In re the Proposed Activation of the Minnesota Joint Underwriting Ass'n

Citations: 410 N.W.2d 436; 1987 Minn. App. LEXIS 4686Docket: Nos. CX-87-319, C4-87-333

Court: Court of Appeals of Minnesota; August 18, 1987; Minnesota; State Appellate Court

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Relators are contesting a ruling by the Commissioner of Commerce that extended the activation of the Joint Underwriting Association (JUA) and Market Assistance Plan (MAP) for grain buyers and public grain warehouse operators beyond the initial 180 days. The Minnesota Joint Underwriting Act was established in 1986 to provide insurance coverage to individuals or entities unable to obtain it through standard means, particularly when required by law or necessary for business operations. The Act includes provisions for the JUA and MAP to assist in obtaining mandatory insurance coverage. The Commissioner can activate these programs as needed, initially for 180 days, after which a hearing determines if an extension is warranted.

During a hearing held in December 1986, three grain buyers and public grain warehouse operators testified that they required an extension of the JUA and MAP due to their inability to secure necessary grain storage and buyers' bonds through traditional avenues. The administrative law judge (ALJ) ruled that the legislature intended to classify these bonds as 'insurance' under the Act and that the testimony provided was sufficient to justify continuing the JUA and MAP for this class of businesses. The Commissioner upheld these findings. 

Key issues include whether the legislature intended for bonds to be considered 'insurance' under the JUA Act and whether the testimony of three individuals was adequate to support the continuation of the programs beyond the initial period. Relators argue against the inclusion of surety bonds as insurance, citing the specific reference to 'general liability insurance coverage' in the statute.

The primary goal of statutory interpretation is to determine legislative intent, as outlined in Minn.Stat. 645.16 (1986). An agency's interpretation of its own statutes is generally presumed correct due to its expertise, but this deference is not warranted if strong evidence suggests the agency's interpretation is incorrect (Buhs v. State, Department of Public Welfare, 306 N.W.2d 127, 129 (Minn.1981)). In this case, bonds are not equivalent to general liability insurance, as obtaining a bond typically requires collateral. This collateral is necessary for the surety’s indemnification from the principal, distinguishing it from insurance, which does not require collateral and does not typically allow the insurer to seek indemnification from the insured. This distinction supports the conclusion that the authors of the JUA Act did not intend for bonds to be classified as insurance, given that the JUA uses terms related to premiums and does not mention collateral or indemnification by policyholders. Additionally, compelling the JUA to issue bonds could disrupt the suretyship relationship, particularly for businesses unable to provide sufficient collateral. The decision that bonds are not insurance is also reinforced by Minn.Stat. 621.02, which indicates that the association may exclude coverage for certain high-risk entities. Finally, related statutes should be interpreted in conjunction with one another (Lenz v. Coon Creek Watershed District, 278 Minn. 1, 11, 153 N.W.2d 209, 217 (1967)).

Several statutes related to insurance explicitly include bonds, such as Minn.Stat. 60A.06, subd. 1(6), 60A.23, subd. 5, and 70A.02, subd. 1. However, the JUA Act lacks a provision for bonds, suggesting the legislature intentionally excluded them from JUA coverage. Relators argue that testimony from three grain buyers and public grain warehouse operators is inadequate for extending the JUA and MAP beyond 180 days. This issue has been addressed in a prior ruling, where it was determined that the repeated use of "any person or entity" in the statute allows one class member to initiate extended activation for the entire class. The conclusion is that the legislature did not intend for bonds to be classified as "insurance" under Minn.Stat. 621.02-22. The previous decision is reversed.