Mark Herll v. Auto-Owners Insurance Company
879 F.3d 293
8th Cir.2018Background
- The Herlls’ home suffered wind and hail damage; they submitted a claim to Auto-Owners. Dispute over amount of loss led to a three-member appraisal panel per the policy.
- The panel issued a one-page typed handwritten "Appraisal Award" listing two items: (1) "Dwelling—All but front & right window related loss" (RCV $116,208; ACV $81,345.60) and (2) "Dwelling—front & right window related loss an additional" (RCV $60,000; ACV $42,000).
- The award included handwritten notes: totals fields read "$ see above" and the panel added "We question the # of losses here" and "GROSS LOSS." The loss date was mistakenly listed but the parties agree on the correct date.
- Auto-Owners paid the ACV for item (1) (less deductible) but refused to pay for item (2), contending the award excluded front and right window losses. The Herlls sought the additional payment.
- The parties requested clarification from the appraisal panel. The umpire emailed views but did not resolve the ambiguity. The Herlls sued in state court for breach and declaratory relief; Auto-Owners removed to federal court.
- The district court (excluding late affidavits from Auto-Owners) granted summary judgment to the Herlls, confirmed the appraisal award in full, and ordered payment. Auto-Owners appealed.
Issues
| Issue | Herlls' Argument | Auto‑Owners' Argument | Held |
|---|---|---|---|
| Whether the appraisal award unambiguously required payment for front & right windows | The award lists amounts for those windows and totals refer to "see above," so it must include the window losses | The award is unclear: notes questioning number of losses and "see above" make it ambiguous and do not require payment | Ambiguous; court must not affirm but should resubmit award for clarification |
| Whether a reviewing court may confirm an ambiguous appraisal award without remanding to panel | The award on its face confirms damage including windows, so court may confirm | Under Minnesota law, ambiguous awards must be submitted back to arbitrators/umpire for clarification before confirmation | Court erred: must resubmit to appraisal panel for clarification rather than confirming |
| Whether the district court properly excluded affidavits submitted by Auto‑Owners | (Implicit) The affidavits would not alter the plain meaning of the award | Affidavits from panel members explain ambiguity and support defendant’s interpretation; they were submitted late but relevant | Court declined affidavits as untimely; on appeal, ambiguity made remand necessary regardless of affidavits |
| Whether time limits prevent court from resubmitting ambiguous award to panel | Herlls: 90‑day challenge rule bars modification now; court must confirm | Auto‑Owners: statute permits resubmission to clarify ambiguous award despite modification time limits | Held resubmission allowed; statutory scheme permits sending ambiguous awards back for clarification despite the 90‑day modification window |
Key Cases Cited
- QBE Ins. Corp. v. Twin Homes of French Ridge Homeowners Ass’n, 778 N.W.2d 393 (Minn. Ct. App. 2010) (Minnesota Uniform Arbitration Act applies to appraisal awards in insurance disputes)
- David A. Brooks Enters., Inc. v. First Sys. Agencies, 370 N.W.2d 434 (Minn. Ct. App. 1985) (appraisal awards reviewed under arbitration principles)
- Johnson v. Mut. Serv. Cas. Ins. Co., 732 N.W.2d 340 (Minn. Ct. App. 2007) (application of arbitration statute to insurance appraisal awards)
- Hilltop Constr., Inc. v. Lou Park Apartments, 324 N.W.2d 236 (Minn. 1982) (court may remand to arbitrator to modify/clarify award)
- Menahga Educ. Ass’n v. Menahga Indep. Sch. Dist. No. 821, 568 N.W.2d 863 (Minn. Ct. App. 1997) (court prohibited from ignoring ambiguity and affirming award)
- Art Goebel, Inc. v. N. Suburban Agencies, Inc., 567 N.W.2d 511 (Minn. 1997) (award ambiguous if reasonably susceptible to more than one interpretation)
- All Metro Supply, Inc. v. Warner, 707 N.W.2d 1 (Minn. Ct. App. 2005) (discusses prior timing limits for resubmitting awards; later legislative changes removed the 20‑day constraint)