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Poehler v. Cincinnati Insurance Co.

Supreme Court of Minnesota

July 19, 2017

James Poehler, Appellant/Cross-Respondent,
v.
Cincinnati Insurance Company, Respondent/Cross-Appellant.

         Court of Appeals Office of Appellate Courts

          Alexander M. Jadin, Anthony T. Smith, Timothy D. Johnson, Roeder Smith Jadin, PLLC, Bloomington, Minnesota, for appellant/cross-respondent.

          Anthony J. Kane, Pfefferle Kane LLP, Minneapolis, Minnesota, for respondent/cross-appellant.

          Dale O. Thornsjo, Lance D. Meyer, O'Meara, Leer, Wagner & Kohl, P.A., Minneapolis, Minnesota, for amici curiae The Insurance Federation of Minnesota and The National Association of Mutual Insurance Companies.

          Hudson, J. Dissenting, Anderson, Stras, JJ.

         SYLLABUS

         1. Minnesota Statutes § 549.09, subd. 1(b) (2016), does not require an underlying breach of contract or actionable wrongdoing for the recovery of preaward interest on an insurance appraisal award.

         2. Absent contractual language explicitly precluding preaward interest, an insured may recover preaward interest on an appraisal award for a fire insurance loss, notwithstanding a contractual loss payment provision in the policy stating that the "[l]oss is payable within 5 working days . . . [a]fter there is a filing of an appraisal award."

         3. A fire insurance provision that offers the insured all of the rights and benefits required by Minn. Stat. § 65A.01 (2016), as well as additional rights and benefits, supersedes the language set forth in the Minnesota standard fire insurance policy.

         Reversed.

          OPINION

          HUDSON, Justice.

         The focus of this appeal is on the permissibility of preaward interest on an insurance appraisal award under Minn. Stat. § 549.09, subd. 1(b) (2016). The case presents three questions: (1) whether the recovery of preaward interest under Minn. Stat. § 549.09, subd. 1(b), requires a finding of an underlying breach of contract or actionable wrongdoing; (2) whether an insured may recover preaward interest on an appraisal award for a fire insurance loss when the insurance policy contains a loss payment provision stating that the loss is not payable until an appraisal award is filed; and (3) whether an insured may recover preaward interest on an appraisal award under the Minnesota standard fire insurance policy, Minn. Stat. § 65A.01 (2016), even though the insurer did not adopt the exact statutory language in its insurance policy. For the reasons that follow, we reverse the decision of the court of appeals.

         FACTS

         Respondent/cross-appellant Cincinnati Insurance Company (Cincinnati) issued appellant/cross-respondent James Poehler (Poehler) a homeowner's insurance policy that provided replacement cost coverage for Poehler's home and personal property. As required by statute, the policy included an appraisal clause, providing that either the insurer or the insured may demand an appraisal if they cannot agree on the amount of the loss. See Minn. Stat. § 65A.01, subd. 3. The policy also contained a statutorily-mandated loss payment provision, providing that the loss is payable within 5 working days after the insured files an appraisal award with the insurer.

         A fire damaged Poehler's property in October 2013. Poehler promptly notified Cincinnati of the damage, and Cincinnati made its first payment on the claim a week after the fire. On December 2, 2013, Poehler properly demanded an appraisal under the appraisal clause of the policy, which requires a "written request" from the demanding party. By then, Cincinnati had paid Poehler $105, 394.

         Cincinnati continued making payments and had paid a total of $175, 663 by the time an appraisal hearing was held in June 2014. The parties authorized the appraisers to decide "all issues" involving the claim, including coverage issues. At the appraisal hearing, Poehler argued that he was entitled to an additional $170, 442 beyond what Cincinnati had already paid for the loss; Cincinnati argued that Poehler was entitled to an additional $57, 965. On June 23, 2014, the appraisers issued an award, determining that Poehler's total loss was $88, 480 more than what Cincinnati had paid by the time of the appraisal hearing. Cincinnati paid the appraisal award in full on July 9, 2014.[1]

         Poehler subsequently brought a motion in Hennepin County District Court, seeking, among other relief, confirmation of the appraisal award under the Uniform Arbitration Act, Minn. Stat. § 572B.22 (2016), and preaward interest under Minn. Stat. § 549.09, subd. 1(b). Cincinnati responded that confirmation of the appraisal award was unnecessary because it had already paid the full award, and it should not be required to pay preaward interest because it had promptly complied with all the terms of the policy and the appraisal award. The district court confirmed the appraisal award and granted Poehler preaward interest in the amount of $14, 635. In concluding that Poehler was entitled to preaward interest, the district court noted that Cincinnati had "initially undervalued Poehler's loss by more than $88, 000, " leaving him "to bear a significant portion of the burden of his loss." The district court calculated the preaward interest from December 2, 2013, the date Poehler demanded an appraisal, to June 23, 2014, the date of the award, which was 203 days later. Based on the appraisal award and the preaward interest period, the district court calculated preaward interest as follows: "203/365 x $263, 144.04 x 10% = $14, 635.13."

         The court of appeals reversed, concluding that the preaward interest statute, Minn. Stat. § 549.09, subd. 1(b), "does not apply to appraisal awards pursuant to an insurance policy in the absence of an underlying breach of contract or actionable wrongdoing." Poehler v. Cincinnati Ins. Co., 874 N.W.2d 806, 807 (Minn.App. 2016). Poehler sought review of the court of appeals' decision and Cincinnati requested conditional cross-review. We granted both parties' petitions.

         ANALYSIS

         I.

         We begin with the question of whether the court of appeals erred in holding that Minn. Stat. § 549.09 requires a finding of "an underlying breach of contract or actionable wrongdoing" for the recovery of preaward interest on an insurance appraisal award, Poehler, 874 N.W.2d at 807. Poehler contends that the court of appeals' interpretation of section 549.09 is contrary to the statute's plain language and legislative purpose, as well as the court of appeals' prior decisions. In response, Cincinnati argues that under section 549.09 preaward interest is only provided for awards of "damages, " and Minnesota courts have defined "damages" solely as compensation for wrongdoing. We conclude that the court of appeals erred in its interpretation of the statute, because Minn. Stat. § 549.09 does not require a finding of wrongdoing for the recovery of preaward interest on appraisal awards.

         We review statutory interpretation issues de novo. Christianson v. Henke, 831 N.W.2d 532, 535 (Minn. 2013). In interpreting a statute, we first "determine whether the statute's language, on its face, is ambiguous." Id. at 536 (citation omitted) (internal quotation marks omitted). "A statute is only ambiguous if its language is subject to more than one reasonable interpretation." Id. at 537. If we determine that a statute is clear and unambiguous, our "role is to enforce the language of the statute and not explore the spirit or purpose of the law." Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826, 836 (Minn. 2012).

Minnesota Statutes § 549.09, subd. 1(b), states, in relevant part, Except as otherwise provided by contract or allowed by law, preverdict, preaward, or prereport interest on pecuniary damages shall be computed . . . from the time of the commencement of the action or a demand for arbitration, or the time of a written notice of claim, whichever occurs first, except as provided herein. . . .
Except as otherwise provided by contract or allowed by law, preverdict, preaward, or prereport interest shall not be awarded on the following:
(1) judgments, awards, or benefits in workers' compensation cases, but not including third-party actions;
(2) judgments or awards for future damages;
(3) punitive damages, fines, or other damages that are noncompensatory in nature;
(4) judgments or awards not in excess of the amount specified in section 491A.01; and
(5) that portion of any verdict, award, or report which is founded upon interest, or costs, disbursements, attorney fees, or other similar items added by the court or arbitrator.

(Emphasis added.)

         Section 549.09 plainly and unambiguously provides preaward interest on "pecuniary damages"-including those awarded in insurance appraisals-that are not otherwise excluded by the statute.[2] The statute, however, does not define "pecuniary" or "damages, " Minn. Stat. § 549.09, nor have we interpreted either term in the context of the statute. The parties here dispute the definition of "damages."

         In determining whether a statute is ambiguous, we give technical words and phrases their special or defined meaning, and other words and phrases their plain and ordinary meaning. In re Welfare of J.J.P., 831 N.W.2d 260, 264, 266 (Minn. 2013). Although Cincinnati contends that "damages" is a legal term that is defined as compensation for wrongdoing only, we have held that the term "damages" does not have an accepted technical meaning in the insurance industry.[3] Minn. Min. & Mfg. Co. v. Travelers Indem. Co., 457 N.W.2d 175, 179 (Minn. 1990).

         Because we conclude that the term "damages" does not have a technical meaning, we interpret it according to its plain and ordinary meaning. In determining the plain and ordinary meaning of undefined words or phrases in a statute, we may consult the dictionary definitions of those words and apply them in the context of the statute. See Shire v. Rosemount, Inc., 875 N.W.2d 289, 297 (Minn. 2016). In general, dictionaries define "damages" as compensation for loss, injury, or wrong. For example, Webster's defines "damages" as "the estimated reparation in money for detriment or injury sustained: compensation or satisfaction imposed by law for a wrong or injury caused by a violation of a legal right." Webster's Third New International Dictionary of the English Language Unabridged 571 (2002). The American Heritage Dictionary defines "damages" as "[m]oney required to be paid as compensation for an injury or wrong." The American Heritage Dictionary of the English Language 457 (5th ed. 2011). New Oxford defines "damages" as "a sum of money claimed or awarded in compensation for a loss or an injury." New Oxford American Dictionary 439 (3d ed. 2010). Thus, the ordinary meaning of "damages" is not limited to compensation for wrongdoing only; rather, it extends to compensation for any injury suffered, whether wrongful or not.

         In addition, unless otherwise provided by contract or law, subdivision 1(b)(3) of section 549.09 precludes the recovery of preaward interest on "damages that are noncompensatory in nature." Minn. Stat. § 549.09, subd. 1(b)(3). In other words, section 549.09 provides preaward interest on all awards of compensatory damages that are not excluded by the statute. See Lessard v. Milwaukee Ins. Co., 514 N.W.2d 556');">514 N.W.2d 556, 558 (Minn. 1994). The statute does not define "noncompensatory" or "compensatory." Minn. Stat. § 549.09. We have stated that "[i]n the absence of a statute defining compensatory damages, it is clear that compensatory damages are generally synonymous with actual damages." Phelps v. Commonwealth Land Title Ins. Co., 537 N.W.2d 271');">537 N.W.2d 271, 275 (Minn. 1995). And we have defined "actual damages" as "[a]n amount awarded to a complainant to compensate for a proven injury or loss; damages that repay actual losses." Ray v. Miller Meester Advert., Inc., 684 N.W.2d 404');">684 N.W.2d 404, 407 (Minn. 2004) (citing Damages, Black's Law Dictionary (7th ed. 1999)). Therefore, even the definitions of "compensatory damages" and "actual damages" do not indicate that section 549.09 can be reasonably interpreted to condition the recovery of preaward interest on a finding of wrongdoing.

         Accordingly, we hold that Minn. Stat. § 549.09, subd. 1(b), unambiguously provides for preaward interest on all awards of pecuniary damages that are not specifically excluded by the statute, and does not restrict the recovery of preaward interest to cases or matters involving wrongdoing or a breach of contract. Because we conclude that the statutory language ...


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