This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).






Michael Schellenberg, a/k/a

 Michael Schoenberg, d/b/a

 Golden Eagle Motor Sports, et al.,





 Northland Insurance Companies, d/b/a

 Northfield Insurance Company,



Oakwood Insurance Agency, Inc., et al.,



Filed February 6, 2001


Randall, Judge


Anoka County District Court

File No. C2-98-4470


Robert J. Patient, 1250 Norwest Center, 55 East Fifth Street, St. Paul, MN  55101 (for appellants)


Michael S. Kreidler, Louise A. Behrendt, Stich, Angell, Kreidler, Brownson & Ballou, P.A., The Crossings, Suite 120, 250 Second Avenue South, Minneapolis, MN  55401 (for respondent)


            Considered and decided by Kalitowski, Presiding Judge, Randall, Judge, and Crippen, Judge.


U N P U B L I S H E D   O P I N I O N


            Appellants brought an action to recover damages to business property from a fire, which occurred after the business moved from Colorado to Minnesota.  Appellants claim coverage under the surplus lines commercial property policy in question. Appellants challenge the district court's grant of summary judgment to respondent and denial of partial summary judgment to appellants.  Appellants argue the policy, as it relates to the geographical scope of coverage, is ambiguous, and coverage should be based on appellants' reasonable expectations.  We affirm.


            In 1994, appellants Michael Schellenberg, et al. (Schellenberg) contacted Henry Ham of the Henry Ham Insurance Agency to procure insurance for his business, Golden Eagle Motor Sports, which was located in Broomfield, Colorado.  After visiting Schellenberg's business and discussing his insurance needs, Ham recommended a surplus lines commercial property policy through respondent Northland Insurance Companies (Northland). For the next three years, Schellenberg continued to purchase Northland insurance policies through Ham. 

            In mid-July 1997, Schellenberg telephoned Ham to discuss moving his business to Minnesota.  In his deposition, Schellenberg testified that he wanted "[Ham] to verify everything [was] intact with the policy, that [Schellenberg would] be covered during the transition."  Ham told Schellenberg that he would "double check" and get back to him.  Schellenberg stated Ham never got back to him regarding coverage under the Northland policy.  Schellenberg admitted Ham never made any direct representations regarding coverage for Schellenberg's move to Minnesota.  Schellenberg stated, however, that he felt secure about coverage for two reasons: first, Ham had seen Schellenberg transport his business property to shows throughout Colorado and out of state and had never said anything to Schellenberg about a need for transit coverage; second, Schellenberg thought that because Ham never got back to him one way or the other about coverage, he must have had coverage in place.

            Schellenberg testified that the next conversation he had with Ham was on approximately September 22, 1997, when he stopped by Ham's office to obtain a motor vehicle bond.  Schellenberg did not ask, and Ham did not mention, anything regarding transit coverage for Schellenberg's move to Minnesota.  Schellenberg moved to Minnesota at the end of September 1997.  Schellenberg never directly contacted Northland to determine if coverage under the subject policy had "followed him" to Minnesota.

            In mid-July, on the same day Schellenberg contacted Ham about moving to Minnesota, Schellenberg also contacted Louanne Cherrier of Oakwood Insurance Agency in Coon Rapids, Minnesota, regarding potential insurance needs in Minnesota.  After asking Schellenberg several questions about his insurance coverage requirements, Cherrier agreed to handle his insurance.  Schellenberg testified that after he read her the declarations page of the Northland policy, Cherrier told him it sounded like he had "great coverage" and that the garage keeper's policy covered goods in transit.  After meeting with Schellenberg in Minnesota to discuss his insurance needs, Cherrier reviewed a copy of Schellenberg's Colorado policy for help in finding comparable coverage in a new policy. 

            Within a week, Cherrier learned that Northland did not supply the same type of coverage in Minnesota as had been included in Schellenberg's Colorado policy.  On October 23, 1997, a fire destroyed Schellenberg's business.  No new policy was put in place before the fire occurred.  Cherrier received written notice on October 24, 1997, stating Northland declined to write coverage for Schellenberg in Minnesota.             

            Schellenberg submitted a claim to Northland for business personal property lost at the Minnesota site.  Northland denied coverage on the basis that its policy only covered losses occurring at or within 100 feet of the Golden Eagle Motor Sports premises in Broomfield, Colorado.     

            Schellenberg sued respondent Northland for breach of contract after Northland denied Schellenberg's claim for fire losses.  Schellenberg also sued Oakwood Insurance Agency and its agent, Cherrier, for negligence, errors, and omissions.  That lawsuit is concluded and is not before us, but some of Schellenberg's present claims overlap with that lawsuit.  The jury in Schellenberg's action against Oakwood and Cherrier found that Cherrier was negligent but that her negligence was not a direct cause of Schellenberg's lack of coverage at the time of the fire.  This appeal is from the district court's grant of summary judgment in favor of Northland and against Schellenberg.


On appeal from summary judgment, this court determines whether there is a genuine issue of material fact and whether the district court erred in its application of the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  The interpretation and construction of insurance contracts are questions of law which this court reviews de novo.  Haarstad v. Graff, 517 N.W.2d 582, 584 (Minn. 1994).  The evidence must be viewed in the light most favorable to the party against whom summary judgment was granted.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). 

Schellenberg asserts that the policy grants coverage in one provision, takes it away in another, possibly gives it back in an extension, and then takes it away in an exclusion, thereby creating an ambiguity regarding the geographical scope of coverage.  Schellenberg asserts that portions of the policy contradict each other, rendering the policy too complicated and therefore ambiguous.   Schellenberg claims that he has coverage for his business and personal property anywhere in the United States since the section on "Commercial Property Conditions" states:



     Under this Coverage Part:


1.      We cover loss or damage commencing:


                                    a.  During the policy period shown in the Declarations;



                                    b.  Within the coverage territory.


2.      The coverage territory is:


a.       the United States of America (including its territories and possession);


b.      Puerto Rico; and


c.  Canada.

The next page of the policy, entitled "Building and Personal Property Coverage  Form," reads in its first paragraph: "Many provisions in this policy restrict coverage.  Read the entire policy carefully to determine rights, duties and what is and is not covered."  The first section on the page reads, in relevant part:

            A.  COVERAGE

We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.

* * * *


1.b. Your Business Personal Property located in or on the building described in the Declarations or in the open (or in a vehicle) within 100 feet of the described premises, * * * .


The issue of whether an insurance policy provision is ambiguous is a question of law. Progressive Cas. Ins. Co. v. Metcalf, 501 N.W.2d 690, 691-92 (Minn. App. 1993) (citing  Columbia Height Motors, Inc. v. Allstate Ins. Co., 275 N.W.2d 32, 34 (Minn. 1979)).  "A policy's complexity alone, however, does not make it ambiguous."  Reinsurance Ass'n v. Johannessen, 516 N.W.2d 562, 564 (Minn. App. 1994) (citation omitted). 

A provision is ambiguous if it is reasonably subject to more than one definition or interpretation or if it creates an irreconcilable conflict among provisions within the policy. O'Shaughnessy v. Smuckler Corp., 543 N.W.2d 99, 101 (Minn. App. 1996), review denied (Minn. Mar. 28, 1996).  If this court finds the language was ambiguous, the ambiguity must be resolved in favor of the insured. Columbia Heights, 275 N.W.2d at 36.  "The policy must be construed as a whole, and unambiguous language must be given its plain and ordinary meaning." Henning Nelson Constr. Co. v. Fireman's Fund Am. Life Ins. Co., 383 N.W.2d 645, 652 (Minn. 1986).

Schellenberg fails to show how, when reading the policy as a whole, there is no reasonable interpretation of coverage.  The two provisions Schellenberg relies on do not create an irreconcilable conflict within the policy.  The generalized statement of "coverage territory" under Section H of the commercial property conditions shows that Northland is authorized to sell insurance anywhere in the country.  It does not state that no matter where an insured lives, insurance coverage follows the insured to all the territories listed without any change of address notification to the insurance company being necessary.  

Rather, the declarations page of Schellenberg's policy states the insured property is a "[o]ne story, joisted masonry building located [at] 1766 S. 112th, Broomfield, CO, protection class 2, occupied as a motorcycle repair shop."  The declarations pages of an insurance policy are a crucial part of determining the scope of a policy.  Reinsurance Ass'n, 516 N.W.2d at 564.  The declarations page makes no reference to any location other than Schellenberg's place of business in Broomfield, Colorado. 

The policy read as a whole, giving a plain meaning to all provisions, contains no irreconcilable conflicts.  It is clear from the policy language that Schellenberg's coverage was tied to his business premises in Broomfield, Colorado.  The district court did not err in finding no ambiguity as to the geographic scope of the policy's coverage territory.

            Schellenberg also claims he is entitled to coverage based on his reasonable expectations.  He asserts he had reasonable expectations of coverage because Ham and Cherrier led him to believe, through a series of errors and omissions, that he was covered during and after his move to Minnesota.  Although Schellenberg claims he was not well served by Ham, Schellenberg concedes that Ham never told him he would have the kind of coverage he now seeks.  We note that Schellenberg chose not to sue Ham for claimed errors and omissions and breach of fiduciary duty.  Thus, the issue of Ham's negligence, if any, is not before us.  Regarding Cherrier's opinion that Schellenberg had "great coverage" under the Northland policy, we note that Schellenberg did not obtain a favorable jury verdict on his claim against her.  As stated before, Schellenberg's claim against Cherrier and the resulting jury verdict are not at issue on appeal.

Reasonable expectation of coverage is a question of law to be decided by the court.  Sicoli v. State Farm Mut. Auto. Ins. Co., 464 N.W.2d 300, 303 (Minn. App. 1990).  The seminal case examining the doctrine of reasonable expectations is Atwater Creamery Co. v. Western Nat'l. Mut. Ins. Co., 366 N.W.2d 271 (Minn. 1985) where the court decided that ambiguity is not a condition precedent to the application of the reasonable expectation doctrine, but rather one of four factors for determining reasonable expectation of coverage.  Atwater was a fact-specific case.  The court in Atwater concluded that there was a reasonable expectation of coverage under the policy even though the court did not find any ambiguity in the policy.  Id. at 276.  The court found that the definition of burglary in that policy operated to exclude certain cases of burglary where there were no signs of forced entry or exit, and that anyone buying such a policy would reasonably expect that burglary, regardless of the burglar's skill level, would be covered.  Id. at 277-78. 

The four factors to be considered in determining reasonable expectation are (1) the presence of ambiguity, (2) language operating as a hidden major exclusion, (3) whether the insurer communicated "important, but obscure, conditions or exclusions," and (4) whether the general public knows of the particular provisions at issue in the contract.  Id. at 278.  See also Hubred v. Control Data Corp., 442 N.W.2d 308, 311 (Minn. 1989) (restating the four factors outlined in Atwater).  The doctrine of reasonable expectations has never stood for the unlimited principle that what you "believe that you think you have" automatically transforms a lack of coverage into actual coverage.

            The factors are not present in this case.  We already determined there is no ambiguity regarding the geographical scope of coverage.  In addition, the policy does not have a definition operating as a hidden exclusion to coverage like in Atwater.  Northland accurately communicated the type of coverage and indicated that the only property covered was Schellenberg's business at the Colorado location, as stated in the policy.  No Minnesota location was named in the policy. 

            We find this set of facts to be an unfortunate loss for Schellenberg.  We understand his argument that Cherrier led him to believe that he had coverage, and we understand that his Colorado agent never indicated that he did not.  But Schellenberg chose not to sue the Colorado agent, and when he did sue Cherrier for negligence, he lost.  Those events do not operate to rewrite Schellenberg's policy with Northland.  Errors and omissions are not the issue before us; insurance coverage is.  We affirm the district court's determination that Schellenberg did not have any.

            We affirm the district court's conclusion that the Northland policy was not ambiguous.  We agree that Schellenberg had no reasonable expectations of coverage that would support reforming Northland's policy.  The district court properly denied summary judgment of Schellenberg and granted summary judgment of Northland.