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Bassford Remele is a full service litigation firm located in Minneapolis, Minnesota. Founded in 1882, the firm represents local, national and international clients in all areas of civil litigation and dispute resolution.
Case Law Update
Date: Jan 11, 2008 — Minneapolis, MN
During the week of January 11, 2008, the Minnesota appellate courts released opinions on the following topics that may be of interest to our clients:
1.
Civil Procedure - Resolution of Motions to Enforce Settlement Agreements
2.
Insurance Coverage - Drop-Down Automobile Insurance Policy Provision
3.
1. CIVIL PROCEDURE - RESOLUTION OF MOTIONS TO ENFORCE SETTLEMENT AGREEMENTS
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District courts must treat motions to enforce settlement agreements similar to motions for summary judgment, and must specifically grant or deny each claim.
Following a lawsuit asking for adjudication of the rights and obligations of the parties relating to telecommunications equipment owned by the plaintiff, the parties reached a settlement agreement. The agreement required plaintiff to pay defendant a sum of money for damages and related costs, and to remove its equipment from defendant’s roof.
When plaintiff failed to comply with the agreement, defendant moved to enforce the settlement, asking that the district court order plaintiff to remove and relocate its equipment and pay monetary damages and attorneys’ fees. The district court granted the motion to enforce the settlement and awarded fees and costs, but did not address defendant’s request for monetary damages. Defendant appealed.
The court of appeals found that the district court’s refusal to rule on the request for damages was tantamount to a denial of the request. The Minnesota Supreme Court disagreed, holding that given the important public policy of encouraging and enforcing settlement of claims, a district court must treat a motion to enforce a settlement agreement as it would a summary judgment motion, and specifically rule on each claim.
VoiceStream Minneapolis, Inc. v. RPC Properties, Minnesota Supreme Court, File No. A06-394, January 10, 2008.
2. INSURANCE COVERAGE - DROP-DOWN AUTOMOBILE INSURANCE POLICY PROVISION
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A drop-down provision in an automobile insurance policy that reduced bodily injury coverage for resident family members to the minimum statutory amount is valid and enforceable.
Plaintiff-insured and her daughter commenced a declaratory judgment action following a one-car accident in which the plaintiff’s son was driving a vehicle with his parents (the insureds) and plaintiff’s daughter and her fiancé as passengers. The insureds’ policy contained bodily injury liability limits of $300,000 per person or $500,000 per accident. The policy also contained a drop-down limit for bodily injury liability coverage to $30,000 per person or $60,000 per accident when a “covered person” was legally obligated to pay “a member of that covered person’s family residing in that covered person’s household.” The defendant-insurer denied coverage for amounts above the policy’s drop-down limits because claimants were residents of the insureds’ household.
The district court found the drop-down limits unenforceable. The Court of Appeals disagreed, holding the provision valid and enforceable for several reasons. First, the drop-down provision provided the minimum coverage required by Minnesota law. The Court next concluded that the phrase “resident of your household” was not ambiguous, and held the provision did not violate the reasonable expectations of the insured.
It is worth noting that despite its ruling that the drop-down provision was valid and enforceable, the Court of Appeals nonetheless refused to apply the provision to the case at hand. Adhering to the principle that exclusions in insurance policies are narrowly interpreted against the insurer, the Court of Appeals held that a college student living in a different state, who only periodically resided in the insured household, was not a resident of that household, and therefore, the drop-down provision did not apply to limit coverage.
Frey v. United Services Automobile Association, Minnesota Court of Appeals, File No. A06-2445, January 8, 2008.
3. INSURANCE COVERAGE - DETERMINATIONS OF NO-FAULT COVERAGE ISSUES BEFORE
ARBITRATION; NON-ASSIGNMENT CLAUSES
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Minnesota’s No-Fault Insurance Act permits district courts to determine coverage issues before compelling arbitration.
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A non-assignment clause in an insurance policy may prohibit the assignment of post-loss insurance proceeds.
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An insurer cannot waive its rights under a non-assignment clause by making payments to the assignee that are compelled by statute.
This case involves ten customers of defendant’s windshield repair company that were insured by plaintiff-insurer. As payment for windshield repair work, defendant accepted an assignment of each customer’s insurance proceeds. When billed by defendant, plaintiff sent defendant a payment for less than the amount billed. Defendant attempted to initiate arbitration under the Minnesota No-Fault Automobile Insurance Act, Minn. Stat. §§ 63B.41-.71, to determine amounts owed. Plaintiff filed a declaratory judgment action seeking a declaration that the non-assignment clause in its insurance contract prohibited customers from assigning payments to defendant.
The district court issued a temporary restraining order, enjoining the arbitration proceeding, and then denied defendant’s motion to dismiss the declaratory judgment action on the grounds that arbitration was not mandatory under the No-Fault Act. The court then granted plaintiff’s motion for summary judgment, holding that the plain language of the non-assignment clause prevented an assignment of rights under the policy.
The Court of Appeals affirmed, holding it was proper for the district court to rule on the coverage issue involving the non-assignment clause before compelling arbitration. The Court also agreed that a non-assignment clause can properly restrict the assignment of post-loss proceeds. The Court reasoned that if such assignments were permitted, the insurance company would face additional risk that it expressly sought to avoid through the language in the insurance contract. Finally, the Court held plaintiff did not waive its rights under the non-assignment clause by making payments directly to defendant.
Auto Owners Insurance Co. v. Star Windshield Repair, Inc., Minnesota Court of Appeals, File No. A07-972, January 8, 2008.
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