the unrebutted portion of the damage award because it was not fully explained by the district court.