Case Law Update

Date: January 1, 2010 — Minneapolis, MN

During the week of January 1, 2010, the Minnesota appellate courts released opinions on the following topics that may be of interest to our clients:

1. Insurance Law - Negligence Claims Against Insurance Agents 2. Anti-SLAPP Statute - Public Participation Immunity

1.   INSURANCE LAW – NEGLIGENCE CLAIMS AGAINST INSURANCE AGENTS

• Pierringer settlement with insurance carrier does not release negligence claim against agent for failure to procure insurance.
• Indemnification of insurer required by Pierringer settlement did not require plaintiff to indemnify agent absent contract requiring indemnification of agent by insurer.

Plaintiff purchased automobile insurance and a supplemental umbrella policy through defendant agency.  Plaintiff alleged that before purchasing insurance, he specifically requested that the supplemental umbrella policy include $1,000,000 in underinsured-motorist (“UIM”) coverage.  The umbrella policy obtained by defendant agency excluded UIM coverage.

Subsequently, plaintiff was seriously injured in a car accident.  After obtaining the policy limits of the other motorist and settling a worker’s compensation claim against his employer, plaintiff made a demand to the insurer for UIM coverage under the umbrella policy.  After the insurer denied the claim, plaintiff brought suit against defendant agent and the insurer.  Plaintiff entered into a Pierringer settlement with the insurer for the policy limits of his underlying automobile policy.  The Pierringer settlement required plaintiff to indemnify the insurer for claims made against it resulting from the motor vehicle accident at issue.

Plaintiff proceeded to trial against defendant agency.  The jury found that defendant agency was negligent in failing to procure an umbrella policy containing UIM coverage and awarded damages.  Defendant agency filed a motion for judgment as a matter of law on the grounds that: (1) the agency did not have liability separate from the insurer’s liability and (2) to the extent separate liability existed, the Pierringer release created “circular indemnity,” extinguishing the damage award.  The trial court denied the motion.

The Minnesota Court of Appeals affirmed. The Court first looked at the issue of separate liability.  The Court held that plaintiff’s claim against defendant agency was distinct from his claim against the insurer, stating: “negligence actions by insureds against agents are not actions seek[ing] coverage under their policy…they are separate actions based on the agent's tortious conduct and do not depend on the agent's status and binding authority.”  The Court noted that the only issue tried to the jury was whether defendant agency was negligent in failing to procure coverage, not whether defendant agency had bound coverage and created a contract between the insurer and plaintiff.  Because this issue was not submitted to the jury, defendant agency failed to establish that a contract had been created eliminating separate liability.

The Court also rejected defendant agency’s “circular indemnity” argument.  In sum, defendant agency argued that the Pierringer release extinguished the damage award because it required plaintiff to indemnify the insurer, and the insurer was required by law to indemnify the agent.  The Court held that the insurer was not required to indemnify its agent as a matter of law absent an express agreement.  Further, the Court reiterated that the action against defendant agency was an action for negligence, not an action seeking insurance coverage.  Absent a determination by the jury that a contract of insurance was created, or an express agreement, indemnity could not be imposed as a matter of law.

Graff v. Robert M. Swendra Agency, Inc., A09-173 and A09-522 (Minn. Ct. App. 12/29/09).

2.   ANTI-SLAPP STATUTE - PUBLIC PARTICIPATION IMMUNITY

• If the nature, purpose, and intended audience of the speech show that the speech is not genuinely aimed at procuring favorable government action, then the speech is not immune under Minnesota’s Anti-SLAPP statute.

This is a case involving allegedly defamatory speech.  The two respondents were members of a corporation that operated a treatment facility.  In the spring of 2007, the corporation announced plans to relocate its facility.  Appellant Swift was a member of a group that opposed relocation of the facility.  The challenged communications involved blog entries and an email authored by Swift.  The first blog entry involved Swift’s reaction to news that one of the respondents had apparently committed suicide, with statements about respondent’s character and conduct, and the other blog entry stated that respondent had made death threats.  Swift’s email was sent to a law school dean, where the other respondent was formerly a faculty member, and generally asked the dean to talk to respondent.  As a result of these communications, respondents brought a defamation suit against Swift.

Swift moved to dismiss the defamation action, claiming immunity for public participation under Minnesota’s Anti-SLAPP (“strategic lawsuit against public participation”) statute, Minn. Stat. § 554.03.  The district court held that Swift was not entitled to immunity because the communications were not genuinely aimed at procuring favorable government action.

This case is significant because it is the first case addressing what constitutes public participation under the anti-SLAPP statute.  The statute defines public participation as “speech or lawful conduct that is genuinely aimed in whole or in part at procuring favorable government action.”  The court construed the statute based upon the plain language.

The court held that the anti-SLAPP statute covers communications to government entities and third parties but that entitlement to immunity depends on the nature of the statement, the purpose of the statement, and the intended audience.  In this case, the court found that the blog entries were aimed at creating ill will toward respondent.  As to the email, despite Swift’s subjective intent to procure favorable government action, the court found that the email only called for non-governmental action against respondent personally.  Therefore, the Court of Appeals affirmed, holding that Swift’s speech was not genuinely aimed at procuring favorable government action, and thus was not entitled to immunity under the anti-SLAPP statute.

Freeman v. Swift, A09-598 (Minn. Ct. App. 12/29/09).

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