This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).


Sherman Johnson, et al., petitioners,


Milbank State Auto Insurance Company,


In the Matter of the Arbitration between: Sherman Johnson and
State Auto Insurance Companies.

Filed February 29, 2000
Reversed and remanded
Crippen, Judge

Pennington County District Court
File No. C098591

Robert M. Albrecht, Brink, Sobolik, Severson, Malm & Albrecht, P.A., P.O. Box 790, Hallock, MN 56728 (for respondents)

Troy A. Wolf, Smith, Bakke, Hovland & Oppegard, Suite 204, 1506 Main Avenue, P.O. Box 657, Moorhead, MN 56561-0657 (for appellant)

Considered and decided by Davies, Presiding Judge, Crippen, Judge, and Schumacher, Judge.

U N P U B L I S H E D   O P I N I O N


Because appellant Milbank State Auto Insurance Company was compelled in 1998 to pay no-fault benefits respecting respondent Sherman Johnson's losses in a 1994 auto accident, the trial court concluded that appellant was collaterally estopped from presently asserting—in respondent's uninsured-motorist claim—that his injuries represent a condition that existed before the 1994 accident. We conclude that a party is not collaterally estopped on the basis of a determination in a no-fault dispute, and therefore we reverse and remand for entry of a judgment consistent with this opinion.


While in his car, respondent Sherman Johnson was struck by an uninsured motorist on February 4, 1994. Appellant Milbank, respondent's insurer, paid no-fault and uninsured-motorist benefits for treatment of injuries respondent sustained in the accident. In 1996, respondent was found to be suffering a rotator-cuff tear in his left shoulder. Appellant claims this was a pre-existing injury, pointing to:

a) during the first fifteen months of treatment, respondent sought only chiropractic care;
b) no rotator cuff tear was discovered during May 1995 visits with doctors;
c) respondent's work as a drywall taper was physically taxing, and respondent was 65 years old at the time of the accident;
d) respondent had been seen for "rotator cuff tendinitis" and pain in his left shoulder in 1984;
e) respondent had been involved in a car accident in 1988 for which he received no-fault benefits for an injury to his left shoulder; and
f) respondent saw a doctor only four weeks before the 1994 accident and complained of shoulder problems related to his work.

In 1998, after appellant denied respondent's no-fault claim for benefits for the rotator cuff surgery, the no-fault arbitrator awarded respondent $18,425.11. The district court subsequently confirmed this arbitration award. Respondent then initiated an arbitration action against appellant for UM benefits for the rotator cuff surgery. Respondent argued that the issue of causation had already been determined in the no-fault arbitration and that appellant is collaterally estopped from litigating the causation issue in the UM proceeding.

The arbitration panel held that collateral estoppel was a legal issue the arbitrators could not decide, and that respondent did not sustain his burden of proof on causation. At the parties' request, the arbitration panel answered the damages question, finding respondents Sherman and Mona Johnson suffered $25,000 in damages.

On respondent's motion, the trial court accepted the arbitration panel's decision on damages but reversed the conclusion that the damages were not caused by the 1994 accident. The court determined the insurer was collaterally estopped from raising the issue of a pre-existing injury because respondent had earlier succeeded in establishing his right to no-fault benefits despite the possible existence of a pre-existing condition.


Whether collateral estoppel is available is a mixed question of law and fact that this court will review de novo. Falgren v. State Bd. of Teaching, 545 N.W.2d 901, 905 (Minn. 1996).

Minnesota's rules of no-fault arbitration provide:

Given the informal nature of no-fault arbitration proceedings, the no-fault award shall not be the basis for a claim of estoppel or waiver in any other proceeding.

Minn. R. No-Fault Arb. 32. This rule affects both parties, sparing both future claims of insureds and future defenses of insurers from claims that the issues were determined in earlier no-fault proceedings. Because this rule was not effective until September 1999, respondent contends that collateral estoppel is appropriate in this case under previous law.

We conclude that Rule 32 is not in conflict with prior law but rather merely confirms the legal policy that no-fault proceedings should be conducted without risk that any determination in the resolution of the no-fault case will preclude the other party from making claims in subsequent proceedings.

The No-Fault Act is intended to encourage appropriate medical treatment by assuring prompt payment for such treatment, Minn. Stat. § 65B.42(3) (1998), and to relieve economic distress of uncompensated victims of automobile accidents, Minn. Stat. § 65B.42(1) (1998). Thus, even when there is some question of whether an injury may be traced in part to a pre-existing condition, the Minnesota Supreme Court has deemed it appropriate that no-fault benefits be chargeable to the insurer when an accident covered by the policy leads to injury. See Great W. Cas. Co. v. Northland Ins. Co, 548 N.W.2d 279, 281 (Minn. 1996) (concluding insurer bore responsibility for entire disability caused by accident which occurred during policy term, despite evidence that injury was partially attributable to pre-existing condition); see also Scheibel v. Illinois Farmers Ins. Co., No. C1-98-2097, 1999 WL 391910, *2 (Minn. App. June 15, 1999), review granted (Minn. Sept. 28, 1999) (concluding insurer bore responsibility only for injuries arising from second accident).

As appellant contends, a decision on causation is made differently in no-fault proceedings from what would be the case in the context of a tort or uninsured motorist claim. Although appellant draws unwarranted conclusions from this proposition, it is important in deciding the case because it demonstrates the broad view of causation that prevails in promptly determining no-fault cases.[1]

Consistent with the policy determination that no-fault proceedings be promptly decided, there are no precedents for the application of collateral estoppel—against the claims of an insured or an insurer—on the basis of a prior determination in a no-fault proceeding. Neither party is prejudiced by strategies hastily employed in the effort to handle no-fault claims promptly. Respondent points to a single unpublished decision of this court that applies collateral estoppel in similar circumstances, but it is significant both that the opinion is not published and that it was decided in 1990, before the development of no-fault policy indicated by the Minnesota Supreme Court in the Great West decision.

Reversed and remanded.

[1] Appellant draws a distinction between the doctrines of causation in no-fault and tort, pointing to the holdings requiring "something less than proximate cause in the tort sense" for no-fault liability. See Continental W. Ins. Co. v. Klug, 415 N.W.2d 876, 878 (Minn. 1987) (holding standard in a no-fault case is not proximate cause but rather is "something less than proximate cause in the tort sense and something more than the vehicle being the mere situs of the injury") (quotation omitted); see also Tlougan v. Auto-Owners Ins. Co., 310 N.W.2d 116, 117 (Minn. 1981). These holdings focus on the characterization of the event that caused injuries, i.e., deciding whether the injury arose out of the use or maintenance of an automobile. They do not deal with the issue of whether the injuries were caused by a particular event or another, and they are not persuasive in determining whether a party should be collaterally estopped from addressing a pre-existing cause issue already decided in a no-fault proceeding.