This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2004).






Joseph Okrakene,





Governing Board of Directors of the Minnesota FAIR Plan,



Nila Grant Agency, Inc.,



Dean Burrington Agency, Inc.,



Filed March 21, 2006


Shumaker, Judge


Hennepin County District Court

File No. 04-015151




M. Gregory Simpson, Siegel, Brill, Greupner, Duffy & Foster, P.A., 1300 Washington Square, 100 Washington Avenue South, Minneapolis, MN 55401 (for appellant)


Bradley J. Ayers, Wendy M. Canaday, Flynn, Gaskins, Bennett, LLP, 333 South Seventh Street, Suite 290, Minneapolis, MN 55402 (for respondent Minnesota FAIR Plan)


Terrence M. Gherty, Gherty & Gherty, S.C., The Constitution Building, P.O. Box 190, Hudson, WI 54016 (for respondent Dean Burrington Agency, Inc.)



            Considered and decided by Lansing, Presiding Judge; Shumaker, Judge; and Halbrooks, Judge.

U N P U B L I S H E D   O P I N I O N


            Appellant contends that the district court misapplied the law by holding that he failed to renew his FAIR Plan insurance when he did not pay his premium because, he argues, the insurer had modified the contract and because the FAIR Plan Act statutorily effected a renewal.  The district court correctly applied the law, and we affirm.


Appellant Joseph Okrakene desired to obtain casualty insurance on his house in Minneapolis but was not able to do so through the “voluntary” insurance market.  With the assistance of his own insurance agent, Okrakene applied to respondent Minnesota FAIR Plan, a statutory carrier that writes coverage for properties that standard carriers will not insure.

In return for a premium of $735.98, FAIR Plan agreed to provide fire and other loss insurance on Okrakene’s house from May 17, 2003, to May 17, 2004.  Okrakene paid the premium and coverage was bound.

On April 2, 2004, FAIR Plan sent to Okrakene a “Renewal Premium Due Notice” with a “Premium Statement” and “Renewal Declarations” for a “Dwelling Fire” policy that would be effective from May 17, 2004, to May 17, 2005.  The notice stated that the premium of $735.98 was due May 18, 2004, and the Premium Statement indicated that the current policy would expire on May 17, 2004, and that “To continue your coverage, please send your payment before the Due Date shown.”  FAIR Plan did not receive Okrakene’s premium payment.

FAIR Plan sent an “Expiration Notice” and “Premium Statement” to Okrakene on May 17, 2004.  The Premium Statement provided:  “Dear Policyholder:  As of the Expiration Date shown above, we have not received your renewal premium payment, therefore, this policy was not renewed and has expired.”  The expiration date shown was May 17, 2004.  FAIR Plan did not receive a premium payment in response to the Expiration Notice.

On May 18, 2004, FAIR Plan sent to Okrakene a “Policy Lapse Notice” which stated:  “Dear Policyholder:  Premium payment has not been received for this policy.  Your policy is CANCELLED on the Cancellation Date indicted below, at the time specified in the policy.”  The cancellation date was May 18, 2004.  FAIR Plan did not receive a premium payment after this notice.

A fire damaged Okrakene’s house on June 26, 2004, and he sought insurance proceeds from his fire insurance policy.  FAIR Plan denied his claim on the ground that Okrakene had not renewed his insurance policy and, at the time of the fire, he did not have fire insurance coverage through FAIR Plan.

Okrakene sued, and he and FAIR Plan made cross-motions for summary judgment.  The district court granted FAIR Plan’s motion, ruling that Okrakene had no insurance policy in force on the date of the fire.  From that determination, Okrakene appealed.




            On appeal from summary judgment, we determine whether there exists any genuine issue of material fact for trial and whether the district court erred in its application of the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  Okrakene does not contend that there are genuine issues of material fact for trial but rather that the district court misapplied the law.

            Okrakene’s first argument is that, by sending Renewal Declarations to him, without expressly requiring prior payment, FAIR Plan amended its policy and extended coverage for another year.  The district court rejected this argument and held that the various notices FAIR Plan sent showed that Okrakene had to pay a premium before coverage would become effective.  The evidence supports the district court’s holding.  FAIR Plan sent a Renewal Premium Due Notice and a Premium Statement along with the Renewal Declarations.  The notice and statement made it clear that the premium would have to be paid if coverage were to continue.  Thus, FAIR Plan offered to renew Okrakene’s policy for another year on the terms shown in the declarations if he paid the premium for that policy.

            FAIR Plan’s documents did not constitute a modification of the insurance policy whereby Okrakene could obtain coverage without first paying the premium.  Rather, those documents had the legal effect of an offer which had to be accepted before an insurance contract would come into existence.

            The Minnesota Supreme Court has held that “the unsolicited issuance of a renewal policy . . . is not an acceptance, but an offer, and a completed contract is not formed until acceptance is expressed by the insured or necessarily inferred form his conduct.”  Byman v. Auto-Owners Ins. Co.,364 N.W.2d 465, 467 (Minn. App. 1985) (citing St. Paul Fire & Marine Ins. Co. v. Bierwerth, 285 Minn. 310, 318, 175 N.W.2d 136, 141 (1969))That holding reflects long-settled law that “[a] binding renewal contract cannot be effected without the mutual assent of the parties.”  Royal Ins. Co. v. Western Cas. Ins. Co., 444 N.W.2d 846, 848 (Minn. App. 1989).  Furthermore, ministerial acts that are customary office routine are not considered to be a deliberate intent to keep insurance policies in effect.  Bierwerth, 285 Minn. at 321, 175 N.W.2d at 143. 

            FAIR Plan notified Okrakene in advance of the expiration of his insurance policy, of the date on which the policy would expire, of the need to pay a premium to renew coverage, of the date on which that payment was due, and of the terms of the renewed coverage.  Okrakene did not pay the premium or indicate expressly or through his conduct that he desired to renew the FAIR Plan insurance policy.  He clearly did not accept FAIR Plan’s renewal offer, and no new insurance came into existence.

            Okrakene also argues that his policy was renewed by virtue of the statutory provisions of Minn. Stat. § 65A.27, subd. 8 (2004), the FAIR Plan Act.  He cites the definitions of “renewal” and “renew” in Minn. Stat. § 65A.38, subd. 8 (2004), for the proposition that, by sending a new policy or other insurance documents at the end of an existing policy period, the FAIR Plan insurer thereby renews the existing policy even without a premium having been paid.  He also argues that once a policy is in existence, the FAIR Plan insurer must follow the statutory requirements of advance notice of intent to cancel and of a statement of the reasons for the cancellation before the policy may be cancelled.  He notes that FAIR Plan did not comply with those requirements.

            We reject the notion that the intent of the statutory definitions of “renewal” and “renew” is to create an automatic policy renewal mechanism irrespective of premium payment.  That interpretation is both unreasonable and violative of public policy.  It is unreasonable because its logical extension is that, by sending renewal declarations as part of an offer of coverage, the insurer becomes bound to cover the property, at least until it can cancel, even though it never received any payment for that coverage and despite its express statement that the policy would not be renewed without a premium payment.

            Furthermore, if Okrakene’s interpretation of the terms “renewal” and “renew” were accurate, it would mean that a former insured who did not desire to renew his policy would nevertheless have coverage forced upon him simply because the insurer sent renewal declarations.  If the insured then had this forced coverage for a period of time, presumably the insurer could sue him for the cost of that coverage.  Sound public policy dictates that contracts, being a matter of mutual assent, may not be forced upon parties.

            Okrakene argues that FAIR Plan did not comply with the statutory cancellation procedures provided by the FAIR Plan Act.  Those procedures come into play only when an insurer desires to cancel an existing insurance contract.  Here, no insurance contract existed because coverage was never renewed.  Thus, there was no contract to cancel and the cancellation procedures do not apply.