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Housing and Redevelopment Authority of Redwood Falls v. Housing Authority Property Insurance

United States District Court, D. Minnesota

July 14, 2015

Housing and Redevelopment Authority of Redwood Falls, Plaintiff,
v.
Housing Authority Property Insurance, a Mutual Company, Defendant.

MEMORANDUM AND ORDER

PAUL A. MAGNUSON, District Judge.

This matter is before the Court on the parties' cross-Motions for Summary Judgment.[1] For the reasons that follow, the Court grants in part and denies in part both Motions.

BACKGROUND

In this insurance-coverage action, Housing and Redevelopment Authority of Redwood Falls (HRA) is suing Housing Authority Property Insurance, a Mutual Company (HAPI) for confirmation of an appraisal award and recovery of pre-award interest. The material facts are straightforward and undisputed.

HRA owns the Lakeside Manor, a public-housing apartment building in Redwood Falls, Minnesota. (Bloomquist Decl. (Docket No. 16) Ex. 1.) On January 24, 2013, a fire broke out in the building. (Id.) The fire killed one resident, displaced other residents, and caused extensive damage. (Id.)

At the time, HRA maintained a commercial-property insurance policy with HAPI. (See Compl. (Docket No. 1) Ex. A.) The policy provides coverage for loss due to, among other things, fire and states that, in the event of a covered loss, HAPI would pay HRA the replacement cost value of the loss. (Id. at 2, 5, 14, 21, 37, 46, 48, 49.) The policy also includes an appraisal clause that governs the procedure for determining the value of the loss: "If you' and we' do not agree on the amount of the loss or the value of the covered property, either party may demand that these amounts be determined by appraisal." (Id. at 49.) Should the appraisal panel agree on the value of the loss, that amount "will be the amount of the loss" and "will be payable 30 days after a satisfactory proof of loss is received and... the filing of [the] appraisal award." (Id.)

HRA notified HAPI of the fire damage on January 25, 2013. (Bloomquist Decl. Ex. 1.) HAPI accepted coverage of the loss and made $2, 387, 239 in payments to HRA over the ensuing months. (Id. Exs. 4, 7.) The parties disagreed, however, on the total value of the loss and HAPI demanded an appraisal. (Id. Ex. 3.)

At the appraisal panel, the parties submitted disparate repair estimates: HRA projected the number at $6, 026, 015 while HAPI approximated the number at $2, 834, 433.90. (Lulic Aff. (Docket No. 19) Exs. 3-4.) On June 4, 2014, the appraisal panel issued its award, determining the replacement cost value of the loss to be $3, 871, 891 and the actual cash value of the loss to be $3, 097, 512.80. (Bloomquist Decl. Ex. 5.) A few weeks later, on June 23, 2014, HAPI paid HRA the difference between the appraised actual cash value and both the previous payments and the $2, 500 deductible, or $707, 773.80. (Id. Ex. 6.)

HRA then sued HAPI in Minnesota state court, seeking a declaration that HAPI must pay the remaining portion of the replacement cost value as individual repairs are finished and not once all repairs are completed; confirmation of the appraisal award under Minnesota's Uniform Arbitration Act, Minn. Stat. § 572B.22; and recovery of preaward interest under Minnesota's general prejudgment-interest statute, Minn. Stat. § 549.09. (Compl. ¶¶ 33-40.) HAPI removed the case to this Court (Notice of Removal (Docket No. 1)), and answered with a general denial (Answer (Docket No. 4)).

The parties now move for summary judgment on the requests to confirm the appraisal award and recover pre-award interest.

DISCUSSION

Summary judgment should be granted if the moving party shows that there are no genuine disputes of material fact and it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A fact is material if its resolution affects the outcome of the case. Paine v. Jefferson Nat'l Life Ins. Co., 594 F.3d 989, 992 (8th Cir. 2010). A dispute is genuine if the evidence could cause a reasonable jury to return a verdict for either party. Id . When evaluating a motion for summary judgment, the Court must view the facts in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. Marlowe v. Fabian, 676 F.3d 743, 746 (8th Cir. 2012).

A. Confirmation of the Appraisal Award

The simpler issue presented by this case is whether the Court should confirm the appraisal award. HRA argues that the appraisal award equates to an arbitration award and that the Court must confirm an arbitration award unless a party makes a timely challenge to the award. HAPI counters that the Court lacks the authority to confirm the appraisal award because appraisal and ...


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