This opinion will be unpublished and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


St. Paul Fire and Marine Insurance Company,


Green Lake State Bank,

Filed February 29, 2000
Harten, Judge

Kandiyohi County District Court
File No. C2-98-1005

Richard P. Mahoney, Victor E. Lund, Mahoney, Dougherty & Mahoney, P.A., 801 Park Avenue, Minneapolis, MN 55404-1189 (for appellant)

Jeffrey J. Bouslog, James C. Zacharski, Oppenheimer, Wolff & Donnelly, LLP, 45 South Seventh Street, Suite 3300, Minneapolis, MN 55402 (for respondent)

Considered and decided by Toussaint, Chief Judge, Harten, Judge, and Foley, Judge.[*]

U N P U B L I S H E D   O P I N I O N


Appellant insured challenges adverse summary judgment declaring that respondent insurer had no duty to defend appellant for claims in an underlying action or to indemnify appellant for the settlement costs of those claims. Because we see no error of law in the summary judgment, we affirm.


1. The Policy

During 1994, respondent St. Paul Fire and Marine Insurance (St. Paul) insured appellant Green Lake State Bank (Bank) with a commercial general liability policy providing "Personal injury liability" coverage:

We’ll pay amounts any protected person is legally required to pay as damages for covered personal injury that:
* results form your business activities, other than advertising, broadcasting, publishing or telecasting done by or for you; and
* is caused by personal injury offense committed while this agreement is in effect.

* * * *

Personal injury means injury, other than bodily injury or advertising injury, caused by a personal injury offense.
Personal Injury Offense means any of the following offenses:
* False arrest, detention or imprisonment.
* Malicious prosecution.
* Wrongful entry or wrongful eviction.
* Invasion of the right of private occupancy of a room, dwelling or premises that a person occupies.
* Libel or slander.
* Making known to any person or organization written or spoken material that belittles the products, work or completed work of others.
* Making known to any person or organization written or spoken material that violates an individual’s right of privacy.

The policy excluded contract liability:

We won’t cover the protected person’s liability for injury or damage assumed under any contract or agreement.

However, we won’t apply this exclusion to liability for injury, or damages the protected person would have without the contract or agreement.

2. The Underlying Action

Bank owned property that it leased to Alton and Ardys Dysband who used it to operate a group home. The terms of the lease gave the Dysbands the right of first refusal to purchase the property. In 1994, Prairie Community Services, Inc. (PCS) offered to buy the property for $325,000. Bank offered the property to the Dysbands for that amount, but they refused the offer, claiming the price was too high.

Bank sold the property to PCS and brought an unlawful detainer action against the Dysbands, which resulted in their eviction. The Dysbands did not challenge the unlawful detainer action; instead, they sued Bank for breach of contract, defamation, and conspiracy to breach the contract.

St. Paul agreed to defend and indemnify the defamation claim, but when the Dysbands voluntarily dismissed that claim, St. Paul withdrew. The Dysbands amended their complaint three times. In 1996, they added claims of breach of duty of confidentiality and interference with business relationships; in August 1997, they added a claim of unjust enrichment; and in December 1997, during the pretrial settlement conference attended by Bank but not by St. Paul, they added claims of wrongful eviction and belittlement. The third amended complaint was drafted not by the Dysbands’ attorney but by Bank’s attorneys and Dysbands’ attorney never signed it.

Eventually, the case settled. Bank granted Dysbands $50,000, paid a $40,000 judgment for them, and transferred to them real property worth $63,000. St. Paul did not receive a copy of the third amended complaint before it received a copy of the settlement agreement. Bank then sought defense and indemnification from St. Paul.

3. This Action

St. Paul brought this declaratory judgment action to determine its contractual obligations to Bank. Both parties moved for summary judgment. The district court denied Bank’s motion and granted St. Paul’s, finding that: (1) Bank’s breach-of-contract claim is not a claim for wrongful eviction, so St. Paul had no duty to defend or indemnify it; (2) Bank’s claim for interference with a business relationship is not a claim for belittlement, so St. Paul had no duty to defend or indemnify it; (3) unjust enrichment is not a personal injury offense covered by the policy, so St. Paul had no duty to defend or indemnify it; and (4) Bank engaged in collusion by having its claims for wrongful eviction and belittlement phrased in the language of the policy and St. Paul did not receive written notice of the settlement, so St. Paul had no duty to indemnify it.

On appeal, Bank contends that the Dysbands’ claims are covered by Bank’s policy and that St. Paul is liable for the settlement.


1. Coverage

"Insurance coverage issues are questions of law for the court." State Farm Ins. Cos. v. Seefeld, 481 N.W.2d 62, 64 (Minn. 1992) (citation omitted).

It is undisputed that none of the first three versions of the Dysbands’ complaint included claims for belittlement and wrongful eviction. Bank contends, however, that it is not the language of the complaint but rather the facts alleged in the complaint that trigger the insurer’s liability. For this Bank relies on Ross v. Briggs and Morgan, 540 N.W.2d 843 (Minn. 1995) and Garvis v. Employers Mut. Cas. Co., 497 N.W.2d 254 (Minn. 1993).

Neither case supports Bank’s position. Ross eschewed the "far too generous reading of the complaint" that would have been necessary to equate the third party’s claims with those covered under the policy. 540 N.W.2d at 848. Garvis found that the insurer had no obligation to go beyond an allegation of emotional distress to assume physical manifestations, had no obligation to conduct an investigation beyond the four corners of the complaint after denying coverage, and was correct in refusing to consider a telephone call into a room a "wrongful entry" covered by its policy. 497 N.W.2d at 258-260. Both cases denied coverage; neither case supports extending coverage in the instant case to claims not alleged until the third amended complaint was drafted in connection with the settlement.

A. Belittlement

The fact supporting the defamation claim, i.e. that PCS told the Kandiyohi County Commissioners the Dysbands’ financial problems led to inadequate care for their clients, would arguably support the Dysbands’ claim for belittlement. But the defamation claim was in all things voluntarily dismissed from the second amended complaint, and St. Paul withdrew its defense on the basis of that dismissal. The third amended complaint merely asserts that "[d]efendants, and each of them, made known to persons and organizations, information that belittled the plaintiffs [sic] work." There are no supporting facts. An insurer is not liable to defend and indemnify a claim after it is voluntarily withdrawn from a complaint.

B. Wrongful Eviction

Bank asserts that its breach of contract claim, present in all four versions of the complaint, is really a claim for wrongful eviction. But all versions show that the Dysbands were alleging breach of the contract that gave them the right to purchase Bank’s property at a fair price. They did not allege wrongful eviction until the third amended complaint, when they simply asserted, "[d]efendants, and each of them, wrongfully evicted plaintiffs from their property." St. Paul had no duty to defend or indemnify a claim for breach of contract because that claim was specifically excluded from coverage. See Franklin v. Western Nat’l Mut. Ins. Co., 574 N.W.2d 405, 407 (Minn. 1998) (denying trespass coverage under a policy that covered wrongful entry "[b]ecause the pleading clearly manifest that the dispute concerned the terms of the contract, rather than a ‘wrongful entry * * *.’").

Bank also argues that all wrongful eviction claims necessarily arise out of landlord-tenant contracts, so the contract exclusion is irrelevant to a wrongful eviction claim. But the damages resulting from wrongful eviction are not the damages resulting from breach of contract; to recover for both, a plaintiff must make both claims. The damages the Dysbands claimed were caused by Bank’s alleged breach of the contract to sell the property to the Dysbands, not by the unlawful detainer action.

There is no coverage for the claims advanced in Dysbands’ third amended complaint, notwithstanding the Dysbands’ efforts to characterize those acts as wrongful eviction and belittlement.

2. The Settlement

Bank contends that after St. Paul rejected the tender of defense, Bank had the right to settle the claim and to bind St. Paul by the settlement. An insured may settle a claim on the condition that the settlement is collectible only from the available insurance. See Miller v. Shugart, 316 N.W.2d 729, 732-34 (Minn. 1982). However, that settlement is binding on the insurer only if: (1) the insurer receives notice of the settlement; (2) the settlement is not the product of fraud or collusion; and (3) the settlement is reasonable and prudent. Brownsdale Coop. Ass’n v. Home Ins. Co., 473 N.W.2d 339, 341 (Minn. App. 1991) (citing Miller, 316 N.W.2d at 732-33), review denied (Minn. Sept. 25, 1991). St. Paul contends that it did not receive notice and that the settlement was the product of fraud and collusion.

Bank never tendered to St. Paul the third amended complaint, which was the only version including claims of wrongful eviction and belittlement. The case was settled before the third amended complaint was drafted. Its drafting was one element of the settlement; it was drafted by Bank’s lawyers, not the Dysbands’ attorney. In fact, the Dysbands’ attorney never signed it.

The district court found that the settlement was the product of collusion. We agree. Bank, as the insured, must prove the absence of collusion, because the settlement occurred prior to trial. Miller, 316 N.W.2d at 735-36. Bank asserts that it was permissible to persuade the Dysbands’ attorney to include claims for wrongful eviction and belittlement. But these claims were obviously inserted to the detriment of St. Paul and to the benefit of Bank, not to the detriment or benefit of the Dysbands.[1] Bank does not meet its burden of proving that the settlement was not collusive.

We conclude that the settlement between Dysbands and Bank is not enforceable as to St. Paul, and St. Paul had no duty to defend or indemnify the Dysbands’ claims.


[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] Even the Dysbands' jury instructions, submitted on the day of settlement and prior to the third amended complaint, reflect that their case was based on breach of contract, tortious interference with business relations, and unjust enrichment, none of which is a covered claim.