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Oliver v. State Farm Fire and Casualty Insurance Co.

Court of Appeals of Minnesota

January 22, 2019

Sheila Oliver, et al., Appellants,
v.
State Farm Fire and Casualty Insurance Company, Respondent.

          Hennepin County District Court File No. 27-CV-17-16316

          Alexander M. Jadin, Timothy D. Johnson, Jeffrey J. Woltjen, Smith Jadin Johnson, PLLC, Bloomington, Minnesota (for appellants)

          Scott G. Williams, William L. Moran, Lehoan T. Pham, C. Todd Koebele, HKM, P.A., St. Paul, Minnesota (for respondent)

          Considered and decided by Halbrooks, Presiding Judge; Bratvold, Judge; and Klaphake, Judge. [*]

         SYLLABUS

         I. The 90-day limit to file a motion to modify an arbitration award under Minn. Stat. § 572B.24(a) (2018) does not apply to an insured's request for preaward interest following an appraisal award.

         II. An insurance appraisal panel determines the amount of loss under the policy and lacks authority to grant preaward interest under Minn. Stat. § 549.09, subd. 1(b) (2018).

          OPINION

          BRATVOLD, JUDGE

         Appellants Sheila and William Oliver challenge the district court's judgment denying their motion to grant preaward interest from their insurer, respondent State Farm Fire and Casualty Insurance Company (State Farm), for damages awarded by an appraisal panel. The district court characterized the Olivers' motion as a motion to modify the appraisal award and denied the motion as untimely.

         We reverse the district court's decision for three reasons. First, the Olivers were unambiguously entitled to preaward interest for pecuniary damages awarded by the appraisal panel and may claim preaward interest without proving wrongdoing by the insurer or breach of contract. Poehler v. Cincinnati Ins. Co., 899 N.W.2d 135, 140-41 (Minn. 2017) (interpreting and applying Minn. Stat. § 549.09, subd. 1(b)). Second, Minnesota caselaw establishes that an appraisal panel determines the amount of loss under the insurance policy. Consequently, an appraisal panel lacks authority to grant preaward interest, which is a statutory right that arises independent of the insurance policy.

         Third, the district court erred in applying a 90-day filing deadline to the Olivers' motion. Precedent establishes that the Minnesota Uniform Arbitration Act (MUAA), Minn. Stat. §§ 572B.01-.31 (2018), applies to insurance appraisal awards, in addition to arbitration awards. And, under the MUAA, Minn. Stat. § 572B.24(a) requires that a party seeking to modify an arbitration award on specified grounds must do so within 90 days of an arbitrator's decision. Because an appraisal panel's authority is limited to determining amount of loss under the policy, a motion to modify an appraisal award may not include a request for preaward interest, which arises from statute and not the policy. We conclude that section 572B.24 does not apply to the Olivers' motion for preaward interest.

         Thus, we reverse the district court's decision denying the Olivers' motion for preaward interest and remand to the district court for proceedings consistent with this opinion.

         FACTS

         On May 11, 2015, a fire occurred at the Olivers' home in Edina. On May 20, 2015, the Olivers submitted a claim to State Farm under their homeowners' insurance policy. The parties were "unable to agree on the measurement of the loss." In January 2016, the Olivers sent State Farm an email demanding an appraisal under the terms of the insurance policy.[1]The Olivers' email did not include a request for preaward interest.

         On March 14, 2016, after hearing testimony and receiving evidence from the parties, the appraisal panel issued an award in favor of the Olivers; the total award was $1, 143, 778.39. State Farm paid the appraisal award.

         On August 8, 2017, in a letter to State Farm, the Olivers demanded $94, 009.18 in preaward interest. State Farm refused to pay preaward interest "based on the two-year limitation clause provided in the [Olivers'] homeowners' policy."[2]

         On October 25, 2017, the Olivers filed a motion in district court requesting that the court (1) confirm the appraisal award under Minn. Stat. § 572B.22, and (2) grant preaward interest on the appraisal award under Minn. Stat. § 549.09, subd. 1(b). The Olivers argued that Minnesota law "unambiguously provide[s] for preaward interest on insurance appraisal awards." The Olivers also contended, based on the language in section 549.09, that "[i]nterest accrues from the date of the first written notice of the claim" through the date of the appraisal award. The first written notice of the Olivers' claim occurred on May 20, 2015, and the appraisal award was issued on March 14, 2016. Because there were 300 days between the dates of the first written notice and the appraisal award, the Olivers argued that State Farm owed them $94, 009.18 in preaward interest, after applying the statutory interest rate. Finally, the Olivers asserted that, because their claim to preaward interest was a statutory right, it was not subject to the homeowners' policy's "limiting language," and therefore, that they did not have to request preaward interest within the two years specified in the policy.

         State Farm opposed the Olivers' request on three grounds. First, State Farm argued that the Olivers' request amounted to a new legal action that had to be dismissed for insufficient service of process because no summons and complaint were served. Second, State Farm argued there was no award to confirm because it had already paid the appraisal award. Third, State Farm argued that the Olivers' claim was untimely because it was made more than two years after the date of loss, contrary to the policy's requirement, and filed more than 90 days after notice of the appraisal award, contrary to Minn. Stat. § 572B.24.

         The district court issued an order granting the Olivers' motion to confirm the award in the amount of $1, 143, 778.39. With regard to the preaward-interest request, the district court agreed with State Farm that the Olivers had made a motion to modify the appraisal award under the MUAA. Because the Olivers proceeded under the MUAA, the district court reasoned that their request was "subject to its limitations" and not "obviate[d] [from] the need to seek [preaward interest] in an appropriate procedural fashion." Because the Olivers failed to comply with the 90-day filing deadline in section 572B.24(a), the district court denied their motion for preaward interest.

         The Olivers asked for leave to file a motion for reconsideration, arguing that the district court incorrectly characterized their motion as a motion to modify because their motion for preaward interest under section 549.09 did not require a modification of the award. The Olivers also argued that the appraisal panel was not authorized to grant preaward interest, which can only be decided by the ...


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