STATE OF MINNESOTA
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`IN SUPREME COURT
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`A15-1438
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`Court of Appeals
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` McKeig, J.
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`Took no part, Anderson, J.
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`John Wilbur,
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`Appellant,
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`vs.
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`State Farm Mutual Automobile
`Insurance Company,
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` Filed: April 5, 2017
` Office of Appellate Courts
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`Respondent.
`________________________
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`Wilbur W. Fluegel, Fluegel Law Office, Minneapolis, Minnesota; and
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`Charles D. Slane, TSR Injury Law, Bloomington, Minnesota, for appellant.
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`William L. Moran, HKM, P.A., Saint Paul, Minnesota, for respondent.
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`Michael L. Weiner, Yaeger & Weiner, PLC, Minneapolis, Minnesota, for amicus curiae
`Minnesota Association for Justice.
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`Dale O. Thornsjo, Lance D. Meyer, O’Meara, Leer, Wagner & Kohl, P.A., Minneapolis,
`Minnesota, for amici curiae The Insurance Federation of Minnesota, Property Casualty
`Insurers Association of America, and National Association of Mutual Insurance
`Companies.
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`_______________________
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`S Y L L A B U S
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`Under the plain language of Minn. Stat. § 604.18, subd. 3 (2016), “proceeds
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`awarded” to an insured are capped by the insurance policy’s limit.
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`Affirmed.
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`1
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`IN SUPREME COURT
`
`A15-1438
`
`
`Court of Appeals
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` McKeig, J.
`
`Took no part, Anderson, J.
`
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`John Wilbur,
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`Appellant,
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`
`
`
`
`
`vs.
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`
`
`
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`State Farm Mutual Automobile
`Insurance Company,
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`
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`
`
`
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` Filed: April 5, 2017
` Office of Appellate Courts
`
`
`
`
`
`
`
`Respondent.
`________________________
`
`Wilbur W. Fluegel, Fluegel Law Office, Minneapolis, Minnesota; and
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`Charles D. Slane, TSR Injury Law, Bloomington, Minnesota, for appellant.
`
`William L. Moran, HKM, P.A., Saint Paul, Minnesota, for respondent.
`
`Michael L. Weiner, Yaeger & Weiner, PLC, Minneapolis, Minnesota, for amicus curiae
`Minnesota Association for Justice.
`
`Dale O. Thornsjo, Lance D. Meyer, O’Meara, Leer, Wagner & Kohl, P.A., Minneapolis,
`Minnesota, for amici curiae The Insurance Federation of Minnesota, Property Casualty
`Insurers Association of America, and National Association of Mutual Insurance
`Companies.
`
`_______________________
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`S Y L L A B U S
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`Under the plain language of Minn. Stat. § 604.18, subd. 3 (2016), “proceeds
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`awarded” to an insured are capped by the insurance policy’s limit.
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`Affirmed.
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`1
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`O P I N I O N
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`MCKEIG, Justice.
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`The question presented in this case is whether the “proceeds awarded” to an insured
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`under Minn. Stat. § 604.18 (2016)—which authorizes the award of “taxable costs” when
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`an insurer denies benefits without a reasonable basis—are capped by the insurance policy
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`limit. The district court answered that question in the affirmative and held that Wilbur’s
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`underinsured-motorist policy limit capped the amount of his award under the plain
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`language of section 604.18. Wilbur challenged that determination. The court of appeals
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`affirmed after determining that the statute was ambiguous. Because we conclude that
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`section 604.18 unambiguously caps “proceeds awarded” at the amount recoverable under
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`the insurance policy, we affirm.
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`FACTS
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`On January 10, 2009, a driver rear-ended appellant John Wilbur’s car. Wilbur
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`suffered injuries that required surgery on his neck and caused permanent nerve damage.
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`The at-fault driver’s liability insurer paid $100,000 to Wilbur, the full amount available
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`under the policy. Wilbur’s underinsured-motorist policy with respondent State Farm also
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`had a $100,000 coverage limit. Wilbur made a settlement demand on State Farm for the
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`full $100,000 available under the policy. State Farm initially offered and paid $1,200.
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`After further correspondence, State Farm offered an additional $26,800 to settle the claim.
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`Several months later, Wilbur declined the offer, served a complaint on State Farm alleging
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`breach of contract, and claimed that he was entitled to the full amount recoverable under
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`his policy with State Farm.
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`2
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`In 2011, a jury returned a verdict in Wilbur’s favor in the amount of $412,764.63 as
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`personal injury damages. The district court later reduced the verdict to $255,956.59 to
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`account for the at-fault driver’s payment of $100,000 and other collateral-source payments.
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`The district court ultimately entered judgment in the amount of $98,800, subtracting State
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`Farm’s initial $1,200 payment from Wilbur’s policy limit of $100,000.
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`After the jury’s verdict on the breach-of-contract claim, Wilbur amended his
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`complaint to add a claim under Minn. Stat. § 604.18, which permits an insured to recover
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`“taxable costs” if an insurer unreasonably denies insurance benefits. The statute provides
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`a remedy of “one-half of the proceeds awarded that are in excess of an amount offered by
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`the insurer at least ten days before the trial begins or $250,000, whichever is less.” Minn.
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`Stat. § 604.18, subd. 3(a)(1). After entering judgment on Wilbur’s breach-of-contract
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`claim, the district court held a separate trial on his claim under section 604.18 and
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`concluded that State Farm had denied Wilbur insurance benefits without a reasonable basis.
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`The district court then turned to the question of how much in “taxable costs” to
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`award on Wilbur’s section 604.18 claim. The amount of “taxable costs” available to
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`Wilbur under section 604.18 turns on whether the phrase “proceeds awarded” refers to an
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`amount capped by the insurance policy limit. If the proceeds awarded to Wilbur are capped
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`by his policy limit, State Farm’s liability under section 604.18 would be $36,000: one-half
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`of the difference between State Farm’s last settlement offer of $26,800 and $98,800 (which
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`is Wilbur’s policy limit of $100,000 minus State Farm’s initial payment of $1,200). But if
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`the proceeds awarded are not capped by the policy limit, the amount would be $114,578.30:
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`one-half of the difference between State Farm’s last settlement offer of $26,800 and
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`3
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`$255,956.59 (which is the jury’s award of $412,764.63 minus $156,808.04 in collateral-
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`source payments). The district court determined that “proceeds awarded” were capped by
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`the insurance policy limit. Accordingly, the district court entered judgment in Wilbur’s
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`favor for $36,000. The district court also awarded $35,832.90 in costs and disbursements
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`that Wilbur incurred while litigating this claim, the statutory cap of $100,000 in attorney
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`fees, and $12,475.47 in prejudgment interest.
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`Wilbur appealed, arguing that “proceeds awarded” under section 604.18 are not
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`capped by the policy limit. The court of appeals affirmed, holding that although the phrase
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`“proceeds awarded” was ambiguous, several factors showed that it meant “the amount of
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`the judgment entered by the district court as UIM benefits.” Wilbur v. State Farm Mut.
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`Auto. Ins. Co., 880 N.W.2d 874, 884 (Minn. App. 2016). We granted Wilbur’s petition for
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`review.
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`ANALYSIS
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`“The interpretation of statutes is a question of law which we review de novo.”
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`Boutin v. LaFleur, 591 N.W.2d 711, 714 (Minn. 1999). When interpreting statutes, our
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`goal is to effectuate legislative intent. State v. Maurstad, 733 N.W.2d 141, 148 (Minn.
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`2007). “[W]e first look to see whether the statute’s language, on its face, is clear or
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`ambiguous.” Am. Family Ins. Grp. v. Schroedl, 616 N.W.2d 273, 277 (Minn. 2000). “A
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`statute is only ambiguous when the language therein is subject to more than one reasonable
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`interpretation.” Amaral v. St. Cloud Hosp., 598 N.W.2d 379, 384 (Minn. 1999). We
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`consider the canons of statutory construction only after determining that a statute is
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`ambiguous. State v. Struzyk, 869 N.W.2d 280, 284-85 (Minn. 2015).
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`4
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`“We are to read and construe a statute as a whole and must interpret each section in
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`light of the surrounding sections to avoid conflicting interpretations.” Schroedl,
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`616 N.W.2d at 277. A court may ascertain the meaning of doubtful words in a statute “by
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`reference to their association with other associated words and phrases.” State v. Suess,
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`52 N.W.2d 409, 415 (Minn. 1952).
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`Section 604.18 provides a remedy for an insured when an insurer denies a first-party
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`claim without a reasonable basis.1 Under the statute, a court may award certain taxable
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`costs to an insured who can show that there was an “absence of a reasonable basis for
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`denying the benefits of the insurance policy” and “that the insurer knew of the lack of a
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`reasonable basis” or “acted in reckless disregard of the lack of a reasonable basis.” Minn.
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`Stat. § 604.18, subd. 2(a). If an insured proves that the insurer denied benefits without a
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`reasonable basis, the court may award “an amount equal to one-half of the proceeds
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`awarded that are in excess of an amount offered by the insurer at least ten days before the
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`trial begins or $250,000, whichever is less.” Id., subd. 3(a)(1) (emphasis added).2 The
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`phrase “proceeds awarded” is the focus of this appeal.
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`Three aspects of section 604.18 show that “proceeds awarded” unambiguously
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`refers to an amount capped by the insurance policy limit. First, the statute’s use of the
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`1
`A first-party claim is made by an injured party against his own insurer. In contrast,
`a third-party claim is made by an individual other than the insured; for example, by an
`injured party against the insurer of the at-fault party. See Latterell v. Progressive N. Ins.
`Co., 801 N.W.2d 917, 922 (Minn. 2011).
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`In addition to these taxable costs, the statute permits a district court to award up to
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`$100,000 in attorney fees, as well as prejudgment and postjudgment interest, costs, and
`disbursements. Minn. Stat. § 604.18, subd. 3(a).
`5
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` 2
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`word “proceeds” to refer to insurance policies in two other subdivisions shows that the
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`phrase “proceeds awarded” is constrained by the defined limits of the insurance policy.
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`The statute first uses “proceeds” in its definition of the term “insurance policy”:
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`“ ‘Insurance policy’ means a written agreement between an insured and an insurer that
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`obligates an insurer to pay proceeds directly to an insured.” Minn. Stat. § 604.18, subd.
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`1(a) (emphasis added). The statute later states: “Attorney fees may be awarded only if the
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`fees sought are separately accounted for by the insured’s attorney and are not duplicative
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`of the fees for the insured’s attorney otherwise expended in pursuit of proceeds for the
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`insured under the insurance policy.” Id., subd. 3(a)(2) (emphasis added). “[C]onflicting
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`interpretations of the same word” in the same context are not favored. Clark v. Pawlenty,
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`755 N.W.2d 293, 306 (Minn. 2008) (declining to interpret the word “successor” differently
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`in different sections of the Minnesota Constitution); see also Akers v. Akers, 46 N.W.2d
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`87, 92 (Minn. 1951) (holding that the same word used in different subdivisions of the same
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`statute must be given the same meaning).
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`The references in section 604.18 to “proceeds” and “proceeds awarded” do not
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`conflict. Subdivisions 1(a) and 3(a)(2) use “proceeds” to refer to money awarded under an
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`insurance policy, and subdivision 3(a)(1) uses the phrase “proceeds awarded” to set out the
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`formula by which a district court may allocate such money. All three terms operate in a
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`similar context and manner. The fact that “proceeds” refers to insurance-policy proceeds
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`in other parts of the statute supports interpreting the phrase “proceeds awarded” in the same
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`way.
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`6
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`Second, subdivision 3(a)(1) contemplates a capped settlement offer, indicating that
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`“proceeds awarded” are capped by the insurance policy limit. The district court may award
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`“an amount equal to one-half of the proceeds awarded that are in excess of an amount
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`offered by the insurer at least ten days before the trial begins or $250,000, whichever is
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`less.” Minn. Stat. § 604.18, subd. 3(a)(1). The connection between “proceeds awarded”
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`and the “amount offered by an insurer” before trial is telling; insurers’ settlement offers
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`before trial are almost always capped by the insurance policy’s limit.
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`Finally, the timing of the section 604.18 proceeding suggests that “proceeds
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`awarded” are capped by the insurance policy limit. Subdivision 4(b) states, “An award of
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`taxable costs under this section shall be determined by the court in a proceeding subsequent
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`to any determination by a fact finder of the amount an insured is entitled to under the
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`insurance policy . . . .” Minn. Stat. § 604.18, subd. 4(b) (emphasis added). In other words,
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`proceeds can be awarded under section 604.18 only “subsequent to” a jury’s determination
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`of the benefits to be paid “under the insurance policy.” And benefits paid under an
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`insurance policy are capped by the policy’s limit. This link supports the interpretation that
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`the “taxable costs” awarded under section 604.18 may not exceed the policy’s limit.
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`In urging us to reach the opposite conclusion, Wilbur observes that restricting
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`“proceeds awarded” to the insurance policy limit will sometimes produce inadequate
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`remedies. But “it is our job to interpret the Act as written and it is the Legislature’s job to
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`7
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`draft legislation, as it deems appropriate.” KSTP-TV v. Metro. Council, 884 N.W.2d 342,
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`349 n.4 (Minn. 2016).3
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`Accordingly, we hold that under the plain language of Minn. Stat. § 604.18, subd.
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`3, “proceeds awarded” to an insured are capped by the insurance policy’s limit.
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`CONCLUSION
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`For the foregoing reasons, we affirm the decision of the court of appeals.
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`Affirmed.
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`ANDERSON, J., took no part in the consideration or decision of this case.
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`3
`Because the language of section 604.18 is unambiguous, we have no occasion to
`consider legislative history. See, e.g., In re Welfare of J.B., 782 N.W.2d 535, 545 (Minn.
`2010) (“Resort to legislative history to interpret a statute is generally appropriate only
`where the statute itself is ambiguous.”).
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`8
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