author: PAUL H. ANDERSON, Justice.

text:
    NATHE BROTHERS, INC., petitioner, Appellant, v. AMERICAN NATIONAL FIRE INSURANCE COMPANY, an Ohio company, Respondent.
    No. C5-98-2328.
    Supreme Court of Minnesota.
    Aug. 3, 2000.

      Jeffrey S. Sheridan, Aaron T. Stone, Strandemo & Sheridan, P.A., Inver Grove Heights, for appellant.
    Charles J. Noel, Jennifer Kjos Fackler, Charles J. Noel & Associates, P.A., St. Paul, for respondent.
    Jeffrey J. Lindquist, Pustorino, Tilton & Parrington, P.A., for amicus curiae Insurance Fed. of Minnesota.
    Paul A. Sortland, Sortland Law Office, Minneapolis, for amicus curiae Minnesota Trial Lawyers Association.
   OPINION

PAUL H. ANDERSON, Justice.

This matter comes to us on appeal from a district court grant of summary judgment for respondent American National Fire Insurance Company. The Minnesota Court of Appeals affirmed, holding that under the terms of the insurance policy and the Minnesota Standard Fire Insurance Policy, appellant Nathe Brothers, Inc.’s failure to provide a sworn proof of loss within 60 days of American National’s request barred it from any recovery under the policy. We conclude that Nathe Brothers’ failure to submit a sworn proof of loss within 60 days does not automatically bar Nathe Brothers from recovery; therefore, we reverse.

Appellant, Nathe Brothers, Inc., a Minnesota corporation, is the owner and operator of the 49 Club, a restaurant and bar in Lino Lakes, Minnesota. On November 6, 1996, Nathe Brothers purchased a policy of property hazard insurance from respondent American National covering the 49 Club facility. On November 16, 1996, a rainstorm caused water and ice accumulations on the flat roof over the banquet hall of the 49 Club which damaged the roof and caused flooding in the banquet hall. Nathe Brothers' immediately notified American National of the damages.

On December 4, 1996, American National sent an adjuster to the 49 Club to survey the damage. Sometime shortly after the adjuster surveyed the site, American National cancelled its insurance policy with Nathe Brothers. Approximately 2 weeks later, on December 17, 1996, American National sent a reservation of rights letter to Nathe Brothers.

On December 24, 1996, Nathe Brothers sent a letter to American National inquiring about its claim and attached a damage and repair estimate of $362,700. One month later, on January 22, 1997, American National informed Nathe Brothers that based on certain policy exclusions, coverage would be limited to $10,000. By a letter dated January 30, 1997, American National informed Nathe Brothers that if it did not agree with the $10,000 adjustment, it must execute and return a “Proof of Loss” with supporting documentation within 60 days. American National enclosed its standard proof of loss form with the letter, as well as a check for $8,949.42 ($10,000 less the policy’s deductible).

On February 14, 1997, by a letter from its attorney, Nathe Brothers returned American National’s check along with the proof of loss form which it had not completed. Nathe Brothers also claims to have attached to the letter another copy of its damage and repair estimate.

By a letter dated February 21, 1997, American National informed Nathe Brothers that the proof of loss had not been properly executed and disputed receiving the damage and repair estimate. In the letter, American National reiterated that a properly executed proof of loss was required for Nathe Brothers to maintain this claim. Nathe Brothers then returned a properly executed proof of loss by a letter dated April 24, 1997. By a letter dated May 30, 1997, American National-returned the proof of loss, rejecting it as incomplete and containing obvious errors. Regardless of any errors or omissions in the proof of loss, the parties do not dispute the district court’s finding that Nathe Brothers submitted a sworn proof of loss on April 24, 1997, approximately 84 days after American National’s initial request.

Following American National’s rejection of the proof of loss, Nathe Brothers commenced this action in Anoka County District Court, alleging that American National had breached its insurance policy. In its answer, American National denied many of Nathe Brothers’ factual allegations and alleged that it had no liability under the policy because Nathe Brothers had failed to submit its proof of loss within 60 days- of American ■ National’s request. American National then moved for summary judgment, arguing that Nathe Brothers’ suit was barred because it failed to provide the sworn proof of loss within 60 days. The district court agreed with American National, and granted summary judgment in its favor.

Nathe Brothers appealed. The court of appeals held that under American National’s policy and Minnesota’s Standard Fire Insurance Policy (Minn.Stat. § 65A.01 (1998)), the timely submission of a sworn proof of loss is a condition precedent to recovery, and that Nathe Brothers’ failure to do so barred its recovery. See Nathe Bros., Inc. v. American Nat’l Fire Ins. Co., 597 N.W.2d 587, 590-91 (Minn.App.1999). The court also discussed whether American National had waived this requirement in its communications with Nathe Brothers. See id. at 591. After noting that this issue had not been presented to the district court, the court of appeals concluded that Nathe Brothers had not produced sufficient evidence to raise a material issue of fact on the issue of waiver and therefore could not withstand summary judgment on the issue. See id.

We accepted review on the sole question of whether the failure to submit a timely proof of loss will operate as a bar'to any recovery under either American National’s policy or Minnesota’s Standard Fire Insurance Policy. In response, American National argues that the plain language of its policy and the modern language of the Standard Fire Insurance Policy, which American National conceded at oral argument are essentially identical, make the requirement that a proof of loss be submitted within 60 days of the insurer’s request a condition precedent to recovery by an insured. Nathe Brothers argues that while submission of a proof of loss is a condition of recovery, failure to meet the timeliness requirement will not completely bar recovery.

This matter involves the interpretation of insurance policy and statutory language, which presents questions of law that we review de novo. See American Nat’l Property & Cas. Co. v. Loren, 597 N.W.2d 291, 292 (Minn.1999). General contract principles govern the construction of insurance policies, and insurance policies are interpreted to give effect to the intent of the parties. See Dairyland Ins. Co. v. Implement Dealers Ins. Co., 294 Minn. 236, 244-45, 199 N.W.2d 806, 811 (1972). Because most insurance policies are presented as preprinted forms, which a potential insured must usually accept or reject as a whole, ambiguities in a policy are generally resolved in favor of the insured. See Atwater Creamery Co. v. Western Nat’l Mut. Ins. Co., 366 N.W.2d 271, 277 (Minn.1985). However, a statutorily required provision in an insurance policy will not necessarily be construed against the insurer. See Laidlaw v. Commercial Ins. Co., 255 N.W.2d 807, 811 (Minn.1977). Additionally, we have stated that when interpreting an insurance policy, we will avoid an interpretation that will forfeit the rights of the insured under the policy, unless such an intent is manifest in “clear and unambiguous” language. Sterling State Bank v. Virginia Surety Co., 285 Minn. 348, 353-54, 173 N.W.2d 342, 346 (1969); see also Struble v. Occidental Life Ins. Co., 265 Minn. 26, 35, 120 N.W.2d 609, 616 (1963).

Property hazard loss insurance, and in particular the Minnesota Standard Fire Insurance Policy, has an extensive legal history in Minnesota. Both parties have cited to a number of our earlier rulings to support their respective positions regarding our interpretation of the Standard Fire Insurance Policy. Therefore, analysis of this issue requires a careful review of our case law.

Before enactment of the Minnesota Standard Fire Insurance Policy in 1895, two decisions of our court addressed, in a different context, questions similar to those presented here. In Bowlin v. Hekla Fire Ins. Co., we stated “it [was] manifest” that the policy requirement that a proof of loss be submitted 30 days after notice of loss was a “necessary condition precedent to the right of recovery * * *.” 36 Minn. 433, 434, 31 N.W. 859, 859 (1887). We also held in Shapiro v. St. Paul Fire & Ma rine Ins. Co. that an insured’s failure to submit a proof of loss within 60 -days of the loss as required by the policy-was a bar to recovery absent any waiver by the insurer. 61 Minn. 135, 136, 63 N.W. 614, 614 (1895). Our analysis in these early cases was based on the fact that these policies contained specific policy language that expressly made the timely submission of a proof of loss a condition precedent to recovery. See Mason v. St. Paul Fire & Marine Ins. Co., 82 Minn. 336, 339, 85 N.W. 13, 15 (1901).

In 1895, the Minnesota legislature enacted the Minnesota Standard Fire Insurance Policy. See generally Act of Apr. 25,1895, ch. 175, § 53, 1895 Minn. Laws 420. The Standard Fire Insurance Policy provided a standard form, which contained required terms and conditions for policies of fire insurance. See id. The standard form contained a provision requiring that a sworn proof of loss be submitted by the insured to the insurer “forthwith” after the loss. Id. We subsequently interpreted the requirement that a proof of loss be provided “forthwith” after the loss to create a condition subsequent to recovery on the policy. See Mason, 82 Minn, at 338-40, 85 N.W. at 14-15; see also Boston Ins. Co. v. A.H. Jacobson Co., 226 Minn. 479, 483, 33 N.W.2d 602, 604-05 (1948). In other words, while the proof of loss was a requirement of the policy and must be provided prior to any payment, failure to provide it in a timely manner would not automatically bar any recovery on the policy.

We explained the basis for our conclusion that this is a condition ■ subsequent when we stated:

[W]hile the provisions prescribing the time within which to give proof of loss are in the form of conditions precedent, they are in reality conditions subsequent affecting rights that have already accrued under the policy and intended not as conditions of liability, but for evidential purposes in enabling the insurer to determine its liability, and — [w]hen they [insurance policies] contain provisions of forfeiture they must be regarded as penalties defeating a right that has already accrued. Such being the nature of these conditions, it is manifest that the general rules of construction require that they shall be construed with much less strictness than those conditions that operate prior to the loss. A condition subsequent should never be construed as defeating an already vested right, unless the intention of the parties to create a forfeiture is unquestionable. In accordance with these principles, we find the majority of the courts most unwilling to give such a construction to these, subsequent conditions as will defeat the rights of the insured, unless the facts of the case show fraud or clear injustice to the insurer.

Boston Ins., 226 Minn, at 483, 33 N.W.2d at 605 (quotation omitted) (emphasis added).

In Boston Ins., we relied on our earlier decision, in Mason where we discussed the nature of the proof of loss requirement and described the requirements for making it a condition precedent for recovery. Boston Ins., 226 Minn, at 482-83, 33 N.W.2d at 604-05. Specifically,' in Mason we stated

[UJnless the policy provides a forfeiture, or makes the service of proofs of loss unthin the time specified therein a condition precedent to the liability of the company, the time within which such proofs are required to be furnished is not of the essence of the contract. Where no forfeiture is provided by the terms of the contract, and the service of proofs of loss within the specified time is not made a condition precedent to the liability of the company, the effect of such failure is simply to postpone -the day of payment. No liability attaches to the company, however, until such proofs are furnished; but unless otherwise provided, expressly or by fair implication, it is not important that the proofs be not in fact served within the time stated in the policy.

82 Minn, at 838-39, 85 N.W. at 14 (emphasis added).

Acknowledging our holdings in Mason and its progeny, American National goes on to argue that amendments to the Standard Fire Insurance Policy made in 1955 changed the nature of the proof of loss requirement from a condition subsequent to a condition precedent. See generally Act of Apr. 18, 1955, ch. 482, § 1, 1955 Minn. Laws 755-56 (codified at Minn.Stat. § 65A.01 (1998)). The two changes that American National asserts are relevant to this appeal are (1) a maintenance of suit clause was added to the 2-year limitation on actions, stating that no action could be maintained on the policy “unless all the requirements of this policy have been complied with,” and (2) the timeliness requirement for submission of the proof of loss was changed from “forthwith” to “60 days” from the date of loss. Id.; Minn.Stat. § 65A.01, subd. 3. See generally Act of Apr. 25, 1895, ch. 175, § 53, 1895 Minn. Laws 420.

There is one other relevant change to the Standard Fire Insurance Policy that occurred in 1955, but which the parties have not addressed. Prior to the 1955 amendments, the Standard Fire Insurance Policy proof of loss requirement operated as the initial notice of loss to the insurer. The 1955 amendments separated the notice requirement and now require that the insured provide immediate notice of the loss to the insurer. See Act of Apr. 18, 1955, ch. 482, § 1, 1955 Minn. Laws 755. The proof of loss, including sworn statements of interest, amount of the loss, and certain factual information, is now required within 60 days of the loss. See id.

We have not directly addressed the specific question presented by this appeal in light of the 1955 amendments. However, in McCullough v. Travelers Cos., we addressed the effect of the 1955 amendment’s maintenance of suit clause on other policy provisions, specifically the requirement of an “examination under oath.” 424 N.W.2d 542, 545 (Minn.1988).

In McCullough, we held that under the post-1955 language of the Standard Fire Insurance Policy, the insured’s failure to submit to an examination under oath prior to bringing suit on the policy did not require dismissal of the insured’s suit. Id. at 545. The insured in McCullough, because of scheduling conflicts, had been unable to attend the scheduled examination under oath. Id. at 543-44. When no examination under oath was rescheduled, the insured brought suit on the policy. See id. at 544. The district court granted summary judgment for the insurer, and the court of appeals affirmed, both concluding that the maintenance of suit clause made the submission to the examination under oath a condition precedent to suit and that in failing to submit to the examination under oath the insured forfeited all benefits under the policy. See id.

We reversed the lower courts, holding that the post-1955 language of the Standard Fire Insurance Policy’s maintenance of suit clause did not expressly create a condition precedent and that the requirements of the policy make the examination under oath a condition subsequent to recovery on the policy. See id. We stated that the insured would still have to submit to the examination under oath if so requested, but that failure to submit to the examination under oath prior to suit neither prevented his suit nor operated as a complete bar to recovery. See id. at 545. Our holding in McCullough makes it clear that the addition of the maintenance of suit clause to the Standard Fire Insurance Policy did not make strict compliance with all its terms a condition precedent to recovery.

American National also argues that the amendment to the Standard Fire Insurance Policy which requires the proof of loss to be submitted within 60 days of the loss manifests a legislative intent that requires strict compliance with this provision. We disagree. Prior to the 1955 amendments, the Standard Fire Insurance Policy stated that a proof of loss must be submitted “forthwith” after the loss. We have interpreted this requirement to mean that the insured has a reasonable time to submit a proof of loss. See Mason, 82 Minn, at 339, 85 N.W. at 15. We also have held that what constitutes a reasonable time is a question of fact. See id. Further, we have stated that what constitutes a reasonable time would vary in each case:

As to what is a reasonable time within which to give notice to an insured depends upon the facts and circumstances of each case. Cases in which the length of time was a week, a month, a year, or more, in and of themselves, are not determinative. Instances might arise where a very short time would be unreasonable; others where a long period of time would be reasonable.

Farrell v. Nebraska Indem. Co., 183 Minn. 65, 67, 235 N.W. 612, 613 (1931). We have also stated generally that when an insured has failed to timely submit a proof of loss, absent express language making the failure to timely submit the proof of loss fatal to the rights of the insured, an insurer must show it was prejudiced to avoid its liability under policy. See Reliance Ins. Co. v. St. Paul Ins. Cos., 307 Minn. 338, 342, 239 N.W.2d 922, 925 (1976).

The addition of the 60-day timeliness requirement for the proof of loss in the Standard Fire Insurance Policy affected a significant aspect of fire loss insurance. It eliminated the uncertainty naturally arising from the “forthwith” standard in the original statute. Under the 60-day requirement, there is no factual dispute about what is a reasonable time for the submission of a proof of loss. Both parties know that if the proof of loss is submitted within 60. days, the insurer can raise no claim that the submission was untimely.or that the insurer was prejudiced by any delay. After 60 days, if the insurer can show it was prejudiced by the delay, it may seek to limit its liability to the extent of its prejudice and the insured cannot claim its submission was within a reasonable time. In essence, this provision has eliminated the uneértainty we noted in Farrell.

Additionally, as we noted earlier, prior to enactment of the 1955 amendment, the proof of loss also operated as initial notice to the insurer of the loss. We recognized the importance of that notice stating that:

The object, or at least one of the objects, in requiring immediate or forthwith proof of loss, is to give ample opportunity to the company to investigate into the cause of the fire and the nature and extent of the loss, and make such other investigation and inquiry as a long delay might render futile and fruitless.

Fletcher v. German-American Ins. Co., 79 Minn. 337, 341, 82 N.W. 647, 648 (1900). In Fletcher, we observed that a delay in providing the sworn proof of loss did not deprive the insurer of any of the opportunities mentioned above when the insurer had actual and immediate notice of the loss. Id. In separating the notice and proof of loss requirements, the legislature was quite clear that notice was now required to be immediate. This immediate notice thus protects the insurer’s interests in the manner we describe in Fletcher.

As a result of the 1955 amendments, the submission of a sworn proof of loss now more closely resembles the submission to an examination under oath than it does its original notice function. It now operates as an investigative tool available to the insurer to verify facts and compliance with policy conditions. American National’s course of conduct with respect to the use of the proof of loss in this case supports this view and by its actions in this matter it essentially admits its liability and is now only contesting the extent of that liability. American National paid the undisputed part of Nathe Brothers’ claim without the submission of a proof of loss and only required a proof of loss for the disputed part of the claim.

Further, American National’s policy does not require the proof of loss to be submitted within 60 days of the loss, as does the Standard Fire Issuance Policy, but only requires a proof of loss to be submitted 60 days after requested. As in this case, an insurer may choose to pay on a claim without ever requesting a sworn proof of loss, again indicating by its actions that the submission of a sworn proof of loss is not a condition precedent to its liability; rather, it is a condition subsequent to recovery.

In Mason and Boston Ins., we discussed what would be required of the legislature to make the proof of loss provision a condition precedent to the Standard Fire Insurance Policy. We stated that there needed to be express language stating that the failure to comply with the timeliness requirement would be “fatal to the rights of the insured, or a condition precedent to the liability of the company.” Mason, 82 Minn, at 338, 85 N.W. at 14; see also Hagstrom v. American Fidelity Co., 137 Minn. 391, 393, 163 N.W. 670, 671 (1917). The legislature added no such specific language to the Standard Fire Insurance Policy in 1955 or at any time since then.

With regard to the timeliness requirement for an insured’s submission of a sworn proof of loss, our holdings in Mason and its progeny are unaffected by the 1955 amendments to the Standard Fire Insurance Policy and remain the law in Minnesota. As we stated in Mason, “the time within which such proofs are required to be furnished is not of the essence of the contract.” 82 Minn, at 338, 85 N.W. at 14.

We therefore conclude that the failure to submit a sworn proof of loss in a timely manner will not necessarily bar recovery on a policy, absent specific policy language stating that failure to timely submit a sworn proof of loss will be fatal to the rights of the insured or that the submission of a sworn proof of loss is a condition precedent to the liability of the insurer. Because the Minnesota Standard Fire Insurance Policy contains no such specific language, nor are such conditions necessarily implied in its terms, the Standard Fire Insurance Policy’s requirement that a proof of loss be submitted within 60 days is not a condition precedent to recovery nor does a failure to timely submit a proof of loss effect a forfeiture.

Our analysis here is consistent with our earlier decisions that notice and proof of loss provisions in insurance policies should be construed liberally in favor of the insured “so as not to defeat without a plain necessity [the insured’s] claim for the indemnity which, in the making of the insurance contract, it was his object to secure.” Sterling, 285 Minn. at 358-54, 173 N.W.2d at 346 (quoting Struble, 265 Minn. at 35, 120 N.W.2d at 616). Our analysis is also in accord with our long-standing judicial policy disfavoring forfeitures in insurance contracts. See Wait v. Journeymen Barbers’ International Union of America, 210 Minn. 180, 188, 297 N.W. 630, 634 (1941); see generally Lee R. Russ, Couch on Insurance § 22:35 (3d ed.1995).

We hold that Nathe Brothers’ submission of its sworn proof of loss after 60 days does not operate as an automatic bar to recovery on its policy with American National. We reverse the decision of the court of appeals and remand this matter to the district court for further proceedings consistent with this opinion.

Reversed and remanded.

      . While not relevant to this appeal, the issue of contention between American and Nathe Brothers is whether the roof actually collapsed from accumulations of water and ice, as Nathe Brothers claims, or whether the roof merely sagged, as American claims.

      . We note a discrepancy between the Minne-sóla. Reporter and the Northwestern Reporter on the spelling of this party's name. The Northwestern Reporter lists the name as "Shapire.”

      . The specific provision stated:
      In case of any loss or damage under this policy, a statement in writing, signed, and sworn to by the insured, shall be forthwith rendered to the company, setting forth the value of the property insured, except in case of total loss on buildings the value of said buildings need not be stated, the interest of the insured therein, all other insurance thereon, in detail, the .■ purposes for which and the persons by whom the building insured, or containing the property insured, was used, and the time at which and manner in which the fire originated so far as known to the insured. -
      Act of Apr. 25, 1895, ch. 175, § 53, 1895 Minn. Laws 420:

      . The new language of the statute as of 1955 is as follows:
      In the case of any loss under this policy the insured shall give immediate written notice to this company of any loss, protect the property from further damage, and a statement in writing, signed and sworn to by the insured, shall within 60 days be rendered to the company, setting forth the value of the property insured, except in case of total loss on buildings the value of said buildings need not be stated, the interest of the insured therein, all other insurance thereon, in detail, the purposes for which and the persons by whom the building insured, or containing the property insured, was used, and the time of which and manner in which the fire originated, so far as known to the insured.
      Act of Apr. 18, 1955, ch. 482, § 1, 1955 Minn. Laws 755. See also Act of Apr. 25, 1895, ch. 175, § 53, 1895 Minn. Laws 420.


source: Caselaw Access Project

author: PAUL H. ANDERSON, Justice. STRINGER, Justice

license: Public Domain

text:
    LEAMINGTON CO., petitioner, Appellant, v. NONPROFITS’ INS. ASSOCIATION, an Interinsurance Exchange, Respondent.
    No. C9-98-2056.
    Supreme Court of Minnesota.
    Aug. 3, 2000.

      Paul C. Peterson, William L. Davidson, David J. Retzlaff, Lind, Jensen & Sullivan, P.A., Minneapolis, for appellant.
    Charles J. Noel, Jennifer Kjos Fackler, Charles J. Noel & Associates,' P.A., St. Paul, Patricia E. Kuderer, Hoff, Barry & Kuderer, P.A., Eden Praire, for respondent.
    Jeffrey J. Lindquist, Pustorino, Tilton & Parrington, P.A., Minneapolis, for amicus curiae Insurance Fed. of Minnesota.
    Paul A. Sortland, Sortland Law Office, Minneapolis, for amicus curiae Minnesota Trial Lawyers Association.
   OPINION

PAUL H. ANDERSON, Justice.

This matter comes to us on appeal from a district court grant of summary judgment for Nonprofits’ Insurance Association (NIA). NIA moved for summary judgment, arguing that Leamington Co.’s breach of contract action was barred because Leamington failed to submit a sworn proof of loss 60 days after one was requested by NIA. NIA also argued that because Leamington was not a named insured on its policy, Leamington had no standing to sue. The Minnesota Court of Appeals affirmed the district court, holding that Leamington’s failure to submit the proof of loss within 60 days barred it from any recovery. The court of appeals did not decide whether Leamington had standing to sue under the policy because the issue was rendered moot by the court’s holding on the proof of loss issue. - .We reverse, holding that Leamington’s action is not barred by its failure to submit the proof of loss within 60 days of NIA’s request. Further, because we conclude that there are material issues of fact regarding Leamington’s standing under the policy, we reverse the district court’s conclusion on this issue and remand for further proceedings.

Appellant, Leamington Co., a Minnesota corporation, owns .the Francis Drake Building (Drake) in Minneapolis. From 1983 until May 1996, Leamington leased the Drake to People Serving People, Inc. (PSP), a Minnesota nonprofit corporation. PSP used the 144-room Drake as a homeless shelter. A 10-year lease agreement, signed in 1990, required PSP to maintain liability and hazard loss insurance equal to the value of the Drake. The lease also required that Leamington be named in the insurance policy as the owner-insured.

From May 1994 until May 1996, insurance on the Drake was provided under annual policies issued by respondent NIA to PSP. During the times relevant to this appeal, PSP purchased these policies through independent agent Acordia of Minnesota and its predecessors. Leam-ington introduced evidence on summary judgment indicating that Acordia and the predecessor agents were aware of Leam-ington’s lease requirement that it be listed as an owner-insured and the 1994-1995 policy listing Leamington as a loss payee. Leamington also produced evidence that Acordia had been provided with a copy of the lease between PSP and Leamington and that Acordia was aware that the primary reason for PSP’s purchase of the insurance policy was to comply with its lease obligations.

When NIA’s policy with PSP was renewed in 1995 and again in 1996, Leaming-ton was not named as a loss-payee or as an additional insured on the policy. However, in August 1996, after discovering the damage to the Drake, Acordia became aware of the omission of Leamington on the policies and notified NIA. NIA promptly issued endorsements listing Leamington as an additional insured for 1994, 1995, and 1996. NIA now claims that these changes were made without the knowledge of PSP and at the sole request of Leamington. NIA also states that the endorsements issued were only for the liability coverage and not for the hazard loss coverage. Leamington asserts that its omission from the policy was a mutual mistake and that both PSP and NIA, through its agents, intended that Leamington be listed as an additional insured.

Meanwhile, problems developed in the business relationship between Leamington and PSP and in May 1996, PSP vacated the Drake. When it repossessed and inspected the Drake, Leamington discovered water damage to the ceilings and walls of the rooms and corridors, which probably was caused by thawing of snow or ice during December 1995. Leamington also discovered extensive vandalism and property destruction throughout the building attributed by Leamington to PSP’s guests and invitees. Leamington offered evidence to show that in July 1996, it notified Acordia of its potential claim. Leamington also provided NIA with written notice of its claim on August 30,1996.

On November 26, 1996, NIA sent a reservation of rights letter to Leamington. In the letter, NIA also requested a sworn proof of loss and included a standard proof of loss form. Leamington completed and signed the sworn proof of loss and mailed it to NIA on February 11, 1997 — 77 days after NIA’s request.

Leamington received no response from NIA after it mailed the proof of loss. In August 1997, Leamington commenced an action in Hennepin County District Court alleging that NIA breached its policy and seeking to reform the policy to include Leamington as an additional insured. Among other allegations and denials in its answer, NIA denied that Leamington was entitled to coverage on the grounds that it was not a named insured on the policy. Additionally, NIA argued that, in any case, because the proof of loss was not provided within 60 days of NIA’s request, Leaming-ton was barred from recovery on the policy.

NIA moved for summary judgment claiming (1) that by failing to provide the sworn proof of loss within 60 days of NIA’s request, Leamington was barred from recovery, and (2) that Leamington was a stranger to the policy with no standing to assert a reformation claim. The district court agreed with NIA and granted it summary judgment, concluding that Leam-ington’s failure to provide the proof of loss within 60 days after NIA’s request barred it from recovery under the policy and under the Minnesota Standard Fire Insurance Policy. See Minn.Stat. § 65A.01, subd. 3 (1998). The court further stated that Leamington could not have obtained reformation of the policy because it was not a party to the original contract and that the contracting parties did not agree to reformation.

Leamington appealed. The court of appeals, in an unpublished decision, affirmed the district court’s ruling that Leaming-ton’s failure to provide the proof of loss within 60 days barred it from recovery on the policy. See Leamington Co. v. Nonprofits’ Ins. Ass’n, C9-98-2056, 1999 WL 561951, at *3 (Minn.App. July 28, 1999). The court of appeals did not decide whether Leamington had standing to reform the policy because the court concluded that this issue was rendered moot. See id. at *4. We accepted review on two issues: first, whether Leamington’s failure to timely submit a sworn proof of loss barred it from any recovery on the policy and second, whether the district court erred in finding that Leamington had no standing to bring an action to reform the policy.

I.

Summary judgment is appropriate when a district court determines that “there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law.” Minn. R. Civ. P. 56.03. When reviewing a grant of summary judgment, an appellate court must consider (1) whether there are any genuine issues of material fact, and (2) whether the lower court erred in its application of the law. See Offerdahl v. University of Minn. Hosps. & Clinics, 426 N.W.2d 425, 427 (Minn.1988). When, as in this case, the material facts are not in dispute, we review de novo the lower court’s application of the law. See Hubred v. Control Data Corp., 442 N.W.2d 308, 310 (Minn.1989). Additionally, the interpretation of an insurance policy is a question of law that we review do novo. See Metropolitan Property & Cas. Ins. Co. & Affiliates v. Miller, 589 N.W.2d 297, 299 (Minn.1999).

The court of appeals, relying on its earlier decision in Nathe Bros., Inc. v. American Nat’l Fire Ins. Co., 597 N.W.2d 587, 590 (Minn.App.1999), concluded that Leamington’s failure to timely submit a sworn proof of loss effected a complete bar to any recovery by Leamington on the policy. See Leamington, 1999 WL 561951, at *2-3. In Nathe, the court of appeals held that timely submission of the proof of loss is a condition precedent to any liability on the part of an insurer and therefore the failure to timely submit a proof of loss operates as a bar to recovery on the policy. 597 N.W.2d at 590.

We reversed the court of appeals’ holding in Nathe in a decision considered and released contemporaneously with this decision. See generally Nathe Brothers, Inc. v. American Nat’l Fire Ins. Co., 615 N.W.2d 341 (Minn.2000). In Nathe, we held that under Minnesota’s Standard Fire Insurance Policy (Minn.Stat. § 65A.01 (1998)), the timely submission of a proof of loss is not a condition precedent to recovery on a policy. See id., at 349. Therefore, under the Standard Fire Insurance Policy, the failure to timely submit a proof of loss will not automatically operate as a bar to recovery. See id.

On appeal, NIA asserts, and Leamington agrees, that its policy terms comply with and are essentially the same as those contained in the Standard Fire Insurance ‘ Policy. See generally Minn. Stat. § 65A.01, subd. 3. As we explained in Nathe, under the Standard Fire Insurance Policy, an insured’s failure to timely submit a sworn proof of loss statement does not automatically operate as a complete bar to recovery. Nathe, 615 N.W.2d at 349. Neither party argues that Leaming-ton’s 17-day delay in submitting the proof of loss caused prejudice to NIA. Accordingly, we hold that Leamington’s delay in submitting its proof of loss does not bar its recovery in this case.

II.

Having concluded that Leamington is not barred from bringing an action because of its delay in submitting its proof of loss, we must now address the propriety of the district court’s conclusion that Leam-ington cannot sue to reform this policy. Leamington argues that the court erred in granting summary judgment because there are material issues of fact as to whether NIA’s omission of Leamington as an additional insured on its policy with PSP was a mutual mistake, thus justifying reformation of the policy to include Leamington. The court, in a brief statement; concluded that because Leamington was a “stranger” to this insurance policy, it had no standing to assert a reformation claim.

An insurance policy, or any written instrument, may be reformed by the courts if it can be proved that: “(1) there was a valid agreement between the parties expressing their real intentions; (2) the written instrument failed to express the real intentions of the parties; and (3) this failure was due to a mutual mistake of the parties, or a unilateral mistake accompanied by fraud or inequitable conduct by the other party.” Nichols v. Shelard Nat’l Bank, 294 N.W.2d 730, 734 (Minn.1980). These facts must be established by evidence that “is clear and consistent, unequivocal and convincing.” Id. The purpose of reformation is not to create a new policy; rather, it is to bring the written instrument into conformity with the intent of the contracting parties. See Jablonski v. Mutual Serv. Cas. Ins. Co., 408 N.W.2d 854, 857 (Minn.1987).

NIA asserts that we should not reach the question of whether Leam-ington may bring an action for reformation of this policy because Leamington has no standing to bring such an action. However, the facts in the record indicate that evidence provided by Leamington on summary judgment was sufficient to raise a material issue of fact and, if believed, could establish Leamington as an intended additional insured on the policy with standing to seek reformation.

Leamington referred the district court to the lease agreement between Leaming-ton and PSP that stated as one of its terms that PSP procure and maintain hazard loss insurance on the Drake sufficient to cover the value of the property and improvements and that Leamington be named as an owner-insured on the policy. Leaming-ton provided evidence to show that a copy of this lease was given to NIA’s agents. Further, Leamington points to the fact that it was listed as a loss-payee on the 1994-95 policy. Leamington also introduced evidence to show that when Acordia, NIA’s agent, discovered the omission, Acordia promptly requested endorsements naming Leamington as an additional insured and that NIA issued those requested endorsements.

NIA also maintains that because both it and PSP object to the reformation, Leamington cannot seek reformation. However, NIA cites no authority for this proposition, nor has our review of applicable case law uncovered any. Certainly, PSP’s and NIA’s objections are evidence supporting their claim that naming Leam-ington as an additional insured on this policy was not the intent of the parties at the forming of this agreement, but the objections are not determinative of that issue.

Finally, NIA and the dissent argue that Leamington lacks standing to even bring this claim because it was not named on the policy, referring to Leamington as a “stranger to the contract.” This argument misses the main point of Leamington’s claim. Leamington is not a “stranger” to this policy; it asserts that by its contractual relation with PSP it was an intended beneficiary of this policy. If Leamington establishes that when entering into this policy PSP and NIA intended Leamington to be named on the policy, it would clearly have standing to bring an action to enforce the policy. See Minn. R. Civ. P. 17.01; see, e.g., Snicker v. Byers, 176 Minn. 541, 546-47, 224 N.W. 152, 154 (1929) (holding that intended beneficiary of a bond was a real party in interest with rights to sue to enforce the bond).

If NIA’s and the dissent’s arguments were correct, then an omitted party could never bring an action to reform a policy because it will inevitably not be named on the policy. Permitting Leamington standing to assert its reformation claim does not, as the dissent asserts, “open [] the door” to a “stranger to the contract”; rather, it does not improperly close the door to parties who have a legitimate reformation claim. Additionally, while not argued below, the record indicates that Leamington may have rights as an intended third-party beneficiary of the policy. See Cretex Cos. v. Construction Leaders, Inc., 342 N.W.2d 135, 139 (Minn.1984) (adopting Restatement (Second) of Contracts § 302 (1979) rule on third-party beneficiaries).

For the foregoing reasons, we conclude that Leamington has proffered evidence sufficient to raise genuine issues of material fact regarding its claim that there was a valid agreement between PSP and NIA that included Leamington as a named insured on the policy, that the written policy failed to accurately reflect that intent, and that this failure was due to the mutual mistakes of PSP and NIA. While NIA has proffered evidence to the contrary, we hold that because there is evidence here sufficient to raise genuine issues of material fact, summary judgment was inappropriate.

In sum, we conclude that Leamington’s delay in submitting its proof of loss does not bar it from recovery on this policy. We also conclude that Leamington has raised material issues of fact on its claim to reform the policy to add it as an additional insured. Accordingly, we hold that the court of appeals erred in its decision on the proof of loss requirement and that the district court erred in granting NIA summary judgment on Leamington’s reformation claim. We reverse and remand this matter to the district court for further proceedings consistent with this opinion.

Reversed and remanded.

PAGE, J., took no part in the consideration or decision of this case.

STRINGER, Justice

(dissenting).

I respectfully dissent. I agree with the majority that Leamington’s failure to submit a proof of loss within 60 days is not a condition precedent to recovery and does not necessarily operate as' a complete bar to recovery. However, I disagree with the majority’s conclusion that a material issue of fact remains as to whether the omission of Leamington as an additional insured on the policy was a mutual mistake.

The majority concludes that Leamington raises a genuine issue of material fact regarding its inclusion in the policy under the test provided in Nichols v. Shelard Nat'l Bank, 294 N.W.2d 730, 734 (Minn.1980), because Leamington presented evidence indicating that the parties intended to include it as an additional insured. But what the parties intended is of no importance if the claimant seeking reformation is not one of the parties. See, e.g., 13 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 37:1, at 5 (4th ed. 2000) (“Under the traditional common-law rule, only parties in privity of contract could sue on the contract * * *. * * * Even today, courts recite talismani-cally * * * that ‘strangers to a contract’ have no rights under the contract”) That is the situation here. Leamington’s evidence is that one of NIA’s agents had a copy of the lease agreement between Leamington and PSP requiring that Leamington be named as an owner-insured on the policy and that Leamington was listed as a loss-payee on the 1994-95 policy. Additionally, Leamington argues that after discovering the omission, Acordia requested endorsements naming Leamington as an additional insured.

While all this may be true, the answer is that it does not matter. The only parties to the contract, NIA and PSP, are not before the court seeking reformation and in fact now object to the reformation: NIA claims that the earlier endorsements listing Leamington as an additional insured were made without PSP’s knowledge and at the sole request of Leamington. Far from revealing a mutual mistake, it appears that Leamington may have mistakenly believed it was included as an additional insured, but NIA and PSP-the actual parties to the con-traet-were not mistaken and reached a different understanding entirely. Where NIA and PSP, as parties to the contract, agree that Leamington was not accidentally omitted, it defies common sense to permit Leamington, as a stranger to the contract, to introduce evidence that the omission was a mistake. The majority has opened the door for what can only be perceived as the dreadful prospect of a stranger to a contract having standing to claim that the contract should be reformed to benefit the stranger when the parties to the contract expressed no such intention.

With respect to the majority’s comment that Leamington may have rights as an intended third-party beneficiary of the policy, I agree that this issue was not argued below and thus should not be addressed here. See Thiele v. Stick, 425 N.W.2d 580, 582 (Minn.1988) (limiting review to issues raised in the district court).

      . At various points in time relevant to this matter, NIA was represented by Berkely Risk Services (1994-1995), RBW, Inc. (1995), and finally Acordia (1996). '

      . Leamington settled its claims against PSP in a separate action. As a condition of the settlement, Leamington was granted exclusive rights to pursue all insurance claims for real property damage to the Drake.

      . We see a noteworthy difference between the insurance policy we addressed in Nathe and NIA's policy; and, while not dispositive of the question before us, this difference warrants comment. In Nathe, it was uncontested that the proof of loss and maintenance of suit requirements of the insurer’s policy and the Standard Fire Insurance Policy were essentially the same. See id., at 349. The Standard Fire Insurance Policy contains a maintenance of suit clause stating that no action may be maintained on the policy "unless all the requirements of this policy have been complied with.” Minn.Stat. § 65A.01, subd. 3 (1998). By its plain language, this clause applies to “all requirements of this policy,” including the requirement that a sworn proof of loss be provided to the insurer within 60 days of the loss. Id.

      NIA claims that its policy’s proof of loss and maintenance of suit requirements are also identical with the Standard Fire Insurance Policy. We do not agree. NIA's policy does contain both a proof of loss requirement and a maintenance of suit clause. The proof of loss requirement provides that an insured must submit a signed and sworn proof of loss within 60 days of NIA's request. This requirement is contained in the policy’s Building and Personal Property Coverage Form. However, the policy’s maintenance of suit clause is found in its Commercial Property Conditions section. This section specifically refers to itself throughout this section as "this Coverage ParL”.
      The Commercial Property Conditions section of NIA's policy contains no proof of loss requirement and appears to limit the . operation of its maintenance of suit clause only to those terms found in "this Coverage Part.” This clause specifically states "No one may bring a legal action against us under this Coverage Part, unless ⅜ * ⅜ [tjhere has been full compliance with all of the terms of this Coverage Part ⅜ ⅜ (Emphasis added.) The plain language of the policy manifests an intent to apply only the maintenance of suit clause to the terms contained in the Commercial Property Conditions section, not the Building and Personal Property Coverage Form.
      NIA argues that when an insured fails to timely submit a proof of loss, its policy’s proof of loss and maintenance of suit terms effect a forfeiture. However, terms of forfeiture regarding notice and proof of loss conditions are strictly construed against forfeiture and we will not read a forfeiture provision into an insurance policy when, as here, the policy language does not plainly manifest that intent. See Sterling State Bank v. Virginia Sur. Co., 285 Minn. 348, 353-54, 173 N.W.2d 342, 346 (1969).

      . The dissent argues that because NIA and PSP object to the reformation, Leamington's belief that it should have been named on the policy is the mistake in this case, not a mutual mistake by NIA and PSP. While this is one possible determination from the facts presented, it is just that — a factual determination— and therefore inappropriate on summary judgment. Leamington has adduced evidence sufficient to raise a material question of fact as to whether there was a mutual mistake in this case. We make no comment on whether they will be able to prevail on this issue. As we noted earlier, the standard of proof for reformation claims is high. However, Leam-ington does not have to prove its case to withstand summary judgment; it need only demonstrate “a genuine issue as to any material fact.” Minn. R. Civ. P. 56.03.

      ., Williston goes on to note that exceptions to the general rule have developed in the case of third party beneficiaries. See 13 Samuel Wil-listón & Richard A. Lord, A Treatise on the Law of Contracts § 37:1, at 7 (4th ed.2000).


author: Alan C. Page Associate Justice

text:
    In re Petition for DISCIPLINARY ACTION AGAINST Tracy R. EICHHORN-HICKS, an Attorney at Law of the State of Minnesota.
    No. C9-00-373.
    Supreme Court of Minnesota.
    Aug. 21, 2000.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent Tracy R. Eiehhorn-Hicks committed professional misconduct warranting public discipline, namely, misuse of his trust account, failure to maintain proper trust account records, temporary misappropriation of funds, false certification on Ms attorney registration statements and false statements to the Director in violation of Minn. R. Prof. Conduct 1.15(a), (c), (h), and (i), 8.1(a)(1), 8.4(c), 8.4(d), and Lawyers Professional Responsibility Board Opinion Nos. 9 and 15.

Respondent admits his conduct violated the Rules of Professional Conduct, waives his rights pursuant to Rule 14, Rules on Lawyers Professional Responsibility, and has entered into a stipulation with the Director wherein they jointly recommend that the appropriate discipline is a one-year suspension from the practice of law and payment of $900 in costs and disbursements pursuant to Rule 24(d), Rules on Lawyers Professional Responsibility (RLPR), with reinstatement conditioned on successful completion of the professional responsibility portion of the bar examination. The parties further agree that the reinstatement hearing provided for under Rule 18, RLPR, is not waived.

This court has independently reviewed the file and approves the jointly recommended disposition.

IT IS HEREBY ORDERED that respondent Tracy R. Eichhorn-Hicks is suspended for one year and he shall pay $900 in costs and disbursements pursuant to Rule 24, RLPR. Respondent shall successfully complete the professional responsibility portion of the bar examination prior to reinstatement and the reinstatement hearing under Rule 18, RLPR, is not waived.

GILBERT, J., took no part in the consideration or decision of this case.

BY THE COURT:

Alan C. Page

Associate Justice


author: Russell A. Anderson Associate Justice

text:
    Betty KULAS, Relator, v. George MACK and Minnesota Assigned Risk Benefit Plan/Berkley Administrators, Respondents, and Special Compensation Fund.
    No. C3-00-773.
    Supreme Court of Minnesota.
    Aug. 24, 2000.
    Betty Jane Kulas, Grand Forks, ND, pro se.
    Minnesota Assigned Risk Benefit Plan/Berkley Administrators Jeffrey B. Nelson and Lisa Pearson Doran, Minneapolis; Special Compensation Fund Thaddeus V. Jude, St. Paul, for respondents.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that the decision of the Workers’ Compensation Court of Appeals filed March 29, 2000, be, and the same is, affirmed without opinion. See Minn. R. Civ.App. P. 136.01, subd. 1(b).

BY THE COURT:

Russell A. Anderson

Associate Justice


text:
    In re Petition for DISCIPLINARY ACTION AGAINST Steve C. SAMBORSKI, an Attorney at Law of the State of Minnesota.
    No. C0-00-1380.
    Supreme Court of Minnesota.
    Aug. 24, 2000.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent Steve C. Samborski has committed professional misconduct warranting public discipline.

Respondent has entered into a stipulation for temporary suspension with the Director wherein they jointly recommend that respondent be temporarily suspended from the practice of law pending resolution of the allegations of the petition for disciplinary action. Respondent admits that this temporary suspension is in his best interests and waives his rights pursuant to Rule 16, Rules on Lawyers Professional Responsibility RLRP, to contest this temporary suspension and the right to oral argument.

This court has independently reviewed the file and approves the jointly recommended suspension.

IT IS HEREBY ORDERED that respondent Steve C. Samborski is temporarily suspended from the practice of law in Minnesota pursuant to Rule 16, RLPR.

BY THE COURT:

Alan C. Page

Associate Justice


author: KALITOWSKI, Judge.

text:
    Patrick John IGO, petitioner, Appellant, v. COMMISSIONER OF PUBLIC SAFETY, Respondent.
    No. C0-00-262.
    Court of Appeals of Minnesota.
    Aug. 1, 2000.
    Review Denied Oct. 17, 2000.

      Brian M. Marsden, Roseville, for appellant.
    Mike Hatch, Attorney General, Jeffrey F. Lebowski, Joel A. Watne, Assistant Attorneys General, St. Paul, for respondent.
    Considered and decided by KLAPHAKE, Presiding Judge, KALITOWSKI, Judge, and STONEBURNER, Judge.
   OPINION

KALITOWSKI, Judge.

Appellant Patrick John Igo challenges the district court’s order sustaining the cancellation of his driver’s license by the Commissioner of Public Safety, arguing that the court erred in finding the Commissioner of Public Safety had sufficient cause to believe appellant had violated the total abstinence restriction on his driver’s license by consuming “nonalcoholic” beer.

FACTS

The parties do not dispute the relevant facts. Following several DUI convictions and driver’s license revocations in the 1980s, appellant Patrick John Igo’s driving privileges were reinstated subject to a condition of total abstinence in 1990. At approximately 1:00 a.m. on September 4, 1999, appellant was stopped by a Washington County sheriffs deputy for speeding on his motorcycle. Upon approach, the deputy noticed a distinct odor of alcoholic beverage and asked if appellant had been drinking. Appellant indicated that he had consumed several cans of Sharp’s, a “nonalcoholic” beer. Appellant was pleasant and cooperative, and displayed no indicia of intoxication other than the odor of alcohol.

While running a driver’s license check, the deputy discovered the abstinence restriction on appellant’s license. He administered a portable breath test that registered a steady green light, indicating the presence of alcohol in appellant’s system in a concentration between 0.004 and 0.055. The deputy gave appellant a verbal warning for speeding, issued a citation for violating the abstinence restriction, and reported the incident to the Commissioner of Public Safety.

The commissioner subsequently can-celled appellant’s license based on his violation of the total abstinence restriction, and the cancellation was upheld by a reviewing officer. Appellant filed a petition for reinstatement with the district court, pursuant to Minn.Stat. § 171.19 (1998). At the hearing on his petition, the parties stipulated that Sharp’s beer contains 0.37 percent alcohol.

The district court determined that because the commissioner had presented evidence that Sharp’s beer contains alcohol, this case was not controlled by this court’s decision in Plaster v. Commissioner of Pub. Safety, 490 N.W.2d 904 (Minn.App.1992). The district court concluded that the commissioner had sufficient cause to believe appellant had violated his abstinence restriction and that the cancellation of his driving privileges was not arbitrary or capricious.

ISSUES

1. Did the district court err by applying an arbitrary-and-caprieious standard of review to the Commissioner of Public Safety’s cancellation of appellant’s license?

2. Did the commissioner have sufficient cause to believe appellant had violated the abstinence restriction on his driver’s license based on appellant’s consumption of “nonalcoholic” beer?

ANALYSIS

There is a presumption of regularity and correctness when license matters are reviewed. Thorson v. Commissioner of Pub. Safety, 519 N.W.2d 490, 493 (Minn.App.1994). This court will not reverse a license determination unless it finds that it is unsupported by substantial evidence or is arbitrary and capricious. Id. The Commissioner of Public Safety must present some evidence to show that sufficient cause existed to believe a violation of the total abstinence clause occurred. Plaster v. Commissioner of Pub. Safety, 490 N.W.2d 904, 906 (Minn.App.1992). Appellant must show that the commissioner acted unreasonably. Thorson, 519 N.W.2d at 493.

I.

The district court upheld the cancellation of appellant’s license after concluding that the commissioner’s decision was not arbitrary or capricious given the undisputed presence of alcohol in appellant’s system. Appellant argues that the court applied the incorrect standard of review under this court’s recent holding in Madison v. Commissioner of Pub. Safety, 585 N.W.2d 77 (Minn.App.1998), review denied (Minn. Dec. 15, 1998). We disagree.

In Madison, we held that because Minn. Stat. § 171.19 (1998) authorizes the district court to take new evidence at a hearing on a petition for reinstatement, the court must do more than simply determine whether the commissioner had sufficient cause for cancellation based on the facts known at the time of the initial cancellation. Madison, 585 N.W.2d at 83. Under Madison, the district court must weigh witness credibility and all of the evidence, and independently determine whether the cancellation is justified. Id. at 82-83.

Although appellant is correct that Madison requires a district court to review license revocations and cancellations de novo, he has not shown that the district court failed to do so in this case. The record reflects that the court received new evidence at the hearing on appellant’s petition, including the parties’ stipulation concerning the alcohol content of Sharp’s beer and testimony from both appellant and the investigating officer. Because no facts were in dispute, it was not necessary for the court to make credibility determinations. Further, the findings and conclusion reflect that the court examined the facts and resolved the case after the appropriate independent review.

II.

The Commissioner of Public Safety has the authority to require complete abstinence from alcohol and other controlled substances as a continuing condition for retaining a driver’s license. Askildson v. Commissioner of Pub. Safety, 403 N.W.2d 674, 677 (Minn.App.1987), review denied (Minn. May 28,1987). The commissioner’s regulations require cancellation of a driver’s license that is reinstated subject to an abstinence restriction if the commissioner has sufficient cause to believe the driver has consumed alcohol after completing rehabilitation. Minn. R. 7503.1300, subp. 3 (1999).

The district court upheld the cancellation based on its interpretation of the undisputed facts, the commissioner’s regulations, and the scope of the impact of this court’s decision in Plaster. We review the district court’s application of the law de novo when the material facts are not in dispute. Hubred v. Control Data Corp., 442 N.W.2d 308, 310 (Minn.1989).

Appellant argues that the commissioner lacked sufficient cause to believe that he violated his abstinence restriction because, under this court’s holding in Plaster, the consumption of Sharp’s beer cannot constitute such a violation. We disagree.

Appellant misconstrues the holding in Plaster. In that case, we reversed a license revocation after concluding that the commissioner had failed to show sufficient cause to believe that the driver had violated his abstinence restriction. 490 N.W.2d at 908. As here, the driver presented evidence indicating he had only consumed Sharp’s “nonalcoholic” beer, which discloses on its label that it “ ‘contains less than 0.5 percent alcohol by volume.’ ” Id. at 907. But, unlike the facts here, in Plaster the commissioner failed to present any evidence that Sharp’s contains alcohol, necessarily rendering the license cancellation without sufficient cause under Minn. Stat. § 171.14 (1998). Id. at 907.

Here, the commissioner provided the ev-identiary basis that was lacking in Plaster. This evidence consisted of (1) appellant’s admission that he consumed three to four cans of Sharp’s beer; (2) the stipulated fact that Sharp’s beer contains 0.37 percent alcohol; and (3) the results of appellant’s breath test, indicating the presence of alcohol in his system. Based on this evidence, the district court did not err in finding that appellant violated the terms of the commissioner’s regulations, which mandate cancellation whenever a licensee subject to an abstinence restriction consumes “alcohol.” Minn. R. 7503.1300, subp. 3.

Appellant also contends, that under Plaster, the consumption of Sharp’s beer cannot violate an abstinence restriction because Sharp’s is not an “intoxicating beverage.” We disagree. Rule 7503.1300, subpart 3, specifically provides that the consumption of “alcohol” is a violation of an abstinence restriction. Appellant has not attempted to argue that this rule is invalid or beyond the scope of the commissioner’s authority, nor did Plaster so hold. Rather, the holding in Plaster was that because the commissioner failed to establish sufficient cause to believe Plaster had consumed alcohol, the district court erred by prematurely shifting the burden of proof to Plaster to show that the commissioner had acted unreasonably. 490 N.W.2d at 906-07.

Appellant cites language in Plaster concerning the fairness of revoking a driver’s license based on the consumption of a beverage that contains so little alcohol that it is labeled “nonalcoholic.” Plaster, 490 N.W.2d at 908. But this discussion was not essential to the resolution of the case and is therefore dictum, which is not binding in subsequent cases. K.R. v. Sanford, 588 N.W.2d 545, 548 (Minn.App.1999), aff'd 605 N.W.2d 387 (Minn.2000).

Appellant also argues that the commissioner’s cancellation here is unfair because it punishes a driver under an abstinence restriction when the driver has deliberately avoided the consumption of intoxicating beverages. But we have previously held that the abstinence requirement serves to minimize the risk to the public “by requiring known repeat offenders to prove abstinence and sobriety for a prescribed period of time.” Mechtel v. Commissioner of Pub. Safety, 373 N.W.2d 832, 835 (Minn.App.1985). Thus, the abstinence requirement serves a rational purpose of ensuring that a driver who has already been deemed “inimical to public safety” can demonstrate self-control by abstaining from all alcohol consumption. It is for this reason that the commissioner can require abstinence even when the driver is not behind the wheel of a vehicle. See Askildson, 403 N.W.2d at 677. We conclude that likewise the commissioner can impose a restriction of total abstinence from alcohol, even where there is no evidence of a risk that the consumption could result in intoxication.

DECISION

The district court did not err in sustaining the cancellation of appellant’s driver’s license. The record supports the conclusion that the commissioner established sufficient cause to believe that appellant violated his abstinence restriction and that appellant failed to show that the commissioner’s actions were unreasonable.

Affirmed.