Ridgewood Bay Resort, Inc., Respondent,

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A21-1352

Ridgewood Bay Resort, Inc.,
Respondent,

vs.

Auto-Owners Insurance Company,
Appellant.

Filed June 20, 2022
Affirmed in part, reversed in part, and remanded
Wheelock, Judge

Sherburne County District Court
File No. 71-CV-19-1066

Charles J. Lloyd, Adam C. Hagedorn, Livgard & Lloyd PLLP, Minneapolis, Minnesota
(for respondent)

Beth A. Jenson Prouty, Arthur, Chapman, Kettering, Smetak & Pikala, P.A., Minneapolis,
Minnesota (for appellant)

Considered and decided by Wheelock, Presiding Judge ; Jesson, Judge; and Bryan,
Judge.
NONPRECEDENTIAL OPINION
WHEELOCK, Judge
In this insurance -coverage dispute arising from fire damage, appellant -insurer
challenges the grant of summary judgment to respondent -owner.
Appellant argues the
district court (1) erred in determining coverage under an ordinance -or-law endorsement
and (2) misapplied the burden to show a genuine issue of material fact on the applicability
2
of a preexisting-violation exclusion. By notice of related appeal, respondent -owner argues
the district court erred in (1) denying its motion to am end the complaint to include a
bad-faith claim, (2) overruling its objection to the appraisal panel’s award based on a claim
that the panel exceeded its authority, and (3) denying its claim for prejudgment interest.
Because the district court correctly de termined both that the policy language is ambiguous
and that the insurer did not meet its burden as to exclusion, did not abuse its discretion in
denying the owner’s motion to amend, and correctly determined that the appraisal panel
did not exceed its scop e, we affirm in part. But because it erred in denying prejudgment
interest, we also reverse in part and remand.
FACTS
Respondent Ridgewood Bay Resort Inc. owns and operates a lakeside restaurant and
bar that caught fire in August 2017. The fire damaged the structure and business personal
property in the bar area and caused smoke damage elsewhere in the building. According
to Ridgewood Bay, state and county agencies inspected the building following the fire and
ordered that the ADA-noncompliant bathrooms and the undamaged kitchen vent hood,
kitchen walls and flooring, and septic system be brought up to code before the restaurant
could reopen. At all relevant times, appellant Auto- Owners Insurance Company insured
Ridgewood Bay under a commercial-property insurance policy containing an
ordinance-or-law coverage endorsement (O&L endorsement). The O&L endorsement lists
four coverage types, one of which, Coverage A, provides coverage up to the full
3
building-coverage limit of $400,800, while the other three, C overages B-D, each cover up
to a $10,000 limit, all subject to a $1,000 deductible. 1
Ridgewood Bay reported the loss to Auto- Owners and filed its claim for coverage.
Auto-Owners determined that the insurance policy applied to losses of business persona l
property damaged in the fire but disputed whether all of the property listed in Ridgewood
Bay’s inventory was unsalvageable and therefore eligible for coverage. Auto- Owners did
not dispute that Ridgewood Bay’s building also sustained covered physical da mage;
however, the parties disagreed on which provisions of the O&L endorsement apply to the
work that the state and county agencies must require to bring the building into compliance
with applicable codes. Auto- Owners took the position that Ridgewood Bay is limited to
Coverage C; thus, Coverage A and Coverage B do not apply. The record shows that
litigation commenced before Auto- Owners made any explicit final decision regarding
coverage pursuant to the insurance policy and the O&L endorsement for the ful l scope of
work that Ridgewood Bay submitted in its claim .
2
Ridgewood Bay served Auto- Owners with a complaint asserting breach of contract
on the basis that (1) Ridgewood Bay was entitled to the full replacement cost of damaged
business-personal-property items under the commercial property policy; (2) Ridgewood
Bay was entitled to the full replacement value for the code -required repairs and
reconstruction on the undamaged portions of the building under the O&L endorsement ;

1 Only Coverages A, B, and C are at issue in this appeal.

2 As of the district court’s July 2020 order, Auto-Owners had neither paid in full nor denied
the claim.
4
and (3) Auto-Owners refused to issue payment as provided by the policy. The parties filed
cross-motions for partial summary judgment on the issue of which coverage provisions of
the O&L endorsement apply to the code -required upgrades. Ridgewood Bay asked the
district court to find that Coverage A applies to its claim for code -required upgrades.
Auto-Owners countered that the only potentially available coverage for code -required
upgrades is Coverage C and alleged that questions of fact existed on whether the
preexisting-violation exclus ion precluded coverage. Ridgewood Bay subsequently moved
to amend its complaint under Minn. Stat. § 604.18 (2020), to add a claim of bad faith
against Auto-Owners for its handling of the business-personal-property claim.
On the parties’ cross-motions for summary judgment, the district court determined
that Coverages A, B, and C of the O&L endorsement applied and that the
preexisting-violation exclusion did not. The district court denied Ridgewood Bay’s motion
to amend the complaint. It also incorporated the parties’ stipulation for an appraisal into
its order, relying on a form proposed by Ridgewood Bay.
Following the appraisal, Auto- Owners moved the district court to enter judgment
on the appraisal award without reference to prejudgment interest. Ridgewood Bay opposed
the motion, asserting that the appraisal panel exceeded its authority and that any judgment
must include prejudgment interest. The district court directed entry of judgment and denied
all motions not expressly addressed in its order, incl uding Ridgewood Bay’s request for
prejudgment interest. Auto-Owners appeals, and Ridgewood Bay filed a notice of related
appeal.
5
DECISION
Auto-Owners asserts that the district court erred in determining both that Coverage
A applied to the code -required upgrades and that Auto- Owners had the burden of proving
the applicability of the preexisting- violation exclusion to defeat summary judgment. By
notice of related appeal, Ridgewood Bay argues that the district court erred in denying its
motion to amend its complaint to assert a claim of bad faith, in failing to find that the
appraisal panel exceeded its scope, and in denying its claim of entitlement to prejudgment
interest. We address each issue in turn.
I. The district court did not err in granting partial summary judgment in favor
of Ridgewood Bay on coverage and exclusions.

“We review a district court’s summary judgment decision de novo. In doing so, we
determine whether the district court properly applied the law and whether there are genuine
issues of material fact that preclude summary judgment. ” Riverview Muir Doran, LLC v.
JADT Dev. Grp., LLC , 790 N.W.2d 167, 170 (Minn. 2010) (citation omitted). “The
interpretation of an insurance policy, ‘including whether provisions in a policy are
ambiguous, is a legal question subject to de novo review.’” King’s Cove Marina, LLC v.
Lambert Com . Constr. LLC , 958 N.W.2d 310, 316 (Minn. 2021) (quoting Latterell v.
Progressive N. Ins. Co., 801 N.W.2d 917, 920 (Minn. 2011)). “ Language in an insurance
policy is ambiguous if it is reasonably susceptible to more than one interpretation. ”
Midwest Fam . Mut. Ins. Co. v. Wolters , 831 N.W.2d 628, 640 (Minn. 2013) . But policy
endorsements and exclusions “must be construed in terms of the entire contract, and in
such a way, if possible, to give effect to all provisions.” Gen. Mills, Inc. v. Gold Medal
6
Ins. Co., 622 N.W.2d 147, 151 (Minn. App. 2001) (citing Bobich v. Oja, 104 N.W.2d 19,
24-25 (Minn. 1960)), rev. denied (Minn. Apr. 17, 2001).
A. The district court did not err in concluding that ambiguous coverage
provisions must be construed in favor of R idgewood Bay and that there
is no genuine issue of material fact that R idgewood Bay suffered a “loss
in value” due to code enforcement.

The distric t court concluded that the coverage provisions are ambiguous because
there are at least two reasonable interpretations of each of the terms “ demolition” and
“required.” The court looked to the parties ’ differing interpretations of “demolition,”
reasoning that Auto -Owners’s limited interpretation of the term to mean a complete
leveling or tearing- down of a building was sensible , but that Ridgewood Bay’s broader
definition of the term to include removing or tearing out parts of a building as a step toward
remodeling was also reasonable, noting the affidavits of Ridgewood Bay’ s construction
project manager referring to the “demolition required to bring the building into
compliance.” The district court also reasoned that the term “requires” could mean the
demolition itself must literally be required by the ordinance or law, but that such a reading
is far narrower than the ordinary plain meaning of the term.
The district court additionally concluded that undisputed evidence showed
Ridgewood Bay suffered a “loss in value” due to code enforcement, relying in part on a
Loss Payment provision in the O&L endorsement that references the amount the insured
would “actually spend to repair, rebuild or reconstruct the building.” The district court
therefore concluded tha t Coverage A applied to code -required upgrades.
7
Auto-Owners argues that the district court erred in concluding that Coverage A
applies to code -required updates, contending that (1) the policy is not ambiguous and,
reading the policy as a whole, the sole reasonable interpretation is that only Coverage C
applies to code-required remodeling; and (2) there is no “loss in value” to trigger Coverage
A.
1. The coverage provisions in the O&L endorsement are ambiguous.

Ridgewood Bay raised the issue of the applicability of Coverage A in its motion for
partial summary judgment, asking the district court to determine that Coverage A provides
coverage for the code-required upgrades, while Auto- Owners asked the court to determine
the scope of Coverages A and B in i ts cross-motion for partial summary judgment. The
district court denied partial summary judgment to Auto- Owners on the scope of coverage
under Coverage A and B and granted partial summary judgment to Ridgewood Bay on
coverage under Coverage A.
The relevant policy language appears in a section of the O&L endorsement labeled
“Coverages.” Coverage A reads in part:
1. Coverage A – Coverage For Loss to The Undamaged
Portion Of The Building.
With respect to a covered building that has sustained covered
direct physical damage, we will pay under Coverage A for the
loss in value of the undamaged portion of the building as a
consequence of enforcement of an ordinance or law that
requires demolition of undamaged parts of the same building.

(Emphasis added.)

8
Coverage B expands on Coverage A as follows:
2. Coverage B – Demolition Cost Coverage.
With respect to a covered building that has sustained covered
direct physical damage, we will pay the cost to demolish and
clear the site of undamaged parts of the same building, as a
consequence of enforcement of an ordinance or law that
requires Demolition of such undamaged property.

(Emphasis added.) 3

Coverage C, in part, reads as follows:

3. Coverage C – Increased Cost Of Construction Coverage .
a. With respect to a covered building that has sustained
covered direct physical damage, we will pay the increased cost
to:
(1) Repair or reconstruct damaged portions of
that building; and/or
(2) Reconstruct or remodel undamaged portions
of that building, whether or not demolition is required when
the increased cost is a consequence of enforcement of the
minimum requirements of the ordinance or law .

(Emphasis added.)

Auto-Owners asserts that Cove rages A and B can only have one reasonable
meaning, arguing that the common, ordinary understanding of the word “demolition” is
destruction, leveling, or raz ing, not tear ing out or removing materials as part of a
remodeling project, and that when Coverages A, B, and C are read together, the differences
between the coverage applications are apparent. Under Auto-Owners’s reading, Coverages
A and B apply when an ordinance or code requires demolition of part of the building—
whether demolition is expressly included in the code or ordinance , or if a building official

3 “Demolition” is not defined in the policy.
9
orders part of the building to be demolished as a requirement of the code or ordinance —
whereas Coverage C applies to the cost of repairs or remodeling required by the code or
ordinance, including any related demolition.
Ridgewood Bay argues that the phrase “ as a consequence of enforcement of an
ordinance or law that requires demolition of undamaged parts” included in Coverage A and
B applies to situations like Ridgewood Bay’s, where as a result of enforcement of a code,
upgrades are required that cannot be accomplished unless some level of interior demolition
takes place. The district court found this interpretation of Coverage A, meaning an
ordinance or law requires remodeling of undama ged parts of the building, and demolition
is a component of the remodeling, to be reasonable. We agree.
Policy language is ambiguous if susceptible to two or more reasonable
interpretations, and any ambiguity is resolved in favor of the insured. Wolters, 831 N.W.2d
at 636. “In an action to determine coverage, ” the burden is on the insured to “ establish a
prima facie case of coverage. ” SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 311
(Minn. 1995), overruled on other grounds by Bahr v. Boise Cascade Corp., 766 N.W.2d
910 (Minn. 2009). We conclude that Ridgewood Bay met its burden of establishing
coverage by providing another reasonable interpretation of the language in Coverages A
and B.
We are unconvinced that Coverage A or B applies only when the demolition itself
is required either by the ordinance or law or by its enforcement, but not when the
code-required upgrades have a demolition component, because this is not what the
language of the coverage provision says. Nor do we agree that this is t he only reasonable
10
interpretation of Coverages A and B, because Coverage C applies in cases where
demolition occurs as a consequence of complying with the requirements of an ordinance
or law. We observe that Coverage C could also be understood to provide coverage for
increased reconstruction costs associated with code compliance in situations involving
demolition or no demolition. Such an interpretation would give effect to all provisions.
We also note that while dictionary definitions support a contenti on that the common
understanding of “demolish” is to tear down, break apart, or raze,4 the actions contemplated
in the O&L endorsement exist in a building construction and rehabilitation context, in
which the idea that one can “demolish” fixtures and interior components, such as cabinets
or a sink, is not an uncommon usage of the term. And the Loss Payment provision
associated with Coverage A provides coverage for “the amount [insured] would actually
spend to repair, rebuild or reconstruct the building.” (Emphasis added.) This cuts against
the contention that “demolition” in Coverage A can only mean razing or leveling the
structure because under that interpretation, there would be no repa irs to cover.
The district court correctly concluded that the terms “demolition” and “requires” are
ambiguous here, given both Auto- Owners’s interpretation that demolition only means
destruction, leveling, or raz ing a building or a portion of a building as required by
enforcement of a code or ordinance and Ridgewood Bay’s interpretation that demolition
can mean tearing out a portion of a building or removing materials when remodeling as
required to bring the building up to code. Because Coverages A and B are subject to more

4 The American Heritage Dictionary of the English Language 483 (5th ed. 2011) (defining
“demolish”).
11
than one reasonable interpretation, they are ambiguous, and thus the contract must be
construed in favor of Ridgewood Bay as the insured. Wolters, 831 N.W.2d at 636.
2. Ridgewood Bay showed a loss in value as a matter of law.
Auto-Owners further argues that Coverage A cannot apply because the elements in
need of code -mandated updates did not sustain any loss in value. Coverage A reads, in
relevant part, “we will pay under Coverage A for the loss in value of the undamaged portion
of the building as a consequence of enforcement of an ordinance or law that requires
demolition of undamaged parts of the same building.” (Emphasis added .) Auto-Owners
additionally points to language in the Loss Payment provision of the O&L endorsement
providing that “[ w]hen there is a loss in value of an undamaged portion of a building to
which Coverage A applies,” payment is determined as “either the amount spent to repair,
rebuild, or reconstruct demolished property . . . or—if the property is not repaired, rebuilt,
or reconstructed—for the actual cash value of the building at the time of the loss up to the
limit of insurance for Coverage A.” Auto-Owners argues that the code -required upgrades
do not result in any loss in value for Ridgewood Bay, because the upgrades will ultimately
increase the value of the property, citing deposition testimony of Ridgewood Bay’s owner
acknowledging that if all the code -required upgrades are completed, the value of the
building will go up. Auto-Owners asserts t hat “amounts spent to update property are not
amounts being spent to repair, rebuild, or reconstruct demolished property.”
Ridgewood Bay argues that it has clearly sustained a loss in value because unless it
submits plans to bring the building into complia nce and performs the code -required
upgrades, county and state officials will not issue permits to finish repairing the damage to
12
the building caused by the fire, and no certificate of occupancy to operate will be issued,
leaving Ridgewood Bay with a damage d, unusable building which is “essentially
worthless.” In support of this argument, Ridgewood Bay points to a report prepared for
Auto-Owners by a third -party forensic -design consultant stating that , as part of the
permitting process for fire restoration, the county building official required conversion of
the restrooms to meet ADA requirements in compliance with the Minnesota State Building
Code, and, without those updates, no permit to repair the fire damage would be issued. The
same report also notes that until the noncompliant septic system is updated, and the kitchen
walls, floor, ceiling, and vent hood are brought into compliance with Minnesota Health
Department rules, Ridgewood Bay is unable to reopen.
We conclude that Ridgewood Bay has sufficiently pointed to facts in the record to
demonstrate a loss in value, defeating Auto- Owners’s assertion that Coverage A does not
apply as a matter of law. We reject Auto -Owners’s argument that there can be no loss in
value if upgrades occur as part of repairing or rebuilding, as it is possible that properties
remodeled or rebuilt due to code -required changes could lose rather than gain value. We
agree with the district court’s observation that “loss in value cannot be understood
independently from costs related to repair, rebuilding, or reconstruction because that is how
payment for the loss would be determined” under the Loss Payment provision of the policy.
B. The district court correctly placed the burden on A uto-Owners to show
that genuine issues of material f act exist as to the preexisting -violat ion
exclusion.

“An insurer has the burden of proving that a policy exclusion applies.” Henning
Nelson Const r. Co. v. Fireman’ s Fund Am. Life Ins. Co., 383 N.W.2d 645, 652 (Minn.
13
1986) (affirming judgment in favor of insured where insurer did not bring forth evidence
that the exclusion was met). “The moving party has the burden of showing an absence of
factual issues before summary judgment can be granted .” Anderson v. State, Dep’ t of
Natural Res., 693 N.W.2d 181, 191 (Minn. 2005). “In order to successfully oppose a
motion for summary judgment, appellant must extract specific, admissible facts from the
voluminous record and particularize them for the trial judge.” Kletschka v. Abbott -Nw.
Hosp., Inc., 417 N.W.2d 752, 754 (Minn. App. 1988), rev. denied (Minn. Mar. 30, 1988).
The O&L endorsement contains a preexisting- violation exclusion, which reads,
“[u]nder this endorsement we will not pay for loss due to any ordinance or law that: (1) You
were required to comply with before the loss, even if the building wa s undamaged; and
(2) You failed to comply with.” The district court concluded that the burden to prove the
exclusion’s applicability fell to Auto-Owners as the insurer and that Auto- Owners did not
prove that Ridgewood Bay was required to comply with the applicable codes prior to the
covered event. Auto-Owners contends that the district court improperly placed the burden
of proving the applicability of the exclusion on Auto-Owners rather than placing the burden
on Ridgewood Bay, as the party moving for summary judgment , to show that no question
of material fact existed regarding whether Ridgewood Bay was required, but failed, to
comply with the relevant ordinances prior to the fire.
We note that Ridge wood Bay did not address the exclusion in its initial arguments
to the district court supporting partial summary judgment. Auto- Owners, in its
memorandum opposing summary judgment, raised as an issue of material fact whether
Ridgewood Bay was required to comply with the relevant code requirements before the
14
loss. In response, Ridgewood Bay argued that there is no dispute that the fire was the
triggering event for the order to bring undamaged parts of the property up to code and that
while Auto-Owners was “hinting at reliance on” the exclusion, it did not bring any evidence
forward to support the application of the exclusion in accordance with its burden.
Auto-Owners then responded that its argument as to the exclusion was offered to show
issues of material fact with Ridgewood Bay’s motion for summary judgment and was not
in support of Auto-Owners’s cross-motion.
While the burden to prove a policy exclusion’s applicability would typically fall to
Auto-Owners as the insurer, we observe that within the summa ry-judgment framework,
Ridgewood Bay, as the moving party, must satisfy the initial burden to show that there
were no genuine issues of material fact as to the exclusion’s applicability in order to prove
it is entitled to coverage as a matter of law. The district court did not directly address this.
However, our review of the record shows no genuine issue of material fact as to whether
Ridgewood Bay was required to comply with the ordinances prior to the fire as the
triggering event.
As previously noted, Ridgewood Bay’s memorandum in support of its motion for
summary judgment included Auto-Owners’s own forensic engineer ’s report , which
explains that county officials based the requirement to make the bathrooms ADA compliant
on the scope of the repair work from the fire. Minnesota Department of Health inspection
reports following the fire were also included, referencing orders from previous inspections
issued in October 2013, December 2015, and January 2017 that do not include viola tions
for the kitchen wall and floor surfaces, kitchen vent hood, or septic system. This supports
15
a conclusion that these items were not required to be brought up to compliance with the
code at the time of the previous inspections. The district court found that “ the covered
event caused enforcement” of the ordinances and that “[b]efore the covered event, county
or state officials had not identified code issues. Their inspections only occurred because
of the covered event. ” We agree and therefore conclud e that Ridgewood Bay’s initial
burden regarding coverage notwithstanding the exclusion was met.
As Ridgewood Bay met its initial burden , the burden then shifted to Auto- Owners
as the nonmoving party to point to record evidence showing a genuine issue of m aterial
fact that the exclusion applied. The record shows that Auto- Owners did not point to any
evidence showing that the code violations in question “required immediate compliance or
retrofitting” prior to the covered event. Ridgewood Bay, as the moving party, met its initial
burden, and Auto- Owners, as the nonmovant, did not produce any evidence that the
preexisting-violation exclusion applied to defeat Ridgewood Bay’s claim of coverage.
Therefore, we conclude the district court correctly found that Aut o-Owners did not meet
its burden to prove that the preexisting-violation exclusion applied.
In sum, the district court correctly concluded that the use of the terms “demolition”
and “requires” in the O&L endorsement are ambiguous, resulting in more than one
reasonable interpretation of the provisions. Thus, the policy must be construed in favor of
the insured, meaning Coverages A, B , and C apply to Ridgewood Bay’s code -required
upgrades. We are unable to conclude that, as a matter of law, Coverage A canno t apply to
Ridgewood Bay’s claims for code -required upgrades due to a lack of “loss in value” that
falls under Coverage A. We further conclude that the burden properly rested with
16
Auto-Owners to show that the preexisting- violation exclusion applies, and t he insurance
company did not meet its burden. Therefore, the district court did not err in granting partial
summary judgment to Ridgewood Bay.
II. The district court did not abuse its discretion in denying Ridgewood Bay’ s
motion to amend its complaint to ass ert a claim of bad faith under Minn. Stat.
§ 604.18.

We review an order denying a motion to amend a complaint for abuse of discretion.
Bjerke v. Johnson, 727 N.W.2d 183, 196 (Minn. App. 2007), aff’d, 742 N.W.2d 660 (Minn.
2007). “Generally, the decision to permit or deny amendments to pleadings is within the
discretion of the district court and will not be reversed absent a clear abuse of discretion.”
Johns v. Harborage I, Ltd., 664 N.W.2d 291, 295 ( Minn. 2003). “Whether the district
court has abused its discretion in ruling on a motion to amend may turn on whether it was
correct in an underlying legal ruling.” Doe v. F.P., 667 N.W.2d 493, 500-01 (Minn. App.
2003) (citing Fabio v. Bellomo, 504 N.W.2d 758, 762 (Minn. 1993)), rev. denied (Minn.
Oct. 21, 2003).
Ridgewood Bay moved the district court to amend its complaint to include a claim
alleging Auto- Owners acted in bad faith in investigating Ridgewood Bay’s
business-personal-property losses. Minn. Stat. § 604.18, subd. 2(a), permits the court to
award taxable costs to an insured against an insurer if the insured can establish (1) the
absence of a reasonable basis for denying the benefits of the policy and (2) that the insurer
knew of the lack of a reasonable basis for denying, or acted in reckless disregard of the
lack of a reasonable basis for denying, the benefits of the policy. “[T] he proper inquiry
under the first prong of the . . . standard is whether a reasonable insurer under the
17
circumstances would not have denied the insured the benefits of the insurance policy. ”
Peterson v. W. Nat ’l Mut. Ins. Co., 946 N.W.2d 903, 910 (Minn. 2020) . Relevant to the
second prong is “the insurer’s actual investigation and evaluation,” which requires the
insured to prove that the insurer either knew, or recklessly disregarded or remained
indifferent to, information that would have allowed it to know that it lacked an objectively
reasonable basis for denying the claim. Id. at 912.
The district court denied the motion, finding that Ridgewood Bay did not establish
a prima facie case that Auto -Owners lacked a reasonable basis for denying the benefits of
the policy. The court observed that while Auto- Owners had not yet provided Ridgewood
Bay with all of its business-personal-property benefits, it had not outright denied the claim
and had in fact made a partial payment against the claim. The district court additionally
found that Ridgewood Bay did not establish a prima facie case that Aut o-Owners did not
complete or attempt to complete a reasonable investigation such that it should have known
it lacked an objectively reasonable basis for denying the claim.
Ridgewood Bay first argues the district court improperly weighed evidence and
made credibility deter minations as to Auto- Owners’s conduct and reasoning when all that
was needed was for Ridgewood Bay to assert a prima facie case. Citing to Swanlund v.
Shimano Industrial Corp., Ridgewood Bay claims that the court should have considered
only the allegations it asserted because Ridgewood Bay need only present evidence that, if
unrebutted, would support judgment in its favor. 459 N.W.2d 151, 154 (Minn. App. 1990)
(where this court considered only evidence presented by the appellant to establish that
appellant met the prima -facie-evidence standard in a claim for punitive damages). The
18
district court stated, however, that “even if these allegations are unrebutted,” Ridgewood
Bay did not “establish[] a prima facie basis to amend their complaint.”
We note that Minn. Stat. § 604.18, subd. 4(a), identifies evidence the court may
consider in a claim for taxable costs, reading in part:
The motion must allege the applicable legal basis under this
section for awarding taxable costs under this section, and must
be accompanied by one or more affidavits showing the factual
basis for the motion. The motion may be opposed by the
submission of one or more affidavits showing there is no
factual basis for the motion. At the hearing, if the court finds
prima facie evidence i n support of the motion, the court may
grant the moving party permission to amend the pleadings to
claim taxable costs under this section.

(Emphasis added.)
Ridgewood Bay submitted with its motion an affidavit of its claims adjuster that
provided a timeline of communications between the claims adjuster and Auto -Owners’s
claims handler and stated that Auto -Owners retained a mitigation company to inspect the
damaged property. In opposing the motion, Auto- Owners submitted an affidavit of the
claims han dler indicating that Auto- Owners had a reasonable basis to question whether
some of Ridgewood Bay’s property claims qualified as a total loss based on smoke damage.
In their affidavit, the claims handler further asserted that the investigation was delayed by
nonresponsive third -party mitigation companies and that after Auto- Owners retained legal
counsel, the claim -handling activities were reduced to monitoring the litigation. The
statute requires the district court to review all of the parties’ submissions to determine
whether a factual basis for the motion exists. Minn. Stat. § 604.18, subd. 4(a).
19
Ridgewood Bay claims that Auto- Owners’s submission does not establish a lack of
factual basis for the motion as required by statute. We disagree. In finding no factual basis
for the motion, the district court reviewed the affidavits and concluded that both parties
contributed to delays in processing the claim, that Auto- Owners’s rationale for
investigating the claim prior to granting or denying it was objectively reasonable, and that
Auto-Owners did not outright deny the benefits of the policy for Ridgewood Bay’s
business-personal-property claim. We conclude that the district court did not improperly
weigh evidence when evaluating whether Ridgewood Bay establi shed a prima facie case.
Finally, Ridgewood Bay argues that the district court should have concluded that
Auto-Owners denied benefits to Ridgewood Bay without a reasonable basis due to
Auto-Owners’s failure to complete its investigation. Ridgewood Bay contends that
Auto-Owners “chose to do nothing” and “abandoned its investigation” after failing several
times to find a third -party evaluator to audit Ridgewood Bay’s claim and that therefore
Auto-Owners should have issued payment based on the amounts Ridgewood Bay’s claims
adjuster identified. We disagree. This reasoning requires that the district court accept
Ridgewood Bay’s conclusory allegations that Auto- Owners abandoned its investigation
and indefinitely delayed any payments on the business-personal-property claim. To the
contrary, the record reflects that the district court considered whether there was evidence
that Auto-Owners had determined it would not complete the investigation or that additional
payments would not be made. It concluded that Ridgewood Bay did not establish a prima
facie case that the investigation was abandoned.
20
We discern no clear abuse of the district court’s discretion and give deference to its
decision. Therefore, we affirm the district court’s decision to deny Ridgewood Bay’ s
motion to amend.
III. The district court did not err in rejecting Ridgewood Bay’s argument that the
appraisal panel exceeded its authority.

Ridgewood Bay argues the district court erred in finding that the appraisal panel
acted within its authority when it determined that no demolition costs were associated with
the septic repairs. Ridgewood Bay asserts that the panel made an impermissible coverage
decision in response to the request on the award form that they “ state the cost to demolish
and clear the site of undamaged parts of the building.” We disagree and conclude that the
district court did not err in finding that the appraisal panel acted within its authority.
“The scope of appraisal is limited to damage questions while liability questions are
reserved for the courts.” Quade v. Secura Ins., 814 N.W.2d 703, 706 (Minn. 2012).
Appraisers generally “have authority to decide the amount of loss but may not construe the
policy or decide whether the insurer should pay.” Id. (quotation omitted). But “‘questions
of law or fact, which are involved as mere incidents to a determination of the amount of
loss or damage,’ are appropriate to resolve in an appraisal in order to ascertain the ‘amount
of loss.’” Cedar Bluff Townhome Condo. Ass ’n v. Am. Fam . Mut. Ins. Co., 857 N.W.2d
290, 293 (Minn. 2014) (quoting Quade, 814 N.W.2d at 707).
Ridgewood Bay objected to the appraisal award and moved to remand t he award to
the panel for valuation of septic-system demolition, arguing that the panel acted beyond its
authority by assigning no demolition costs to the septic system, thereby limiting the
21
coverage that applied to the septic system to the amount available pursuant to Coverage C.
The district court found that the panel did not exceed its authority and denied Ridgewoo d
Bay’s motion. In so finding, the district court highlighted that the award form issued to the
panel containing the instruction to “ state t he cost to demolish and clear the site of
undamaged parts of the building” was proposed by Ridgewood Bay itself. We agree that
this is significant. Since Ridgewood Bay proposed the language now at issue in the award
form and consented to its being ordere d for use by the panel in its valuation decisions, any
error by the panel in excluding septic -system demolition costs was invited by Ridgewood
Bay.
“[T]he doctrine of invited error . . . precludes a party from asserting error on appeal
which he invited or could have prevented in the court below.” In re Hibbing Taconite Mine
& Stockpile Progression, 888 N.W.2d 336, 344 (Minn. App. 2016) (quotation omitted) ;
see Am. States Ins. Co. v. Ankrum , 651 N.W.2d 513, 522- 23 (Minn. App. 2002) (stating
that a party who acquiesced in the submission of a question cannot argue on appeal that the
district court erred by submitting the question). Here, each party submitted a proposed
appraisal form to the district court, the parties discussed the competing forms with the court
at an informal conference, final proposed forms were submitted, and the court issued an
order electing to use Ridgewood Bay’s proposed form. Throughout this process,
Ridgewood Bay had ample opportunity to raise concerns about whether its own proposed
language might lead the panel to analyze whether demolition associated with the septic
system was for undamaged parts of the building, but it did not do so.
22
As this is an invited error, we need not reach the issue. Even so, a review of the
question on the merits leads us to conclude that the appraisal panel did not exceed the scope
of its authority by making a coverage determination. The appraisers were instructed by the
court to use the form provided, and we observe that the appraisers were int erpreting the
form, not the insurance policy, to guide their decision. Since the form question at issue
asks the panel to “state the cost to demolish and clear the undamaged parts of the building,”
we agree with the district court that the panel would nec essarily have to make underlying
inferences about what property was “part of the building,” whether parts were damaged or
undamaged, and whether those parts required demolition.
In support of its argument that the panel exceeded its authority, Ridgewood Ba y
points to affidavits submitted by the appraisers stating that they discussed whether the
septic system was part of the building as a factor in their decision. However, whether there
were demolition costs to part of the building associated with the septi c system was
precisely the question before them, so the panel must necessarily have considered whether
the septic system was part of the building in order to value those costs. We conclude that,
when asked to determine how much cost to assign for demolishing parts of the building
required for septic repair, the panel’s actions in addressing the question of whether the
septic system was part of the building is not an interpretation of coverage, but rather just
the sort of question of fact “involved as [a] mere incident[] to a determination of the amount
of loss or damage ” that is appropriate to “ ascertain the amount of loss.” Cedar Bluff,
857 N.W.2d at 293.
23
Therefore, we conclude that the district court did not err in determining that the
panel acted within the scope of its authority.
IV. The district court erred by entering judgment on the appraisal award without
including prejudgment interest.

Ridgewood Bay argues that the district court erred by failing to include prejudgment
interest when it entered judgme nt. We agree.
The application of prejudgment interest is a matter of statutory interpretation that
we review de novo. Poehler v. Cincinnati Ins. Co., 899 N.W.2d 135, 139 (Minn. 2017).
We first consider whether and how Ridgewood Bay raised the issue of prejudgment interest
to the district court. Auto- Owners asserts that Ridgewood Bay did not bring a motion for
prejudgment interest before the district court; instead, it opposed Auto- Owners’s motion
for entry of judgment and argued that it was entitled to prejudgment interest not included
in the appraisal award. But Ridgewood Bay’s initial complaint requests relief in the form
of an award of its costs and disbursements, including prejudgment interest. And in its
opposition to Auto- Owners’s motion for entry of judgment, Ridgewood Bay requested an
award of prejudgment interest. The district court, in its order granting Auto- Owners’s
motion, itemized amounts owed by Auto-Owners, but did not include prejudgment interest,
and stated th at “all other motions not expressly addressed are denied.” Because
prejudgment interest was the only issue before the court not expressly addressed in the
district court’s order, we conclude that the court denied Ridgewood Bay’s request for
prejudgment interest.
24
Next, we consider the arguments regarding whether Ridgewood Bay is entitled to
prejudgment interest. Ridgewood Bay argues that it is entitled to prejudgment interest
under either Minn. Stat. § 549.09, subd 1(b) (2020), or Minn. Stat. § 60A.0811, s ubd. 2
(2020). In response, Auto- Owners claims that Ridgewood Bay is not entitled to
prejudgment interest because, first, the only applicable statute is Minn. Stat. § 60A.0811
(2020), and second, Auto- Owners did not breach its duty to make payments, and t hus the
interest requirement was not triggered.
Minn. Stat. § 549.09, subd. 1(a) (2020), provides that “w hen a judgment or award
is for the recovery of money . . . interest from the time of the verdict, award, or report until
judgment is finally entered s hall be computed by the court administrator or
arbitrator . . . and added to the judgment or award.” In addition, Minn. Stat, § 549.09, subd.
1(b), states:
Except as otherwise provided by contract or allowed by law ,
preverdict, preaward, or prereport inte rest on pecuniary
damages shall be computed as provided in paragraph (c) from
the time of the commencement of the action or a demand for
arbitration, or the time of a written notice of claim, whichever
occurs first, except as provided herein.

(Emphasis added .)

Alternatively, Minn. Stat. § 60A.0811, subd. 2(a), provides that an insured who
“prevails in any claim against an insurer based on the insurer’s breach or repudiation of, or
failure to fulfill, a duty to provide services or make payments is entitled to recover ten
percent per annum interest on monetary amounts due under the insurance policy.”
Subdivision 3 of Minnesota Statutes section 60A.0811 additionally states, “ This section
25
applies to a court action or arbitration proceeding, includi ng an action seeking declaratory
judgment.”
Auto-Owners first alleges that Ridgewood Bay is not entitled to prejudgment
interest under Minn. Stat . § 549.09, subd. 1(b), because Ridgewood Bay’s recovery of
preaward interest is “otherwise . . . allowed by law,” specifically, by Minn. Stat
§ 60A.0811. Our recent ruling on the interplay between Minn. Stat . § 549.09 and Minn.
Stat. § 60A.0811 supports this conclusion.
In K & R Landholdings, LLC v. Auto- Owners Insurance, we held that insureds are
entitled to preaward interest from appraisal proceedings under Minn. Stat. § 549.09
because appraisal proceedings do not determine liability and therefore are not “court
actions,” meaning preaward interest is not “otherwise allowed by law ” under Minn. Stat.
§ 60A.0811 within the meaning of Minn. Stat. § 549.09, subd. 1(b). 907 N.W.2d 658, 664
(Minn. App. 2018).
Here, we are presented with the inverse situation, where Ridgewood Bay’s award is
a “court action” to which Minn. Sta t § 60A.0811, subd. 3, likely applies. The facts and
procedural posture here are distinguishable from those in K & R Landholdings , LLC
because this litigation began as a breach -of-contract action, and the district court entered
judgment based on the appraisal panel’s award. As Ridgewood Bay states, “[t]he judgment
entered here concluded a court action involving Auto-Owners’s breach of its insurance
policy, it did not confirm an appraisal award . Because Ridgewood Bay is seeking
prejudgment interest on a court action, Minn. Stat. § 60A.0811, subd. 2(a), is the applicable
statute.”
26
The question then turns to whether interest is owed to Ridgewood Bay under Minn.
Stat. § 60A.0811, subd. 2(a). Auto- Owners argues that it paid the appraisal award within
the cont ractual timeframe and therefore did not breach its duty to make payments.
However, the statute provides that
[a]n insured who prevails in any claim against an insurer based
on the insurer’s breach or repudiation of, or failure to fulfill, a
duty to provid e services or make payments is entitled to
recover . . . interest on monetary amounts due under the
insurance policy, calculated from the date the request for
payment of those benefits was made to the insurer.

Minn. Stat. § 60A.0811, subd. 2(a).
Ridgewood Bay is seeking interest on the judgment entered in its favor following a
claim that Auto -Owners breached its contract by failing to provide coverage Ridgewood
Bay was entitled to under its policy. Thus, the requirements of the statute are satisfied.
Auto-Owners argues it did not breach its “duty to make payments” because it paid
the appraisal award less than 30 days after it was issued. It relies on the policy language,
which reads:
We will pay for covered loss or damage within 30 days after
we receive the sworn proof of loss, if you have complied with
all of the terms of this Coverage Part and:
(1) We have reached agreement with you on the amount of
loss; or (2) An appraisal award has been made.

If Minn. Stat. § 60A.0811, subd. 2(a), was intended to limit interest to the
contractual deadline by which the insurer is to pay following the award of the amount due
or the entry of judgment, it would not call for calculation of interest from the date the
demand for payment of benefits was made. In addition, Minn. Stat. § 60A.0811 does not
27
include limiting language, such as “[e] xcept as otherwise provided by contract or allowed
by law,” as Minn. Stat § 549.09 does. Minn. Stat. § 549.09, subd 1(b) (emphas is added).
Auto-Owners’s interpretation of Minn. Stat. § 60A.0811, subd. 2(a), does not follow the
plain language of the statute, and we are therefore unpersuaded. We reverse the district
court on its denial of prejudgment interest to Ridgewood Bay and r emand only for
calculation of the appropriate amount of interest to be awarded.
Affirmed in part, reversed in part, and remanded.