864 F.3d 986
8th Cir.2017Background
- HRA owns a public-housing building that burned on January 24, 2013; HRA had insurance with Housing Authority Property Insurance (HAPI).
- HAPI accepted coverage and paid $2,387,239, but the parties disputed total loss value; HAPI demanded appraisal under the policy.
- Appraisal panel awarded actual cash value of $3,097,512.80 on June 4, 2014; HAPI paid HRA $707,773.80 (award minus prior payments and deductible) on June 23, 2014.
- HRA sued to confirm the appraisal award and sought pre-award interest under Minn. Stat. § 549.09; HAPI removed to federal court on diversity grounds.
- District court confirmed the award but denied pre-award interest, reasoning the policy’s loss-payment timing implicitly governed when interest would begin and no loss-of-use occurred because payment was made within the contract’s payable period.
- Minnesota Supreme Court subsequently decided Poehler v. Cincinnati Ins. Co., holding § 549.09 permits pre-award interest on appraisal awards absent contractual language expressly precluding it; this Court remanded in light of Poehler.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Minn. Stat. § 549.09 authorizes pre-award interest on an appraisal award when the insurance policy does not expressly address pre-award interest | HRA: § 549.09 authorizes 10% pre-award interest from written notice of claim on the awarded amount | HAPI: Contract’s loss-payment clause implicitly governs timing, and because payment occurred within the contractual payable period HRA suffered no loss of use and is not entitled to pre-award interest | Reversed district court; under Poehler § 549.09 permits pre-award interest absent contract language expressly barring it; remanded for calculation of interest |
Key Cases Cited
- Nat'l Am. Ins. Co. v. W & G, Inc., 439 F.3d 943 (8th Cir.) (state law governs insurance disputes in diversity cases)
- Cont'l Cas. Co. v. Advance Terrazzo & Tile Co., 462 F.3d 1002 (8th Cir.) (state supreme court decisions are binding on federal courts)
- Murphy v. Aurora Loan Servs., LLC, 699 F.3d 1027 (8th Cir.) (issues not adequately developed on appeal may be remanded for district court consideration)