Kyle Wendell Else, Appellant, vs. Auto-Owners Insurance Company, Respondent.
A20-0476
STATE OF MINNESOTA IN SUPREME COURT
October 5, 2022
Chutich, J. Concurring in part, dissenting in part, Thissen, J., Gildea, C.J., Anderson, J.
Court of Appeals. Filed: October 5, 2022 Office of Appellate Courts
Michelle K. Olsen, Jacob M. Birkholz, Birkholz & Associates, LLC, Mankato, Minnesota; and Timothy D. Johnson, Smith Jadin Johnson, PLLC, Bloomington, Minnesota, for appellant.
Timothy P. Tobin, Jeffrey M. Markowitz, Marissa K. Linden, Arthur, Chapman, Kettering, Smetak & Pikala, P.A., Minneapolis, Minnesota, for respondent.
Dale O. Thornsjo, Lance D. Meyer, O’Meara, Leer, Wagner & Kohl, P.A., Minneapolis, Minnesota, for amici curiae The Insurance Federation of Minnesota, The American Property Casualty Insurance Association, and The National Association of Mutual Insurance Companies.
S Y L L A B U S
- The Minnesota
standard fire insurance policy, Minnesota Statutes section 65A.01 (2020) , entitles insureds to prejudgment interest on a covered loss. The coverage limit of the insured’s policy does not control the amount of prejudgment interest that may be awarded under the standard fire policy. - When an insurer denies liability for a fire loss and the parties do not engage in appraisal, the Minnesota standard fire insurance policy entitles a homeowner to prejudgment interest that begins to accrue 60 days after the insurer receives proof of loss.
Reversed and remanded.
O P I N I O N
CHUTICH, Justice.
This appeal involves a dispute between a homeowner and an insurance company over prejudgment interest. At issue is whether a homeowner is entitled to prejudgment interest for a fire loss in an amount that brings the homeowner’s total recovery above the coverage limit in the insurance policy. After fires damaged his home, appellant Kyle Else sought coverage from his homeowner’s insurer, respondent Auto-Owners Insurance Company. Auto-Owners denied coverage, claiming that Else had intentionally set the fires. Else sued, and a jury found for Else on his claims against Auto-Owners. The district court awarded Else prejudgment interest, but limited the amount, finding that Else’s total recovery for his personal property loss could not exceed the policy coverage limit. The court of appeals affirmed. Because we conclude that the Minnesota standard fire insurance policy,
FACTS
In 2015, two separate fires a week apart damaged Kyle Else’s home. At the time of the fires, he insured his home under an insurance policy issued by Auto-Owners Insurance Company. Else made claims under the policy for the damage to his home and other losses, including the loss of personal property.
The dispute here relates to Else’s claim for household personal property loss. The Auto-Owners policy covered property loss because of fire, including personal property up to a limit of $173,411. The policy provides that the insurer will pay the amount of loss in excess of the insured’s deductible, “not to exceed the applicable limit of insurance.” The policy does not specifically address interest.
Auto-Owners asserted that Else caused the fires and denied his claims. The State of Minnesota charged him with arson, but a jury acquitted him of all criminal charges. Despite this acquittal, Auto-Owners continued to maintain that Else caused at least one of the fires and accordingly continued to deny coverage for the fire losses. Else requested an appraisal, and Auto-Owners refused his request.
Else sued Auto-Owners for its denial of insurance coverage, and the case went to trial. The jury found that Else did not start either fire and awarded him damages. After considering post-trial motions, including Else’s motion for prejudgment interest, the district court adjusted the amount of damages but did not award prejudgment interest.
In his first appeal, Else raised several issues, including the district court’s failure to consider his motion for prejudgment interest. The parties agreed that he is entitled to prejudgment interest but disputed the amount. The court of appeals remanded to the district court for a determination of the appropriate amount of prejudgment interest. Else v. Auto-Owners Ins. Co. (Else I), No. A19-0650, 2020 WL 413351, at *11 (Minn. App. Jan. 27, 2020), rev. denied (Minn. Apr. 14, 2020).
On remand, the district court applied Minnesota’s prejudgment interest statute,
The court of appeals affirmed the district court’s award of prejudgment interest on the personal property portion of the judgment. Else v. Auto-Owners Ins. Co. (Else II), No. A20-0476, 2020 WL 7490559, at *8 (Minn. App. Dec. 21, 2020). The court of appeals concluded that “the district court correctly determined that Else is not entitled to prejudgment interest in excess of the applicable policy limit” of the Auto-Owners policy. Id. The court of appeals also concluded that Else is not entitled to prejudgment interest in excess of the policy limit under the Minnesota standard fire insurance policy. Id. at *6. Else petitioned for further review, asking us to determine what effect the standard fire policy has on insurance companies’ attempts to limit prejudgment
ANALYSIS
This case requires us to decide whether the Minnesota standard fire insurance policy,
The district court awarded prejudgment interest under
Else challenges the court of appeals’ decision on a number of grounds. He argues that Lessard is distinguishable because that case involved underinsured motorist benefits and because the policy language here is different from the policy language at issue in Lessard. He also argues that he is entitled to prejudgment interest in excess of the policy limit under the Minnesota standard fire insurance policy. We resolve this dispute based on the interest provision of the standard fire policy.
I.
The Minnesota Legislature first enacted the Minnesota standard fire insurance policy in 1895 “to secure uniformity in fire insurance policies.” Watson v. United Servs. Auto. Ass’n, 566 N.W.2d 683, 690 (Minn. 1997); see
We have described prejudgment interest generally as “an element of damages awarded to provide full compensation by converting time-of-demand . . . damages into time-of-verdict damages.” Lienhard v. State, 431 N.W.2d 861, 865 (Minn. 1988). The interest provision of the standard fire policy provides that the insurer “will not in any case be liable for more than the sum insured, with interest thereon from the time when the loss shall become payable.”
Else argues that the standard fire policy entitles him to prejudgment interest in excess of the coverage limit of the Auto-Owners policy. According to Else, the standard fire policy describes the liability of the insurer as its coverage limit plus interest. Auto-Owners counters that the interest provision does not require an insurer to pay prejudgment interest in excess of the policy limit. Pointing to the standard fire policy’s interest provision being framed in terms of the company not being liable for more than a particular amount, Auto-Owners maintains that the interest provision is a cap on the insurer’s liability, not a guarantee of minimum coverage. The court of appeals agreed with Else that the interest provision contemplates that an insurer may be liable for prejudgment interest in an amount that exceeds the policy limit, but the court of appeals agreed with Auto-Owners that the interest provision states “a maximum” and “is not a minimum requirement.” Else II, 2020 WL 7490559, at *6.
We hold that the plain language of the standard fire policy, by its express terms, entitles an insured to prejudgment interest in an amount that may cause the insured’s total recovery to exceed the coverage limit of the policy. The inclusion in
Because we apply the Minnesota standard fire insurance policy, we have no need to consider the rule of law from Lessard. We held in Lessard that “an insured, in the absence of any statutory command to the contrary, may not recover
II.
We next consider when prejudgment interest began to accrue under the Minnesota standard fire insurance policy. The court of appeals never reached this issue, based on its determination that the standard fire policy did not apply. Else II, 2020 WL 7490559, at *6. After oral argument, we requested supplemental briefing addressing “when prejudgment interest began to accrue under the Minnesota standard fire insurance policy” and “whether prejudgment interest may begin to accrue before ascertainment of the loss.”1 We address the accrual issue here in the interests of judicial economy. See McGuire v. Bowlin, 932 N.W.2d 819, 828 (Minn. 2019) (resolving a question of law not addressed by the court of appeals or district court in the interests of judicial economy).
The standard fire policy provides that an insured is entitled to interest “from the time when the loss shall become payable.”
At issue is whether prejudgment interest can begin accruing before ascertainment of the loss when the insurer denies all liability. The standard fire policy provides that the loss becomes payable after the insurer receives the insured’s proof of loss and ascertainment of the loss is made either by an agreement of the parties or an appraisal award.
We have previously awarded prejudgment interest under the standard fire policy starting 60 days after proof of loss without ascertainment of the loss. Marshall Produce Co. v. St. Paul Fire & Marine Ins. Co., 98 N.W.2d 280, 300 (Minn. 1959). In Marshall, a fire caused property damage, and the insurers denied liability under the property owner’s policies. Id. at 284, 286. Applying the same loss-payable provision as appears in the current standard fire policy,
Auto-Owners acknowledges that we awarded prejudgment interest under the standard fire policy in Marshall without ascertainment of the loss. Auto-Owners contends, however, that we should not treat that outcome as stare decisis because the opinion “includes no analysis on interest.” Although we did not state the rationale for awarding prejudgment interest 60 days after proof of loss, 98 N.W.2d at 300, we could not have decided whether and when prejudgment interest began to accrue without interpreting and applying the language of the standard fire policy. Further, we supported our interpretation of the standard fire policy with citations to legal authority. See 98 N.W.2d at 300 n.7.3
The federal court correctly applied Marshall and correctly articulated the rule of law from Marshall—that in the situation “where the insurer disclaims all liability” and there has accordingly been no ascertainment of the loss by agreement or appraisal, interest begins to run 60 days after proof of loss. Craigie, 191 F. Supp. at 716. Our interpretation of the standard fire policy in Marshall and the rule of law articulated in Craigie have stood unchallenged—until now—for the last 60 years.5
The Legislature has amended other provisions of the standard fire policy since our decision in Marshall, but the Legislature has notably not amended the loss-payable provision in the last 65 years. See
We next apply the standard fire policy to the facts here. Once an insured submits a proof of loss for a fire insurance claim, the standard fire policy contemplates that the insurer can settle the claim if it agrees with the amount of loss, or request appraisal if it disagrees with the amount of loss. See
The dissent suggests that “[n]o one contests” that “an insured has the right to recover interest on fire insurance claims.” But the dissent itself contests that right. The dissent acknowledges that a “likely result” of his interpretation of the standard fire policy “is that Else would recover no interest” under the policy.7 The
Situations like these, when the insurer denies liability, make clear why the appraisal process is not always appropriate. Auto-Owners rejected Else’s request for appraisal on the ground that the loss was “total.” See
In the 125 years the standard fire policy has been in place, we have never interpreted the standard fire policy to deny an insured prejudgment interest when the insurer denies liability. We decline to adopt that interpretation for the first time today.
For the foregoing reasons, we reverse the decision of the court of appeals and remand to the district court to recalculate prejudgment interest consistent with this opinion.
Reversed and remanded.
Kyle Wendell Else, Appellant, vs. Auto-Owners Insurance Company, Respondent.
A20-0476
STATE OF MINNESOTA IN SUPREME COURT
October 5, 2022
C O N C U R R E N C E & D I S S E N T
THISSEN, Justice (concurring in part and dissenting in part).
This is a tale of two statutory interest provisions. On the one hand,
Except as otherwise provided by contract or allowed by law, preverdict, preaward, or prereport interest on pecuniary damages shall be computed as provided in paragraph (c) 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.[1]
I will refer to this as the prejudgment interest statute. Here, the district court awarded appellant Kyle Wendell Else prejudgment interest under
The second interest provision is found in the Minnesota Standard Fire Insurance Policy statute codified in
The amount of loss for which this company may be liable shall be payable 60 days after proof of loss, as herein provided, is received by this company and ascertainment of the loss is made either by agreement between the insured and this company expressed in writing or by the filing with this company of an award as herein provided. It is moreover understood that there can be no abandonment of the property insured to the company, and that the company will not in any case be liable for more than the sum insured, with interest thereon from the time when the loss shall become payable, as above provided.
loss payable provision only provides interest from the time the loss becomes payable. Indeed,
I agree with the court that the policy Auto-Owners issued to Else is subject to chapter 65A. I also agree that, by its terms, interest awarded under the loss payable provision is not subject to coverage limits set forth in the policy.
I disagree with the court, however, on the operation of the loss payable provision in
A.
I will return to my reasons why I disagree with the court‘s conclusion about how the loss payable provision in
We could end our analysis there and allow Else to keep the prejudgment interest he was already awarded—prejudgment interest that Auto-Owners already paid up to coverage limits and that Auto-Owners is not seeking to claw back. I support that resolution of the case.
Poehler is instructive on this point, even though the dispute in Poehler was somewhat different from the dispute in this case. In Poehler, the insured insisted that it could recover preaward interest under
The contractual loss payment provision in Poehler was functionally equivalent to the contractual loss payable provision in the Auto-Owners policy at issue here, with one important exception. In both policies, losses were payable within a certain timeframe after one of three events occurs: (1) the parties agree on the amount of loss; (2) an appraiser files an appraisal award determining the amount of loss; or (3) final judgment is entered on the amount of loss. See Poehler, 899 N.W.2d at 142. Neither policy included in the loss payable provision or elsewhere an express provision about or prohibition on preaward interest. The primary difference between the policies is that the policy in Poehler required that losses be paid within 5 days of the triggering event, while the Auto-Owners policy required (like section 65A.01) that losses be paid within 60 days after the triggering event.
In Poehler, the insurer argued that the contractual loss payable provision limited the period of time when interest accrued: no interest accrued until 5 days after the loss payable triggering event. See id. at 141-42. We rejected that argument, holding that, “absent contractual language explicitly precluding preaward interest, an insured may recover [under
Poehler then addressed another argument: Was the insured limited by
We also rejected that argument. We noted that while the provisions of section 65A.01 may not be omitted, changed, or waived, “insurance companies may include additional or different terms into their policies that offer more coverage than the statutory minimum.” Id. at 145 (citation omitted) (internal quotation marks omitted). We held that section 65A.01 did not apply at all to, and was not incorporated into, the policy because the policy provision “offered greater benefits and broader coverage to the insured.” Id. (noting that the policy provision included a shorter payment schedule than the statutory provision and omitted the interest language in section 65A.01). Accordingly, we concluded that the insured could recover preaward interest under
Under one reading of Poehler, the same result is compelled in this case. Although Auto-Owners’ policy did not benefit Else by shortening the time after which a loss is payable to something less than 60 days, the failure of the Auto-Owners policy language to address accrual of interest arguably benefitted Else by allowing Else to recover prejudgment interest under
In its analysis, however, Poehler did not wrestle with the sticky issue the parties face in this case: Does a policy provision that allows for recovery of prejudgment interest under
Because both parties seem to agree that Else may recover interest under
B.
I start with the text of the statute. The loss payable provision authorizes an insured to recover interest that runs “from the time when the loss shall become payable, as above provided.”
a proof of loss consistent with the
The court does not contest that the words of the loss payable provision plainly set forth the two conditions that must be met before a loss becomes payable and before interest accrues on such a loss. The court does no statutory interpretation at all. Rather, the court contends that we are prevented from applying the plain language of the statute—at least as to the date of interest accrual—because of our decision in Marshall Produce Co. v. St. Paul Fire & Marine Ins. Co., 98 N.W.2d 280 (Minn. 1959). The court asserts that we held in Marshall that, in cases where no appraisal is done, interest under the loss payable provision starts to accrue 60 days after proof of loss is filed—the insured need not satisfy the “ascertainment of loss” condition of the policy before interest starts to accrue. I disagree because Marshall held no such thing.
In Marshall, we were asked to determine whether smoke contamination from a nearby fire was a loss under the insured‘s policy. Id. at 284. The insured owned and operated a plant for the storage of eggs and milk and the processing of the eggs and milk into powder form. Id. A house near the plant caught fire and smoke drifted and entered the processing plant, contaminating the eggs, egg powder, and milk powder. Id.smoke-laden air.” Id. at 284-85. The insured suffered losses because of the Army‘s rejection and sought coverage for its losses from its insurer.
Central to the case was whether the insurance policy‘s language of “loss or damage” included the merchandise‘s loss in value because of the smoke damage or whether it required physical damage by fire. Marshall, 98 N.W.2d at 287. We spent many pages analyzing that question and concluded that the insured property did not have to be physically damaged by fire to recover under the policy. Id. at 290-91. Rather, because the smoke contamination was so severe, we determined that the smoke-damage loss was recoverable “as if the goods had been physically destroyed by the fire itself.” Id. at 292. We held that the policy covered the insured‘s losses.
At the tail end of the case, we summarized as follows: “We reach the conclusion that the trial court‘s finding of loss and damage to the shell eggs and egg and milk powder in drums is adequately supported by the evidence and that plaintiff is entitled to interest thereon from July 10, 1956.” Id. at 300 (emphasis added). Those italicized dozen words and a string cite in an attached footnote at the end of a long opinion is the sole foundation for the court‘s conclusion that, despite plain language that interest does not accrue until two conditions are satisfied—proof of loss and ascertainment—we have already interpreted the loss payable provision to say that interest accrues solely upon proof of loss.
First, we conducted no interpretation of the language of the loss payable provision contained within the predecessor statute to section 65A.01. See id. at 280-301; see also Act of May 11, 1967, ch. 395, art. 6, § 27, 1967 Minn. Laws 587, 778 (repealing Minnesota chapter 65 (1965) as part of a
Moreover, none of the four cases cited in the footnote string cite after the award of interest interpreted the
As to the other cases cited in the footnote in Marshall, the policy in Schrepfer v. Rockford Ins. Co. also did not include an ascertainment condition. 79 N.W. 1005, 1006 (Minn. 1899). Indeed, the court expressly distinguished the policy at issue from policies that included an ascertainment requirement. Id. at 1006-07. But the policy included a provision that stated that, when a dispute arose over the amount of loss, the insurer had a right to arbitrate and ascertain the amount of loss before it was required to pay it. Id. at 1007. Most significant here is that in Schrepfer, we affirmatively held that such an arbitration provision was a “condition precedent” to recover under the policy; precisely opposite to the conclusion that the court reaches in this case. See id. The Schrepfer court ultimately concluded that the insurer waived its right to arbitrate under the policy—but we also limited accrual of interest to the date of the waiver, a date that was long after proof of loss was submitted.5 Id. Finally, Perine v. Grand Lodge of A.O.U.W., 53 N.W. 367 (Minn. 1892), involved a life insurance policy, not the standard fire policy.
The court acknowledges that these cases did not interpret the text or operation of the loss payable provision in
[T]he company, within sixty days after the insured shall have submitted a statement as provided in the preceding clause, shall either pay the amount for which it shall be liable, which amount, if not agreed upon, shall be ascertained by award of referees, as hereinafter provided [or replace, rebuild, or repair the property].
Further, the “general principles” that the court claims the Marshall court drew from the cases cited in footnote 7 of the case are irrelevant to interpreting the statutory language of
Indeed, the court does not claim that we explicitly engaged in legal interpretation of the statute in Marshall. Rather, the court rests its conclusion solely on the facts in Marshall and not our legal reasoning. Essentially, the court posits that because the relevant insurance policy included the statutory loss payable provision, there was no evidence that the loss had been ascertained, and the court approved an award of interest that accrued 60 days after the proof of loss was filed, it necessarily follows that we held that the statutory ascertainment condition may be ignored in every case.6
We rejected precisely such an argument in Staub v. Myrtle Lake Resort, LLC, a case about proof of causation in negligence cases. 964 N.W.2d 613, 628-29 (Minn. 2021). In Staub, we relied on a prior decision in Osborne v. Twin Town Bowl, Inc., 749 N.W.2d 367 (Minn. 2008), and held that a plaintiff claiming negligence need not establish that her theory of causation preponderates over alternative theories when alternative theories of liability are consistent with the plaintiff‘s theory (i.e., when each theory of causation could be one of the substantial factors causing harm). Staub, 964 N.W.2d at 628. We concluded that prior cases, where the facts recited in the opinion suggested that we dismissed negligence claims because the plaintiffs failed to meet their burden to show that their theory preponderated over
The court acknowledges that we included absolutely no analysis of the statutory language of
The best explanation of why we did not analyze the statute is that the meaning of the statute was not, in fact, before us in Marshall. A review of the briefs in Marshall7 demonstrates that the insurer did not claim that it was not obligated to pay interest because the amount of the loss had not been ascertained by agreement or by an appraiser (the second loss payable condition in
“The rule of stare decisis is never properly invoked unless in the decision put forward as precedent the judicial mind has been applied to and passed upon the precise question.” Fletcher v. Scott, 277 N.W. 270, 272 (Minn. 1938); see also In re Krogstad, 958 N.W.2d 331, 337-38 (Minn. 2021) (recognizing the principle articulated in Fletcher); Hanson v. Dep‘t of Nat. Res., 972 N.W.2d 362, 380 (Minn. 2022) (Chutich, J., concurring) (quoting Fletcher for this principle). In Marshall, we did not apply our “judicial mind” to the question of whether the loss payable provision in
C.
In this case, one likely result of remand under my plain reading of the statute is that Else would recover no interest
First, it is critical to remember that this case is not about whether Else receives prejudgment interest. It is about whether he receives prejudgment interest in excess of policy limits. The district court awarded Else prejudgment interest under
Moreover, I am not convinced that
view, if Else cannot recover interest under the
At the end of the day, the court‘s essential policy concern seems to be that an insurer may play games and delay the final ascertainment of the amount of loss unnecessarily. It views prejudgment interest (not post-ascertainment interest) as a tool needed to disincentivize such behavior. And I find the court‘s policy concerns reasonable. Indeed, such concerns are a reason the Legislature enacted section 549.09. But I disagree that it is our place as a court to impose a unique and distinct “prejudgment interest” regime under
Moreover, the court‘s concern about the unfairness caused by recalcitrant insurers seems to focus on the precise situation where, as in this case, the insurer refused to agree to an appraisal process. Let‘s take a counterfactual. Assume that Auto-Owners agreed to an appraisal and the panel determined the amount due rather than a jury after trial. In that case, I do not believe Else would, or even could, argue that he is entitled under the statutory loss payable provision to interest before the appraisers made their determination of the amount of loss. Otherwise, important portions of the text of the loss payable provision—“and ascertainment of the loss is made . . . by the filing with this company of an award as herein provided” and “with interest thereon from the time when the loss shall become payable, as above provided“—become meaningless.
Moreover, in the specific context of an insurer‘s refusal to engage in an appraisal process (or voluntarily agree to the amount of loss), we have already provided a different kind of protection against an insurer that is dragging its feet. As discussed above in note 5,
Else may claim that Auto-Owners waived, or is estopped from contending, that Else did not satisfy the ascertainment requirement of the loss payable provision along the lines of our decision in Schrepfer. See 79 N.W. at 1006–07. In short, we need not work so hard to avoid plain statutory language to protect insureds from foot-dragging insurers when protection is already provided under
D.
In conclusion, my first preference would be to reject Else’s argument that the last sentence of the loss payable provision should be incorporated in
If the case is remanded to the district court so that it can apply the loss payable provision in
GILDEA, Chief Justice (concurring in part and dissenting in part).
I join in the concurrence and dissent of Justice Thissen.
ANDERSON, Justice (concurring in part and dissenting in part).
I join in the concurrence and dissent of Justice Thissen.
Notes
In case of any loss under this policy the insured shall give immediate written notice to this company of any loss, protect the property from further damage, and a statement in writing, signed and sworn to by the insured, shall within 60 days be rendered to the company, setting forth the value of the property insured, except in case of total loss on buildings the value of said buildings need not be stated, the interest of the insured therein, all other insurance thereon, in detail, the purposes for which and the persons by whom the building insured, or containing the property insured, was used, and the time at which and manner in which the fire originated, so far as known to the insured.
In case the insured and this company, except in case of total loss on buildings, shall fail to agree as to the actual cash value or the amount of loss, then, on the written demand of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within 20 days of such demand. In case either fails to select an appraiser within the time provided, then a presiding judge of the district court of the county wherein the loss occurs may appoint such appraiser for such party upon application of the other party in writing by giving five days’ notice thereof in writing to the party failing to appoint. The appraisers shall first select a competent and disinterested umpire; and failing for 15 days to agree upon such umpire, then a presiding judge of the above mentioned court may appoint such an umpire upon application of party in writing by giving five days’ notice thereof in writing to the other party. The appraisers shall then appraise the loss, stating separately actual value and loss to each item; and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two when filed with this company shall determine the amount of actual value and loss. Each appraiser shall be paid by the selecting party, or the party for whom selected, and the expense of the appraisal and umpire shall be paid by the parties equally.
Potential waiver issues also make this case messy in many ways. An issue that is not squarely before us but may be relevant to the ultimate resolution of the case on remand is whether Auto-Owners’ conduct constitutes a waiver, or estops the insurer, from claiming that Else has failed to satisfy the ascertainment condition. The record is not fully developed, and the district court did not address the issue.
Based on Else‘s complaint and evidence in the record, it appears that Else first demanded appraisal by email on December 7, 2015. On December 16, 2015, Else sent Auto-Owners a follow-up letter of appraisal demand in which he suggested two separate appraisals—one appraisal for the February 11, 2015, fire, which originated in the garage and was likely linked to a faulty wiring harness in Else‘s GMC Acadia SUV but the cause of which was left “undetermined” by fire investigators; and a second appraisal for the February 18, 2015, fire, which destroyed Else‘s home. At the time Else demanded arbitration in December 2015, arson charges against Else relating to the second fire remained pending. They were not resolved until his acquittal on those charges on November 10, 2016.
On December 31, 2015, Auto-Owners responded to Else‘s appraisal demand. Auto-Owners observed that it had asked Else for a signed, sworn proof of loss several months previously and Else had failed to submit anything. Auto-Owners also noted that, several months earlier, it scheduled Else to submit to an examination under oath as required under the policy and to provide other documents. Else had done neither. Appraisal under the policy was contingent on Else complying with those policy requirements. Auto-Owners also stated that the February 18 fire appeared to be a total loss, in which event an appraisal was inappropriate. It concluded that an appraisal was either not required or was “at best . . . premature.” Else ultimately completed an examination under oath on April 5, 2016, and submitted a Proof of Loss on June 7, 2016. The record is unclear about whether Else subsequently specifically renewed his demand for an appraisal.
In previous cases, we have suggested that an insurer‘s right under a policy to insist that disputes over an amount of loss be submitted to an arbitrator may be waived. E.g., Schrepfer, 79 N.W. at 1007. In Schrepfer, we were not interpreting the loss payable clause now found in section 65A.01, but instead a policy provision that gave the insurer a right to arbitrate. Id. at 1006-07. In its policy with Else, Auto-Owners agreed that if it would not reach agreement on the actual cash value or amount of loss covered by the policy, “either party can make a written demand for an appraisal,” which would set forth the process for appraising the loss. Of course, that language requires a dispute to exist. Further, the party seeking the appraisal must comply with other conditions of the policy. And, as noted, the policy also recognizes that, in addition to an agreement of the parties or a determination by appraisers, ascertainment may occur upon “court judgment.”
It is also worth noting that the predecessor to the appraisal provisions in
In part, because it is not clear whether Else argued about a waiver to the district court, I would leave the resolution of all these issues for the district court to determine on remand.