# U ni te d S ta te s Co ur t of A pp ea ls For the Eig hth Circu it

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No. 1 5- 34 99

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Hou si ng an d R ed ev el op m en t Au th or it y of R ed woo d F al ls

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

Hou si ng Aut ho rit y

Pro pe rty Ins ur an ce

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll ee

__ __ __ __ __ __ App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Dis tri ct of M in ne so ta - Mi nn eap ol is

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Su bm it te d: Octo be r 18 , 20 16 Fil ed : J ul y

28 , 20 17

__ __ __ __ __ __ Befo re GRUENDER, BEAM, an d S HEPHERD, Circ ui t J ud ge s.

__ __ __ __ __ __ GRUENDER, Circ ui t J ud ge

.

Hou si ng an d Red ev el op m en t Aut ho rit y of Red wood Fa lls (“ H RA ”) ap pe al s th e di st ric t co ur t’s or de r de cl in in g to gr an t pr e-awa rd in te res t on an in su ran ce ap pr ai sa l award

. Bec au se th e Mi nn es ot a Su pr em e Co ur t su bs eq ue nt ly ru le d th at Mi nn es ot a St at ut e se ct io n 54 9.0 9 pr ov id es fo r pr e-awa rd in te res t on su ch award s, we rev ers e th e di st ric t co ur t’s o rd er an d re m an d fo r fu rth er p ro ceed in gs

.HRA own s a pu bl ic -h ou si ng ap art m en t bu il di ng in su red by Hou si ng Aut ho rit y

Pro pe rty In su ran ce (“ HAPI”). The bu il di ng cau gh t fir e on J a n u a r y 2 4
, 20 13
, an d
HRA su bm it te d an in su ran ce cl ai m to HAPI. HAPI acce pt ed co ve rag e of th e lo ss an d

pa id $2 ,38 7,2 39 to HRA. Howev er, th e pa rti es di s ag reed on th e to ta l va lu e of th e lo ss , an d HAPI de m an de d an ap pr ai sa l pu rs ua nt to th e te rm s of th e in su ran ce po li cy

.

B e f or e th e ap pr ai sa l pa ne l, HAPI es ti m at ed th e to ta l rep ai r co st a t $2 ,83 4,4 33 .90
, whi le HRA req ue st ed $6 ,10 9,0 69 .35

. On Ju ne 4, 20 14
, th e ap pr ai sa l
pa ne l is su ed it s award an d de te rm in ed th at th e a c t u a l cas h va lu e of th e lo ss was $3 ,09 7,5 12 .80

. On Ju ne 23
, 20 14
, HAPI pa id HRA $7 07 ,77 3.8 0, whi ch rep res en te d th e di ffer en ce be twee n th e act u al cas h va lu e of th e lo ss an d th e pa y m en ts al read y

m ad e, le ss a $2 ,50 0 d ed uc ti bl e.

HRA th en su ed HAPI in a Mi nn es ot a st at e co ur t, se ek in g con fir m at io n of the
ap pr ai sa l award un de r Mi nn es ot a’s Uni fo rm Arb it rat io n Act an d reco ve ry of pr eaward in te res t un de r Mi nn es ot a St at ut e se ct i o n 5 4 9

. 09

. HAPI rem ov ed th e cas e to fed e r a l co ur t ba se d on di ve rs it y juri sd ic ti on , an d bo th pa rti es fil ed m ot io ns fo r

su m m ary jud gm en t. HRA arg ue d th at , un de r se ct io n 54 9.0 9, it was en ti tl ed to in te res t of 10 pe rcen t p er y ear o n t he act ua l ca sh va lu e of th e lo ss , s ta rti ng fro m th e ti m e o f th e writ te n no ti ce of th e cl ai m

. The di st ric t co ur t co nf irmed th e ap pr ai sa l award
, bu t it de ni ed HRA’ s re qu es t fo r pr e-awa rd in te res t u nd er s ect io n 5 49 .09

.

Sect io n 54 9.0 9 is Mi nn es ot a’s ge ne ral pr ejud gm en t in t eres t st at ut e. As is rel ev an t h ere, i t s ta te s:

Exc ep t as ot he rwis e pr ov id ed by co nt ract or al lo wed by la w, pr ev erd ic t, pr eawar d, or pr erep or t in te res t on pe cu ni ary da m ag es sh al l be co m pu te d

as pr ov id ed in pa rag rap h (c) fro m th e ti m e of th e co m m en cem en t of th e act io n o r a d e man d fo r arb it rat io n, or th e ti m e of a writ te n no ti ce of cl ai m , whi ch ev er o ccu rs fir st , exc ep t as pro vi de d h erei n.

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-Mi nn

. St at

. § 54 9.0 9, su bd

. 1( b)

. The di st ric t co u r t r e a s on ed th at “ [t]he fir st si x

wor ds of th e st at ut e, ‘[e] xc ep t as ot he rwis e pr ov id ed by co nt ract ,’ res ol ve th e is su e.”
Hou s. an d Red

ev. Aut h. of

Red wo od Fal ls v. Hou s. Aut h. Pro p. In s. , No. 14 -cv -4 74 1, 20 15 WL 42 55 85 8, at *3 (D. Mi nn

. Ju ly 14
, 20 15 ) (q uo ti ng id

. ). The co ur t no te d th at , “ [t]ho ug h th e in su ran ce po li cy do es no t ex pr es sl y pr oh ib i t p r e-awa rd in te res t, it im pl ic it ly ad dr es se s whe n th e in te res t wou ld st art accr u i n g b a s e d on whe n HAPI

m us t pa y th e lo ss .” Id

. Sp eci fic al ly, a po rti on of th e in su ran ce po li cy st at es th at “ [a]n in su red lo ss wil l be pa y ab le 30 da y s aft er

. . . t h e fil in g of an ap pr ai sa l award .” Id

. The co ur t al so reas on ed th a t g r an ti ng pr e-awa rd in te res t wou ld no t fu rth er th e
pu rp os e of th e st at ut e, whi ch is “ to co m pe ns at e th e pl ai nt iff fo r th e lo ss of us e of hi s

m on ey ,” un le ss HAPI “ wro ng fu ll y wit hh el d th e m on ey ” be y on d th e pa y ab le da te se t fo rth in th e in su ran ce po li cy

. Id

. a t *4 (q uo ta ti on om it te d)

. Hen ce, be cau se HAPI fu l l y c o mp e n sa te d HRA le ss th an th irt y da y s aft er th e ap pr ai sa l pa ne l is su ed it s award , th e co ur t h el d t ha t HRA “ su ffer ed no lo ss of t he us e o f th e m on ey ” an d th us

was no t en ti tl ed to pr e-awa rd in te res t. Id

. It ent ered su m m ary jud gm en t in fav or of HAPI, id

. at 5 , and HRA no w app eal s. 1

“ W e rev ie w de no vo a gr an t of su m m ary jud gm en t, co ns id eri ng th e fact s in th e li gh t m os t fav or ab le to th e no nm ov in g pa rty. Su m m ary jud gm en t is pr op er whe n no
ge nu in e is su es of m at eri al fact ex is t and th e m ov in g pa rty is en ti tl ed to jud gm en t as

a m at te r of la w.” Na t’l Am. In s. Co

. v. W & G, In c. , 43 9 F.3 d 94 3, 94 5 (8 th Ci r. 20 06 ) (ci ta ti on om it te d)

. “ In in su ran ce co ve rag e act io ns in vo lv in g di ve rs it y of ci ti zen sh ip
, st at e la w co nt ro ls ou r an al y si s of th e in su ran ce po li cy .” Id

. “ Deci si on s fro m th e st at e

su pr em e co ur t as to st at e la w are bi nd in g on th is co ur t.” Co nt ’l Ca s. Co

. v. Adv an ce Ter ra zz o & Til e Co

. , 46 2 F .3d 10 02 , 10 07 (8t h C ir. 2 00 6)

.

At th e ti m e th e di st ric t co ur t gr an te d su m m ary jud gm en t in fav or of HAPI, th e M i n n e so ta Su pr em e Co ur t ha d no t y et ad dr es se d whe th er se ct io n 54 9.0 9 pe rm it s

HAPI do es no t ap pe al th e co nf irmatio n o f th e ap pr ai sa l awa rd

. 1

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-reco ve ry of pr e-awa rd in te res t on an ap pr ai sa l award whe n th e in su ran ce po li cy do es

no t ex pr es sl y ad dr es s pr e-awa rd in te res t. Si nc e th en , th e Mi nn es ot a Su pr em e Co ur t ha s res ol ve d th is is su e in Poe hl er v. Ci nc in na ti In su ra nc e Co mpa ny , --- N.W .2d ---, 20 17 WL 30 45 53 1 (Mi nn

. Ju ly 19
, 20 17 ). As in th is cas e, th e pa rti es in Poe hl er d i sa gr eed ov er whe th er an in su red was en ti tl ed to pr e-awa rd in te res t u n d e r

se ct io n 54 9.0 9 aft er ap pr ai se rs is su ed an award de te rm in in g t ha t th e in su red ’s t ot al lo ss was gr eat er tha n what th e in su rer had pa id by th e ti m e of th e ap pr ai sa l hear in g. Id

. at *1 -2

. Mo reo ve r, th e in su ran ce po li c y in Poe hl er was id en ti cal in al l rel ev an t

res pe ct s to t h e p o l i c y h e re, as it de cl ared th at a “ [l]os s is pa y ab le wit hi n 5 wor ki ng da y s

. . . [a]fter th ere is a fil in g of an ap pr ai sa l award .” Id

. at *4 (em ph as is om it te d)

.

In Poe hl er , th e co ur t fir st ex pl ai ne d th at se ct io n 54 9.0 9 “ un am bi gu ou sl y pr ov id es fo r pr eawar d in te res t on al l award s of pe cu ni ary da m ag es th at are no t
sp eci fic al ly excl ud ed by the st at ut e, an d d oe s n ot res tri ct th e rec ov ery of pre -awar d in te res t to cas es or m at te rs in vo lv in g wro ng do in g or a br each of co nt ract .” Id

. Nex t, th e co ur t he ld th at , “ ab se nt co nt ra c t u a l l an gu ag e ex pl ic it ly pr ecl ud in g pr eawar d in te res t, an in su red m ay reco ve r pr eawar d in te res t on an ap pr a i s a l a w a r d fo r a fir e in su ran ce lo ss , no twi th st an di ng a co nt ract ua l lo ss pa y m en t pr ov is io n st at in g th at th e lo ss is pa y ab l e aft er th e fil in g of an ap pr ai sa l award .” Id

. Fi na ll y , th e co ur t

co ns id ered an d reject ed an arg um en t th at th e lo ss -p ay m en t pr ov is io n in an ot he r
st at ut e, Mi nn es ot a St at ut e se ct io n 65 A.01
, pr ecl ud ed the ins ur ed fr om re cove rin g pr eawar d i n t e r e s t on th e ap pr ai sa l award

. Id

. at *6 -8

. Thu s, th e co ur t he ld th at th e in su red m ay reco ve r pr e-awa rd in te res t un de r se ct io n 54 9.0 9. Id

. at * 8

. As su ch
, HRA li ke wis e is en ti tl ed to su ch in te res t.

Howev er, th e co ur t di d no t de ci de w h e t h e r su ch in te res t m us t be cal cu la te d ba se d on (1 ) th e fu ll am ou nt of th e ap pr ai sa l award
, rep res en ti ng th e act ua l cas h va lu e of th e lo ss , or (2 ) th e di ffer en ce be twee n th e a c t u a l c a sh va lu e of th e lo ss an d th e
pa y m en ts al read y m ad e be fo re th e ap pr ai sa l was de m an de d. In a fo ot no te , th e co ur t ob se rv ed th at th e tri al co ur t “ award e d p r eawar d in te res t on th e fu ll am ou nt of th e

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-ap pr ai sa l award ,” an d it “ ack no wled ge [d ] th at [th e tri al co ur t’s or de r] is an om al ou s.”

Id

. at *8 n.4

. Pres um ab ly, th e co ur t ack no wled ge d th at th is was “ an om al ou s” in li gh t of th e in su rer’s argu m en t th at “ if ‘ lo ss of us e of m on ey ’ is th e b as is for

an award of
pr eawar d in te res t in th is cas e, it m us t be reco gn iz ed th at [th e in su red ] di d no t ha ve

a ‘l o s s o f us e’ of [th e fu ll am ou nt of th e ap pr ai sa l award ]. ” Id

. (al te rat io ns an d
qu ot at io n om it te d)

. In an y ev en t, th e c o u r t d e c l in ed to ad dr es s th e is su e be cau se it

co nc lu de d t ha t t he in su rer fa il ed to pre se rv e th e is su e fo r ap pe al

. Id

.

Si m il arl y , we de cl in e to ad dr es s th is is su e, as th e di st ric t c ou rt ha s ha d no
op po rtu ni ty to cal cu la te th e pr e-awa rd in te res t owe d to HRA, an d th e pa rti es di d no t
arg ue th is is su e on ap pe al

. Se e Mur ph y v. Aur or a Lo an Se rv s., LLC
, 69 9 F.3 d 10 27
, 1 0 33 -3 4 (8 th Ci r. 20 12 ) (“ [W] he re th e pa rti es di d no t ad eq ua te ly d ev el op an i s s u e ,
re man d i n g to al lo w th e di st ric t co ur t to ad dr es s th e m at te r in th e fir st in st an ce is
ap pr op ria te .”). Thu s, on rem an d, th e di st ric t c o u r t may de ci de in th e fir st in st an ce ho w to cal cu la te th e p re-a ward in te res t.

Fo r th e reas on s st at ed ab ov e, we rev ers e th e di st ric t co ur t’s or de r gr an ti ng

su m m ary jud gm en t in fav or of HAPI an d rema n d fo r fu rth er pr oc eed in gs no t in co ns is te nt wit h t hi s o pi ni on

.

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