Mark Ratka, et al., Respondents, vs. St. Joseph Mutual Insurance Company, Appellant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-1661

 

Mark Ratka, et al.,

Respondents,

 

vs.

 

St. Joseph Mutual Insurance Company,

Appellant.

 

Filed ­­­May 18, 2004

Affirmed

Forsberg, Judge*

Concurring specially, Randall, Judge

 

Stearns County District Court

File No. C8-01-4333

 

 

Gerald W. Von Korff, Tim Sime, Rinke-Noonan, P.O. Box 1497, St. Cloud, MN 56302-1497 (for respondents)

 

William M. Hart, Katherine A. McBride, Damon L. Highly, Meagher & Geer, PLLP, 33 South Sixth Street, Suite 4200, Minneapolis, MN 55402; and Gerald L. Hasselbrink, P.O. Box 37, St. Joseph, MN  56374 (for appellant)

 

            Considered and decided by Randall, Presiding Judge; Klaphake, Judge; and Forsberg, Judge.

 

U N P U B L I S H E D   O P I N I O N

 

FORSBERG, Judge

 

            Appellant insurer challenges the district court's denial of its motions for JNOV or a new trial.  Because we see competent evidence that sustains the jury's verdict and no abuse of discretion, we affirm.

FACTS

 

 In 1996, respondents Mark and Pamela Ratka purchased a farmstead.  It had several buildings, including a house and a barn with an attached silo.   The house and the barn, but not the silo, were insured with a homeowner's policy issued by appellant St. Joseph Mutual Insurance Company (SJM).  Respondents farmed the property, raising crops but no livestock, until 1999, when Mark Ratka became employed as a mechanic. 

On Tuesday, August 15, 2000, Pam Ratka called the fire department to report that the silo connected to the barn was on fire.  The fire department sprayed more than 6,000 gallons of water on the silo, but could not extinguish the fire.  Before leaving, the fire department told Mark Ratka that he should monitor the silo by feeling the doors and staves for heat and watching for smoldering and that he could cool the doors by wetting them with a garden hose.  The fire department also said that, to extinguish the fire, the silage would have to be unloaded or the silo would have to be taken down, but gave no time frame for doing this.

The Ratkas realized that the fire had spread to the barn about midnight on the night of August 30-31.  They called the fire department, but the barn burned down before the fire department arrived.  The Ratkas claimed coverage for the barn in the amount of $93,000 from SJM, which, following an investigation, denied coverage.  The Ratkas then brought this action.

Following trial, the jury answered "no" to five questions on a special verdict form: 

1.         Did a loss occur while the hazard was increased by any means within the control or knowledge of Mark or Pamela Ratka?

[2.]      Did Mark and Pamela Ratka fail to make all reasonable exertions to save and protect the barn when it was exposed to loss or damage from fire?

[3.]      Did Mark and Pamela Ratka fail to make all reasonable exertions to save and protect the personal property in the barn when it was exposed to loss or damage from fire?

[4.]      Was the barn being used for a "business purpose", as defined in the insurance policy, from August 15, 2000 until the barn fire was discovered?

[5.]      At the time they requested insurance coverage on the barn in 2000 and up until they discovered the barn fire, did Mark or Pamela Ratka willfully conceal or misrepresent any material fact or circumstance concerning the insurance, the subject of the insurance, or the interests of the insured therein?

 

The district court ordered judgment in the amount of $94,500 ($93,000 less $1,000 deductible for the barn and $2,500 for the personal property in the barn) for the Ratkas. 

SJM moved for JNOV on the ground that evidence showed that (1) the Ratkas knew and had control of the increased risk to the barn from the burning silo, precluding coverage as a matter of law, and (2) the Ratkas used their barn for business purposes, also precluding coverage as a matter of law.   In the alternative, SJM moved for a new trial, on the ground that (1) the jury's verdict on the Ratkas' knowledge of the increased risk was not justified by the evidence and the law; (2) the jury's verdict on the use of the barn for business purposes was not justified by the evidence and the law; (3) SJM was prejudiced by the district court's jury instruction that replaced the policy wording with statutory language, and (4) SJM was prejudiced by the district court's exclusion of a letter from the  Ratkas' counsel.[1] 

The district court denied the motion.  SJM appeals from the denial.

D E C I S I O N

 

1.         Denial of Motion for JNOV

             The decision whether to grant JNOV is a question of law,  Edgewater Motels, Inc. v. Gatzke, 277 N.W.2d 11, 14 (Minn. 1979), and we review questions of law de novo,  Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils.  Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).  The denial of a motion for JNOV must be affirmed if there is "any competent evidence reasonably tending to sustain the verdict."  Pouliot v. Fitzsimmons, 582 N.W.2d 221, 224 (Minn. 1998) (quotation omitted); see also Hughes v. Sinclair Mktg., Inc., 389 N.W.2d 194, 198 (Minn. 1986) (holding that a jury verdict will be sustained on any reasonable theory based on the evidence).  But if "the jury's verdict cannot be sustained on any reasonable theory of the evidence," the moving party is entitled to JNOV as a matter of law.  Obst v. Microtron, Inc., 614 N.W.2d 196, 205 (Minn. 2000).

 

Thompson v. Hughart, 664 N.W.2d 372, 376 (Minn. App. 2003), review denied (Minn. Sept. 16, 2003). 

A.        Increased Risk

            The Ratkas' policy with SJM provided that, "We [SJM] will not pay for a loss if you[the Ratkas] create or know of a condition that increases the chance of loss arising from a Peril We Insure Against."  The policy excludes from coverage "loss or damage caused by . . . [n]eglect of any insured person to use all reasonable means to protect insured property at and after a loss or when property is threatened by a Peril We Insure Against" regardless of  "any other cause or event that contributes concurrently or in any sequence to the loss." 

The jury found that the loss did not occur because of any condition within the knowledge and control of the Ratkas and that the Ratkas did not fail to use all reasonable means to protect their barn when it was threatened by fire.  Competent evidence supports the jury's verdict.     

Mark Ratka's direct examination testimony included this exchange:

Q.        What did they [the fire department] tell you to do [about the fire in the silo]?

A.        They told me to kept a close eye on it, feel the doors and the staves, watch for anything smoldering.  If there was heat or smoldering, to run the water over the doors. 

. . . .

Q.        Did you ever consider taking the silo down?

A.        Yes

Q.        And, how did you come to consider that?

A.        It was about a week before the barn had burned.  In my regular process of checking I was up in, I crawled up the chute, reached my hand in and felt haylage inside of it.

 

On cross-examination, he testified:

The fire department, the main chief that was in charge had never really advised me that [the silo had to come down].  Possibly to take it down.  One other guy on the fire department had said that last resort that that's what should be done. . . . He did not say I should take it down, he just had said if, if it continued to smolder and didn't seem to be getting any better, than that's what should be done.

 

Mark Ratka also testified that he had made plans to take the silo down on Labor Day weekend, September 1-4, and that he did not think the barn was in any danger between August 15, when the fire department left his property after failing to extinguish the fire in the silo, and August 30, when the barn burned down. 

Competent evidence sustains the findings that the loss did not occur while the hazard was increased by any means within the control or knowledge of Mark or Pamela Ratka and that Mark and Pamela Ratka did not fail to make all reasonable exertions to save and protect the barn when it was exposed to loss or damage from fire.   The motion for JNOV on this issue was properly denied.   See Danielson v. St. Paul Fire & Marine Ins. Co., 256 Minn. 283, 286, 98 N.W.2d 72, 75 (1959) (affirming denial of insurer's motions for JNOV or a new trial on the ground that a jury could have found that the collapse of deteriorating barn was caused by a windstorm and that the delay in repairing the barn was reasonable). 

B.        Business Purpose

            The policy excluded "loss to other structures used for business."  "Business" was defined as, among other things, "any full or part time trade, profession, or occupation."  Farming is a "business" within the meaning of an insurance policy exclusion.   See Useldinger & Sons, Inc., v. Hangsleben, 505 N.W.2d 323, 328-29 (Minn. 1993).  Mark Ratka's unopposed testimony was that he was not in the farming business at the time the fire occurred; he was employed as a mechanic.  He also testified that he harvested the hay and put it in the barn in 1998, when he was farming, and that he planned to use it when he started dairy farming.  Competent evidence supports the jury's verdict that the barn was not being used for a "business purpose,"  i.e., farming.

2.         Denial of Motion for a New Trial

            Because the district court has the discretion to grant a new trial, we will not disturb the decision absent a clear abuse of that discretion.  Halla Nursery, Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905, 910 (Minn. 1990).  But where the trial court exercised no discretion and ordered a new trial because of an error of law, a de novo standard of review applies.  Id.

A.        Replacement of Policy Language with Statutory Language

The district court, at the Ratkas' request, provided the jury with a version of the policy in which portions of the policy language had been replaced with the language of Minn. Stat. § 65 A. 01, subd. 3 (1998).  Specifically, the original policy excludes damage caused by "Neglect of any insured person to use all reasonable means to protect insured property at and after a loss or when property is threatened by a Peril We Insure Against."  And the altered policy reads, "If the insured property shall be exposed to loss or damage from the perils insured against, the insured shall make all reasonable exertions to save and protect the same."  The statutory language was the same as the language on the special verdict form: "Did Mark and Pamela Ratka fail to make all reasonable exertions to save and protect . . . ."  By altering the language in the policy, the district court brought the policy into conformity with state law and avoided jury confusion. 

SJM objected to the altered version of the policy because it looked "sloppy" and added weight to the Ratkas' attorney's characterization of SJM as "a sloppy company" in closing argument. But, as the district court noted, this "reference to sloppiness had nothing to do with the appearance of the policy or the portions of the policy language changed by the Court."  The alteration of the policy was not an abuse of discretion.

B.        Exclusion of the Ratkas' Attorney's Letter

            Absent erroneous interpretation of the law, the question of whether to admit or exclude evidence is within the district court's discretion.  Kroning v. State Farm Auto Ins. Co., 567 N.W.2d 42, 45-46 (Minn. 1997).  A complaining party is entitled to a new trial on the basis of an erroneous evidentiary ruling only if the party can demonstrate prejudice.  Id. at 46.

            Counsel for the Ratkas wrote to SJM saying, erroneously, that the Ratkas had met with their insurance agent on August 13, 2000.  SJM sought to admit the letter as evidence to indicate the Ratkas' lack of credibility. The Ratkas moved to exclude the letter; that motion was denied on January 27, 2003. On January 28, 2003, the Ratkas' attorney executed an affidavit stating that the Ratkas had not supplied the information in the letter.  The district court then reversed its ruling on the ground that the letter would be cumulative and therefore not probative and that its admission would be prejudicial because the Ratkas would be "force[d] . . . to hire a new attorney." 

            In light of the attorney's affidavit exonerating the Ratkas and admitting to a mistake in the letter, the admission of the letter would have had no bearing on the Ratkas' credibility.  Excluding it was not an abuse of discretion.

            The motions for JNOV or a new trial were properly denied.

            Affirmed.

           

RANDALL, Judge (concurring specially).

            I concur in the result.  There is nothing else to do with the "unargued issue."

            On appeal, St. Joseph Mutual Insurance Company specifically stated that it did not challenge the trial jury's determination that respondents did not willfully conceal any facts before the district court.  The undisputed facts in the case lead to a reasonable argument that respondents waited to buy fire insurance on their silo and their barn until they knew that the silo (attached to the barn) was on fire.  That, of course, would void all coverage.  Farm Bureau Mutual Cas. Co. v. Stein, 284 Minn. 407, 410, 170 N.W.2d 334, 337 (1969) (holding no coverage is afforded for events occurring prior to acceptance of payment by insurance company).  Although the district court let the issue go to the jury and the jury returned a verdict in favor of respondents, the district court stated in its memorandum, as part of its order denying appellant's request for a JNOV and/or a new trial:

The Court acknowledges that Defendant presented powerful circumstantial evidence which might lead most juries to conclude that Plaintiffs knew there was a fire in the silo when they took the steps to obtain coverage on the barn on or about August 12th-August 15th. 

 

The facts leading up to the district court's making that statement are as follows: 

            In 1999, respondents asked for a premium quote for fire insurance coverage for their barn, which had the 4,000 bales of hay inside.  They told their insurance agent they wanted insurance coverage for the barn, but shortly thereafter, since respondents never paid dollar one of the premium for fire insurance coverage, the insurance coverage was cancelled in December 1999.  Nine months later, in August 2000, without getting back to the insurance agent and asking any more questions or requesting a new quote for coverage, Mark Ratka sent his insurance agent a check for the amount of money he assumed was necessary to start fire insurance coverage on the barn.  Ratka testified that on Saturday, August 12, 2000, he claims to have written and mailed to his insurance agent, a check, which, for some unstated reason, he dated Monday, August 14, 2000. 

            On Tuesday, August 15, 2000, Ratka telephoned his insurance agent at 11:42 a.m. to "see if the check was received."  The person answering the telephone told Ratka that Christiansen, the agent, was away from the office.  Ratka called the insurance agency again at 1:58 p.m. to see "if his check had been received."  In that telephone call, he learned that the check had been received.  Approximately two hours later, his spouse, Pam Ratka, called the local fire department to report that the silo connected to the barn was on fire.  The fire department came and sprayed more than 6,000 gallons of water on the silo, but could not totally extinguish the fire.  They left instructions as to what to do to keep the fire from spreading to the attached barn.  At trial, a silo fire expert testified that because of the extent of the silo fire, it probably had started at least a month before August 14, 2000, probably around mid-July, and that the smell and the smoke from the burning silage should have been obvious before, and certainly by, August 14.

            The facts show a series of remarkable coincidences.  First, you have the gap of time between December 1999 and August 2000.  Then you have the lack of any telephone calls or other contact between respondents and their insurance agent before August 12, 2002.  Then you have Ratka's desire to pick August 12, 2002, to send a check for the "guesstimated" amount to the insurance company to begin coverage on property that had been cancelled for nonpayment of premium nine months before.  Then you have Ratka calling the agency twice on Tuesday, August 15, to see "if the check had been received."  Lastly, you have the remarkable coincidence of respondents reporting a fire approximately two hours after they had been assured that the premium check had been received.  Despite these facts and the district court's comments, the district court let the matter go to a jury, and after a verdict favorable to respondents, the court denied appellant's motion for a JNOV or a new trial.

            Appellants did not argue the issue of whether insurance coverage for respondents was voided ab initio by the evidence showing respondents may have waited until after the casualty happened (the fire) to send in a premium check to start coverage.  At oral argument, appellant was asked about that issue and whether it was an issue; appellant's counsel stated categorically that they were not, on appeal, challenging the jury's determination that respondents did not willfully conceal or misrepresent any facts during the trial court trial.

            With that stipulation by appellant's counsel, there is no basis to examine the issue further.  Thus, I feel compelled to concur in the result, which sustains the issue of fire insurance coverage for respondents.

            I concur in the result.

 

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.