This opinion will be unpublished and

may not be cited except as provided by

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






La Crescent Concrete, Inc., d/b/a

Croell Redi-Mix,





Reliance National Indemnity Co.,



Filed October 16, 2001

Reversed and remanded

Willis, Judge


Houston County District Court

File No. C099318


Michael W. Gill, Francis (Frank) M. Doherty, Hale, Skemp, Hanson, Skemp & Sleik, 505 King Street, Suite 300, P.O. Box 1927, La Crosse, WI 54602-1927 (for appellant)


Barbara A. Burke, Andrea E. Reisbord, Cousineau, McGuire & Anderson, Chtd., 600 Travelers Express Tower, 1550 Utica Avenue South, Minneapolis, MN  55416-5318 (for respondent)


            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


Appellant challenges the district court’s conclusion that appellant’s insurer had no duty to defend against a third-party lawsuit.  Because we conclude that the insurer did not show that all parts of the claim against appellant fall clearly outside the scope of the policy’s coverage, we reverse and remand.


Appellant La Crescent Concrete, Inc., d/b/a Croell Redi-Mix (La Crescent), operates a concrete-mixing plant adjacent to the residences of Jack Elder and Erwin Lichte.  In 1998, Lichte and Elder sued La Crescent, alleging that La Crescent’s plant (1) disturbs their peace and quiet because its operations frequently create loud noises at unreasonable times and (2) substantially interferes with their use and enjoyment of their property because its operations cause “excessive noise and the discharge of toxic and noxious dust” in violation of federal, state, and local laws.

At all relevant times, respondent Reliance National Indemnity Co. insured La Crescent under a commercial-lines insurance policy.  La Crescent tendered the defense of Elder and Lichte’s lawsuit to Reliance, but Reliance denied that its policy provided coverage and refused to defend.  La Crescent sued Reliance, seeking a declaratory judgment regarding the policy’s coverage and Reliance’s duty to defend.  Reliance moved for summary judgment.

The district court denied Reliance’s motion for summary judgment, determining that the allegations of Elder and Lichte’s complaint created a duty on the part of Reliance to defend La Crescent and that Reliance had breached that duty.  But the court also determined that Reliance would “no longer be obligated to provide said defense upon a showing that there is no coverage for the property damage alleged in the Lichte and Elder complaint” and that Reliance was not barred from raising any applicable defenses under the policy or asserting any policy exclusions against La Crescent.

After additional discovery, Reliance again moved for summary judgment, arguing that there was no coverage under the policy.  The district court granted the motion, and this appeal followed.


            On appeal from summary judgment, this court asks (1) whether there are any genuine issues of material fact and (2) whether the district court erred in its application of the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  Here, the parties do not dispute the material facts.  Interpreting an insurance policy and applying it to the facts of a case present questions of law, which this court reviews de novo.  Iowa Kemper Ins. Co. v. Stone, 269 N.W.2d 885, 886-87 (Minn. 1978).  Words of an insurance policy “are to be given their natural and ordinary meaning and any ambiguity regarding coverage is construed in favor of the insured.”  Am. Family Ins. Co. v.  Walser, 628 N.W.2d 605, 609 (Minn. 2001).  “The question of whether a legal duty to defend or indemnify arises is a legal question subject to de novo review.”  Metro. Prop. & Cas. Ins. Co. & Affiliates v. Miller, 589 N.W.2d 297, 299 (Minn. 1999) (citation omitted).  

            La Crescent argues that Reliance had a duty to defend it against Elder and Lichte’s lawsuit.  Minnesota caselaw provides:

An insurer’s duty to defend its insured arises when any part of the claim against the insured is arguably within the scope afforded by the policy.  The duty to defend is broader in scope than the duty to indemnify.  An insurer seeking to escape its duty to defend has the burden of establishing that all parts of the cause of action fall clearly outside the scope of coverage.


Id. (citations omitted).  The duty to defend is contractual in nature and is generally determined by the allegations of the complaint against the insured and the indemnity coverage offered by the policy.  Republic Vanguard Ins. Co. v. Buehl, 295 Minn. 327, 332, 204 N.W.2d 426, 429 (1973).

Lichte and Elder’s lawsuit alleges that La Crescent’s plant disturbs their peace and quiet because its operations frequently create loud noises at unreasonable times and that the plant substantially interferes with their use and enjoyment of their property because its operations cause “excessive noise and the discharge of toxic and noxious dust.”  Reliance’s policy with La Crescent provides, in pertinent part:

            We will pay those sums that the insured becomes legally obligated to pay as damages because of * * * “property damage” to which this insurance applies.  We will have the right and duty to defend the insured against any “suit” seeking those damages.  However, we will have no duty to defend the insured against any “suit” seeking damages for * * * “property damage” to which this insurance does not apply.


The policy applies to “property damage” only if it is caused by an “occurrence” during the policy period. 

The policy defines “property damage” as:  “Physical injury to tangible property, including all resulting loss of use of that property” and “[l]oss of use of tangible property that is not physically injured.”  Under the policy’s terms, an “occurrence” is “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  The policy does not define “accident,” but the parties agree that the appropriate definition of that term is provided by Minnesota caselaw:

Accident, as a source and cause of damage to property, within the terms of an accident policy, is an unexpected, unforeseen, or undesigned happening or consequence from either a known or an unknown cause.


Hauenstein v. Saint Paul-Mercury Indem. Co., 242 Minn. 354, 358-59, 65 N.W.2d 122, 126 (1954) (footnote omitted).

La Crescent contends, and Reliance does not dispute, that Elder’s and Lichte’s alleged loss of the use of their backyards is property damage within the meaning of the policy.  But Reliance claims that the property damage was not accidental because “the proper focus is on whether the conduct or injury-causing event was accidental, not the resultant harm.”  Reliance reasons that because La Crescent intentionally operated its concrete-mixing plant, the alleged property damage sustained by Elder and Lichte was not caused by an accident because it was the inevitable consequence of the operations of the plant.  In support of its position, Reliance cites Sage Co. v. Ins. Co. of N. Am., 480 N.W.2d 695 (Minn. App. 1992), and Gilman v. State Farm Fire & Cas. Co., 526 N.W.2d 378 (Minn. App. 1995).  But in Walser, the Minnesota Supreme Court abrogated the definition of “accident” applied in both Sage and GilmanSee 628 N.W.2d at 611-12.

In Sage, this court stated that “case law in this state has defined accident as ‘an unexpected, unforeseen, or undesigned happening,’” ignoring the “or consequence” language in the Hauenstein definition of “accident.”  480 N.W.2d at 698 (citing Hauenstein, 242 Minn. at 358-59, 65 N.W.2d at 126).  In Gilman, the jury concluded that the insured intentionally tackled the plaintiff but did not intend to cause the resulting injury.  526 N.W.2d at 381.  On appeal, this court reasoned that there was no accident even though the plaintiff’s injury was unintended because “the proper analysis requires the fact-finder to determine whether the wrongful or tortious event was an accident.”  Id. at 383. 

            In Walser, the supreme court rejected the analyses of Sage and Gilman, holding that “the Hauenstein definition of accident as an unexpected, unforeseen, or undesigned happening or consequence remains applicable.”  628 N.W.2d at 611.  Thus, Reliance’s argument that Elder’s and Lichte’s losses of use were not accidental solely on the ground that La Crescent intentionally operated its concrete mixing plant does not reflect the current state of Minnesota law.

            Because Reliance has not shown that all parts of Elder and Lichte’s cause of action clearly fall outside the scope of the policy’s coverage, the district court erred in concluding that Reliance has no duty to defend La Crescent.

            Reversed and remanded.