This opinion will be unpublished and

may not be cited except as provided by

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






Virtual Home Care, Inc. and

Katheryn I. Kunkel,





St. Paul Fire & Marine Insurance Company,



CFG Insurance Services, Inc.,



Filed September 4, 2001


Harten, Judge


Hennepin County District Court

File No. 995401


Paul A. Sortland, Sortland Law Office, 33 South Sixth Street, Suite 4100, Minneapolis, MN 55402-3601 (for appellants)


Bethany K. Culp, Hinshaw & Culbertson, 222 South Ninth Street, Suite 3100, Minneapolis, MN 55402 (for respondent St. Paul Fire & Marine Insurance Company)


Robert G. Haugen, Susan E. Gustad, Johnson & Lindberg, PA, 7900 International Drive, Suite 960, Minneapolis, MN 55425-1582 (for respondent CFG Insurance Services, Inc.)


            Considered and decided by Lansing, Presiding Judge, Harten, Judge, and Willis, Judge.

U N P U B L I S H E D   O P I N I O N




            Appellants brought this action against respondents insurer and insurance broker/agent after the insurer declined to defend them in an underlying action.  The district court granted respondents summary judgment on the ground that the policy did not cover the claims made in the underlying action.  Because we see no error of law in the district court’s determination, we affirm.



1.         The Underlying Action


In May 1996, appellant Katheryn Kunkel purchased two corporations, Chances Are and Nydel Corp., from her brother Mark Christenson.  With the purchase of Nydel Corp., Kunkel also acquired First Respiratory, Inc., a corporation previously purchased by Nydel.  Kunkel held these companies for about six months, as part of her own corporation, appellant Virtual Home Care (VHC).  In January 1997, Kunkel sold all the VHC assets she had purchased from Christenson to Intrepid-New Horizons Home Care (Intrepid).

About three weeks after the sale, Intrepid sued four individuals: Kunkel; Christenson; Brenda Kiehler, a VHC employee who became an Intrepid employee after the sale; and Cindy Vaughn, another former VHC employee.  According to Intrepid, during and after the sale these defendants had (1) informed patients and caregivers that VHC was being closed, not sold; (2) removed files that were Intrepid’s property so Intrepid could not provide service to patients; (3) wrongfully entered on Intrepid’s property to remove assets; and (4) told former VHC clients that certain Intrepid personnel were not to be trusted.   Following arbitration, the lawsuit was resolved. 

2.         The Policy

            The defendants in the underlying action tendered their defense to respondent St. Paul Fire and Marine Insurance Co. (St. Paul), asserting that its policy obligated it to defend them.  The policy stated that the insurer would defend “any claim or suit for covered injury or damage made or brought against any protected person.”  It provided coverage to an individual “named in the [i]ntroduction as an individual” only for “the conduct of a business of which you are the sole owner” and for employees “only for work done within the scope of their employment by you or their duties for you.”

            In relevant part, the policy provided coverage for advertising injury liability and personal injury liability.  “Advertising” is defined as “attracting the attention of others by any means for the purpose of seeking customers or increasing sales or business.”   “Advertising injury offense” is:

            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.

            Unauthorized taking or use of any advertising idea, material, slogan, style or title of others.


The policy provides coverage for


amounts any protected person is legally required to pay as damages for covered advertising injury that:

            [R]esults from the advertising of your products, work or completed work; and

            [I]s caused by an advertising injury offense committed while this agreement is in effect.


“Personal injury offense” is defined to include


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.

Interfering with the rights provided to a person by a Patient’s Bill of Rights or any similar law.


The policy provides coverage for


amounts any protected person is legally required to pay as damages for covered personal injury that:

results from your business activities, other than advertising, broadcasting, publishing or telecasting done by or for you; and

is caused by a personal injury offense committed while this agreement is in effect.


“Publishing” is defined as:


creating and producing any printed material for distribution or sale to others for any purpose.


However, we won’t consider creating and producing any of the following printed material to be publishing:

Correspondence written in the conduct of your business.

Bulletins, financial or annual reports, newsletters and other printed material that describes or reports your business activities.


The policy excluded coverage for, in relevant part,


            [1] [A]dvertising injury that results from the failure of any protected person to do what is required by a contract or agreement [but not] the unauthorized taking or use of advertising ideas if the contract or agreement doesn’t specifically prohibit such taking or use.


            [2] [L]iability for injury or damage assumed under any contract or agreement * * * [but not] injury or damage the protected person would have without the contract or agreement.


            [3] [P]ersonal injury or advertising injury that results from:

the protected person knowingly breaking any criminal law; or

any person or organization breaking any criminal law with the consent or knowledge of the protected person.


[4] [P]ersonal injury or advertising injury that results from making known to any person or organization false written or spoken material that:

was made by or for the protected person; and

the protected person knew was false when it was made known.


3.         The Present Action

            When Kunkel, Christenson, Kiehler, and Vaughn tendered their defense to St. Paul, they asserted that the policy covered Intrepid’s claims of tortious interference with contract, trespass to realty, defamation, and tortious interference with prospective business relations.  St Paul declined to defend Kunkel, Kiehler, and Vaughn.  Appellants, Kunkel and VHC, then brought this action against respondents, St. Paul and CFG Insurance Services Inc., (CFG), the agent/broker that sold the policy to VHC. 

Respondents moved for and were granted summary judgment on the bases that (1) St. Paul had no duty to defend because appellants were not named insureds; (2) the policy could not be reformed to name them as insureds; and (3) the policy’s failure to provide them with coverage was the result of appellants’ own failure to communicate their intentions, not of CFG’s failure to transmit their names.  The district court also noted that the policy covered the claims.

Appellants moved for reconsideration of their claim that the policy should be reformed.  The district judge granted the motion and recused herself from the case.  Because judgment for respondents had been entered, appellants’ time for appeal was running out.  The successor district judge, knowing that he would lose jurisdiction to reconsider once the time to appeal had expired, vacated the summary judgment. Respondent CFG petitioned this court for a writ of prohibition preventing enforcement of the vacation of judgment and later appealed from that order.  This court denied the writ and dismissed the appeal as an appeal from a nonappealable order.  CFG sought review of both decisions by the Minnesota Supreme Court, which declined to review either.

Appellants moved to amend the complaint to add a reformation claim and a negligence claim against CFG and later moved for summary judgment on the reformation claim.  The district court heard the motion and granted summary judgment to respondents, finding that, contrary to the holding of the first district court judge, Intrepid’s claims were not covered under the policy.  The district court did not reach appellants’ motion to amend the complaint by adding a reformation claim and a negligence claim.

Appellants now argue that the district court was precluded by the first summary judgment from revisiting the issue of whether the claims were covered under the policy and that, in any event, the claims were covered.[1]



1.         Preclusion

Appellants moved for summary judgment on the issue of reformation; the district court issued summary judgment to respondents finding that the claims in the underlying action were not covered by the policy.

A trial court has inherent authority * * * to grant summary judgment sua sponte without notice to either party where there remains no genuine issue of material fact, one of the parties deserves judgment as a matter of law, and the absence of a formal motion creates no prejudice to the party against whom summary judgment is entered.


Similarly, in cases where the moving party did not meet the notice requirements of Rule 56.03, this court has considered whether the party against whom summary judgment was entered had a meaningful opportunity to oppose the grant of summary judgment.


Modern Heating & Air Conditioning, Inc. v. Loop Belden Porter, 493 N.W.2d 296, 299 (Minn. App. 1992) (citations omitted) (emphasis in original).  Appellants now maintain that they were prejudiced because they did not know coverage would be an issue and had not fully argued it.

The record refutes this argument.  In their response to appellants’ motion, respondents identified as the first question presented:

1.         Is St. Paul obligated to reimburse Virtual Home for defense costs it was not obligated to pay for claims that were not potentially covered?


Respondents went on to assert that:

Intrepid did not seek damages from Kunkel; Kiehler; or Vaughn that would be covered under the St. Paul policy even if Virtual Home Care had been named as an insured.


In their reply memorandum, appellants did not oppose respondents’ argument on the issue of coverage; instead of arguing the issue, they said it was “not relevant to this proceeding * * *.”  We reject their argument that they were prejudiced by lack of notice of the issue.

            Appellants also argue that the district court was not free to consider the issue of coverage because dictum in the first summary judgment motion said there was coverage, and this dictum became law of the case.  This argument ignores the fact that the first summary judgment was vacated.  “Vacate” means “[t]o nullify or cancel; make void; invalidate <the court vacated the judgment>.” Black’s Law Dictionary, 1546 (7th ed. 1999).  Because the first summary judgment was vacated, its dictum could not have become law of the case.  Moreover, the “law of the case” doctrine

does not serve as a substantive limitation to a court’s power.  It is a flexible doctrine that varies within the context of its application.  Between coordinate courts, a court is not deprived of the power to revisit a previously decided issue, so long as the case remains within its jurisdiction.


Kornberg v. Kornberg, 525 N.W.2d 14, 18 (Minn. App. 1994) (quotation and citations omitted), aff’d, 542 N.W.2d 379 (Minn. 1996).  “[T]he doctrine is not normally applied by a district court to its own decisions.”  Kornberg v. Kornberg, 542 N.W.2d 379, 386 n.2 (Minn. 1996) (citation omitted).  Appellants’ reliance on the law-of-the-case doctrine is misplaced.  The district court was free to consider the coverage issue.

2.         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).  This court therefore reviews de novo the district court’s determination that the claims did not fall within the policy.[2]

            To determine whether claims are arguably covered by a policy, the language of the policy is compared to that of the complaint.  Franklin v. Western Nat’l Mut. Ins. Co. 574 N.W.2d 405, 407-08 (Minn. 1998).  Appellants argue that Count X, alleging tortious interference with contract against Kunkel, Kiehler, and Vaughn; Count XI, alleging trespass to realty against Kiehler; Count XIII, alleging defamation against Kiehler; and Count XIV, alleging tortious interference with prospective business relations against Kiehler, were covered by the policy.[3] 

            Count X reads in relevant part:

            Kunkel or someone at [her] direction contacted the patients and caregivers of Virtual and wrongfully informed those persons that the company was going out of business and closing its Mankato office.


* * * *


This is based on paragraph 27 of the complaint, which states that “an agent of Virtual sent letters to clients and caregivers saying the company was going out of business and closing its Mankato office * * *.”  Sending a going-out-of-business letter does not fall within any of the categories enumerated for personal injury offense or for advertising offense.  Nor does it fall within the category of “[m]aking known to any person or organization written or spoken material that belittles the products, work or completed work of others.”  The letter did not refer to Intrepid at all, either positively or negatively.  Intrepid was not belittled by the letter, which was substantially accurate.

            Moreover, if Kunkel, Kiehler, or Vaughn had intentionally distributed false information in order to damage Intrepid’s reputation, that conduct would be excluded from coverage as making known false statements that the protected person knew to be false when they were made.  Therefore, whether the contents of the letter are taken to be true or false, there is no coverage.

            Count X also alleges that Kiehler removed patient files from the New Ulm office and that the defendants removed patient files from the Mankato office.  All these events occurred after Kunkel had sold the businesses at the New Ulm and Mankato offices to Intrepid and after Kiehler had become an Intrepid employee. 

Moreover, taking files is not a “business activity” within the meaning of the policy’s coverage for personal injury damage resulting from “business activity” and conversion of files is not among the personal injury offenses listed in the policy.  Finally, it is arguable that the exclusion for injury that results from a protected person knowingly breaking any criminal law would exclude coverage for injury resulting from the protected persons having taken files that were the property of Intrepid.  See Minn. Stat. § 609.52, subd. 2 (2000) (whoever takes moveable property of another without the other’s consent and with either intent to deprive the owner permanently of the property or intent to exercise temporary control of the property that manifests an indifference to the rights of the owner or the restoration of property commits theft). 

Count XI alleges that Kiehler or someone at her direction wrongfully entered Intrepid’s New Ulm office and removed property without Intrepid’s consent.  Again, this necessarily occurred after the sale of the property to Intrepid and while Kiehler was an Intrepid employee.  Even were the VHC policy in effect when the alleged acts occurred, it would not have covered Kiehler who was not then acting as a VHC employee.

Count XIII and Count XIV allege that Kiehler told past clients of VHC and potential future clients of Intrepid that Intrepid’s management was not trustworthy and that the clients therefore did not choose Intrepid to provide their health care.  However, since Intrepid’s management was necessarily in existence at the time Kiehler allegedly made these statements, she was an Intrepid employee, not a VHC employee, when she made them and was not covered by the policy. 

Because the claims in the underlying action were not covered by the policy, there was no duty to defend and the district court did not err in granting summary judgment.


[1] Appellants also argue both that they are “insureds” under the policy and that, if they are not named insureds, the policy should be reformed to name them as insureds. The judgment from which this appeal is taken (1) assumed, but did not decide, that appellants were named insureds, and (2) stated that the issue of reformation was “not reached.”  The previous judgment, holding that appellants were not named insureds and that the policy could not be reformed to name them as insureds, was vacated.  Therefore, we cannot review the previous judgment because it no longer exists.  

[2] We note that the district court’s analysis was exceptionally comprehensive.

[3] These allegations were also made against Christenson, but his defense is not at issue.