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STATE OF
MINNESOTA
IN COURT OF APPEALS
C9-99-1175
Glass Service
Company, Inc.,
Respondent,
vs.
Progressive
Specialty Insurance Company, et al.,
Appellants.
Filed January
4, 2000
Affirmed;
Motion to Strike Granted,
Motion for Fees Denied
Davies, Judge
Hennepin County
District Court
File No. 981732
Charles J. Lloyd, Lindquist &
Vennum, P.L.L.P., 4200 IDS Center, 80 South Eighth St.,
Minneapolis, MN 55402 (for respondent)
John M. Bjorkman, Brian A. Wood,
Eric J. Magnuson, Rider, Bennett, Egan & Arundel, L.L.P., 333
South Seventh St., Suite 2000, Minneapolis, MN 55402 (for
appellants)
Thomas H. Goodman, Siegel, Brill,
Greupner, Duffy & Foster, P.A., 1300 Washington Square, 100
Washington Ave. S., Minneapolis, MN 55401 (for amicus curiae
Minnesota Independent Glass Association)
Considered and decided by Davies,
Presiding Judge, Foley, Judge,* and Mulally, Judge.**
* Retired judge of the Minnesota
Court of Appeals, serving by appointment pursuant to Minn. Const.
art. VI, § 10.
** Retired judge of the district
court, serving as judge of the Minnesota Court of Appeals by
appointment pursuant to Minn. Const. art. VI, § 10.
SYLLABUS
Insurance policy language that
requires an insurer to pay an “amount necessary” to replace
windshields with windshields of like kind and quality simply
requires reimbursement of reasonable charges for the services
necessary to replace the windshield.
OPINION
DAVIES, Judge (Hon.
William R. Howard, District Court Judge)
Appellant Progressive Insurance
Company argues that the trial court erred in interpreting
appellant’s insurance policy, having improperly substituted
language from the Unfair Claims Practices Act (UCPA) in place of
insurance policy language. We affirm.
FACTS
Under its automobile insurance
policy, appellant Progressive Insurance Company provides coverage
for windshield glass.1
1 Appellant’s
insurance policy states they will “pay under Comprehensive
Coverage, without a deductible, for the costs of repairing or
replacing damaged window glass * * * .” The policy also states:
Our Limit of Liability for loss shall not exceed * * * the amount
necessary to repair or replace the property with other of the like
kind and quality * * * .
Respondent Glass Service Company
is a Minnesota business that has provided auto glass replacement
services to auto owners, including some of those insured by
appellant. Respondent received an assignment of each such
insured’s claim against appellant.
This dispute arose when appellant
did not pay the full amount of respondent’s invoices dated from
1996 through March 10, 1998. Before 1996, appellant routinely paid
the full amount of respondent’s invoices; but, in 1996,
appellant established a procedure to determine the amount it would
pay on an auto windshield claim. Under this new procedure,
appellant determined a range of charges it would pay for the
replacement by calling three glass replacement businesses for
quotes. In each of the claims involved in this case,
respondent’s price was higher than the price quoted by the
vendors surveyed.
The trial court concluded that
appellant’s market surveys were flawed because it did not always
follow its established procedure and, even when it did, appellant
did not ask for the price of a similar quality glass or sealant
kit. The trial court also concluded that, because respondent
proved its prices were within a reasonable range, appellant
breached its contract with its insureds when it failed to pay
“reasonable costs to ‘repair or replace the property with
other property of like kind and quality.’”
The trial court denied
appellant’s motion for a new trial or amended findings of fact.
This appeal follows.
ISSUES
I. Did the trial court err in its
interpretation of appellant’s insurance policy?
II. Did the trial court err in
finding that appellant breached its contract?
III. Should the appendix to
appellant’s reply brief, and any references thereto, be
stricken?
ANALYSIS
I.
The interpretation of insurance
contract language and the construction of a statute both raise
questions of law, which are reviewed de novo. Watson v. United
Services Auto. Ass’n, 566 N.W.2d 683, 688 (Minn. 1997).
“General principles of contract interpretation apply to
insurance policies.” Lobeck v. State Farm Mut. Auto. Ins. Co.,
582 N.W.2d 246, 249 (Minn. 1998). If contract language is clear
and unambiguous, “the language used must be given its usual and
accepted meaning.” Id. (quoting Bobich v. Oja, 258
Minn. 287, 294, 104 N.W.2d 19, 24 (1960)). Exclusions in an
insurance policy are part of the contract and must be given the
same consideration as other parts of the policy. Lobeck,
582 N.W.2d at 249.
Appellant argues that the trial
court did not give proper meaning to the policy term
“necessary.” In Butwin Sportswear Co. v. St. Paul Fire
& Marine Ins. Co., 534 N.W.2d 565, 567 (Minn. App. 1995),
this court held that “necessary” is not an ambiguous term. The
plain and ordinary meaning of “necessary” is “[a]bsolutely
essential * * * [n]eeded to achieve a certain result or effect;
requisite.” Id. (quoting American Heritage Dictionary
1207 (3d ed. 1992)). In Butwin, this court, applying
the phrase “necessary expenses,” concluded that the service of
a fire loss “adjuster” was peripheral to the claim and not
essential. Thus, the cost of that service was ruled not to be a
necessary expense. Butwin, 534 N.W.2d at 567.
There lurks about this case the Butwin
question of unnecessary peripheral costs, for respondent’s sales
practices include giving “free” steaks to its customers as
sale premiums. But, because appellant did not at trial attack
giving free steaks as an unnecessary add-on service, we are left
on appeal with no choice but to treat the practice as a legitimate
sales device, comparable to gift calendars, pens, matchbooks,
dinner mints, etc.
That leaves us with the question
whether the price charged was reasonable, for common sense
dictates that the amount “necessary” to replace a windshield
with one of like kind and quality is a price that is reasonable in
the marketplace. The trial, in fact, focused on the range of
prices within the marketplace and on whether appellant’s process
properly determined the “reasonable cost.” Appellant concedes
that its policy obligates it to pay for windshield replacement so
long as the price charged falls within a reasonable range, for in
paragraph six of its answer to the amended complaint, appellant
stated:
[Appellants] agree they are
required to pay the reasonable cost sufficient to pay for the
repair or replacement of comparable window glass. [Appellants]
maintain that they have a process in place to determine the
reasonable cost, and have already paid Glass Service Company
that amount on each claim in dispute.
We in no way intend to suggest
that appellant and other insurers should not be allowed to control
costs. But adding “necessary” to the policy language gave
appellant no additional tool with which to manage costs, for the
concept of reasonableness inherently encompasses the concept of
“necessary” as stated in appellant’s policy. The trial court
properly focused on the reasonableness of respondent’s charges.
Appellant further argues that the
trial court erred because it substituted a reasonableness
requirement from the UCPA in place of the “amount necessary”
language in appellant’s insurance policy and then never made
findings as to “amount necessary.” But, in its order and
memorandum responding to posttrial motions, the trial court found
that,
[e]ven without using the UCPA as
a guide, [appellant] has failed to provide [respondent] with
“the amount necessary to repair or replace the property with
other of the like kind and quality.”
We take the trial court at its
word that it did not, in the end, use the UCPA to find that
appellant breached its contract.2
2
The purpose of the UCPA is “to regulate trade practices in the
business of insurance * * * .” Minn. Stat. § 72A.17 (1998).
Section 72A.201, subdivision 6(14), makes it an unfair trade
practice by an insurer if the insurer fails “to assume all
reasonable costs sufficient to pay the insured’s chosen vendor
for the repair or replacement of comparable window glass.” The
UCPA provides for administrative enforcement and does not create a
private cause of action. Morris v. American Family Mut. Ins. Co.,
386 N.W.2d 233, 235 (Minn. 1986); Glass Serv. Co. v. State Farm
Mut. Auto. Ins. Co., 530 N.W.2d 867, 872 (Minn. App. 1995), review
denied (Minn. June 29, 1995).
II.
In a breach-of-contract action
against an insurance company, the plaintiff has the burden to
prove that the insurer violated the terms of its insurance policy.
D.H. Blattner & Sons, Inc. v. Firemen’s Ins. Co. of
Newark, 535 N.W.2d 671, 675 (Minn. App. 1995), review
denied (Minn. Oct. 18, 1995). Appellant argues that respondent
did not meet its burden to prove that its invoices were in the
amounts necessary to replace auto windshield glass with glass of
like kind and quality. Appellant also argues that there was no
evidence to support the trial court’s findings that
respondent’s charges were reasonable and that appellant’s
market survey was flawed.
We do not set aside the trial
court’s findings unless they are clearly erroneous. Minn. R. Civ.
P. 52.01. The parties presented testimony at trial as to the
necessity and the reasonableness of the charges. There is evidence
to support the trial court’s finding that respondent’s charges
were reasonable in this market.3
3
At trial, there was no showing—or effort to show—that local
market prices were in general unreasonable.
There is also evidence that the
market survey was flawed.
The trial court did not clearly
err in concluding that appellant breached its contract with
respondent.
III.
The general rule is that this
court will not consider evidence outside the record. Fabio v.
Bellomo, 489 N.W.2d 241, 246 (Minn. App. 1992), aff’d,
504 N.W.2d 758 (Minn. 1993). Respondent moved to strike the
appendix to appellant’s reply brief, and any references to the
appendix, on the basis that the information is outside the scope
of the trial record and not relevant to this appeal. Appellant
counters that the material objected to responds to inaccuracies
and misinformation in the Minnesota Independent Glass Association
amicus curiae brief. Appellant also argues that this court may
take judicial notice of the newspaper advertisements in its
appendix because their truth or accuracy cannot be disputed. See
Femrite v. Abbott N.W. Hosp., 568 N.W.2d 535, 541 (Minn.
App. 1997) (court may take judicial notice of facts that are
capable of accurate and ready determination), review denied
(Minn. Nov. 18, 1997).
But this court cannot take
judicial notice of the advertisements in light of how appellant
seeks to use them. The advertisements are beyond the scope of the
appellate record and are stricken.
Respondent also seeks an award of
attorney fees incurred in bringing the motion to strike. We deny
fees, for appellant’s reply brief does not appear to have been
written with the intent to delay proceedings or increase costs.
DECISION
The trial court did not err in
its interpretation of appellant’s insurance policy language or
in finding that appellant insurance company breached its contract.
Respondent’s motion to strike
is granted, but its motion for attorney fees is denied.
Affirmed; motion to strike
granted, motion for fees denied. |