This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
TMC Stores, Inc.,
Federated Mutual Insurance Co.,
Hennepin County District Court
File No. CT 04-002092
Christopher Hoffer, Paul V. Kieffer, Soucie & Bolt, 100 Anoka Office Center, 2150 Third Avenue North, Anoka, MN 55303 (for appellant)
Leatha G. Wolter, Joel T. Wiegert, Meagher & Geer, P.L.L.P., 33 South Sixth Street, Suite 4200, Minneapolis, MN 55402 (for respondent)
Considered and decided by Minge, Presiding Judge; Dietzen, Judge; and Poritsky, Judge.*
Appellant challenges the denial of its motion to amend its complaint to add a claim that an insurance policy should be reformed due to a mutual mistake. Appellant further challenges the entry of summary judgment dismissing its claim for coverage for business interruption insurance. We affirm.
Appellant TMC Stores, Inc. (TMC) owned and operated a
garden and pet retail store located at
In 1996, respondent Federated Mutual
Insurance Company (Federated) issued TMC a business owner’s commercial
insurance policy. TMC annually renewed
this policy through 2001. The policy
provided for property, liability, and business income coverage. The policy listed only
Robbinsdale Economic Development Authority
(REDA) received the right to incorporate part of the property at
In February 2004, TMC initiated this action seeking a declaration that Federated had a duty to indemnify TMC for alleged losses due to business interruption caused by the construction under the business income and civil authority portions of the insurance policy. In June 2004, Federated filed a motion for summary judgment, arguing that the policy does not provide coverage for the claimed loss. TMC moved for leave to amend its complaint to add claims of reformation and negligence, arguing that it intended to include the parking lot as part of the insured premises, that Federated’s insurance agent also intended to cover this parking lot property in the policy, that both parties were operating under a mutual mistake of fact, and that the insurance policy should be reformed so as to include the parking lot at 4125 Railroad Avenue and to provide proper coverage for the loss. The insurance agent stated that he was unaware of the different addresses and that he did not recall TMC specifically requesting that the adjacent parking lot be covered in the policy. The district court denied TMC’s motion, granted Federated’s motion for summary judgment, and dismissed the case. TMC appeals the denial of its motion to add a claim for reformation and the dismissal of its claims for coverage at summary judgment.
first issue is whether the district court abused its discretion by denying TMC’s motion to add a claim for
reformation. The district court has
broad discretion to grant or deny leave to amend a complaint, and its ruling
will not be disturbed absent an abuse of discretion. Fabio v. Bellomo, 504 N.W.2d 758, 761
The courts will reform
an insurance policy if the claimant can prove that: “(1) there was a valid
agreement between the parties expressing their real intentions; (2) the written
instrument failed to express the real intentions of the parties; and (3) this
failure was due to a mutual mistake of the parties, or a unilateral mistake
accompanied by fraud or inequitable conduct by the other party.” Leamington Co. v. Nonprofits’ Ins. Ass’n,
615 N.W.2d 349, 354 (
The three parts of the
The next issue is
whether the district court erred in granting summary judgment. “On appeal from summary judgment, we consider
(1) whether there are any genuine issues of material fact for trial and (2)
whether the lower courts erred in their application of the law.” N. States Power Co. v.
argues that the district court erred in finding that the business income
section of the insurance policy does not cover its loss. If a policy is unambiguous, the court must
give the language its ordinary and usual meaning and not redraft the
contract. Simon v.
The relevant portions of the insurance policy state:
(1) Business Income
We will pay for the actual loss of Business Income you sustain due to the necessary suspension of your “operations” during the “period of restoration.” The suspension must be caused by direct physical loss of or damage to property at the described premises, including personal property in the open (or in a vehicle) within 100 feet, caused by or resulting from any Covered Cause of Loss.
. . . .
2. “Operations” means your business activities occurring at the described premises.
(Emphasis added). The
“described premises” is defined as
It is undisputed
that the adjacent leased property had a separate address and legal description and
that the adjacent property is not identified in the insurance policy. Because the language of the insurance policy
section covering business income only lists
i. Civil Authority
We will pay for the actual loss of Business Income you sustain and necessary Extra Expense caused by action of civil authority that prohibits access to the described premises due to direct physical loss of or damage to property, other than at the described premises, caused by or resulting from any Covered Cause of Loss.
TMC and Federated agree that TMC’s
store and seven-stall parking lot were not damaged but rather the construction
required tearing up the adjoining parking lot used by TMC at
TMC argues that this is an issue of fact, which should be submitted to a jury. TMC further claims that the phrase “prohibits access” was not defined in the policy and therefore requires a factual determination of whether its customers’ access to the store was prohibited by this construction. Other jurisdictions that have examined this access issue have found that, generally, coverage under the civil authority section is only available when access is completely prohibited. See, e.g., Abner, Herrman & Brock, Inc. v. Great N. Ins. Co., 308 F. Supp. 2d 331, 336-37 (S.D.N.Y. 2004) (finding civil authority provision applies only when access to the premises is completely denied); Dixson Produce, LLC v. Nat’l Fire Ins. Co. of Hartford, 99 P.3d 725, 729 (Okla. Ct. App. 2004) (holding that even though travel to the business was inconvenient, unless access was prohibited, the business could not recover under civil authority policy provision). It is undisputed that TMC’s store remained open throughout the construction and that customers were able to enter the store even though ease of access was diminished. Even if more difficult or less convenient access discouraged customers from patronizing TMC’s store, this was not a prohibition of access. If the record demonstrated a virtual economic shutdown of TMC’s business, this would be a more difficult case. Because access remained and the level of business was not dramatically decreased, the civil authority section of the insurance policy is inapplicable and the district court did not err in granting summary judgment.
* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.