Opinion
No. C6-02-2179.
Filed July 15, 2003.
Appeal from the District Court, Goodhue County, File No. 25-C8-01-946.
Michael D. Tewksbury, Keith J. Kerfeld, Darin S. Wieneke, Tewksbury, Kerfeld Zimmer, (for respondent)
Robert G. Benner, Dunlap Seeger, P.A., (for appellant)
Considered and decided by Kalitowski, Presiding Judge, Randall, Judge, and Schumacher, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellant Grinnell Mutual Reinsurance Company challenges the district court's grant of summary judgment to respondent Malissa J. Parrott, arguing that the district court misapplied the law, or in the alternative, that genuine issues of material fact remain and should be submitted to a jury. We affirm.
FACTS
Respondent Malissa J. Parrott (Parrott) and her husband bought automobile insurance from appellant Grinnell Mutual Reinsurance Company (Grinnell) for a number of years. The Parrotts always dealt with the Michael Ries Agency (Ries). Typically, the Parrotts bought a six-month policy, and paid their premiums monthly. Each month, the Parrotts received a bill from Grinnell naming the due date for the next premium payment.
In early February 2001, Parrott received a bill directing her to mail a premium payment so that Grinnell received it no later than February 17. Parrott did not mail the premium, as she and her husband were contemplating the purchase of a new Ford Mustang. February 17, 2001, was the end of a six-month policy term.
February 22, Parrott called Ries to request that her policy with Grinnell be changed to stop the coverage on her two older cars and begin coverage of the new Mustang. She still had not mailed a premium payment. Ries mailed her a new insurance information card showing coverage from February 17, 2001 to August 17, 2001 for the Mustang and submitted the change request to Grinnell.
On February 23, Grinnell mailed Parrot a document notifying her that it expected to receive a premium payment of $293.85 by March 12. The notice provision stated that if Parrott failed to pay by that date, Grinnell would consider her insurance policy non-renewed retroactive to February 17. The notice said that if she made the payment by March 12, Grinnell would continue her coverage for the six-month term from February 17, 2001 to August 17, 2001.
On March 1, Grinnell mailed Parrott an amended policy statement reflecting that the policy had been changed to include the Mustang. This amended statement showed coverage from February 17, 2001 to August 17, 2001. With this policy statement, Grinnell also sent a new insurance information card for the Mustang. The policy statement included the words "THIS IS NOT A BILL. YOU WILL BE BILLED SEPARATELY." On March 13, Parrott mailed Grinnell a payment in the amount of $293.85. Grinnell received the payment March 16, kept it, and finally deposited the payment into its general fund on March 22.
On March 18, Parrott and her husband were involved in a serious one-car accident while driving the Mustang. Malissa Parrott was seriously injured and her husband was killed. On March 29, before Parrott had formally filed a claim with Grinnell, a Grinnell claims adjuster mailed her a letter stating that Grinnell would not pay any claims arising from the accident because the insurance policy had been cancelled as of February 17 for non-payment of premiums. Parrott applied for benefits from Grinnell, and was denied. On April 13, Grinnell refunded Parrott $274.41. Grinnell never explained why they deducted $19.44 from Parrott's return of premium. Whether it was a charge for pro rata coverage after February 17, or a processing charge, or a "short rate" refund, was never explained by Grinnell, and we cannot speculate.
Parrott filed suit against Grinnell in Goodhue County District Court, claiming coverage for the March 18 accident. After a year of discovery, both parties simultaneously moved for summary judgment. Parrott claimed, but could not verify, that she had received another document from Grinnell sometime before March 13, directing her to pay $293.85. Grinnell denied sending any billing documents other than the February 22 notice of cancellation. Parrott also claimed that an employee of the Ries Agency told her to wait to pay after the policy was modified, as she would receive a bill reflecting her new premium. This claim was unverified.
After an October 18, 2002 hearing, the district court granted summary judgment in Parrott's favor, finding that the parties' conduct indicated that the policy had been in effect the date of the accident. This appeal follows. Grinnell argues that the district court misapplied the law and that the policy had been effectively non-renewed or cancelled before the date of the accident. Alternatively, Grinnell argues that there is a material fact question over whether the parties intended to renew the policy. Grinnell asks this court to reverse and grant summary judgment in its favor, or to reverse and remand for trial.
DECISION I.
On appeal from summary judgment, the reviewing court determines whether there are any issues of material fact and whether the trial court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). This court views the evidence in the light most favorable to the party against whom judgment was granted. Nygaard v. State Farm Ins. Co., 591 N.W.2d 738, 740 (Minn.App. 1999). The interpretation and construction of insurance contracts are questions of law which this court reviews de novo. Haarstad v. Graff, 517 N.W.2d 582, 584 (Minn. 1994).
Non-renewal
First, appellant argues that it properly chose not to renew respondent's policy at the end of a policy period due to non-payment of premiums. In the case of non-payment of a renewal premium, an insurer may terminate a policy without notice to the insured. Dairyland Ins. Co. v. Neuman, 338 N.W.2d 37, 39 (Minn. 1983) (citing Minn. Stat. § 65B.17 (1982)). An insurer may reinstate a policy if the insured complies with the conditions specified in the policy. Sellwood v. Equitable Life Ins. Co. of Iowa, 230 Minn. 529, 533, 42 N.W.2d 346, 350 (1950). Reinstatement allows the original policy to remain in force without having to create a new policy. Id. Here, appellant offered respondent the opportunity to continue her coverage, but she failed to take advantage of this opportunity. Because respondent failed to make a payment in the designated "grace period," appellant was entitled to end the policy without further notice to respondent. See Royal Ins. Co. v. Western Cas. Ins. Co., 444 N.W.2d 846, 847 (Minn.App. 1989) (failure to pay premium by end of grace period resulted in retroactive termination of policy). Appellant's actions to this point cannot be faulted. Were the story to end here, appellant would have a strong defense to respondent's lawsuit.
However, following February 17, appellant's insurance agent processed her request to change coverage from other cars to a Mustang, and on March 1, (five days after Grinnell told Parrott that her policy would be non-renewed retroactive to February 17 if a premium payment was not received by March 12), Grinnell mailed Parrott an amended policy statement showing that the policy was changed to cover the Mustang, telling her that this was not a bill and she would be billed separately, and the policy period for the Mustang was February 17, 2001 to August 27, 2001.
The ultimate determination of whether the insurance was in effect depends upon all the facts, including the prior course of conduct between the insured and the insurer, as well as the actions of the insured after being notified of the unsolicited renewal of the policy.
Martinson v. Iowa Kemper Ins. Co., 390 N.W.2d 447, 449 (Minn.App. 1986) (citation omitted). It is undisputed that appellant mailed respondent a new policy statement and identification card indicating that her coverage had been amended to cover the Mustang and directing her that she would be billed separately. Appellant mailed these documents despite the fact that it had not received a premium payment and had threatened termination. Respondent did not seek out any alternative insurance policy. Testing the circumstances for the meaning reasonably conveyed to respondent, we affirm the district court's conclusion that the sequence of both parties' undisputed actions renewed the policy and that respondent was entitled to at least 10 days notice before the policy could be validly cancelled. See, e.g. Caduff v. Universal Underwriters Ins. Co., 381 N.W.2d 9, 12 (Minn.App. 1986), review denied (Minn. Mar. 27, 1986) (notices sent to insured must be evaluated for the meaning reasonably conveyed to the receiver).
Cancellation
Appellant next argues that even if the policy was renewed by the parties' conduct, as we have determined it was, appellant gave respondent sufficient notice and the policy was cancelled at the time of the accident, March 18, 2001.
Minn. Stat. § 65B.16 (2002) provides that:
No notice of cancellation * * * of an automobile insurance policy * * * shall be effective unless the specific * * * reason or reasons for such cancellation * * * are stated in such notice and the notice is mailed or delivered by the insurer so as to provide the named insured with at least 30 days' notice prior to the effective date of cancellation; provided, however, that when nonpayment of premium is the reason for such cancellation * * * at least ten days notice of cancellation shall be given * * * When nonpayment of premiums is the reason for cancellation, the reason must be given to the insured with the notice of cancellation.
Appellant sent a notice of cancellation to respondent on February 23. Appellant argues that this is more than ten days notice that the policy would be cancelled if payment were not received by March 12. We disagree. Although the cancellation would not be unavoidable until respondent failed to pay a premium by March 12, if she did fail to pay, the cancellation would be effective February 17. The purpose of the statute is to allow a person facing cancellation of her insurance policy the chance to find alternative, continued coverage. Frank v. Illinois Farmers Ins. Co., 336 N.W.2d 307, 310 (Minn. 1983). Here, if respondent failed to pay by March 12, she would be retroactively uninsured until she was able to find alternative insurance. This result would not accomplish the intent of the statute. Because respondent's policy had been renewed by the parties' conduct, appellant was required to give respondent 10 days' notice of cancellation before ceasing coverage. Because appellant mailed the notice of cancellation after the effective date of cancellation (February 17), it failed to meet the requirements of Minn. Stat. § 65B.16, and the cancellation is invalid.
Respondent also argues that the cancellation is invalid because appellant failed to timely refund the full amount of unearned premiums to respondent. Minn. Stat. § 65B.161 (2002) states that:
Cancellation of a policy * * * shall not be effective unless any unearned premium due the insured is returned to the insured with the notice of cancellation or is delivered or sent by mail to the insured so as to be received by the insured not later than the effective date of cancellation.
Here, respondent sent $293.85 to appellant on March 13. Appellant received this amount and deposited it into its general fund on March 22. Not until April 13 did appellant mail any refund to respondent, and then only in the amount of $274.41. This refund is less than the full amount owed to respondent and was sent almost two months after the effective date of cancellation. The depositions of appellant's employees provide no explanation for the timing or amount of this refund. Appellant may have had an explanation for its failure to comply with section 65B.161, but the record does not contain it. We do not base our decision solely on the $19.44 that appellant may owe respondent. Our affirmance of the district court is based on the district court's undisputed findings and conclusion that, between both appellant's and respondent's course of action, respondent had an insurance policy in full force and effect on March 18, 2001. Appellant's actions in receiving, depositing, and then refunding to respondent only a partial premium after March 18 simply buttresses the circumstances that the district court considered in finding coverage.
Appellant calls to our attention a recent Minnesota Supreme Court case, Jorgensen v. Knutson , ___ N.W.2d ___, 2003 WL 21403666 at *1 (Minn. Jun. 19, 2003. Jorgensen does not affect our analysis. Briefly, in Jorgensen , the notice of cancellation sent by the insurance company missed the ten-day notice requirement by one day. The method of time computation was a critical issue. Id . at *3. The method of computation is not at issue here, and the facts of the two cases are easily distinguishable.
The district court correctly concluded that respondent's policy remained in force at the time of her accident.
II.
Finally, appellant argues that genuine issues of material fact remain that should have been submitted to a jury. Specifically, appellant claims that the district court made impermissible credibility determinations to find that the parties' conduct had renewed the insurance policy in question. We disagree. We note that both parties initially moved for summary judgment. Appellant's backup argument was that we are entitled to summary judgment as a matter of law and there are no undisputed facts; but if you find disputed facts, we are entitled to a trial on the merits.
On appeal, both parties referred to facts that may have been disputed before the district court; but the district court's order and memorandum show that it relied only on undisputed facts to reach its conclusion. The district court did not refer to the alleged conversation between respondent and her insurance agent, nor did it refer to the alleged "extra" bill respondent claimed to have received. What is undisputed is that appellant mailed a new, amended policy statement to respondent after sending the "cancellation" notice. The language of that policy statement stated that respondent would be billed separately, that this amended coverage (new Mustang) was not a bill, that the bill would follow later, and the policy period was February 17, 2001 to August 17, 2001. As in Martinson, 390 N.W.2d at 447, the effect of undisputed actions is a legal question that the district court, and this court, may determine without submission to a finder of fact.