Court Opinion

ID: 8246240
Source: CourtListenerOpinion
Date Created: 2022-10-16 09:34:33.134615+00
Date Added: 2024-06-11T16:42:44.582108
License: Public Domain

PAGE, Justice
(dissenting).
I respectfully dissent. The appraisal clause in the Quades’ farmowners insur-anee policy provides, “[i]f you and we fail to agree on the amount of loss, either may demand an appraisal of the loss.” In my view, Secura is not entitled to demand an appraisal because Secura has not challenged the “amount of loss,” but rather has denied coverage.1 Secura argues that it “did not deny coverage for [the Quades’] claim,” but that it “admitted liability.” The argument is unavailing. In response to the Quades’ claim for damage to their roofs, Secura replied:
[Tit’s our understanding that the grommets that seal between the nail head and the roof metal have deteriorated over time. The grommets dry out and crack over time and this allows the water to enter around the nail heads. This is the result of continual deterioration over a period of time rather than a specific storm occurrence. Your farm policy excludes “loss to property caused by any of the following.... [faulty, inadequate or defective] (4) Maintenance”.... I am sorry but we are unable to honor your claim for damage to the roof of the buildings.
The court holds that appraisers “must necessarily determine the cause of the loss,” but that holding sidesteps the central dispute in this case — namely, whether the roof damage is a covered loss. While Minnesota law empowers appraisers to consider causation to determine the “amount of loss,” it does not authorize appraisers to make the legal determination that the claimed loss is not covered by the policy. See Mork v. Eureka-Sec. Fire & Marine Ins. Co., 230 Minn. 382, 384, 42 N.W.2d 33, 35 (1950) (“The finding of appraisers on the question of coverage ... *709[is not] final.”); Harrington v. Agric. Ins. Co. of Watertown, N.Y., 179 Minn. 510, 512, 229 N.W. 792, 793 (1930) (“[Ajlthough the appraisers of a fire loss must determine what property was covered in order to arrive at the amount of damage, the right of the insurer to have a judicial determination of liability includes the right to a judicial determination of the coverage of the policy.”); Itasca Paper Co. v. Niagara Fire Ins. Co., 175 Minn. 73, 78, 220 N.W. 425, 427 (1928) (noting that appraiser’s coverage determinations that “involve[ ] liability on the contract” are “not final and conclusive upon either party”). But that is precisely what the court’s decision permits.
Because the “amount of loss” is not in dispute, I would hold that Secura may not invoke the appraisal clause and affirm the court of appeals.
In the alternative, Secura argues that even if it denied coverage, it should nevertheless be permitted to demand an appraisal. To the extent an insurer is entitled to demand an appraisal when there is a denial of coverage, from the standpoint of judicial economy, it is logical to answer the coverage question first because, if the court determines that there is no coverage, then there is no need for an appraisal. Moreover, if there is a coverage dispute, assuming the appraisal goes forward,. it does not resolve the issues between the parties, necessitating a judicial determination in any event.

. The parties do not dispute that district courts (not appraisers) make coverage determinations. See also Quade v. Secura, Ins., 814 N.W.2d 703, 707 (Minn.2012) ("Coverage questions, such as whether damage is excluded because it was not caused by wind, are legal questions for the court as this case goes forward.”).