United States District Court, D. Minnesota
Housing and Redevelopment, Authority of Redwood Falls, Plaintiff,
Housing Authority Property Insurance, Defendant.
MEMORANDUM AND ORDER
A. Magnuson United States District Court Judge.
matter is before the Court on Plaintiff Housing and
Redevelopment Authority of Redwood Falls's
(“HRA”) Motion for Pre-Award Interest, following
a limited remand from the Eighth Circuit Court of Appeals.
For the following reasons, the Motion is granted in part.
January 24, 2013, a fire damaged a building owned by HRA and
insured by Defendant Housing Authority Property Insurance
(“HAPI”). (July 14, 2015, Order (Docket No. 30)
at 1-2.) HRA notified HAPI of the fire damage the following
day, and HAPI accepted coverage of the loss. (Id. at
2.) HAPI paid HRA $124, 942.79 in disbursements by April 9,
2013, but the parties disputed a substantial portion of the
total value of the loss. (Id.; Compl. (Docket No.
1-1) ¶ 12.)
September 4, 2013, HAPI offered to pay an additional $2, 262,
296.21 if HRA signed a partial proof of loss form, and HAPI
demanded an appraisal to settle the remaining disputed
portion of the loss. (Order at 2.) HAPI paid HRA the
additional $2, 262, 296.21 on October 18, 2013, for a total
of $2, 387, 239.00 in disbursements to HRA. (Id.;
Bloomquist Decl. (Docket No. 16) Exs. 4, 7.)
parties brought their estimates to the appraisal panel for
review. HAPI estimated that the total value of the loss was
$2, 834, 433.90; HRA's estimate was $6, 026, 015.00.
(Order at 2.) The appraisal panel issued its award on June 4,
2014, finding that the replacement cost value of the loss was
$3, 871, 891.00 and the actual cash value of the loss was $3,
097, 512.80. (Order at 2.) On June 23, 2014, HAPI paid HRA
the difference between the actual cash value of the loss and
the amount of disbursements to date, or $707, 773.80.
then sued HAPI, seeking confirmation of the appraisal award
and recovery of preaward interest under Minn. Stat. §
549.09. (Id. at 3.) At summary judgment, this Court
confirmed that the replacement cost value of the loss was $3,
871, 891.00, concluded that confirmation of the actual cash
value was moot because HAPI had already paid the entire
actual cash value of the loss to HRA, and denied HRA's
demand for preaward interest. (Id. at 5, 8.)
took an appeal, and the Court of Appeals reversed this
Court's denial of HRA's request for preaward
interest, citing a recent Minnesota Supreme Court decision.
Hous. & Redev. Auth. of Redwood Falls v. Hous. Auth.
Prop. Ins., 864 F.3d 986, 988 (8th Cir. 2017) (citing
Poehler v. Cincinnati Ins. Co., 899 N.W.2d 135
(Minn. 2017)). The Court of Appeals concluded that HRA was
entitled to preaward interest and remanded to this Court to
calculate that interest. Id. at 989. The mandate on
that decision issued on August 24, 2017. (Docket No. 45.)
moves the Court for recovery of $525, 092.07 in preaward
interest pursuant to Minn. Stat. § 549.09. (Docket No.
HAPI does not dispute HRA's entitlement to preaward
interest, but contends that HRA's recovery of preaward
interest should not be greater than $52, 937.60. (Def.'s
Opp'n Mem. (Docket No. 50).)
Minn. Stat. § 549.09, “an insured may recover
preaward interest on an appraisal award for a fire insurance
loss, notwithstanding a contractual loss payment provision
stating that the loss is payable after the filing of an
appraisal award.” Hous. & Redev. Auth.,
864 F.3d at 988 (quoting Poehler, 899 N.W.2d at
142). Thus, HRA may recover preaward interest here.
of the preaward interest on the appraisal award requires the
Court to identify the applicable interest rate, the length of
time over which the interest rate applies, and the principal
amount to which the interest rate applies. Here, the annual
interest rate is ten percent because the appraisal award is
greater than $50, 000. Minn. Stat. § 549.09, subd.
1(c)(2). The parties disagree about when that preaward
interest began to accrue and about the applicable principal
Stat. § 549.09 unambiguously identifies three events,
the earliest of which triggers when preaward interest starts
to accrue: (1) the commencement of an action, (2) the time of
a demand for arbitration, and (3) the time of a written
notice of claim. See, e.g., In re Estate of
Rutt, 824 N.W.2d 641, 646 (Minn.Ct.App. 2012). Despite
the statute's clarity, ...