may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Depositors Insurance Co.,
Filed July 22, 1997
Affirmed; motion denied
Hennepin County District Court
File No. 9607922
Eric J. Strobel, Shamus P. O'Meara, Peterson & Hektner, Ltd., 8400 Normandale Lake Boulevard, Suite 1475, Minneapolis, Minnesota 55437 (for Appellant)
Louis D. Bass, John J. Carlson, Bass & Carlson, P.A., Suite 2525, 431 South Seventh Street, Minneapolis, MN 55415 (for Respondent)
Considered and decided by Short, Presiding Judge, Klaphake, Judge, and Schultz, Judge.
Depositors Insurance Co. appeals a district court order denying its motion to vacate an arbitrator's decision awarding respondent replacement services benefits. We affirm, but deny respondent's motion for bad faith attorney fees on appeal.
Despite Depositors' denial of Pauls's request for replacement services, Pauls continued to submit replacement services logs to Depositors. On April 8, 1996, sixteen days before the arbitration, Pauls's counsel notified Depositors that she would be seeking reimbursement for the replacement services she had documented and forwarded to Depositors.
Depositors objected, alleging that Pauls had waived her claim to such reimbursement because she omitted it from her arbitration petition. Depositors also challenged an award of replacement services to Pauls on the grounds that her logs lacked credibility and that reimbursement for replacement services requires out-of-pocket expenditures by the person obtaining replacement services, which Pauls could not prove.
The arbitrator made no findings of fact, but awarded Pauls $2,950 of the $6,310 she had requested in replacement services. The district court denied Depositors' motion to vacate the award and granted Pauls's motion for attorney fees under Minn. Stat. § 549.21 (1996) and Minn. R. Civ. P. 11. Depositors' separate appeals from the orders have been consolidated.
At the time of filing the arbitration form, or within 30 days after, the claimant shall file an itemization of benefits claimed and supporting documentation.
Depositors asserts that Pauls effectively waived all of her claims to replacement services by failing to include them in her petition and that rule 5(e) compels this conclusion.
Waiver is "a voluntary relinquishment of a known right." Cohler v. Smith, 280 Minn. 181, 189, 158 N.W.2d 574, 579 (1968). Without actual or implied intent to waive a claim, there can be no waiver. Id. Waiver is generally a question of fact. Meagher v. Kavli, 251 Minn. 477, 486, 88 N.W.2d 871, 878 (1958). "It is only where there is but one inference which can be drawn from the facts that the question of waiver becomes one of law." Id. Where different inferences may be drawn, waiver is resolved as a question of fact. Id.
Although Depositors states that "only one inference can be drawn" from the facts in this case, the record does not support this assertion. Pauls's submission of replacement services logs to Depositors, both prior to and following Depositors' denial of her claim, placed Depositors on notice that she was seeking reimbursement for replacement services.
Rule 5(e) is silent as to amending an arbitration form and Depositors' argument reads into the rule an implied waiver of all claims not included in the initial form or added within 30 days. But "[a]n arbitrator is permitted to interpret the rules under which his decision is being made," Haekenkamp v. Allstate Ins. Co., 265 N.W.2d 821, 824 (Minn. 1978), and judicial interference with an arbitrator's interpretations is inappropriate unless the evidence clearly indicates that the arbitrator exceeded his authority. Id.
In Haekenkamp, the supreme court looked to potential prejudice to the insurance company to determine whether an arbitrator erred by allowing an amendment to an arbitration petition on the day of the hearing. Id. Finding no prejudice, the court found the amendment proper. Id. Similarly, there is no evidence that Depositors was prejudiced by the arbitrator's decision, and counsel for Depositors stated on the record that the company had adequate time to prepare on the issues added by amendment.
Because Pauls's pre-arbitration actions are inconsistent with waiver, and because the rule is silent as to waiver, we conclude that the arbitrator had a right to consider waiver as an issue of fact. See Meagher, 251 Minn. at 486, 88 N.W.2d at 878. Whether the record supports the arbitrator's finding is not an issue on review of an arbitrator's award. See State, Office of State Auditor v. Minnesota Ass'n of Prof'l Employees, 504 N.W.2d 751, 754-55 (Minn. 1993) (holding that review of arbitrator's decision is "extremely narrow" and is confined to whether arbitrator exceeded his or her powers).
Minn. Stat. § 65B.44, subd. 5 (1996) ("replacement service and loss"), provides:
Replacement service loss benefits shall reimburse all expenses reasonably incurred by or on behalf of the nonfatally injured person in obtaining usual and necessary substitute services * * *.
This clause has been interpreted to provide benefits only for actual expenses incurred in hiring household help. Nadeau v. Austin Mut. Ins. Co., 350 N.W.2d 368, 373 (Minn. 1984). But Minn. Stat. § 65B.44, subd. 5, also provides:
Replacement service loss benefits shall reimburse all expenses reasonably incurred by or on behalf of the nonfatally injured person * * * if the nonfatally injured person normally, as a full time responsibility, provides care and maintenance of a home with or without children, the benefit to be provided under this subdivision shall be the reasonable value of such care and maintenance or the reasonable expenses incurred in obtaining usual and necessary substitute care * * *.
Thus, if the evidence supports a finding that a claimant is "primarily responsible for all housework," then the claimant may be eligible to recover replacement services benefits under the second clause of Minn. Stat. § 65B.44, subd. 5. Rindahl v. National Farmers Union Ins. Cos., 373 N.W.2d 294, 297 (Minn. 1985). The claimant is not required to be a full-time homemaker, nor does the claimant need to show out-of-pocket expenditures. Id.; Nadeau, 350 N.W.2d at 373, n.2. Rather, the claimant must prove that he or she had "primary responsibility" for the household. Rindahl, 373 N.W.2d at 297. Whether a claimant is primarily responsible for household management is a question of fact. See id. (district court received evidence and made findings regarding claimant's housework and child care responsibilities).
The arbitrator heard testimony on Pauls's household obligations and her inability to perform those obligations and determined that she was entitled to replacement services benefits under Minn. Stat. § 65B.44, subd. 5. These are fact issues within the scope of the arbitrator's authority and we need not determine whether the record supports the arbitrator's findings. See State, Office of State Auditor, 504 N.W.2d at 754-55.
Depositors claims that determining whether replacement services are "necessary" requires the arbitrator to engage in statutory interpretation in excess of his powers and that the award should be vacated on that ground. We find this argument meritless. Words in a statute are to be given their ordinary meaning, State v. Marsh, 158 Minn. 111, 113, 196 N.W. 930, 931 (1924), and when a statute is free from uncertainty there is no room for statutory construction. Fitzpatrick v. City of St. Paul, 217 Minn. 59, 61, 13 N.W.2d 737, 738 (1944).
The ordinary meaning of the word "necessary" is "absolutely essential" or "indispensable." American Heritage Dictionary 834 (2nd ed. 1985). By awarding Pauls $2,950, rather than the $6,310 she requested in replacement services, the arbitrator either applied the ordinary meaning of "necessary" and reduced Pauls's claim on the ground that some of the services were unnecessary or the arbitrator determined that Pauls had overvalued the services. In either case, the arbitrator was within the scope of his authority. See Great W. Cas. Co. v. Kroning, 511 N.W.2d 32, 35 (Minn. App. 1994) (an arbitrator may decide the necessity and reasonable value of employment services), review denied (Minn. Mar. 15, 1994).
Defendant's post-arbitration motions were not well grounded in fact and not warranted by existing law nor by a good faith argument for extension, modification, or reversal of existing law. Defendant was partially successful in limiting the recovery in arbitration, but still isn't satisfied with the result. The result, however, was based on clearly reasonable and proper fact determinations. The motions by defendant were for an improper purpose to harass, cause further delay in payment and to increase the cost for plaintiff and plaintiff's attorney.
We review decisions on attorney fees under Minn. Stat. § 549.21 and Minn. R. Civ. P. 11 under an abuse of discretion standard. Blattner v. Forster, 322 N.W.2d 319, 321 (Minn. 1982); Uselman v. Uselman, 464 N.W.2d 130, 145 (Minn. 1990). "Requisite to an award of statutory sanctions is that counsel proceeded in bad faith." Id. at 140. Because "the existence of bad faith is an issue of fact, * * * the trial court is in the best position to make this determination." Id. (citation omitted). Under both the statute and the rule, an attorney's conduct is measured by an objective standard. Id. at 143 ("The standard * * * is one of reasonableness under the circumstances.").
It is well established that the grounds on which arbitration awards may be attacked are severely limited. See, e.g., Minn. Stat. § 572.19, subd. 1 (1996) (listing limited grounds for court to vacate arbitration award); Mandich v. Watters, 970 F.2d 462, 466 (8th Cir. 1992) (stating policy favoring arbitration awards); Cournoyer v. American Television & Radio Co., 249 Minn. 577, 580, 83 N.W.2d 409, 411 (1957) (arbitration awards will not be set aside for mistakes of fact); State, Office of State Auditor, 504 N.W.2d at 754 ("every reasonable presumption must be exercised in favor of finality and validity of arbitration award").
In light of the the well-established and extremely narrow review of arbitration awards, the district court had sufficient evidence to conclude that Depositors' counsel's conduct was not objectively reasonable and could provide a basis for an award of attorney fees. The district court's award of attorney fees was not an abuse of discretion. We do, however, deny Pauls's motion for attorney fees on appeal.
Affirmed; motion denied.
[ ]* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.