This opinion will be unpublished and

may not be cited except as provided by

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







Kevin Hardesty,


Allstate Insurance Company,


Filed March 23, 2004

Affirmed in part, reversed in part, and remanded; motion granted

Wright, Judge


Hennepin County District Court

File No. PI 00-2487



Warren V. Bigelow Jr., Law Offices of Warren V. Bigelow Jr., 1000 Superior Boulevard, Wayzata, MN  55391 (for appellant)


Kenneth Gleason, 7401 Metro Boulevard, Suite 510, Edina, MN  55439 (for respondent)



            Considered and decided by Schumacher, Presiding Judge; Willis, Judge; and Wright, 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 dismissal of his claims against respondent insurance company in an action seeking damages for personal injuries sustained in an automobile accident.  Appellant argues that the district court (1) erred in failing to recognize a cognizable claim for basic economic-loss no-fault benefits contained in the complaint; (2) abused its discretion in denying appellant’s motion to amend the complaint; and (3) erroneously dismissed his complaint sua sponte.  Appellant also moves to strike portions of respondent’s brief that refer to materials outside the record.  We affirm in part, reverse in part, and remand.  We also grant appellant’s motion.



On October 28, 1994, appellant Kevin Hardesty sustained personal injuries in a motor-vehicle accident.  Respondent Allstate Insurance Company (Allstate) was Hardesty’s first-party insurer at the time of the accident.  Hardesty initially applied for and received no-fault benefits, including reimbursement for wage loss and medical expenses.  Allstate subsequently denied additional payment of no-fault benefits in a letter dated November 30, 1995. 

On February 9, 2000, Hardesty commenced this action, seeking recovery for his injuries.  The complaint named three defendants: (1) the driver of the other vehicle; (2) the owner of the other vehicle; and (3) Allstate.  Paragraphs three and four of the complaint, which exclusively address underinsured-motorist (UIM) benefits, refer to Allstate.  The complaint makes no reference to Allstate in conjunction with either no-fault insurance or basic economic-loss benefits.

In March 2000, Allstate moved to dismiss Hardesty’s claim for UIM benefits, arguing that Hardesty’s claim was not ripe until the claims against the tortfeasor were resolved.  Prior to the hearing on Allstate’s motion to dismiss, Hardesty and Allstate agreed to stay the UIM-benefits claim pending resolution of the claim against the tortfeasor.  While both parties acknowledge the stay, the agreement was not made part of the record.  

In November 2001, Hardesty settled the claims against the driver and owner and stipulated to an order dismissing those claims with prejudice.  On December 3, 2001, the district court issued an order for judgment submitted by the parties pursuant to the November 2001 stipulation, “dismissing any and all claims in the above-entitled action with prejudice and on the merits.”  The court administrator subsequently entered judgment, dismissing with prejudice the claims against the driver, the owner of the vehicle, and Allstate. 

On June 20, 2002, Hardesty served a new complaint on Allstate, specifically seeking no-fault benefits, including damages for wage loss and medical expenses.  Allstate raised a statute-of-limitations defense, arguing that Hardesty’s claim for no-fault benefits was time barred.  Upon receiving Allstate’s answer, Hardesty realized that the claims against Allstate had been dismissed along with those of the tortfeasor. 

Rather than file the complaint in the second action, Hardesty moved for (1) relief from the judgment dismissing Allstate from the first lawsuit; (2) declaratory relief adjudicating Hardesty’s original complaint sufficient notice to Allstate of a claim for no-fault benefits, including reimbursement for wage loss and medical expenses; and (3) leave to amend the original complaint to set forth a specific claim for no-fault benefits.  The district court vacated the December 2001 judgment dismissing the claim against Allstate, ruled that the original complaint provided insufficient notice to Allstate of a claim for basic economic-loss no-fault benefits, denied Hardesty’s motion to amend his complaint as untimely, and dismissed sua sponte Hardesty’s complaint without prejudice.  This appeal followed. 





Hardesty first argues that the district court erred in failing to recognize a cognizable claim against Allstate for medical expenses and wage loss.  We review the legal sufficiency of a claim de novo.  Stead-Bowers v. Langley, 636 N.W.2d 334, 338 (Minn. App. 2001), review denied (Minn. Feb. 19, 2002).  In reviewing a dismissal for failure to state a claim, our review is limited to the pleadings.  Id.  We may not venture beyond the four corners of the pleadings, and all assumptions made and inferences drawn must favor the party against whom dismissal was granted.  Id.  “The only question before us is whether the complaint sets forth a legally sufficient claim for relief.”  Elzie v. Comm’r of Pub. Safety, 298 N.W.2d 29, 32 (Minn. 1980).

Minnesota rules require notice pleading.  See Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997).  Pleadings generally must consist of “a short and plain statement of the claim showing that the pleader is entitled to relief and a demand for judgment for the relief sought.”  Minn. R. Civ. P. 8.01; see also id. 8.05 (pleadings must be “simple, concise, and direct”).  “The primary function of notice pleading is to give the adverse party fair notice of the theory on which the claim for relief is based.”  Barton, 558 N.W.2d at 749.  “A specific legal theory does not need to be stated if the pleadings contain factual notice of the claim and a request for relief.”  Padco, Inc. v. Kinney & Lange, 444 N.W.2d 889, 891 (Minn. App. 1989), review denied (Minn. Nov. 15, 1989).

At issue here is whether Hardesty notified Allstate that his claim for relief was based on an entitlement to basic economic-loss no-fault benefits, including wages loss and medical expenses, when he pleaded a theory of recovery based on Allstate’s underinsured-motorist coverage.  Hardesty’s complaint refers to Allstate in paragraphs three and four, which provide as follows:


Plaintiffs [Kevin and Shirley Hardesty] were insured for Underinsured Motorist coverage through Defendant Allstate Insurance Company for which premiums were paid, received and accepted by Defendant Allstate.  Said policy of insurance provided for Underinsured Motorist insurance coverage.



Plaintiff Kevin Hardesty’s injuries and damages exceed the limits of liability of $100,000 per person and $300,000 per accident on the at-fault vehicle, and qualify as an Underinsured Motorist Claim against Defendant Allstate Insurance Company. 


In setting forth the theory of recovery against Allstate, the complaint references only UIM benefits.  In his motion to amend the complaint, however, Hardesty claimed that “allegations [of] wage loss and medical expenses as a result of the accident of October 28, 1994 were included” in the complaint as a theory of recovery against Allstate.  The district court disagreed, noting

Hardesty suggests he has always sought no-fault benefits as part of this action.  However, the Complaint makes no reference to no-fault benefits.  Moreover, Hardesty agreed to stay his claim against Allstate, which doesn’t make[ ] sense if the claim had been for no-fault benefits as well as UIM benefits.  Lastly, on June 20, 2002, Hardesty served a new and separate complaint seeking no-fault benefits, which strongly indicates he had not sought no-fault benefits in this action. 


The district court’s reasoning is persuasive.  As mandated by the Minnesota No-Fault Automobile Insurance Act (No-Fault Act), all Minnesota policies have three basic components: (1) basic economic-loss benefits, (2) uninsured/underinsured insurance, and (3) liability coverage.  Minn. Stat. § 65B.49, subds. 2, 3a (2002).  While Hardesty clearly pleaded UIM benefits in his complaint, the same cannot be said of basic economic-loss benefits, which provide first-party coverage for injury resulting in loss arising out of the maintenance or use of a motor vehicle.  See Minn. Stat. § 65B.44, subd. 1(a) (2002).  These benefits reimburse the insured for medical expenses and wage loss.  See Minn. Stat. § 65B.44, subd. 1(a)(1), (2) (2002).  By contrast, UIM benefits protect against the risk of injury by a motorist whose bodily injury liability insurance coverage is less than the amount needed to compensate the injured party for actual damages.  See Minn. Stat.        § 65B.43, subds. 17, 19 (2002).  Although both are components of the No-Fault Act, a claim for basic economic-loss no-fault benefits is distinct from a claim for underinsured-motorist benefits.  Compare Minn. Stat. § 65B.44, subd. 1, with Minn. Stat. § 65B.43, subd. 17.  Hardesty’s claims against Allstate sought recovery only under his UIM coverage.  Even under the relaxed standards of notice pleading, Hardesty’s claims against Allstate did not provide notice that his theory of relief was based on anything other than UIM benefits. 


Hardesty next contends that the district court abused its discretion in denying his motion for leave to amend his complaint to state a claim against Allstate for basic economic-loss damages.  The decision to allow a party to amend its complaint after responsive pleading lies within the sound discretion of the district court.  Wessin v. Archives Corp., 592 N.W.2d 460, 468 (Minn. 1999).  The district court’s ruling “will not be reversed absent a clear abuse of discretion.” Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993); Minn. R. Civ. P. 15.01.

Hardesty argues that, because the district court denied his motion as untimely, it failed to give legal effect to the stipulated agreement to stay the claims against Allstate.  We disagree.  Although the agreement is not a part of the record, both parties agree that it was entered into after Allstate moved to dismiss Hardesty’s UIM claim in March 2000.  At that time, Hardesty sought recovery only for UIM benefits.  Thus, contrary to Hardesty’s argument, the stay did not “freeze” every potential claim against Allstate, including those not pleaded in the complaint.  Rather, the stay only held Hardesty’s UIM claims in abeyance. 

Rule 15.01 provides that, after a responsive pleading has been served, leave to amend a pleading “shall be freely given when justice so requires.”  Minn. R. Civ. P. 15.01.  The Minnesota Supreme Court has recognized, however, that “[t]he interests of justice may sometimes require denial of leave to amend where the motion is not made timely.”  Webster v. Schwartz, 249 Minn. 224, 229, 81 N.W.2d 867, 871 (1957).  In denying Hardesty’s motion, the district court found that “Hardesty filed his motion to amend more than [two and one-half] years after commencement of the action and nearly one year after entry of judgment.”  On these facts, the timing of Hardesty’s motion is prejudicial to Allstate. 

The statute of limitations for actions on “contract or other obligation, express or implied” is six years.  Minn. Stat. § 541.05, subd. 1(1) (2002).  The contract statute of limitations governs actions by an insured against its insurer. Oanes v. Allstate Ins. Co., 617 N.W.2d 401, 402-03 (Minn. 2000) (applying six-year limitation to UIM claim); Metro. Prop. & Cas. Ins. Co. v. Metro. Transit. Comm’n, 526 N.W.2d 628, 630 (Minn. App. 1995) (applying six-year limitation to indemnification claim under no-fault statute), aff’d, 538 N.W.2d 692 (Minn. 1995).  Generally, the statute begins to run when the cause of action accrues, which is when the claim can withstand a motion to dismiss for failure to state a claim on which relief can be granted.  See Oanes, 617 N.W.2d at 406-07. 

Hardesty’s automobile accident occurred on October 28, 1994.  Allstate denied additional payment of basic economic-loss no-fault benefits on November 30, 1995.[1]  The statute of limitations on any claim for basic economic-loss benefits began to run on the date Allstate denied additional payment of these benefits.  Entzion v. Ill. Farmers Ins., ___ N.W.2d ___ (Minn. App. 2004).  Hardesty moved to amend his complaint with a claim for no-fault benefits on November 15, 2002, nearly seven years after the accrual of the cause of action and nearly one year after the claim was time barred.  As the district court concluded, “[t]he timing of the motion is especially problematic considering the aim of the motion is avoiding the statute of limitations by operation of the relation back provision of Rule 15.03 of the Minnesota Rules of Civil Procedure.”  Because the timing of Hardesty’s motion to amend is prejudicial to Allstate, we conclude that the district court did not abuse its discretion in denying the motion.


We nonetheless conclude that the district court abused its discretion in dismissing the complaint sua sponte without affording Hardesty a meaningful opportunity to oppose such action.  See Hebrink v. Farm Bureau Life Ins. Co., 664 N.W.2d 414, 419-20 (Minn. App. 2003) (reversing sua sponte grant of summary judgment when adverse party was not given notice and an opportunity to oppose such action).  We, therefore, reverse the district court’s sua sponte dismissal and remand for reinstatement of the complaint and further proceedings not inconsistent with this opinion.



Hardesty moves to strike portions of Allstate’s brief that are not part of the record.  “The papers filed in the [district] court, the exhibits, and the transcript of the proceedings, if any, shall constitute the record on appeal in all cases.”  Minn. R. Civ. App. P. 110.01.  “An appellate court may not base its decision on matters outside the record on appeal, and may not consider matters not produced and received in evidence below.”  Thiele v. Stich,425 N.W.2d 580, 582-83 (Minn. 1988).  We will strike documents not included in the appellate record and any reference to those documents included in the parties’ briefs.  Brett v. Watts, 601 N.W.2d199, 201-02 (Minn. App. 1999), review denied (Minn. Nov. 17, 1999); Fabio v. Bellomo, 489 N.W.2d 241, 246 (Minn. App. 1992), aff’d, 504 N.W.2d 758(Minn. 1993).  Allstate’s brief refers to an agreement between Allstate and Hardesty to dismiss Hardesty’s claims and an agreement to execute a stipulation of dismissal without prejudice to terminate Hardesty’s action against Allstate.  Neither agreement is included in the record.  We, therefore, grant Hardesty’s motion to strike those portions of Allstate’s brief.

            Affirmed in part, reversed in part, and remanded; motion granted.


[1]  The amount of benefits paid prior to the denial is not discernable from the record.