PSS Properties v. N. Star Mut. Ins. Co.

999 N.W.2d 902

PSS PROPERTIES, LLC, Appellant,

v.NORTH STAR MUTUAL INSURANCE COMPANY, Respondent.

A23-0466

Court of Appeals of Minnesota.

Filed December 18, 2023

Syllabus by the Court

1. For an insured to be entitled to interest under Minnesota Statutes section 60A.0811 (2022), the insured must obtain a favorable determination in a court action or an arbitration proceeding on a claim against its insurer based on the insurer’s breach or repudiation of, or failure to fulfill, a duty to provide services or make payments under an insurance policy.

2. An appraisal award is not sufficient to demonstrate that an insured prevailed in a claim against an insurer in a court action or arbitration proceeding for purposes of Minnesota Statutes section 60A.0811.

Mower County District Court, File No. 50-CV-22-510

Adam C. Hagedorn, Livgard, Lloyd & Christel PLLP, Minneapolis, Minnesota (for appellant)

Louise A. Behrendt, Stacy A. Broman, Joel M. Muscoplat, Meagher + Geer, P.L.L.P., Minneapolis, Minnesota (for respondent)

Considered and decided by Cochran, Presiding Judge; Johnson, Judge; and Hooten, Judge.^*

OPINION

COCHRAN, Judge

In this insurance-coverage dispute, appellant-insured challenges the distinct court’s determination that it is not entitled to recover interest from respondent-insurer under Minnesota Statutes section 60A.0811 (2022). Because appellant did not prevail in a claim against its insurer in a court action or arbitration proceeding, we conclude that the district court did not err by determining that appellant is not entitled to recover interest under section 60A.0811. We therefore affirm.

FACTS

The following facts are undisputed. On April 7, 2019, part of a commercial building owned by appellant PSS Properties, LLC (PSS) collapsed. PSS opened a claim with its insurer, respondent North Star Mutual Insurance Company (North Star), under its commercial property insurance policy. North Star acknowledged receipt of PSS’s insurance claim on April 8, 2019. In June 2019, North Star paid $97,285.31 to PSS for the actual cash value (ACV) of the property damage and lost rental income.

On April 2, 2021, PSS served North Star with a complaint alleging that North Star had breached the insurance contract by failing to fully compensate PSS for its losses. PSS did not raise any other claims in its complaint.

In July 2021, prior to filing the complaint, PSS demanded an appraisal under the insurance policy. The policy authorized either party to "make written demand for an appraisal" if the parties disagreed on "the value of the property or the amount of the loss." The relevant policy language did not condition the demand for an appraisal on the filing of a court action.¹ PSS then filed its complaint alleging breach of contract in district court on March 18, 2022.

The parties held the appraisal on July 19, 2022. The purpose of the appraisal was to determine the ACV of the loss that occurred as a result of the collapse of the building. The appraisal panel awarded PSS a total of $319,342.50 for the ACV of the damage to the building and for lost rental income. On July 27, North Star paid the difference between its original payment and the appraisal award ($222,057.19) to PSS.

PSS then demanded interest on the appraisal award. North Star paid PSS $29,670.30 in interest, calculated pursuant to Minnesota Statutes section 549.09 (2022). See Poehler v. Cincinnati Ins. Co., 899 N.W.2d 135, 141 (Minn. 2017) (explaining that "[section] 549.09 provides for preaward interest on insurance appraisal awards"). PSS responded that it was entitled to additional interest in the amount of $43,654.26 (for a total of $73,324.56 in interest) pursuant to section 60A.0811, which governs recovery of interest by an insured who prevails on specified claims against an insurer in a court action or arbitration proceeding. Minn. Stat. § 60A.0811, subds. 2-3.

On September 20, 2022, PSS filed a motion for entry of judgment on the appraisal award in the amount of $222,057.19 (the difference between the amount North Star originally paid in 2019 and the 2022 appraisal award) and for interest under section 60A.0811. In a cover letter filed with the motion, PSS asked the district court to remove the case from its trial calendar. PSS explained that "the only issue remaining is a legal issue concerning calculation of prejudgment interest on the appraisal award." PSS did not seek a determination on its breach-of-contract claim from the district court.

The district court determined that PSS was not entitled to interest under section 60A.0811 and declined to enter judgment in favor of PSS.

PSS appeals.

ISSUE

Did the district court err by determining that PSS was not entitled to interest under Minnesota Statutes section 60A.0811?

ANALYSIS

PSS argues that the district court erred by denying its request for interest under Minnesota Statutes section 60A.0811 and declining to enter judgment in favor of PSS. North Star counters that the district court did not err because PSS is not entitled to interest under section 60A.0811, only under section 549.09.

[1] It is well settled that an insured, such as PSS, who obtains an appraisal award pursuant to an insurance policy is entitled to preaward interest under section 549.09, even without a determination of breach of contract or actionable wrongdoing by the insurer. Poehler, 899 N.W.2d at 139, 141. North Star paid PSS interest calculated under section 549.09 when PSS demanded interest. The question before this court is whether the district court erred when it concluded that PSS is not entitled to additional interest from its insurer calculated under section 60A.0811.

[2–4] Whether PSS is entitled to interest under section 60A.0811 is a question of statutory interpretation, which we decide de novo. Else v. Auto Owners Ins. Co., 980 N.W.2d 319, 324 (Minn. 2022). When interpreting a statute, we "first determine whether the statute’s language, on its face, is ambiguous." Poehler, 899 N.W.2d at 139 (quotation omitted). A statute is ambiguous if it "is subject to more than one reasonable interpretation." Id. (quotation omitted). If a statute is not subject to more than one reasonable interpretation, we enforce the plain meaning of the statute without "exploring] the spirit or purpose of the law." Id. at 139-40 (quotation omitted). When analyzing statutory language, we read and construe the statute as a whole "to give effect to all of its provisions" and "avoid conflicting interpretations." Am. Fam. Ins. Grp. v. Schroedl, 616 N.W.2d 273, 277 (Minn. 2000).

PSS argues that it is entitled to interest under section 60A.0811 because it prevailed on its breach-of-contract claim against North Star by obtaining an appraisal award in an amount greater than North Star’s original insurance payment. North Star asserts that PSS is not entitled to interest under section 60A.0811 because obtaining a favorable appraisal award is not prevailing in a breach-of-contract claim in a court action or arbitration proceeding. We agree with North Star.

We begin our analysis by considering the relevant language of section 60A.0811. Subdivision 2 of the statute provides:

An insured who prevails in any claim against an insurer based on the insurer’s breach or repudiation of, or failure to fulfill, a duty to provide services or make payments is entitled to recover ten percent per annum interest on monetary amounts due under the insurance policy, calculated from the date the request for payment of those benefits was made to the insurer.

Minn. Stat. § 60A.0811, subd. 2. And subdivision 3 specifies that "[t]his section applies to a court action or arbitration proceeding." Id., subd. 3.

[5] The parties’ legal dispute turns on what it means to "prevail[ ] in any claim" in "a court action or arbitration proceeding" within the scope of section 60A.0811. We begin by examining the meaning of "prevail." This term is not defined by section 60A.0811 or by chapter 60A. See Minn. Stat. §§ 60A.02, .0811 (2022). "In the absence of statutory definitions, we give words and phrases their plain and ordinary meanings." 500, LLC v. City of Minneapolis, 837 N.W.2d 287, 290-91 (Minn. 2013). To ascertain a term’s plain meaning, we may consider dictionary definitions as well as relevant caselaw. See id. (relying on caselaw and dictionary definitions to define "relating to" and "zoning"); see also Lagasse v. Horton, 982 N.W.2d 189, 198 (Minn. 2022) ("When a term is not defined by statute, we may use dictionary definitions."). "Prevail" is defined as "[t]o obtain the relief sought in an action" or "to win a lawsuit." Black’s Law Dictionary 1438 (11th ed. 2019); cf. Borchert v. Maloney, 581 N.W.2d 838, 840 (Minn. 1998) (interpreting the phrase "prevailing party" as used in chapter 549 as "one in whose favor the decision or verdict is rendered and judgment entered").

We next consider the meaning of the phrase "in any claim" as used in the statute. Because "claim" is not defined by the statute, we likewise consider the dictionary definition of this term. See Lagasse, 982 N.W.2d at 198. "Claim" is defined as "[t]he assertion of an existing right" or "any right to payment or to an equitable remedy, even if contingent or provisional." Black’s Law Dictionary 311 (11th ed. 2019). Considering the definitions of "prevail" and "claim" together, we conclude that the phrase to "prevail[ ] in any claim" as used in section 60A.0811 means that the insured must "win" or "receive a decision in their favor" in their assertion of an existing right or claim.

[6,7] Filially, we consider the meaning of the phrase "a court action or arbitration proceeding" as used in section 60A.0811. The legislature has defined "action" as "any proceeding in any court of this state." Minn. Stat. § 645.45(2) (2022). Likewise, this court has explained that "an ‘action’ is confined to judicial proceedings." Johnson v. Mut. Serv. Cas. Ins. Co., 732 N.W.2d 340, 345 (Minn. App. 2007), rev. denied (Minn. Aug. 21, 2007). The term "arbitration"...