SF 3234

2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to commerce; regulating certain warranties; clarifying the legislature's
intent that housing warranties and insurance contract obligations remain
unaffected by corporate dissolution; prohibiting certain bad faith insurance
practices; providing remedies; amending Minnesota Statutes 2004, sections
60A.08, subdivision 6; 302A.781, by adding a subdivision; 322B.863, by adding
a subdivision; 327A.02, by adding a subdivision; 327A.05; proposing coding for
new law in Minnesota Statutes, chapter 604.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 60A.08, subdivision 6, is amended to read:

Subd. 6.

Bankruptcy or, insolvency, or dissolution clause.

Every bond or
policy of insurance issued in this state insuring against either actual loss suffered by the
insured, and imposed by law for damages on account of personal injury, death, or injury
to property caused by accident, or legal liability imposed upon the insured by reason of
such injuries or death, shall, notwithstanding anything in the policy to the contrary, be
deemed to contain the following condition:

The bankruptcy or, insolvency, or dissolution of the insured shall not relieve the
insurer of any of its obligations under this policy, and in case an execution against the
insured on a final judgment is returned unsatisfied, then such judgment creditor shall have
a right of action on this policy against the company to the same extent that the insured
would have, had the insured paid the final judgment.

Sec. 2.

Minnesota Statutes 2004, section 302A.781, is amended by adding a
subdivision to read:

Subd. 4.

Statutory homeowner warranty claims preserved.

The statutory
warranties provided under section 327A.02 are not affected by a dissolution under this
chapter.

Sec. 3.

Minnesota Statutes 2004, section 322B.863, is amended by adding a
subdivision to read:

Subd. 4.

Statutory homeowner warranty claims preserved.

The statutory
warranties provided under section 327A.02 are not affected by a dissolution under this
chapter.

Sec. 4.

Minnesota Statutes 2004, section 327A.02, is amended by adding a subdivision
to read:

Subd. 2a.

Remedies unaffected by corporate dissolution.

The statutory
warranties provided in this section are not affected by the dissolution of a vendor or home
improvement contractor that is a corporation or limited liability company.

Sec. 5.

Minnesota Statutes 2004, section 327A.05, is amended to read:

327A.05 REMEDIES.

Subdivision 1.

New home warranties.

Upon breach of any warranty imposed by
section 327A.02, subdivision 1, the vendee shall have a cause of action against the vendor
for damages arising out of the breach, or for specific performance. If the vendee is the
prevailing party, the vendee may also be awarded the vendee's costs, disbursements, and
reasonable attorney fees. Damages shall be limited to:

(a) (1) the amount necessary to remedy the defect or breach; or

(b) (2) the difference between the value of the dwelling without the defect and
the value of the dwelling with the defect.

Subd. 2.

Home improvement warranty.

Upon breach of any warranty imposed by
section 327A.02, subdivision 3, the owner shall have a cause of action against the home
improvement contractor for damages arising out of the breach, or for specific performance.
If the owner is the prevailing party, the owner may also be awarded the owner's costs,
disbursements, and reasonable attorney fees. Damages shall be limited to the amount
necessary to remedy the defect or breach.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies to causes of action pending on or commenced on or after that date.

Sec. 6.

[604.17] BAD FAITH INSURANCE PRACTICES.

Subdivision 1.

Prohibited conduct.

(a) An insurer shall not act in bad faith in
connection with any matter involving a claim under an insurance policy.

(b) Insurer bad faith includes insurer delay or denial of benefits offered or paid
without an objectively reasonable basis for its offer, delay, or denial. An insurer also
acts in bad faith if the insurer engages in any fraud, false pretense, false promise,
misrepresentation, misleading statement, or deceptive practice that others rely on in
connection with any matter involving a claim under an insurance policy.

(c) For purposes of this section:

(1) "insurance policy" means an insurance policy or contract issued, executed,
renewed, maintained, or delivered in this state, other than a workers' compensation
insurance policy or contract; and

(2) "insurer" means an individual, corporation, association, partnership, or other legal
entity that issues, executes, renews, maintains, or delivers an insurance policy in this state.

Subd. 2.

Penalties and remedies.

A person violating subdivision 1 is acting against
the public interest and is liable for costs, damages, and reasonable attorney fees.

EFFECTIVE DATE.

This section is effective August 1, 2006, and applies to causes
of action commenced on or after that date.

Sec. 7. EFFECTIVE DATE.

Sections 1 to 4 are effective the day following final enactment and apply to actions
pending on or commenced on or after that date, provided that the action is brought within
the time limitation in Minnesota Statutes, section 541.051, subdivision 4.