may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Vesledahl Farms, Inc., et al.,
Rain and Hail Insurance Service, Inc., et al.,
Grinnell Mutual Reinsurance Company, et al.,
Polk County District Court
File No. C0-95-1230
Filed December 17, 1996
Toussaint, Chief Judge
Kurt J. Marben, P.O. Box 506, Thief River Falls, MN 56701 (for respondents Rain and Hail Insurance Service, Inc., et al.)
David R. Unkenholz, P.O. Box 605, Crookston, MN 56716 (for respondents Grinnell Mutual Reinsurance Company, et al.)
Considered and decided by Schumacher, Presiding Judge, Toussaint, Chief Judge,
and Thoreen, Judge.[*]
Appellants Vesledahl Farms, Inc. and Robert and Steve Vesledahl (the Vesledahls) challenge the district court's order granting the joint motion for summary judgment of respondents, Grinnell Mutual Reinsurance Company (Grinnell) and Rain and Hail Insurance Service, Inc.'s (Rain and Hail) (collectively the Insurers). The district court concluded (1) the appraisal reports regarding the crop losses were "final and binding on both parties, both as an arbitration and award pursuant to the Uniform Arbitration Act, Minnesota Statutes Chapter 572, and as a matter of contract * * *, " and (2) there was no fraud or conflict of interest in the selection of the neutral umpire pursuant to Minn. Stat. § 572.10, subd. 2.
The Vesledahls assert the district court erred by applying the law of arbitration rather than appraisal because (1) the language of the policies called for an appraisal, not an arbitration, (2) the legal standard states any ambiguity regarding the definition of the term appraisal must be interpreted in favor of the insured, (3) the contract gave the Vesledahls no indication the appraisal would be interpreted as a final arbitration, thus, the Vesledahls should not be bound to a legal standard it was unaware would apply, and (4) legally, arbitrations are binding and appraisals are not. Therefore, according to the terms of the contract the Vesledahls had cause to believe it would be able to appeal to a district court.
The Vesledahls additionally contend (1) the appraisers' awards should not be considered final or binding from the contract language, (2) the Insurers' agents' statements should bind the Insurers, and (3) the Insurers did not accurately appraise the extent to which the Vesledahls' sunflower crop losses were due to the four hail storms in 1994 because they refused to inspect the sunflower fields after each storm.
Because (1) the district court did not misinterpret the law regarding (a) arbitrations, (b) contractual clauses incorporating statutes, or (c) insurance agents' statements binding the insurer, and (2) the Vesledahls did not present the remaining issue to the district court, we affirm.
On an appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the lower courts erred in their application of the law.
State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990) (citing Offerdahl v. University of Minn. Hosp. & Clinics., 426 N.W.2d 425, 427 (Minn. 1988)). This court conducts a de novo review of a claim that the district court misinterpreted the law. Dohman v. Housely, 478 N.W.2d 221, 224 (Minn. App. 1991) (citing A.J. Chromy Constr. Co. v. Commercial Mechanical Servs., Inc., 260 N.W.2d 579, 581 (Minn. 1977), rev. denied (Minn. Feb. 11, 1992).
The appraisal provision of the parties' contracts necessitated that the district court construe the contract to provide for arbitration. In David A. Brooks Enterprises, Inc. v. First Systems Agencies, 370 N.W.2d 434, 435 (Minn. App. 1985), this court construed an appraisal provision with almost identical language. The contractual language in Brooks called for appraisal and mandated the parties choose appraisers and an umpire. The language also stated the "award in writing of any two shall determine the amount of the loss or damage." Id. The contract did not include any additional indication the contract would be final or binding on the parties. Interpreting that contract, this court in Brooks decided "appraisal awards are to be treated as arbitration awards" and the arbitration statute, Minn. Stat. § 572.01 et seq., governs the decision of appraisers under an insurance policy. Id. The intent of the parties to submit to arbitration indicates whether the contract requires arbitration. See Sanitary Farm Dairies v. Gammel, 195 F.2d 106, 113 (8th Cir. 1952) (citing State v. Equitable Ins. Co., 140 Minn. 48, 167 N.W. 292, 293 (1918); Nelson v. Charles Betcher Lumber. Co., 88 Minn. 517, 93 N.W. 661, 662 (1903)) (under Minnesota law, generally, an appraisal shall be construed as equally conclusive as an arbitration if the parties stipulate to the conclusiveness or their intention to be bound is "inferable from the language they have used"). The courts are called upon to protect parties from being compelled to submit to arbitration where no arbitration agreement exists. Layne-Minnesota Co., 266 Minn. at 291, 123 N.W.2d at 376 (citing Minn. Stat. § 572.09 (a) (b) to provide that courts must protect parties from arbitration if there is no provision for arbitration). However, this court has held when parties incorporate the Uniform Arbitration Act into their contract, "the agreement to arbitrate bec[omes] irrevocable." Layne-Minnesota Co., 266 Minn. at 293, 123 N.W.2d at 378 (see Minn. Stat. § 572.08 (1994) providing an agreement to arbitrate shall be "valid, enforceable, and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract.") The parties' contracts included clauses mandating "conformity to statute" thus, incorporating the Uniform Arbitration Act into their contracts.
Further, the Minnesota Supreme Court has long held:
The rules governing arbitrations have been applied to proceedings for determining the amount of loss under insurance policies, and for making appraisements under other forms of contract, irrespective of whether the persons determining such matters were designated as 'appraisers,' 'referees,' 'arbitrators,' or otherwise.
American Cent. Ins. Co. v. District Court, Ramsey County, Second Judicial Dist., 125 Minn. 374, 377, 147 N.W. 242, 243 (Minn. 1914) (citations omitted). Therefore, the district court here did not misinterpret the law by construing intent to arbitrate from the parties contractual language.
If any terms of this policy are in conflict with statutes of the state in which this policy is issued the policy will conform to such statutes.
Minn. Stat. § 65A.26 (1994) adds:
The written award of a majority of these referees is final and conclusive upon the parties as to the amount of loss * * * .
The terms "final" and "conclusive" in the statute "must be given their plain, ordinary, and popular meaning." Austin P. Keller Constr. Co. v. Commercial Union Ins. Co., 379 N.W.2d 533 (Minn. 1986) (citations omitted). Therefore, the district court did not err by deciding that the appraisals were final and binding because of the incorporation of the statute.
This case is distinguishable from Smith because in Smith the insurance agent made representations to the insured before the event occurred about which the insured had inquired. The insured relied on the agent's representations in taking the actions that resulted in the dispute.
In this case, by contrast, the Vesledahls received assurances that they may resort to legal recourse after they had agreed to and taken part in the appraisal process. There was no reliance on the agents' statements that led to their actions. The district court concluded:
[A]ny representation which may have been made by agents of the defendants after the appraisal process had been completed expressing their opinions as to [the Vesledahls'] rights to pursue the matter in court are ineffective and not binding on [the Insurers].
It is not clear from the record the Vesledahls raised the assertion of impropriety regarding Rain and Hail's umpire to the district court. If this issue was not raised before the district court, we will not decide it now. Id. However, even if the district court did entertain this issue, it does not appear the alleged improprieties would have resulted in a decision to vacate the appraisers' award.
Arbitrator's awards should not be impeached unless their conclusions are so at variance from the conclusions which might legitimately be drawn from the evidence presented as to imply bad faith or failure to exercise an honest judgment. Cournoyer v. American Television & Radio Co., 249 Minn. 577, 579, 83 N.W.2d 409, 412 (1957). The umpire for the Rain and Hail appraisal testified during his deposition (1) he did not rely on the appraisers' representations, and (2) if the underlying data were incorrect, it would "not necessarily" affect his conclusions. From this testimony, it does not appear his conclusions would have been different in the absence of any misleading data.
Regarding Grinnell, the district court determined:
[T]he fact that the neutral umpire selected by the appraisers had received training some eight years earlier by one of the appraisers does not constitute a "relationship" or conflict of interest required to be disclosed pursuant to M.S.A. 572.10 Subd. 2, and that the appraisal was not predicated upon fraud.
We conclude the district court was well within its discretion to determine the relationship between the umpire for Grinnell's appraisal and Grinnell's appraiser was not material. Thus, there was no violation of Minn. Stat. § 572.10, subd. 2 that would precipitate vacating the award.
[ ]* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.