Housing and Redevelopment Authority of Redwood Falls Plaintiff- Appellant
Housing Authority Property Insurance Defendant-Appellee
Submitted: October 18, 2016
from United States District Court for the District of
Minnesota - Minneapolis
GRUENDER, BEAM, and SHEPHERD, Circuit Judges.
GRUENDER, Circuit Judge.
and Redevelopment Authority of Redwood Falls
("HRA") appeals the district court's order
declining to grant pre-award interest on an insurance
appraisal award. Because the Minnesota Supreme Court
subsequently ruled that Minnesota Statute section 549.09
provides for pre-award interest on such awards, we reverse
the district court's order and remand for further
owns a public-housing apartment building insured by Housing
Authority Property Insurance ("HAPI"). The building
caught fire on January 24, 2013, and HRA submitted an
insurance claim to HAPI. HAPI accepted coverage of the loss
and paid $2, 387, 239 to HRA. However, the parties disagreed
on the total value of the loss, and HAPI demanded an
appraisal pursuant to the terms of the insurance policy.
the appraisal panel, HAPI estimated the total repair cost at
$2, 834, 433.90, while HRA requested $6, 109, 069.35. On June
4, 2014, the appraisal panel issued its award and determined
that the actual cash value of the loss was $3, 097, 512.80.
On June 23, 2014, HAPI paid HRA $707, 773.80, which
represented the difference between the actual cash value of
the loss and the payments already made, less a $2, 500
then sued HAPI in a Minnesota state court, seeking
confirmation of the appraisal award under Minnesota's
Uniform Arbitration Act and recovery of pre-award interest
under Minnesota Statute section 549.09. HAPI removed the case
to federal court based on diversity jurisdiction, and both
parties filed motions for summary judgment. HRA argued that,
under section 549.09, it was entitled to interest of 10
percent per year on the actual cash value of the loss,
starting from the time of the written notice of the claim.
The district court confirmed the appraisal award, but it
denied HRA's request for pre-award interest under section
549.09 is Minnesota's general prejudgment interest
statute. As is relevant here, it states:
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.
Minn. Stat. § 549.09, subd. 1(b). The district court
reasoned that "[t]he first six words of the statute,
'[e]xcept as otherwise provided by contract, '
resolve the issue." Hous. and Redev. Auth. of
Redwood Falls v. Hous. Auth. Prop. Ins., No. 14-cv-4741,
2015 WL 4255858, at *3 (D. Minn. July 14, 2015) (quoting
id.). The court noted that, "[t]hough the
insurance policy does not expressly prohibit pre-award
interest, it implicitly addresses when the interest would
start accruing based on when HAPI must pay the loss."
Id. Specifically, a portion of the insurance policy
states that "[a]n insured loss will be payable 30 days
after . . . the filing of an appraisal award."
Id. The court also reasoned that granting pre-award
interest would not further the purpose of the statute, which
is "to compensate the plaintiff for the loss of use of
his money, " unless HAPI "wrongfully withheld the
money" beyond the payable date set forth in the
insurance policy. Id. at *4 (quotation omitted).
Hence, because HAPI fully compensated HRA less than thirty
days after the appraisal panel issued its award, the court
held that HRA "suffered no loss of the use of the
money" and thus was not entitled to pre-award interest.
Id. It entered summary judgment in favor of HAPI,
id. at 5, and HRA now appeals.
review de novo a grant of summary judgment, considering the
facts in the light most favorable to the nonmoving party.
Summary judgment is proper when no genuine issues of material
fact exist and the moving party is entitled to judgment as a
matter of law." Nat'l Am. Ins. Co. v. W & G,
Inc., 439 F.3d 943, 945 (8th Cir. 2006) (citation
omitted). "In insurance coverage actions involving
diversity of citizenship, state law controls our analysis of
the insurance policy." Id. "Decisions from
the state supreme court as to state law are binding on this
court." Cont'l Cas. Co. v. Advance Terrazzo
& Tile Co., 462 F.3d 1002, 1007 (8th Cir. 2006).
time the district court granted summary judgment in favor of
HAPI, the Minnesota Supreme Court had not yet addressed
whether section 549.09 permits recovery of pre-award interest
on an appraisal award when the insurance policy does not
expressly address pre-award interest. Since then, the
Minnesota Supreme Court has resolved this issue in
Poehler v. Cincinnati Insurance Company, --- N.W.2d
---, 2017 WL 3045531 (Minn. July 19, 2017). As in this case,
the parties in Poehler disagreed over whether an
insured was entitled to pre-award interest under section
549.09 after appraisers issued an award determining that the
insured's total loss was greater than what the insurer
had paid by the time of the appraisal hearing. Id.
at *1-2. Moreover, the insurance policy in Poehler
was identical in all relevant respects to the policy here, as
it declared that a "[l]oss is payable within 5 working
days . . . [a]fter there is a filing of an appraisal
award." Id. at *4 (emphasis omitted).
Poehler, the court first explained that section
549.09 "unambiguously provides for preaward interest on
all awards of pecuniary damages that are not specifically
excluded by the statute, and does not restrict the recovery
of pre-award interest to cases or matters involving
wrongdoing or a breach of contract." Id. Next,
the court held that, "absent contractual language
explicitly precluding preaward interest, an insured may
recover preaward interest on an appraisal award for a fire
insurance loss, notwithstanding a contractual loss payment
provision stating that the loss is payable after the filing
of an appraisal award." Id. Finally, the court
considered and rejected an argument that the loss-payment
provision in another statute, Minnesota Statute section
65A.01, precluded the insured from recovering pre-award