Olson v. American Family Mut. Ins. Co.

• Decision Date: 11 December 2001
• Docket Number: No. CX-01-974.,CX-01-974.
• Citation: 636 N.W.2d 598
• Parties: Leonard OLSON, et al., on behalf of themselves and all others similarly situated, Respondents, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Appellant.
• Court: Minnesota Court of Appeals

636 N.W.2d 598

Leonard OLSON, et al., on behalf of themselves and all others similarly situated, Respondents, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Appellant.

No. CX-01-974.

Court of Appeals of Minnesota.

December 11, 2001.

Karl L. Cambronne, Jeffrey D. Bores, Brian N. Toder, Becky L. Erickson, Chestnut & Cambronne, P.A., Minneapolis; and Robert Espeset, Barry Blomquist, Blomquist & Espeset, Minneapolis; and Mark Reinhardt, Mark A. Wendorf, Harvey H. Eckart, Reinhardt & Anderson, St. Paul, for respondents.

Corey J. Ayling, Kathleen M. Brennan, McGrann Shea Anderson Carnival Straughn & Lamb, Chartered, Minneapolis, for appellant.

Considered and decided by ANDERSON, Presiding Judge, PETERSON, Judge, and MULALLY, Judge.¹

OPINION

G. BARRY ANDERSON, Judge.

Respondents sued appellant under several common-law and statutory theories, alleging that appellant improperly charged some insureds over the age of 65 for no-fault wage-loss coverage that, by law, the insureds could not receive under most circumstances. Appellant moved to dismiss respondents' claims under several theories, but argued specifically that the district court lacked subject-matter jurisdiction. The district court denied appellant's motion to dismiss for lack of subject-matter jurisdiction.

Appellant challenges the denial of its motion to dismiss, arguing that the district court lacks subject-matter jurisdiction because respondents are allegedly seeking mandatory premium reductions, and these premium reductions are "no-fault benefits," subject to mandatory arbitration under Minn.Stat. § 65B.525, subd. 1 (2000). Appellant argues this construction of § 65B.525, subd. 1, is justified by the plain language of the arbitration provision, effectuates the Minnesota legislature's intent to streamline no-fault dispute resolution, effectuates the No-Fault Act's remedial purpose, and is consistent with Minnesota precedent. We affirm.

FACTS

On August 24, 2000, the supreme court decided Am. Family Ins. Group v. Schroedl, 616 N.W.2d 273 (Minn.2000). The Schroedl court interpreted Minn.Stat. § 65B.491 (1998), which states:

Senior Citizens

After August 1, 1987, no plan of reparation security issued to or renewed with a person who has attained the age of 65 years may provide coverage for wage loss reimbursement that the insured will not reasonably be expected to be able to receive. It is the responsibility of the person issuing or renewing the plan to inquire as to the applicability of this section. The rate for any plan for which coverage has been excluded or reduced pursuant to this section must be reduced accordingly. This section does apply to self-insurance.

The respondent in Schroedl was a 72-year-old man who elected to exclude wage-loss coverage from his American Family automobile-insurance policy. Schroedl, 616 N.W.2d at 276. The exclusion was effective the day of his automobile accident; that accident resulted in his permanent incapacitation and, ultimately, his death. Id. at 276. Despite the policy's wage-loss coverage exclusion, Schroedl sued for wage-loss reimbursement because he was forced to hire others to operate his rental property. Id. The supreme court found that Schroedl was entitled to wage-loss reimbursement under § 65B.491, despite the policy exclusion. Id. at 282.

The supreme court first noted that the No-Fault Act generally mandates that basic economic-loss benefits, including wage-loss reimbursement, be included in all insurance policies written in this state. See id. at 278; see also Minn.Stat. §§ 65B.43, subds. 6, 7; 65B.44, subd. 1(b) (2000). But the court also recognized that in some limited circumstances the No-Fault Act prohibited wage-loss coverage for some insureds. Schroedl, 616 N.W.2d at 278.

The supreme court found that § 65B.491 "categorically prohibits an insurer from providing coverage for wage loss reimbursement to an insured who is 65 years of age or older" unless the insured will "reasonably be expected to be able to receive `a benefit' from the coverage." Id. at 278 (citation omitted). The court further noted,

[I]f the insured is reasonably expected to benefit from wage loss reimbursement coverage, whether the insured wants it or not, the insurer must provide it to comply with the statute.

Id. at 278-79. Therefore, the statute mandated all-or-nothing coverage, and an insured did not have the option to choose wage-loss coverage if the insurer decided the insured "will not reasonably be expected to be able to receive" wage-loss reimbursement. Minn.Stat. § 65B.491; Schroedl, 616 N.W.2d at 279.

Finally, the Schroedl court found that an insurer had a duty to inquire, at every renewal date, whether an insured over the age of 65 was now entitled to wage-loss reimbursement. Schroedl, 616 N.W.2d at 280. Because American Family had not asked Schroedl whether he qualified to receive wage-loss reimbursement (for which he apparently would have qualified because of his rental property) at every renewal period, the court found American Family had violated the statute and the court awarded Schroedl wage-loss reimbursement. Id. at 282.

The instant case apparently arose out of Schroedl's potentially retroactive impact on Minnesota automobile-insurance policies written during the late 1980s and 1990s. On November 16, 2000, respondents served a class-action complaint on appellant. Respondents also filed similar lawsuits against other Minnesota automobile insurers. The lawsuit alleges that appellant improperly charged some Minnesota insureds over the age of 65 for wage-loss coverage, although under Minnesota law, as interpreted by the Schroedl court, these insureds were not entitled to wage-loss reimbursement. Essentially, respondents allege appellant charged them for wage-loss coverage that, under Schroedl, they could not receive.² On February 14, 2001, appellant generally moved to dismiss respondents' claims but argued separately (from the other defendants in the other cases) that the district court lacked subject-matter jurisdiction. On April 20, 2001, the district court denied appellant's motion to dismiss for lack of subject-matter jurisdiction. This appeal followed.

ISSUE

Whether respondents' claims for improperly charged or overpaid wage-loss coverage premiums must be arbitrated under Minn.Stat. § 65B.525, subd. 1?

ANALYSIS

The existence of subject-matter jurisdiction is a question of law, which we review de novo. Neighborhood Sch. Coalition v. Indep. Sch. Dist. No. 279, 484 N.W.2d 440, 441 (Minn.App.1992), review denied (Minn. June 30, 1992). Here, subject-matter jurisdiction depends on the construction of Minnesota's No-Fault Act. Statutory construction is a question of law, which we also review de novo. Nelson v. Am. Family Ins. Group, 632 N.W.2d 264, 266 (Minn.App.2001); see also Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn.1998).

The legislature provides rules of statutory construction to guide this court in its interpretive task. The intent of the legislature must govern our inquiry, but "[w]ords and phrases [should be] construed according to rules of grammar and according to their common and approved usage." Minn.Stat. § 645.08 (2000). Moreover, "[g]eneral words are construed to be restricted in their meaning by preceding particular words." Id.

When the words of a law in their application to an existing situation are clear and free from all ambiguity, the letter of the law shall not be disregarded under the pretext of pursuing the spirit.

Minn.Stat. § 645.16 (2000); see also Pususta v. State Farm Ins. Cos., 632 N.W.2d 549, 552 (Minn.2001); Nelson, 632 N.W.2d at 266 ("[A] statute should be interpreted * * * to give effect to all of its provisions; `no word, phrase, or sentence should be deemed superfluous, void, or insignificant.'" (quotation omitted)). Under these rules of construction, it is clear that we must first examine "whether the statute's language * * * is clear or ambiguous. A statute is only ambiguous when the language therein is subject to more than one reasonable interpretation." Schroedl, 616 N.W.2d at 277 (citations and quotation omitted).

Appellant argues that the plain meaning of "no-fault benefits" in § 65B.525, subd. 1, includes a statutory entitlement to premium reductions. Appellant points out that the American Heritage Dictionary (2000) defines "benefit" as "an entitlement available in accordance with an insurance policy." Because the word "benefit" must be afforded its "common and approved usage" of "an entitlement available in accordance with an insurance policy," appellant argues respondents' claims must be arbitrated.

The No-Fault Act requires mandatory arbitration of certain no-fault insurance claims:

Except as otherwise provided in section 72A.327, the supreme court and the several courts of general trial jurisdiction of this state shall by rules of court or other constitutionally allowable device, provide for the mandatory submission to binding arbitration of all cases at issue where the claim at the commencement of arbitration is in an amount of $10,000 or less against any insured's reparation obligor for no-fault benefits or comprehensive or collision damage coverage.

Minn.Stat. § 65B.525, subd. 1 (emphasis added). The district court, in its memorandum denying appellant's motion to dismiss for failure of subject-matter jurisdiction, explained,

In this case Plaintiffs are not seeking no-fault benefits, or comprehensive or collision damage coverage. Plaintiffs do not allege that any collision has taken place. The damages Plaintiffs seek are for premiums paid to Defendants in violation of Minn.Stat. § 65[B].491. Such damages are not of the type for which arbitration is mandatory under the provisions of the No-Fault [A]ct.

We conclude appellant's interpretation of the statute does not afford the statutory language its common and approved usage and therefore is not reasonable. We therefore find that respondents' claims, whatever the...