Krueger v. State Farm Fire and Cas. Co., No. C1-93-928

• Decision Date: 28 December 1993
• Docket Number: No. C1-93-928
• Citation: 510 N.W.2d 204
• Parties: Douglas P. KRUEGER, Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, et al., Respondents.
• Court: Minnesota Court of Appeals

Page 204

510 N.W.2d 204

Douglas P. KRUEGER, Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, et al., Respondents.

No. C1-93-928.

Court of Appeals of Minnesota.

Dec. 28, 1993.

Syllabus by the Court

1. When an insurer has issued a fire insurance policy, the terms of that policy determine the extent of the coverage afforded, and it is error to apply only the minimum coverage required by the Minnesota standard fire insurance policy.

2. When a fire insurer has denied a claim based on suspicion of arson, evidence that the insured was not criminally charged with arson is not admissible to counter the insurer's evidence that the fire was incendiary in nature.

3. The Deceptive Trade Practices Act is inapplicable to a claim that an insured was confused about which division of an insurance company issued a fire insurance policy.

James R. Anderson, Marshall, for appellant.

Tony R. Krall and Margaret K. Ackerman, Hanson Lulic & Krall, Minneapolis, for respondents.

Considered and decided by ANDERSON, C.J., and RANDALL and CRIPPEN, JJ.

OPINION

ANDERSON, Chief Judge.

Douglas Krueger appeals from a judgment against him on his claim for the proceeds of a fire insurance policy. Before trial, the court dismissed all of Krueger's claims except for his breach of contract claim and denied respondent's motion to dismiss for insufficient service of process. During trial, the court denied Krueger's motion to elicit evidence of nonprosecution for arson. By directed verdict, the trial court held that the provisions of the Minnesota standard fire insurance policy were incorporated into the policy issued to Krueger and that a provision of the standard policy barred Krueger's claim. We reverse and remand for a new trial.

FACTS

Douglas Krueger owned and rented a house in Springfield, Minnesota. In the summer of 1988, Krueger asked Jack Baynes, a State Farm ¹ agent and employee, for a quote for insurance on the house. Baynes quoted to Krueger an annual premium of $217.58 for coverage to be placed with State Farm Fire and Casualty Company (State Farm Fire). After obtaining a quote of $250 from an agent for a different insurer, Krueger asked Baynes to place the insurance.

Because Krueger's house was built in 1938, it did not meet the underwriting requirements of State Farm Fire. Therefore, Baynes placed the insurance with State Farm General Insurance Company (State Farm General), a State Farm company that underwrites insurance on older houses. The policy period commenced August 8, 1988.

The premium for an older house is normally higher than the premium for a newer house. As a result, in November 1988, Krueger was informed that an additional payment of $54.65 was necessary to keep the State Farm General policy in effect until the renewal date. Krueger paid the additional premium. The billing statements Krueger received from State Farm referred to the policy form numbers and stated that State Farm would provide the coverage described in the policy.

State Farm claims it sent a copy of the State Farm General policy to Baynes, to be forwarded to Krueger. Whether Baynes forwarded the policy to Krueger is not clear from the record. According to an affidavit Baynes submitted in the trial court, a policy was issued by State Farm General to Krueger; the affidavit does not specify whether the policy was sent directly to Krueger, or to Baynes to forward to Krueger. Krueger denies ever receiving the policy.

After this litigation was commenced, State Farm General produced a certified copy of the policy it issued. That policy contains a 30-day vacancy/vandalism clause, which provides that property loss caused by vandalism and malicious mischief is not covered by the insurance if the house had been vacant for more than 30 consecutive days immediately before the loss.

In addition, State Farm General contends the 60-day vacancy/unoccupancy clause of the Minnesota standard fire insurance policy is a mandatory statutory provision which must be read into its policy. This clause provides that, unless otherwise provided in writing, an insurance company shall not be liable for loss occurring while the described premises are vacant or unoccupied beyond a period of 60 consecutive days. Minn.Stat. Sec. 65A.01, subd. 3 (1988). The policy State Farm General issued does not contain the language from the statute.

Krueger's house was occupied by renters until November 1988. After November 1988, nobody lived in the house. Krueger stored personal property at the house and continued to perform routine maintenance on it, in addition to preparing the house for sale.

On May 23, 1989, the house was substantially damaged by fire. Krueger had been patching walls, painting and looking for a plumbing leak in the house earlier that same day. He left the house approximately five hours before the fire was discovered. State Fire Marshal Harold Hustad and a private investigator retained by State Farm concluded the cause of the fire was incendiary in nature. When Krueger sought payment for his loss, State Farm advised him that it believed the fire was "intentionally set within [his] knowledge or control" and denied his claim. State Farm also reserved all other defenses. Krueger sued State Farm to recover the proceeds of the policy.

Krueger served the summons and complaint personally on Baynes. Krueger sent a copy of the summons and complaint to State Farm Fire and State Farm General by regular mail; no acknowledgment of service was included. In addition, Krueger forwarded a copy of the summons and complaint to the Ramsey County sheriff, requesting that the summons and complaint be served on the Commissioner of Commerce. The sheriff did not serve the summons and complaint on the commissioner, but mailed the commissioner a copy. Krueger also mailed copies of his summons and complaint to State Farm Fire and State Farm General by certified mail.

State Farm General and State Farm Fire moved for dismissal, asserting insufficient service of process pursuant to Minn.R.Civ.P. 4.05. Krueger responded that service was effective under Minn.Stat. Sec. 45.028 (1988). On Friday, December 13, 1991, State Farm Fire and State Farm General responded to Krueger's claim that he effected service pursuant to section 45.028. The following Monday, the trial court denied the motion to dismiss without noting whether it had received and considered the response to Krueger's claim of effective service under section 45.028. No memorandum accompanied the order.

In his complaint, Krueger alleged that State Farm and Baynes violated a provision of the Deceptive Trade Practices Act. See Minn.Stat. Sec. 325D.44, subd. 1(2) (1988). Krueger claimed that Baynes and State Farm caused a likelihood of confusion as to the source of goods or services by telling him the insurance on his house would be provided by State Farm Fire and then placing the insurance with State Farm General. In a pretrial order, the trial court granted Baynes and State Farm summary judgment on the claim of deceptive trade practices, finding no evidence that Baynes or State Farm engaged in any of the practices set forth in section 325D.44. In that order, the court dismissed all of Krueger's other claims except his claim for breach of contract. On the first day of trial, the court ordered Baynes and State Farm Fire dismissed as defendants, concluding the breach of contract claim was only against State Farm General.

At trial, the state fire marshal testified regarding the basis for concluding that the fire was incendiary in nature. Betty Rogers, a chemist for the Bureau of Criminal Apprehension, was to be questioned as to her testing of certain samples taken from the fire scene, but did not testify at trial. The trial court did not permit Krueger to elicit testimony that he was not criminally charged with arson.

At the close of Krueger's case, State Farm General moved for a directed verdict based on the 60-day vacancy/unoccupancy language of section 65A.01, subdivision 3. When hearing the directed verdict motion, the trial court stated that if Krueger did not receive a copy of the State Farm General policy, he was bound by the 60-day vacancy/unoccupancy clause found in the standard fire insurance policy. The court also stated that, if Krueger did receive a copy of the State Farm General policy, he would be bound by the 30-day vacancy/vandalism clause in the State Farm General policy. The court ultimately directed a verdict in favor of State Farm General based only on the 60-day vacancy/unoccupancy provision of the standard fire insurance policy. Krueger has appealed, and State Farm has filed a notice of review.

ISSUES

I. Did the trial court err in directing a verdict on the 60-day vacancy/unoccupancy clause?

II. Is the 30-day vacancy/vandalism clause found in State Farm General's policy applicable to the present case?

III. Did the trial court abuse its discretion in excluding evidence that Krueger was not criminally charged with arson?

IV. Did the trial court err in granting summary judgment to State Farm on Krueger's claim of deceptive trade practices?

V. Is Krueger's suit barred for failure to effect service of process within the two-year limitations period?

ANALYSIS

I. Directed Verdict

In reviewing a directed verdict, the appellate court must consider whether, viewing the evidence as a whole, different persons could reasonably reach different conclusions. Dvoracek v. Gillies, 363 N.W.2d 99, 101 (Minn.App.1985). The court must make "an independent determination of the sufficiency of the evidence to present a fact question to the jury." Willmar Poultry Co. v. Carus Chem. Co., 378 N.W.2d 830, 835 (Minn.App.1985), pet. for rev. denied (Minn. Feb. 14 & Feb. 19, 1986).

State Farm contends that because Krueger did not provide a transcript, this court cannot review his claim that the trial court erred in directing a verdict. Generally, when the error alleged on appeal is the trial court's directing a verdict, the record must...