Opinion
No. C2-96-1049.
Filed December 17, 1996.
Appeal from the District Court, Polk County, File No. C0-95-1230.
Robert M. Albrecht, (for appellant)
Kurt J. Marben, (for respondents Rain and Hail Insurance Service, Inc., et al.)
David R. Unkenholz, (for respondents Grinnell Mutual Reinsurance Company, et al.)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
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.
DECISION
On appeal from an order granting summary judgment, an appellate court "must view the evidence in the light most favorable to the party against whom judgment was granted." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993) (citing Abdullah, Inc. v. Martin, 242 Minn. 416, 424, 65 N.W.2d 641, 646 (1954)). "A material fact affects the result or outcome of the case depending on its resolution." Zappa v. Fehey, 310 Minn. 555, 556, 245 N.W.2d 258, 259-260 (1976).
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).
I.
The Vesledahls contend the district court misinterpreted the law by construing their contracts with the Insurers to require submission to arbitration instead of appraisal. We disagree. This court is persuaded by the reasoning in Brassard v. Western Capital Corp., 763 F. Supp. 1017 (D.Minn. 1990), a court is the proper forum to determine whether an agreement to submit a dispute to arbitration exists. Id at 1019; see also Layne-Minnesota Co. v. Regents of Univ. of Minn., 266 Minn. 284, 284, 123 N.W.2d 371, 372 (1963) (where intention of parties concerning scope of arbitration clause of their contracts is clearly expressed or ascertainable, issue of arbitrability shall be determined by court.) Here, as a matter of law, the district court correctly determined the parties' contracts compelled arbitration.
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.
II.
The Vesledahls contend the district court erred by concluding that according to the contracts the appraiser's awards were final and conclusive determinations of the sunflower crop loss due to hail. The "conformity to statute" provisions in both policies read:
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.
III.
The Vesledahls additionally suggest the appraisals should not be considered final and binding because (1) both Insurers' representatives made statements indicating the Vesledahls would be allowed to pursue legal redress after the appraisal, and (2) according to this court's unpublished opinion, Smith v. Integrity Mutual Ins. Co., No. C5-95-2394 (Minn.App. July 16, 1996), insurance companies are bound by the oral representations of their agents.
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].
We agree.
IV.
The Vesledahls claim the Insurers' delay in adjusting the crop loss resulted in an inability to accurately determine the amount of loss attributable to hail damage, and a fallaciously low resulting appraisal. If a claim is not presented to the district court, this court may not review it on appeal. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (quoting Thayer v. American Financial Advisers, Inc. 322 N.W.2d 599, 604 (Minn. 1982)). M.A. Johnson v. Multiple Misc.Items Numbered 1-424, 523 N.W.2d 238 (Minn.App. 1994). Because (1) the Vesledahls did not describe this issue in their complaint, (2) the Vesledahls's reply to Insurers' motion for summary judgment made no mention of this issue, and (3) the Vesledahls did not raise this issue during the summary judgment hearing, this court is unable to decide it.
V.
Finally, the Vesledahls assert the appraisals should be invalidated because Rain and Hail gave the umpire misleading data for its appraisal and Grinnell had a material relationship with its umpire that was not disclosed, in violation of Minn. Stat. § 572.10 (1994).
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.
Affirmed.