Jorgensen v. Knutson

MEYER, Justice

(concurring in part, dissenting in part).

I concur with the majority’s conclusion in Part I that Milbank’s notice of cancellation did not meet the statutory requirements. I disagree, however, that a statutorily deficient notice can become legally effective. The clear intent of the legislature was to force insurers to strictly comply with the ten-day notice, and decisions from other states as well as sound public policy support such a holding.

Minnesota Statutes § 65B.16 (2000) states in clear language that “[n]o notice of cancellation * * * shall be effective unless” it complies with the timing set out in the statute. When the words of a statute are clear and unambiguous, courts must give effect to the intent of the legislature in questions of statutory interpretation. See Minn.Stat. § 645.16 (2002). Section 65B.16 is clear that a notice of cancellation for nonpayment of premium is rendered ineffective if the insured is given less than ten days’ notice. Having found Milbank did not comply with the statute, we should enforce the statute’s remedy and find the cancellation inoperative.

At least five state supreme courts have looked at similar insurance cancellation statutes, and for reasons of statutory interpretation or public policy have held that a shorter notice of cancellation than required by statute is rendered ineffective. See Grubbs v. Credit General Ins. Co., 327 Ark. 479, 939 S.W.2d 290, 292-94 (1997) (holding that a statute declaring “[n]o notice of cancellation * * * shall be effective unless mailed” at least ten days prior to the effective date was unambiguous and an “invalid effective date of cancellation voided the cancellation”); Pedersen v. United Life Ins. Co. of Kan., 139 Kan. 695, 33 P.2d 297, 299 (1934) (construing a statute’s mandate that “[a]ny attempt on the part of such insurance company * * * to cancel or forfeit any such policy without the notice herein provided shall be null and void” strictly against insurers); Me. Bonding & Cas. Co. v. Knowlton, 598 A.2d 749, 750 *906(Me.1991) (noting that “[t]he legislature’s use of the word ‘unless’ is indicative of its intent to require that insurers comply strictly with the statute’s terms in order to effect a policy cancellation”); Pearson v. Nationwide Mut. Ins. Co., 325 N.C. 246, 382 S.E.2d 745, 747-48 (1989) (concluding that insurers must strictly comply with statute stating “[n]o cancellation * * * shall be effective unless” the insured is given fifteen days’ notice, or the cancellation will be ineffective); U.S. Fid. & Guar. Co. v. Sec. Fire & Indem. Co., 248 S.C. 307, 149 S.E.2d 647, 649, 651 (1966) (holding that “the coverage of the policy does not end until after the notice requirements are met” when the statute specified that insurance “shall not be cancelled or terminated until at least ten days after a notice of cancellation”). See also Carroll v. State Farm Mut. Auto. Ins. Co., 419 So.2d 57, 59 (La.Ct.App.1982) (“Because the notice of cancellation in this case was not mailed 10 days prior to the effective date of cancellation and the date of the accident, the purported cancellation was ineffective and the insurance policy remained in effect through the date of the accident.”). These cases conform with a tenet of insurance law, namely that “[n]otices not conforming to the statutory requirements would be ineffective to terminate the insurance contract for nonpayment of premiums.” 3 Eric Mills Holmes, Holmes’ Appleman on Insurance 2d § 16.10 at 447 (1998).

Good policy rationale support a legislative decision to force insurers to strictly comply with the notice provisions of statutes, or risk covering the accidents of insureds that they attempted to cancel. Such a rule provides a very clear incentive for insurance companies to comply with the notice requirements placed on them by our legislature. Those notice requirements are important to allow insureds time to either pay their premiums or find replacement coverage. See generally Appleman, supra, § 16.10 at 441 (stating that “[n]otice gives the insured an opportunity to protect the insurance interest immediately by paying assessments and being reinstated, or by taking out other insurance.”). In addition, strict construction protects third parties. See Pearson, 382 S.E.2d at 748 (“[f]or the protection of both the motoring public and the insured, automobile insurance cancellation dates * * * should not be left to the possible vagaries of date calculations nor to the uncertainties which result when less than the statutorily prescribed period of time has been given.”). Fewer accident victims will face the prospect of a negligent party without insurance when we have bright-line rules surrounding cancellation.

Instead of deferring to legislative intent, the majority turns to “a general tenet of insurance law” — that a notice of cancellation which provides less time than required by statute becomes effective after the appropriate statutory time period has elapsed. As authority for that general proposition, the majority cites first a treatise, and then eleven opinions cited within that treatise. The bulk of the cited cases do not involve a statutory notice requirement at all, but instead wrestle with an insurer’s alleged failure to abide by the policy’s contractual notice provision. See Ocean Accident & Guarantee Corp. v. Felgemaker, 143 F.2d 950 (6th Cir.1944); Hanover Fire Ins. Co. v. Wood, 209 Ala. 380, 96 So. 250 (1923); Commercial Union Fire Ins. Co. v. King, 108 Ark. 130, 156 S.W. 445 (1913); Am. Glove Co. v. Pa. Fire Ins. Co., 15 Cal.App. 77, 113 P. 688 (1910); Mancillas v. Campbell, 42 Colo.App. 145, 595 P.2d 267 (1979); Matin v. Neth. Ins. Co., 203 Mo.App. 153, 219 S.W. 143 (1920); Fritz v. Pa. Fire Ins. Co., 85 N.J.L. 171, 88 A. 1065 (1913); Pinzhoffer v. Franzen, 46 Pa. D. & C. 234 (Ct.Com.Pl.1943).

*907Only two of the cases cited by the majority deal with statutory notice requirements and support its analysis. One of those two is not directly applicable here because the statute being interpreted did not prescribe that notice would be ineffective if it did not comply. See Ins. Mgmt. Inc. v. Guptill, 16 Wash.App. 226, 554 P.2d 359, 363 (1976). After setting aside the inapposite eases from the majority’s original string of citations, we are left with only one case analyzing a similar notice requirement statute that supports the majority’s result, and it is from an intermediate Ohio court: Love v. Motorists Mut. Ins. Co., 86 Ohio App.3d 394, 620 N.E.2d 987 (1993).8

As the unambiguous language of Minn. Stat. § 65B.16 dictates such a result and I find no persuasive countervailing authority, I would hold that the notice of cancellation was ineffective. In so holding, we would join with the five state supreme courts to have squarely addressed the effect of failure to give proper statutory notice of cancellation.

Finally, I would hold that the Miller-Shugart agreement was enforceable for the reasons set forth by the majority.

. A final case cited by the majority, Dupree v. Ga. Mut. Ins. Co., 188 Ga.App. 857, 374 S.E.2d 546 (1988), has two irrelevant holdings. The first, regarding an insurer’s failure to comply with a statutory mandate to notify a public agency of cancellation, has been super-ceded by statute. Walter v. Allstate Ins. Co., 206 Ga.App. 186, 424 S.E.2d 866, 868 (1992) (recognizing that Dupree is no longer "valid precedent”). Dupree's second holding concerns an insurer’s compliance with statutory requirements regarding how notices shall be delivered to the post office, and although still valid precedent, has little bearing on our decision today. Dupree, 374 S.E.2d at 547-48 (finding the testimony of the insurer’s bulk mail clerk and the presence of a certified receipt from the post office satisfy the statute’s requirement).