Poehler v. Cincinnati Insurance Co.

OPINION HUDSON, Justice. The focus of this appeal is on the permissibility of preaward interest on an insurance appraisal award under Minn. Stat. § 649.09, subd. 1(b) (2016). The case presents three questions: (1) whether the recovery of preaward interest under Minn. Stat.’ § 549.09, subd. 1(b), requires a finding of an underlying breach of. contract or actionable wrongdoing; (2) whether an insured may recover preaward interest on an appraisal award for a fire insurance loss when the insurance policy contains a loss payment provision stating that the loss is not payable until an appraisal award is filed; and (3) whether an insured may recover preaward interest on an appraisal award under'the Minnesota standard fire insurance policy, Minn. Stat. § 65A.01 (2016), even though the insurer did not adopt the exact statutory language in its insurance policy. For the reasons that follow, we reverse the decision of the court of appeals. FACTS Respondent/cross-appellant Cincinnati Insurance Company (Cincinnati) issued appellant/cross-respondent James Poehler (Poehler) a homeowner’s insurance policy that provided replacement cost coverage for Poehler’s home and personal property. As required by statute, the policy included an appraisal clause, providing that either the insurer or the insured may demand an appraisal if they cannot agree on the amount of the loss. See Minn, Stat. § 65A.01, subd. 3. The policy also contained a statutorily-mandated loss payment provision, - providing that the loss is payable within 5 working days after the insured files an appraisal award with the insurer. A fire damaged Poehler’s property in October 2013. Poehler promptly notified Cincinnati of the damage, and Cincinnati made its first payment on the claim a week after the fire. On December 2, 2013, Poeh-ler properly demanded an appraisal under the appraisal clause of the policy, which requires a “written request” from the demanding party. By then, Cincinnati had paid Poehler $105,394. Cincinnati continued making payments and had paid a total of $175,663 by the time an appraisal hearing was held in June 2014. The parties authorized the appraisers to decide “all issues” involving the claim, including coverage issues. At the appraisal hearing, Poehler argued that he was entitled to an additional $170,442 beyond what Cincinnati had already paid for the loss; Cincinnati argued that Poehler was entitled to an additional $57,965. On June 23, 2014, the appraisers issued an award, determining that Poehler’s total loss was- $88,480 more than what Cincinnati had paid-by the time of the appraisal — 139 — hearing. Cincinnati paid the appraisal award in full on July 9, 2014.1 Poehler subsequently brought a motion in Hennepin County District Court, seeking, among other relief, confirmation of the appraisal award under the Uniform Arbitration Act, Minn. Stat. §. 572B.22 (20Í6), and preaward interest under Minn. Stat. § 549.09, subd. 1(b). Cincinnati responded that confirmation of the appraisal award was unnecessary because it had already paid the full award, and it should not be required to pay preaward intérest because it had promptly complied with all the terms of the policy and the appraisal award.' The district court confirmed the appraisal award and granted Poehler pre-award interest in the amount of $14,635. In concluding that Poehler was entitled to preaward interest, the district court noted that Cincinnati had “initially undervalued Poehler’s loss by more than $88,000,” leaving him “to bear a significant portion of the burden of his loss.” The district court calculated the preaward interest from December 2, 2013, the date Poehler demanded an appraisal, to June 23, 2014, the date of the award, which was 203 days later. Based on the appraisal award and the preaward interest period, the district court calculated preaward interest as follows: “203/365 x $263,144.04 x 10% = $14,635.13.” The court of appeals reversed, concluding that the preaward interest statute, Minn. Stat. § 549.09, subd. 1(b), “does not apply to appraisal awards pursuant to an insurance policy in the absence of an underlying breach of contract or actionable wrongdoing.” Poehler v. Cincinnati Ins. Co., 874 N.W.2d 806, 807 (Minn.App. 2016). Poehler sought review of the court of appeals’ decision and Cincinnati requested conditional cross-review. We granted both parties’ petitions. ANALYSIS I. We begin with the question of whether the court of appeals erred in holding that Minn. Stat. § 549.09 requires a finding of “an underlying breach of contract or actionable wrongdoing” for the recovery of preaward interest on an insurance appraisal award, Poehler, 874 N.W.2d at 807. Poehler contends that the court of appeals’ interpretation of section 549.09 is contrary to the statute’s plain language and legislative purpose, as weíl as the court of appeals’ prior decisions. In response, Cincinnati argues that under section 549,09 preaward interest is only provided for awards of “damages,” and Minnesota courts have defined “damages” solely as compensation for wrongdoing. We conclude that the court of appeals erred in its interpretation of the statute, because Minn. Stat. § 549.09 does not require a finding' of wrongdoing for the recovery of preawhrd interest on appraisal awards. We review statutory interpretation issues de novo. Christianson v. Henke, 831 N.W.2d 532, 535 (Minn. 2013). In,interpreting a statute, we first “determine whether the statute’s language, on its- face, is ambiguous.” Id. at 536 (citation omitted) (internal quotation marks omitted). “A statute is only ambiguous if its language is subject to more than one reasonáble interpretation.” Id. at 537. If we'determine that a statute is clear and unambiguous, our — 140 — “role is to enforce the language of the statute and not explore the spirit or purpose of the law.” Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826, 836 (Minn. 2012). Minnesota Statutes § 549.09, subd. 1(b), states, in relevant part, Except as othenvise provided by contract or allowed by lay), preverdict, pre-award, or prereport interest on pecuniary damages shall be computed ... 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.... Except as otherwise provided by contract or allowed by law, preverdict, pre-award, or prereport interest shall not be awarded on the following: (1) judgments, aioards, or benefits in workers’ compensation cases, but not including third-party actions; (2) judgments or awards for future damages; (3) punitive damages, fines, or other damages that are noncompensatory in nature; (4) judgments or awards not in excess of the amount specified in section 491A.01; and (5) that portion of any verdict, award, or report which is founded upon interest, or costs, disbursements, attorney fees, or other similar items added by the court or arbitrator. (Emphasis added.) Section 549.09 plainly and unambiguously provides preaward interest on “pecuniary damages”—including those awarded in insurance appraisals—that are not otherwise excluded by the statute.2 The statute, however, does not define “pecuniary” or “damages,” Minn. Stat. § 549.09, nor have we interpreted either term in the context of the statute. The parties here dispute the definition of “damages.” In determining whether a statute is ambiguous, we give technical words and phrases their special or defined meaning, and other words and phrases their plain and ordinary meaning. In re Welfare of 831 N.W.2d 260, 264, 266 (Minn. 2013). Although Cincinnati contends that “damages” is a legal term that is defined as compensation for wrongdoing only, we have held that the term “damages” does not have an accepted technical meaning in the insurance industry.3 Minn. Min. & Mfg. Co. v. Travelers Indem. Co., 457 N.W.2d 175, 179 (Minn. 1990). Because we conclude that the term “damages” does not have a technical meaning, we interpret it according to its plain and ordinary meaning. In determin — 141 — ing the plain and ordinary meaning of undefined words or phrases in a statute, we may consult the dictionary definitions of those words and apply them in the context of the statute. See Shire v. Rosemount, Inc., 875 N.W.2d 289, 297 (Minn. 2016). In general, dictionaries define “damages” as compensation for loss, injury, or wrong. For example, Webster’s defines “damages” as “the estimated reparation in money for detriment or injury sustained: compensation or satisfaction imposed by law for a wrong or injury caused by a violation of a legal right.” Webster’s Third New International Dictionary of the English Language Unabridged 571 (2002). The American Heritage Dictionary defines “damages” as “[mjoney required to be paid as compensation for an injury or wrong.” The American Heritage Dictionary of the English Language 457 (5th ed. 2011). New Oxford defines “damages” as “a sum of money claimed or awarded in compensation for a loss or an injury.” New Oxford American Dictionary 439 (3d ed. 2010). Thus, the ordinary meaning of “damages” is not limited to compensation for 'wrongdoing only; rather, it extends to compensation for any injury suffered, whether wrongful or not. In addition, unless otherwise provided by contract or law, subdivision 1(b)(3) of section 549.09 precludes the recovery of preaward interest on “damages that are noncompensatory in nature.” Minn. Stat. § 549.09, subd. 1(b)(3). In other words, section 549.09 provides preaward interest on all awards of compensatory damages that are not excluded by the statute. See Lessard v. Milwaukee Ins. Co., 514 N.W.2d 556, 558 (Minn. 1994). The statute does not define “noncompensatory” or “compensatory.” Minn. Stat. § 549.09. We have stated that “[i]n the absence of a statute defining compensatory damages, it is clear that compensatory damages are generally synonymous with actual damages.” Phelps v. Commonwealth Land Title Ins. Co., 537 N.W.2d 271, 275 (Minn. 1995). And we have defined “actual damages” as “[a]n amount awarded to a complainant to compensate for a proven injury or loss; damages that repay actual losses.” Ray v. Miller Meester Advert., Inc., 684 N.W.2d 404, 407 (Minn. 2004) (citing Damages, Black’s Law Dictionary (7th ed. 1999)). Therefore, even the definitions of “compensatory damages” and “actual damages” do not indicate that section 549.09 can be reasonably interpreted to condition the recovery of preaward interest on a finding of wrongdoing. Accordingly, we hold that Minn. Stat. § 549.09, subd. 1(b), 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 preaward interest to cases or matters involving wrongdoing or a breach of contract. Because we conclude that the statutory language is unambiguous, we do not explore the spirit or purpose of the statute. See Caldas, 820 N.W.2d at 836. II. Having decided that Minn. Stat. § 549.09 provides for preaward interest on insurance appraisal awards regardless of the existence of wrongdoing, we next address whether the loss payment provision in Cincinnati’s insurance policy precludes Poehler from recovering preaward interest on the appraisal award. The prejudgment interest statute states that the date on which preaward interest begins to accrue is determined according to the schedule contained in the statute “[e]xcept as otherwise prpvided by contract or allowed by law.” Minn. Stat. § 549.09, subd. 1(b). Cincinnati argues that the loss payment provision in its insurance — 142 — policy precludes preaward interest on Poehler’s appraisal award because the provision governs when any and all payments for loss are due, and it states that a loss is not payable until 5 days after the filing of an appraisal award. In response, Poehler argues that the loss payment provision is silent on preaward interest and controls' only the payment of a covered loss. Poeh-ler contends that the insurance policy’s silence on preaward interest should not be interpreted as an exclusion of preaward interest, given established Minnesota precedent requiring strict construction of insurance policies against the insurer. We hold 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. As required by Minn. Stat. § 65A.01, Cincinnati included in its insurance policy a loss payment provision, which states, 10. Loss Payment [[Image here]] Loss is payable within 5 working days-. a. Prom the receipt of the agreement by “us” or, if later, from the date of “your” performance of any conditions set by such agreement; or b. After there is an entry of a final judgment; or c. After there is a filing of an appraisal award with “us”. (Emphasis added.) We have never addressed whether an insurance policy provision governing when payments for loss are due precludes the insured from recovering preaward interest. But two recent cases in the Minnesota federal district court have dealt with this question and reached opposite conclusions. In Housing & Redevelopment Authority of Redwood Falls v. Housing Authority Property Insurance (“Redwood Falls”), No. 14-CV-4741 (PAM/HB), 2015 WL 4255858 (D. Minn. July 14, 2015), appeal docketed, No. 15-3499 (8th Cir. Nov. 3, 2015), the federal district court examined a commercial-property insurance policy between a municipal housing authority and a property insurance company. The issue was almost identical to the issue here. The insurance policy in Redwood Falls covered fire losses and contained a loss payment provision stating that the loss was payable 30 days after the filing of the appraisal award. Id. at *1. After the insurer paid the appraisal award, the insured sued, seeking, among other things, recovery of preaward interest under Minn. Stat. § 549.09. Redwood Falls, 2015 WL 4255858, at *1. Redwood Falls held that the insured was not entitled to preaward interest on the appraisal award because the insured was “not entitled to interest on the award before [the insurer] was obligated to make the payment.” Id. at 3. In reaching this conclusion, the court reasoned that the insurance policy implicitly addressed when any preaward interest would start accruing based on when the insurer was contractually obligated to pay the loss. Id. The court stated that section 549.09 was intended to compensate the plaintiff for the loss of use of his money, and the statute assumed that “the plaintiff previously had a right to the money and the defendant wrongfully withheld the money.” Redwood Falls, 2015 WL 4255858, at *4. According to the court, that assumption did not apply to the facts in Redwood Falls because the insured was not entitled to any payment until after the appraisal award was filed. Id. The court also noted that the insured’s public-policy argument was not “compelling enough to override the clear statutory and contract language,” and “denying pre143 award interest here respects the parties’ contractual expectations.” Id, On the other hand, in a Report and Recommendation of United States Magistrate Judge, Eden Homeowners Ass’n, Inc. v. American Family Mutual Insurance Co. (“Eden”), No. 15-CV-3527 (RHK/HB) (D. Minn. Dec. 22, 2015), a U.S. Magistrate Judge reached the opposite conclusion on similar facts, and her conclusion was adopted by the federal district court, Order Adopting Report and Recommendation, Eden, No. 15-CV-3527 (RHK/HB) (D. Minn. Jan. 11, 2016). In this instance, the insurance policy was between a townhome association and its property insurer. Report and Recommendation, No. 15-CV-3527 at 2. The dispute arose after a hail storm damaged the siding on some of the townhomes. Id. The insurance policy required the insurer to pay a covered loss within 5 business days after (1) receiving the proof of loss and (2) an appraisal award has been made. Id. As of the date the case was removed to the federal court, the insurer had not paid any of the appraisal award. Id. at 5. The court awarded preaward .interest starting from the date on which the insured provided written notice of its claim to the insurer. Id, at 16. According to the court, the insurer erred in “presuming] that the date on which preaward interest began to accrue and the date on which it was obligated to pay a covered loss must be the same.” Id, at 15. The court reasoned that a loss payment provision “governs only when [the insurer] must pay the amount of a covered loss; it (foes not speak to when interest begins to accrue on that amount or when such interest must be paid.” Id. In addition, “the insurance policy is silent as to when interest begins to accrue,” and “[t]o find that the loss payment provision establishes the interest accrual date is inconsistent with the basic principles of contract law.” Id. The court concluded by stating: The parties here were free to contract regarding when interest would begin to accrue on an unpaid covered loss, but they did not. Thus, § 549.09’s conditional phrase “except as otherwise provided by contract” was never triggered, and § 549.09 alone governs the date on which interest began to accrue. Moreover, [the insurer’s position that preaward interest did not start to accrue until five days after the date of the appraisal award is nonsensical. By definition, preaward interest begins to accrue before an award is issued. Id. (footnote omitted). Neither decision is binding on us, but we are persuaded by the reasoning in Eden. The loss payment- provision in Cincinnati’s insurance policy governs only when a covered loss is payable; it does not speak to when interest begins to accrue, which can be months or even years before the payment is due. And the policy does not explicitly prohibit preaward interest on appraisal awards. According to the statute, Cincinnati was free to contract with Poeh-ler on the accrual of interest, but it did not. Accordingly, the conditional phrase in Minn. Stat. § 549.09, “[e]xcept as otherwise provided by contract,” was never triggered and Cincinnati’s policy does not preclude Poehler from recovering preaward interest. III. Cincinnati also argues that Poeh-ler is precluded from recovering preaward interest on his appraisal award by the loss payment provision in Minn. Stat. § 65A.01, which contains Minnesota’s standard fire insurance policy. According to Cincinnati, section 65A.01 governs, the situation here, and the “fe]xcept as otherwise ... allowed by law” language in Minn. Stat. § 549.09, — 144 — subd. 1(b), subordinates the prejudgment interest statute to the mandatory terms set forth in section 65A.01. Cincinnati contends that the loss payment provision mandated by section 65A.01 precludes Poehler from recovering preaward interest on the appraisal award because section 65A.01 states that an insurer does not owe any interest until the loss is payable, which, according to the statute, is 60 days after the filing of the appraisal award, Minn. Stat. § 65A.01, subd. 3. In response, Poehler maintains that section 65A.01’s loss payment provision is not part of Cincinnati’s insurance policy and does not apply here, because in contracting with Poehler, Cincinnati replaced the statutory provision with a “broader, less restrictive, and more ‘homeowner friendly’ ” provision as permitted by the statute. Poehler also contends that, even if we decide that the statutory loss payment provision applies, it does not preclude pre-award interest on the appraisal award; it merely caps Cincinnati’s maximum liability exposure. We conclude that the loss payment provision in section 65A.01 does not apply here, and therefore we need not address the effect of section 65A.01’s loss payment provision on preaward interest for appraisal awards. Minnesota Statutes § 65A.01 requires that certain terms and conditions be included in fire insurance policies in Minnesota. According to the statute, a fire insurance policy must provide the specified coverage and conform to all provisions, stipulations, and conditions in the statute, “except as provided in [other sections of the law] and other statutes containing specific requirements that are inconsistent with the form of this policy.” Minn. Stat. § 65A.01, subd. 1. Section 65A.01 also states, however, that an insurance policy providing coverage against fire may be issued without incorporating the exact language of the statute, provided: Such policy or contract shall, with respect to the peril of fire, afford the insured all the rights and benefits of the Minnesota standard fire insurance policy and such additional benefits as the policy provides; ... such policy or contract is complete as to its terms of coverage; and, the commissioner is satisfied that such policy or contract complies with the provisions hereof.” Id. at subd. 1 (emphasis added). And with regard to loss payment, section 65A.01 provides the following standard clause: 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. Id. at subd. 3 (emphasis added). As we note in Part II of this opinion, the loss payment provision in Cincinnati’s insurance policy does not contain the exact language provided in Minn. Stat. § 65A.01, subd. 3. Among other things, Cincinnati’s loss payment provision provides a shorter payment schedule—5 days as opposed to 60 days—and does not contain the statutory language, “with interest thereon from the time when the loss shall become payable,” id. We have stated that “[u]se of the statutory [fire insurance] form is mandato — 145 — ry, and its provisions may not be omitted, changed, or waived.” Watson v. United Servs. Auto. Ass’n, 566 N.W.2d 683, 690 (Minn. 1997). But insurance companies may include “additional or different terms into their policies that offer more coverage than the statutory minimum.” Id. We will therefore uphold a provision in a fire insurance policy “only if it affords the insured all the rights and benefits of the Minnesota standard fire insurance policy or offers additional benefits which provide more coverage to the insured than the statutory minimum.” Id. at 691 (citing Krueger v. State Farm Fire & Gas. Co., 510 N.W.2d 204, 209 (Minn.App. 1993), rev. denied (Minn. Oct. 27, 1994)). In Krueger, the court of appeals held that the district court had erred in directing a verdict in favor of the insurance company based on a provision in Minn. Stat. § 65A.01. 510 N.W.2d at 208-09. According to the court of appeals, the district court should not have “us[ed] the statute to determine the extent of Krueger’s coverage” when the insurance company had provided a policy—in force at the time of the loss—that contained the minimum coverage required by the statute. Id. at 209. Reversing and remanding to the district court, the court of appeals held that “it was error to direct a verdict without considering whether the [insurance] policy afforded greater coverage than the minimum coverage required by the standard policy.” Id. The court of appeals stated that “[b]y using the standard policy against the insured to impose a vacancy clause not found in the policy, the trial court used the statute as a sword for the insurer, rather than a shield for the insured.” Id. We agree with Krueger that section 65A.01 should not be used “as a sword for the insurer,” and that the statute is not applicable when the parties have agreed to an insurance policy that affords the insured the minimum coverage required by the statute. Here, Cincinnati’s insurance policy afforded Poehler the basic rights and benefits mandated by the law. See Minn. Stat. § 65A.01. To the extent that the provision in Cincinnati’s policy provided a shorter payment schedule than the statutory provision and omitted the “interest” language in section 65A.01, the policy provision offered greater benefits and broader coverage to the insured. Nothing required Cincinnati to provide a shorter payment schedule; it had the opportunity to include the statutory interest language in its policy, but did not do so. Thus, we conclude that the loss payment provision in Cincinnati’s policy governs over the loss payment provision set forth in Minn. Stat. § 65A.01, and we should not look to the statute to determine the extent of Poehler’s coverage. Because the standard fire insurance policy is not applicable here, Poehler is not precluded from recovering preaward interest on the appraisal award.4 — 146 — CONCLUSION For the foregoing reasons, we reverse the decision of the court of appeals. Reversed. Dissenting, Anderson, Stras, JJ. Footnotes [1] Although the policy provides that the loss became payable within 5 working days after the filing of an appraisal award and Cincinnati paid the loss more than 5 working days after the filing of the appraisal award, the district court noted that Poehler had not argued that Cincinnati was late in paying the loss under the loss payment provision of the policy. [2] The dissent argues that "the parties’ appraisal proceeding does not trigger a right to preaward interest,” and by allowing Poehler to recover preaward interest on his appraisal award, we have “ignor[ed] the mandatory triggers for preaward interest” in Minn. Stat. § 549.09, subd. 1(b). However, in calculating preaward interest, the district court found that the statutory preaward interest began accruing on the date that Poehler demanded an appraisal—a demand that the insurance policy required in writing. In other words, the district court found that Poehler’s demand for appraisal was the triggering event. Notably, Cincinnati never challenged the validity of Poehler’s demand for appraisal or argued that the demand was not in writing. Nor has Cincinnati contended that Poehler’s demand for appraisal was not a triggering event. Because the parties have not challenged this finding of the district court, the triggering-event issue raised by the dissent is not properly before us. [3] The cases and secondary literature cited by Cincinnati deal exclusively with factual scenarios or areas of law that involve wrongdoing. Accordingly, the authors of these sources contemplated a meaning of "damages” only in contexts that involve wrongdoing. [4] Cincinnati also contends that “[i]f ‘loss of use of money' is the basis for an award of [preaward] interest in this case, it must be recognized that Poehler did not have a ‘loss of use’ of more than $100,000 of the ultimate appraisal award.” Accordingly, Cincinnati maintains that the district court erred in awarding interest on the full amount of the appraisal award, $263,144, without deducting the $105,394 Cincinnati had already paid to Poehler by December 2, 2013, when Poehler demanded an appraisal. Poehler does not respond to this argument in his reply brief. We acknowledge that it is anomalous for the district court to have awarded preaward interest on the full amount of the appraisal award, but wé need not address this issue because it is not properly before us on appeal. Cincinnati did not object to Poehler's proposed calculation of preaward interest based on the full amount of the appraisal award in the district court. Cincinnati raised this calculation issue before the court of appeals, but the court of appeals ultimately did not need to — 146 — address it Before us, Cincinnati did not raise this issue in its opposition to Poehler’s petition for review or its request for conditional review. When asked at oral argument whether Cincinnati contended that the-district court erred in calculating the preaward interest, Cincinnati responded in the negative. We conclude that Cincinnati did not preserve this issue on appeal and thus we take no position on the merits of the argument. See e.g., In re GlaxoSmithKline PLC, 699 N.W.2d 749, 757 (Minn. 2005) (declining to consider the merits of an issue that the state did not raise in its petition for review, noting that the respondent might have argued its position on the merits more extensively had the issue been raised in the state’s petition and fully developed in the state’s brief).