United States Court of Appeals

For the Eighth Circuit

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No. 15-3499

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Housing and Redevelopment Authority of Redwood Falls

lllllllllllllllllllll Plaintiff - Appellant

v.

Housing Authority Property Insurance

lllllllllllllllllllll Defendant - Appellee

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Appeal from United States District Court 

for the District of Minnesota - Minneapolis

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 Submitted: October 18, 2016

 Filed: July 28, 2017

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Before GRUENDER, BEAM, and SHEPHERD, Circuit Judges.

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GRUENDER, Circuit Judge.

Housing and Redevelopment Authority ofRedwood Falls(“HRA”) appeals the

district court’s order declining to grant pre-award interest on an insurance appraisal

award. Because the Minnesota Supreme Court subsequently ruled that Minnesota

Statute section 549.09 providesfor pre-award interest on such awards, we reverse the

district court’s order and remand for further proceedings.
HRA owns a public-housing apartment building insured by Housing Authority

Property Insurance (“HAPI”). The building caught fire on January 24, 2013, and

HRA submitted an insurance claimto HAPI. HAPI accepted coverage of the loss and

paid $2,387,239 to HRA. However, the parties disagreed on the total value of the

loss, and HAPI demanded an appraisal pursuant to the terms of the insurance policy. 

Before the appraisal panel, HAPI estimated the total repair cost at

$2,834,433.90, while HRA requested $6,109,069.35. On June 4, 2014, the appraisal

panel issued its award and determined that the actual cash value of the loss was

$3,097,512.80. On June 23, 2014, HAPI paid HRA $707,773.80, which represented

the difference between the actual cash value of the loss and the payments already

made, less a $2,500 deductible. 

HRA then sued HAPI in a Minnesota state court, seeking confirmation of the

appraisal award under Minnesota’s Uniform Arbitration Act and recovery of preaward interest under Minnesota Statute section 549.09. HAPI removed the case to

federal court based on diversity jurisdiction, and both parties filed motions for

summary judgment. HRA argued that, under section 549.09, it was entitled to interest

of 10 percent per year on the actual cash value of the loss, starting from the time of

the written notice of the claim. The district court confirmed the appraisal award, but

it denied HRA’s request for pre-award interest under section 549.09.

Section 549.09 is Minnesota’s general prejudgment interest statute. As is

relevant here, it states:

Except as otherwise provided by contract or allowed by law, preverdict,

preaward, or prereport interest on pecuniary damagesshall be computed

as provided in paragraph (c) from the time of the commencement of the

action or a demand for arbitration, or the time of a written notice of

claim, whichever occurs first, except as provided herein.

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Minn. Stat. § 549.09, subd. 1(b). The district court reasoned that “[t]he first six

words of the statute, ‘[e]xcept as otherwise provided by contract,’ resolve the issue.”

Hous. and Redev. Auth. of Redwood Falls v. Hous. Auth. Prop. Ins., No. 14-cv-4741,

2015 WL 4255858, at *3 (D. Minn. July 14, 2015) (quoting id.). The court noted

that, “[t]hough the insurance policy does not expressly prohibit pre-award interest,

it implicitly addresses when the interest would start accruing based on when HAPI

must pay the loss.” Id. Specifically, a portion of the insurance policy statesthat “[a]n

insured loss will be payable 30 days after . . . the filing of an appraisal award.” Id.

The court also reasoned that granting pre-award interest would not further the

purpose of the statute, which is “to compensate the plaintiff for the loss of use of his

money,” unless HAPI “wrongfully withheld the money” beyond the payable date set

forth in the insurance policy. Id. at *4 (quotation omitted). Hence, because HAPI

fully compensated HRA less than thirty days after the appraisal panel issued its

award, the court held that HRA “suffered no loss of the use of the money” and thus

was not entitled to pre-award interest. Id. It entered summary judgment in favor of

HAPI, id. at 5, and HRA now appeals.1

“We review de novo a grant ofsummary judgment, considering the facts in the

light most favorable to the nonmoving party. Summary judgment is proper when no

genuine issues of material fact exist and the moving party is entitled to judgment as

a matter of law.” Nat’l Am. Ins. Co. v. W &G, Inc., 439 F.3d 943, 945 (8th Cir. 2006)

(citation omitted). “In insurance coverage actions involving diversity of citizenship,

state law controls our analysis of the insurance policy.” Id. “Decisions from the state

supreme court as to state law are binding on this court.” Cont’l Cas. Co. v. Advance

Terrazzo & Tile Co., 462 F.3d 1002, 1007 (8th Cir. 2006).

At the time the district court granted summary judgment in favor of HAPI, the

Minnesota Supreme Court had not yet addressed whether section 549.09 permits

HAPI does not appeal the confirmation of the appraisal award.

1

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recovery of pre-award interest on an appraisal award when the insurance policy does

not expressly address pre-award interest. Since then, the Minnesota Supreme Court

has resolved this issue in Poehler v. Cincinnati Insurance Company, --- N.W.2d ---,

2017 WL 3045531 (Minn. July 19, 2017). As in this case, the parties in Poehler

disagreed over whether an insured was entitled to pre-award interest under

section 549.09 after appraisers issued an award determining that the insured’s total

loss was greater than what the insurer had paid by the time of the appraisal hearing. 

Id. at *1-2. Moreover, the insurance policy in Poehler was identical in all relevant

respects to the policy here, as it declared that a “[l]oss is payable within 5 working

days . . . [a]fter there is a filing of an appraisal award.” Id. at *4 (emphasis omitted).

In Poehler, the court first explained that section 549.09 “unambiguously

provides for preaward interest on all awards of pecuniary damages that are not

specifically excluded by the statute, and does not restrict the recovery of pre-award

interest to cases or matters involving wrongdoing or a breach of contract.” Id. Next,

the court held that, “absent contractual language explicitly precluding preaward

interest, an insured may recover preaward interest on an appraisal award for a fire

insurance loss, notwithstanding a contractual loss payment provision stating that the

loss is payable after the filing of an appraisal award.” Id. Finally, the court

considered and rejected an argument that the loss-payment provision in another

statute, Minnesota Statute section 65A.01, precluded the insured fromrecovering preaward interest on the appraisal award. Id. at *6-8. Thus, the court held that the

insured may recover pre-award interest under section 549.09. Id. at *8. As such,

HRA likewise is entitled to such interest.

However, the court did not decide whether such interest must be calculated

based on (1) the full amount of the appraisal award, representing the actual cash value

of the loss, or (2) the difference between the actual cash value of the loss and the

payments already made before the appraisal was demanded. In a footnote, the court

observed that the trial court “awarded preaward interest on the full amount of the

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appraisal award,” and it “acknowledge[d] that [the trial court’s order] is anomalous.” 

Id. at *8 n.4. Presumably, the court acknowledged that this was “anomalous” in light

of the insurer’s argument that “if ‘loss of use of money’ is the basis for an award of

preaward interest in this case, it must be recognized that [the insured] did not have

a ‘loss of use’ of [the full amount of the appraisal award].” Id. (alterations and

quotation omitted). In any event, the court declined to address the issue because it

concluded that the insurer failed to preserve the issue for appeal. Id.

Similarly, we decline to address this issue, as the district court has had no

opportunity to calculate the pre-award interest owed to HRA, and the parties did not

argue this issue on appeal. See Murphy v. Aurora Loan Servs., LLC, 699 F.3d 1027,

1033-34 (8th Cir. 2012) (“[W]here the parties did not adequately develop an issue,

remanding to allow the district court to address the matter in the first instance is

appropriate.”). Thus, on remand, the district court may decide in the first instance

how to calculate the pre-award interest. 

For the reasons stated above, we reverse the district court’s order granting

summary judgment in favor of HAPI and remand for further proceedings not

inconsistent with this opinion. 

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