This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).






Susan Elfstrom, as Trustee for the Next of Kin of

Bruce Leo Tarasar, Jr.,


St. Paul Guardian Insurance Company, a/k/a The St. Paul,

Robert Knox, et al.,



Robert Knox, et al.,
Defendants and Cross-P




St. Paul Guardian Insurance Company, a/k/a The St. Paul,

Defendant and Cross-Defendant.


Filed July 11, 2000


Crippen, Judge


Hennepin County District Court

File No. 9817621


Brad C. Eggen, Law Offices of Brad C. Eggen, 1100 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN 55402 (for appellant)


Bethany K. Culp, Oppenheimer Wolff & Donnelly L.L.P., Plaza VII, Suite 3400, 45 South Seventh Street, Minneapolis, MN 55402-1609 (for respondent St. Paul Guardian)


Dennis Smith, Esquire, 100 Roseville Professional Center, 2233 Hamline Avenue North, Roseville, MN 55113 (for respondents Knox, et al.)


            Considered and decided by Crippen, Presiding Judge, Amundson, Judge, and Anderson, Judge.

U N P U B L I S H E D   O P I N I O N




            Challenging a summary judgment dismissing her suit for a declaration of insurance coverage, appellant Susan Elfstrom, the trustee of the estate of a deceased child, claims (a) that respondent St. Paul Guardian Insurance Company, insurer of the child’s custodians, provided coverage for the death of the child on the premises where the child was receiving custodial care, and (b) that she should have been permitted to amend her pleadings to state a claim for judgment against the agent who obtained the insurance policies for the child’s custodians.  Because both assertions are flawed as a matter of law, we affirm.



            A five-year old boy who was placed in the long-term custody of his grandparents, Robert and Mary Knox, drowned in their swimming pool.  Through their agent, James Higgens, the Knoxes had purchased a combination auto and homeowners “PAK II” insurance policy from respondent St. Paul Guardian Insurance Company.  The policy’s “Homeowners Liability Protection” section stated that it did not cover personal injuries or property damage suffered by the insureds or “family members or any other person regularly residing at an insured location.”  The policy defined “family” as “any relative permanently living with our insured and anyone under 21 living in the household and cared for by the insured or an insured relative.” 

In the “Major Exclusions” section of its policy, St. Paul Guardian stated that it did not cover the legal liability of parties who were in the care of the insureds because of “child care services” provided by an insured, an employee of the insureds, or anyone acting on behalf of the insureds.  But it noted that this exclusion did not apply to “occasional child care services provided” by the insureds, nor did it apply to childcare services provided by an insured to a relative.

            Appellant, the trustee for the child’s next-of-kin, instituted a wrongful death action against the grandparents and their insurer.  The trustee then instituted a declaratory judgment action against St. Paul Guardian, seeking a holding that the insurer must cover and indemnify the grandparents for the claims stated against them.  The trustee and the grandparents then entered into a Miller-Shugart stipulation stating that the grandparents had tendered defense of the wrongful death suit to their insurance agency and St. Paul Guardian, and that both had refused liability coverage or indemnification.[1]  Appellant sought and obtained an amendment of its declaratory judgment action to reflect the Miller-Shugart agreement.  She also moved to amend the original complaint to add the claim that Higgins Insurance Agency and Jim Higgens were liable for the settled liability of the grandparents.

The trial court dismissed appellant’s declaratory judgment suit, determining that the child was a family member, that liability coverage did not extend to a family member, and that the child’s status was not affected by the “child care services” exclusion or its exceptions.  The trial court denied the trustee’s motion to amend its complaint to state a declaratory judgment claim against the agent, concluding that the family of the deceased child did not demonstrate a triable claim against the agent.



1.         The trial court determined that appellant’s attempt to add claims against Higgins and the Higgens Insurance Company failed to present a claim that could survive summary judgment.  See CPJ Enters., Inc. v. Gernander, 521 N.W.2d 622, 625 (Minn. App. 1994) (motions to amend complaints “properly may be denied when the additional claim could not survive summary judgment”) (citations omitted).  More specifically, the court determined that appellant had no claim under the March 1999 Miller-Shugart agreement.  We review de novo the decision that the claim cannot withstand summary judgment where the determination is premised on an application of the law to undisputed facts.  See Commercial Union Ins. Co. v. Minnesota Sch. Bd. Ass’n, 600 N.W.2d 475, 478 (Minn. App. 1999), review denied (Minn. Dec. 21, 1999).

            In her assertion of a cause against the insurance agent in this declaratory judgment matter, appellant seeks enforcement of the Miller-Shugart settlement.  We have previously indicated that this claim cannot succeed against an insurance agent.  See, e.g., St. Michel v. Burns & Wilcox Ltd., 433 N.W.2d 130, 135 (Minn. App. 1988), review denied (Minn. Mar. 17, 1989) (“[d]ifferent questions are involved in applying the same rule of law to a case which does not involve existing contractual responsibilities between an insured and insurer”).

            Appellant contends that the assertion of his claims is permitted by Peterson v. Brown, 457 N.W.2d 745 (Minn. App. 1990), review denied (Minn. Aug. 23, 1990), which recognizes that similar claims may be lawfully assigned by an insured to an injured person. But appellant’s proposed amended pleadings do not call for litigation of assigned causes of action.  Rather, the pleadings call for entry of a judgment on the settlement stated in the Miller-Shugart agreement.[2]  The trial court did not err in finding that appellant’s proposed amendment to the pleadings failed to state a claim that could survive summary judgment.

2.         The interpretation of an insurance policy is a question or law that an appellate court will review de novo.  Metropolitan Property & Cas. Ins. Co. v. Miller, 589 N.W.2d 297, 299 (Minn. 1999).  The determination of ambiguity in an insurance policy is also a question of law.  Hammer v. Investors Life Ins. Co., 511 N.W.2d 6, 8 (Minn. 1994). 

            Appellant claims that the deceased child was not a “family member” whose injuries were outside the scope of St. Paul Guardian’s liability coverage.  Appellant insists that the family-member language is written for permanent care situations and argues that the child in this case was not permanently residing with the Knoxes, it having always been understood that the child ultimately would be returned to his mother.  But the concept of permanence is employed in the family-member language solely in respect to live-in relatives other than children.  Coverage is not extended to “anyone under 21” who lives in the household and is cared for by the insured.  The language extends to “anyone” who is under age 21 and it precludes appellant’s assertion that the clause applies only to children who are non-relatives.  And there is no merit in appellant’s attempts to view the child as a mere “tenant.”  Appellant’s coverage contentions are defeated by unambiguous policy language.

Appellant then contends that the exceptions to the “child care services” exclusion—precluding use of the exclusion for “occasional” child care or care of “a relative” of the insured—establishes that the policy excludes coverage for some child care and allows coverage for others.  But the exceptions to the specific exclusion do not create coverage where a different section specifically limits liability coverage.  See Moorhead Mach. & Boiler Co. v. Employer’s Commercial Union Ins. Co., 285 N.W.2d 465, 468 (Minn. 1979) (where exclusions in an insurance policy clearly preclude coverage, an exception to an exclusion cannot create coverage unless the policy is ambiguous).  Furthermore, it is evident that both the child care exclusion and its exceptions refer to baby-sitting-type child care, not the long-term custody arrangement that existed here.

Appellant also claims that the Knoxes could reasonably expect liability coverage for their grandson’s death.  This court has held that where a household exclusion is neither ambiguous nor hidden and the insured can read the policy and understand the exclusion, the exclusion does not violate the insured’s reasonable expectations.  Vierkant by Johnson v. AMCO Ins. Co., 543 N.W.2d 117, 121 (Minn. App. 1996), review denied (Minn. Mar. 28, 1996).  The policy language that defeats appellant’s coverage claim is neither hidden nor ambiguous and does not violate the insureds’ reasonable expectations.

Appellant’s claim that the coverage under the umbrella policy accompanying the PAK II policy was illusory must also fail.  PAK II’s umbrella policy did not claim coverage broader than the simple PAK II but instead provides added limits and covers some additional property and personal injuries not necessarily covered by other, non-PAK II policies.  Also, there is no evidence here that any premium was specifically allocated to coverage for injuries of family members (or other people under the age of 21) residing with the insureds.  See Jostens, Inc. v. Northfield Ins. Co., 527 N.W.2d 116, 119 (Minn. App. 1995), review denied (Minn. Apr. 27, 1995) (illusory coverage doctrine is best applied “where part of the premium is specifically allocated to a particular type or period of coverage and that coverage turns out to be functionally nonexistent”).

Even if coverage under the umbrella policy were illusory in some circumstances, none of its sections state expanded liability for members of the family, and none of the broadened statements of coverage is pertinent to the family issue.  Finally, the umbrella policy specifically states that it does not cover claims that are excluded from the simple PAK II coverage. 



[1] In the settlement, the grandparents stipulated to a judgment in the amount of $425,000, providing that the Knoxes would pay $45,000 in return for a release of their further liability, and that the child’s trustee would seek the remaining judgment only from the grandparents’ insurance company or the “liability or other insurance carrier” of the agency or individual that sold the policy to the grandparents.


[2] The trial court analysis of this issue may be read to simply suggest that the Miller-Schugart agreement is not an appropriate vehicle for making the assignment of claims permitted by Peterson.  But respondent acknowledges that a settlement document could incorporate both a Miller-Shugart settlement and a separate assignment of claims.  We conclude that the trial court’s objection to appellant’s Miller-Shugart assertion against the insurance agent rests singularly on the reality that appellant is not proposing the assignment of undetermined claims but is asserting the agent’s responsibility for claims already finally determined in the settlement agreement.

The trial court did not reach the assertion of respondent on appeal, that the scope of the assignment stated in the Miller-Shugart employed in this case was confined to indemnity claims and did not extend to claims of negligence or breach of contract.  That contention need not be determined for the disposition of the case before us. 

            Aside from the Miller-Schugart-agreement characteristics of determining a liability and assigning the judgment claim or others, we have suggested before that the agreement has significance in stating a release of alleged tortfeasors.  See, e.g., Peterson, 457 N.W.2d at 750 (remanding so that the trial court could determine whether a duly assigned claim against an insurance agency was released by a Miller-Shugart agreement).  That question also required no attention by the trial court in this case and need not be reviewed.

Finally, the trial court did not determine and we do not have before us the question of whether or not appellant demonstrated the existence of evidence raising genuine issues of material fact on her claims of fault of the agent, either on a theory of negligence or breach of contract.