This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).






Ronald Ralph Gerdesmeier, et al.,


Jeffry Marc Sutherland,

Illinois Farmers Insurance Company, applicant for intervention,


Ronald Ralph Gerdesmeier, et al.,


Illinois Farmers Insurance Company,



Filed December 23, 2003

Affirmed in part, reversed in part and remanded

Minge, Judge


Anoka County District Court

File No. C7-02-6026, C6-02-10780


Gary T. LaFleur, Babcock, Neilson, Mannella, LaFleur & Klint, 118 East Main Street, Anoka, MN 55303 (for respondents)


J. Mark Catron, Kathleen M. Daly, Hansen, Dordell, Bradt, Odlaug & Bradt, P.L.L.P., 3900 Northwoods Drive, Suite 250, St. Paul, MN 55112-6973 (for appellant)


            Considered and decided by Halbrooks, Presiding Judge; Minge, Judge; and Crippen, Judge.*


U N P U B L I S H E D  O P I N I O N


MINGE, Judge


            Illinois Farmers Insurance Company, as the uninsured motorist insurer, appeals from the district court’s refusal to allow it to intervene in the case and to vacate the default judgment its insured, respondents Ronald and Mary Gerdesmeier, obtained against an uninsured motorist.  Because the district court did not abuse its discretion in refusing to permit intervention, we affirm that determination.  Illinois Farmers Insurance Company further appeals from the subsequent judgment on the pleadings entered against it as the insurer and in favor of the respondents on the uninsured motorist claim.  Because a policy provision providing for arbitration of uninsured motorist claims is enforceable and because the default judgment against the uninsured motorist does not preclude arbitration, we reverse the judgment against appellant and remand for arbitration.


            Respondents Ronald and Mary Gerdesmeier were involved in a car accident with Jeffry Sutherland, an uninsured motorist.  On the date of the collision, the Gerdesmeiers had automobile insurance with appellant Illinois Farmers Insurance Company (Illinois Farmers).  The policy included statutorily mandated uninsured motorist coverage and required arbitration if no agreement could be reached as to whether the insured was legally entitled to recover damages or as to the amount of damages.  The policy also required insured individuals making claims to give prompt notice of the accident, cooperate with the insurance company, and promptly send the company any legal papers related to the claim.

            Within the first months after the accident, the Gerdesmeiers sent several letters to Illinois Farmers, informing it of Sutherland’s uninsured status and their intention to assert an uninsured motorist claim.  Illinois Farmers sent a letter to the Gerdesmeiers requesting that all further correspondence be sent to its named claims adjuster.  The Gerdesmeiers sent the requested documentation, including medical and accident reports, to that person.

            One year after the accident, the Gerdesmeiers initiated legal action against Sutherland.  Although Illinois Farmers disagrees, the district court found that the Gerdesmeiers sent Illinois Farmers a copy of the summons and complaint informing it that Sutherland was uninsured and asserting that “pursuant to recent case law [Illinois Farmers] will be bound by the decisions in this case.”

After Sutherland failed to answer the complaint, the Gerdesmeiers brought a motion for default judgment.  The district court found that a copy of this motion was sent to Illinois Farmers.  On September 11, 2002, the district court entered judgment for the Gerdesmeiers for an amount in excess of $100,000.  On September 24, the Gerdesmeiers sent Illinois Farmers a copy of the default judgment and requested payment of the judgment up to the uninsured motorist policy limits of $100,000.  Illinois Farmers refused, claiming that it knew nothing of the litigation against Sutherland and that the Gerdesmeiers had to arbitrate their claims against Illinois Farmers.  The Gerdesmeiers then brought suit against Illinois Farmers for the uninsured policy limits and moved for a judgment on the pleadings.  Illinois Farmers filed motions to intervene as a defendant in the litigation against Sutherland and to set aside the default judgment.  It also claimed that in the uninsured motorist action the Gerdesmeiers had failed to provide Illinois Farmers with adequate notice of and an opportunity to participate and that they were, by terms of the policy, required to arbitrate the uninsured motorist claim.  The district court denied Illinois Farmers’ motions and granted the Gerdesmeiers’ motion for judgment on the pleadings on the uninsured motorist claim, ordering Illinois Farmers to pay $100,000.



Illinois Farmers argues that in deciding the uninsured motorist claim by the Gerdesmeiers, the district court erred by failing to enforce the mandatory arbitration provision in the insurance contract.  Appellate courts review a determination of arbitrability de novo.  Indep. Sch. Dist. No. 88 v. Sch. Serv. Employees Union Local 284, 503 N.W.2d 104, 106 (Minn. 1993).  In addition, “[i]nterpretation of an insurance policy and application of the policy to the facts in a case are questions of law that the court reviews de novo.”  Am. Family Ins. Co. v. Walser, 628 N.W.2d 605, 609 (Minn. 2001).

The Uniform Arbitration Act states that “a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable, and irrevocable. . . .”  Minn. Stat. § 572.08 (2002).  Minnesota favors arbitration for the informal, speedy, and inexpensive resolution of disputes and has previously upheld arbitration provisions in uninsured motorist automobile liability policies.  Dunshee v. State Farm Mut. Auto. Ins. Co., 303 Minn. 473, 478, 228 N.W.2d 567, 570 (1975).  In Dunshee, the insured submitted a demand for arbitration to the insurer to determine its liability for a hit-and-run accident covered by an uninsured motorist policy that required arbitration.  Id. at 476, 228 N.W.2d at 569-70.  While the issue before the court was the scope of the arbitration provision in question, the Minnesota Supreme Court looked to the Uniform Arbitration Act for guidance.  Id. at 477-78, 228 N.W.2d at 570.  As a matter of first impression, the court looked at previous applications of Minn. Stat. § 572.08 and found that there was no reason that the act should not be applied to uninsured motorist insurance policies.  Id. at 478-79, 228 N.W.2d at 570-71.  Dunshee held that the arbitration clause was enforceable and is direct precedent for the enforceability of the arbitration clause in this case.

            The Gerdesmeiers argue that under Kwong v. Depositors Ins. Co., 627 N.W.2d 52 (Minn. 2001) the arbitration provision is contrary to the No-Fault Automobile Insurance Act and unenforceable.  See Minn. Stat. § 65B.42 (2002) (establishing insurance policies that promptly pay benefits to relieve economic distress and ease the burden of litigation).  In some respects, Kwong is similar to this case.  Kwong received a default judgment against an uninsured motorist.  Kwong, 627 N.W.2d at 54.  Kwong then brought suit against his insurer to collect the insurance money after the insurer, in reliance on the policy clause that it was not bound by any judgment obtained by the insured, refused to pay.  Id.  The supreme court ruled that judgments-not-binding clauses are unenforceable because they “erect[] a barrier to the insured’s recovery of . . . benefits that contradicts recognized No-Fault Act principles of providing prompt payment of . . . benefits . . .” and “force[] [the insured] to relitigate issues that have already been established . . . .”  Id. at 56.  The insurer’s legitimate concerns about protecting its interests can be ensured by requiring that the insurer “receive notice of, and an opportunity to participate in, the insured’s personal injury claim.”  Id. at 57 (citation omitted). 

We accept that Kwong stands for the proposition that the insurer cannot by contract nullify the effect of a judgment against an uninsured motorist.  However, we do not view Kwong in isolation.  It did not involve, and makes no reference to, arbitration provisions.  The arguments used to set aside judgments-not-binding clauses do not necessarily apply to arbitration provisions.  In fact, the court’s policy arguments against enforcing judgments-not-binding clauses are the same reasons that support the use of arbitration.  Arbitration is authorized by law; judgment-not-binding clauses are not so authorized and effectively nullify decisions of the judicial system.  Arbitration is intended to promote prompt, less costly dispute resolution.  For these reasons, we conclude that Kwong does not require a reversal of Dunshee or invalidate the use of arbitration in uninsured motorist provisions of insurance policies. 

According to Dunshee,arbitration provisions legitimately dictate the way the insured can handle their claim.  Dunshee, 303 Minn. at 484, 228 N.W.2d at 573-74.  Allowing the insured to obtain and then enforce a default judgment against the insurers when the policy provides for arbitration would allow insureds to circumvent the mandatory arbitration provisions.  The Gerdesmeiers should have first initiated arbitration under their policy rather than suing on the default judgment.  The district court should then have compelled Illinois Farmers to participate in arbitration.  This arbitration may consider both fault and damages issues.

            On appeal, the Gerdesmeiers argue that Illinois Farmers waived its right to compel arbitration.  However, the Gerdesmeiers did not raise the waiver issue in district court and the district court did not address the issue.  Factual issues not presented to the trial court as the finder of fact are normally not considered by this court.  Thiele v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988).  Therefore, we do not reach the issue of waiver in this appeal. 


            Illinois Farmers asserts that its liability under the insurance policy is contingent on the Gerdesmeiers’ cooperation.  Insureds have a duty to cooperate with the insurers.  Miller v. Shugart, 316 N.W.2d 729, 733 (Minn. 1982).  The breach must be substantial and material, prejudicing the insurer.  Juvland v. Plaisance, 255 Minn. 262, 268, 96 N.W.2d 537, 541 (1959).  The issue here is whether the Gerdesmeiers materially breached the cooperation clause in their insurance contract.[1]

The insurance policy in this case required that the Gerdesmeiers give Illinois Farmers notice within six months of the date of the accident and to promptly send it any legal papers relating to the suit.  The accident occurred on December 6, 2000.  The Gerdesmeiers sent letters on January 22 and February 5, 2001, notifying Illinois Farmers of Sutherland’s uninsured status and their intention to assert a claim.  They sent Illinois Farmers medical records, bills, and traffic reports on March 8 and April 12, 2001.  Illinois Farmers argues that the Gerdesmeiers did not give it timely notice because it never received the notice of the complaint or the motion for default judgment.  The district court, however, found that Illinois Farmers did receive these documents.

The finding of notification was made in the context of a motion for judgment on the pleadings.  Such factual determinations should be made only if the pleadings create no fact issues.  Kellar v. VonHoltum, 568 N.W.2d 186, 190 (Minn. App. 1997).  But, where a district court orders a judgment on the pleadings and considers matters outside the pleadings, this court reviews the judgment under the summary judgment standard.  Hofstad v. Hargest, 412 N.W.2d 5, 7 (Minn. App. 1987).  In this case, affidavits were filed and oral testimony was given, so we consider: 1) whether there are any genuine issues of material fact; and 2) whether the lower court erred in its application of the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  A genuine issue for trial must be established by substantial evidence.  DLH, Inc. v. Russ, 566 N.W.2d 60, 69-70 (Minn. 1997).  “[T]here is no genuine issue of material fact when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue . . . .”  Id. at 71.   Illinois Farmers did not offer substantial evidence to support its claim that it did not receive the complaint or the motion for default judgment.  Its’ only evidence was an affidavit by its claims adjuster, the individual responsible for acting or not acting on such documents.  There is a presumption, in the absence of proof to the contrary, that mail properly addressed and sent with prepaid postage is duly received by the addressee.  Nafstad v. Merchant, 228 N.W.2d 648, 550 (Minn. 1975).  The Gerdesmeiers submitted affidavits of mailing.  Further, the Gerdesmeiers sent several letters to Illinois Farmers, they received responses from Illinois Farmers indicating that Illinois Farmers was receiving mail at that address, and the two letters in question were never returned.  On this record we accept the district court’s conclusion that there was no genuine issue of material fact as to whether Illinois Farmers received these documents and that the Gerdesmeiers did not materially breach the cooperation clause of the insurance policy.  


Illinois Farmers appeals the district court’s denial of its motion to vacate the default judgment entered against Sutherland.   The district court may relieve a party from a final judgment based on “[m]istake, inadvertence, surprise, or excusable neglect.” Minn. R. Civ. P. 60.02.  Rule 60.02 is available only to parties; non-parties cannot bring such a motion.  Matter of Bowers, 456 N.W.2d 734, 736  (Minn. App. 1990).  Illinois Farmers is not and was not a party to the default judgment against Sutherland.  Unless the district court erred in failing to grant Illinois Farmers’ motion to intervene, Illinois Farmers cannot bring a proper motion to vacate the default judgment. 

In this appeal, Illinois Farmers does not address the district court’s denial of its motion to intervene.  However, the intervention issue is covered in the notice of appeal and was fully considered below.  This court may independently assess the appropriateness of the district court’s denial of intervention as of right under Minn. R. Civ. P. 24.01.  Norman v. Refsland, 383 N.W.2d 673, 676 (Minn. 1986).  In order to intervene under Minn. R. Civ. P. 24.01, a non-party must demonstrate (1) timely application; (2) an interest relating to the transaction which is the subject of the action; (3) circumstances demonstrating that the disposition of the action may as a practical matter impair or impede the party’s ability to protect that interest; and (4) a showing that the party is not adequately represented by the existing parties.  Minn. R. Civ. P. 24.01. 

The determination of whether intervention is timely must be considered on a case-by-case basis.  Omegon, Inc. v. City of Minnetonka, 346 N.W.2d 684, 687 (Minn. App. 1984), review denied (Minn. June 12, 1984).  Intervention should not be allowed where circumstances show that the intervenor was aware of the suit and permitted the trial to proceed while waiting to see if the outcome would be favorable to its interests.  State Auto. & Cas. Underwriters v. Lee, 257 N.W.2d 573, 576 (Minn. 1977).  The district court found that Illinois Farmers received the complaint and the motion for default judgment.  Therefore, Illinois Farmers permitted the default judgment to be entered without intervening before the judgment was issued.  Based on these determinations related to timeliness, it does not appear that the district court erred or abused its discretion in denying Illinois Farmers’ motion to intervene.

Because Illinois Farmers did not have a right to intervene at this stage in the litigation and because we have recognized the right of Illinois Farmers to enforce arbitration, we do not reach their argument that the court abused its discretion by failing to vacate the default judgment and to enter detailed findings.  Our decision on this issue creates a possible anomaly: the Gerdesmeiers hold a judgment against Sutherland, Illinois Farmers is responsible for uninsured motorist damages, but the Gerdesmeiers must resort to arbitration.  Illinois Farmers stated on the record it accepted being in this unusual position, thus we are not compelled to resolve this possible anomaly from its perspective.  In any event, the Gerdesmeiers have a judgment against Sutherland, which the Gerdesmeiers may enforce against Sutherland personally.


            At oral argument the Gerdesmeiers questioned whether the language of their insurance policy with Illinois Farmers actually required arbitration of their uninsured motorist claim.  Up until then, the parties and the district court had apparently assumed that the policy contained such a requirement.  Since there is arbitration language in the policy and its interpretation was not raised in the district court or the briefs, we decline to reach that issue in this appeal.  See In re Murphy’s Estate, 269 Minn. 293, 301-02, 131 N.W.2d 220, 226 (1964).

            Affirmed in part, reversed in part, and remanded.


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

[1] Although the facts relevant to the cooperation issue are also relevant to the waiver issue, the two issues are not identical and we are not merging them for consideration on appeal.