This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2004).








Ashley-Rose Marie Borchardt,





Premier Security, Inc.,





United National Insurance Company, garnishee,




Filed July 5, 2005


Robert H. Schumacher, Judge


Olmsted County District Court

File No. C3021643



Mark G. Stephenson, Geraldine M. Sutcliffe, Stephenson & Sutcliffe, P.A., 1635 Greenview Drive SW, Rochester, MN  55902 (for respondent)


Steven E. Tomsche, Jeanette P. Cogelow, Tomsche, Sonnesyn & Tomsche, P.A., 610 Ottawa Avenue North, Minneapolis, MN  55422 (for appellant)



            Considered and decided by Peterson, Presiding Judge; Schumacher, Judge; and Wright, Judge.

U N P U B L I S H E D   O P I N I O N


            Appellant United National Insurance Company challenges the grant of summary judgment in favor of respondent Ashley-Rose Marie Borchardt.  We affirm.


Borchardt began working for Premier Security, Inc. on or about November 1, 2001.  On December 5, 2001, she was assigned to work at Mayo High School with a male coworker.  She was sexually assaulted by the coworker twice that day.  Borchardt sued Premier Security, asserting she suffered severe emotional distress, posttraumatic stress syndrome, depression, social isolation, job loss, medical and counseling expenses, and future wage loss.

            Premier tendered its defense to its insurer United, which denied coverage and refused to defend or participate.  Premeir and Borchardt then engaged in discovery and prepared for trial.  Three days before trial, Borchardt and Premier entered into a Miller-Shugart settlement in which Premier admitted liability.  The stipulation further provided that Borchardt's damages were $75,000, that Premier did not have the ability to pay more than $10,000, and that Premier stipulated to a judgment in favor of Borchardt in the amount of $65,000, to be recovered under Premier's policy with United.  Judgment was entered accordingly.

            Borchardt was granted leave by the court to file a supplemental garnishment action against United to recover on the judgment.  Borchardt and United filed cross-motions for summary judgment.  The district court granted summary judgment in favor of Borchardt.


            1.         An appellate court's review of summary judgment "is limited to determining whether there are any genuine issues of material fact and whether the district court erred in its application of law."  Jorgensen v. Knutson, 662 N.W.2d 893, 897 (Minn. 2003) (quotation omitted).  Interpretation of insurance contracts is reviewed de novo.  Id.

            If a plaintiff sues an insured defendant, but the defendant's insurer disputes liability, the plaintiff and defendant may nonetheless arrive at a settlement that relieves the defendant of personal liability.  Miller v. Shugart, 316 N.W.2d 729, 733-34 (Minn. 1982).  If the settlement leaves the coverage defenses intact, the plaintiff may then resolve the coverage issue in proceedings against the insurer.  Bob Useldinger & Sons, Inc. v. Hangsleben, 505 N.W.2d 323, 330-31 (Minn. 1993).  The settlement is not binding on the insurer if it is based on fraud or collusion, and there must be a showing that it is reasonable.  Miller, 316 N.W.2d at 734-35.

            In this case, Borchardt sought a determination of coverage by bringing a garnishment action against the insurer.  See Peterson v. Wilson Township, 672 N.W.2d 556, 557-58 (Minn. 2003) (discussing Miller-Shugart stipulation in garnishment proceedings).  There are no disputes about the garnishment proceedings.

            "General principles of contract interpretation apply to insurance policies."  Lobeck v. State Farm Mut. Auto. Ins. Co., 582 N.W.2d 246, 249 (Minn. 1998).  Terms of a contract are ambiguous if they are susceptible of more than one meaning.  Mickman Bros., Inc. v. Farm Bureau Mut. Ins. Co., 639 N.W.2d 890, 894 (Minn. App. 2002).  If there is no ambiguity, the contract's language must be given its usual and accepted meaning.  Bobich v. Oja, 258 Minn. 287, 294, 104 N.W.2d 19, 24 (1960).  Contracts must be construed to give effect to the intent of the parties.  Id.  Endorsements and the policy must be construed together to give effect to all provisions, "but, where provisions in the body of the policy conflict with an endorsement or rider, the provision of the endorsement governs."  Id. at 294-95, 104 N.W.2d at 24 (footnote omitted).  "Exclusions in a policy or endorsements are as much a part of the contract as other parts thereof and must be given the same consideration in determining what is the coverage."  Id. at 295, 104 N.W.2d at 24-25 (footnote omitted).

            The policy in question provides coverage for bodily injury and property damage, subject to several relevant exclusions.  First, the employer's liability exclusion precludes coverage for bodily injury to an employee of the insured.  Borchardt agrees that the employer's liability exclusion, standing alone, would exclude coverage.  Second, there is an endorsement to the policy that excludes coverage for employment-related practices, such as coercion, demotion, discipline, defamation, or harassment; there is no reference in this exclusion to acts of assault and battery.  Finally, the policy has an endorsement for assault and battery coverage, which states at the top of the page:  "THIS ENDORSEMENT CHANGES THE POLICY.  PLEASE READ IT CAREFULLY."  The endorsement then provides: "It is agreed that this policy provides coverage to the named insured only, for acts of assault and battery alleged to have been committed by an employee of the named insured for which the named insured is legally responsible."

            The district court ruled that the assault and battery endorsement in relation to the policy language created an ambiguity.  Giving meaning to the endorsement and strictly construing the endorsement against the insured, it determined there was coverage.

            On appeal, both parties initially argue that each should prevail under the plain language of the policy, rather than that the language is ambiguous.  United argues that the contract must be read as a whole.  Consequently, it contends that the assault and battery endorsement, read in light of the employer's liability exclusion and the employment-related practices exclusion, does not cover Borchardt's claim because she was an employee.  It cites several foreign jurisdiction cases in support of its argument.

            While it is true that the policy must be considered as a whole, "where provisions in the body of the policy conflict with an endorsement or rider, the provisions of the endorsement governs."  Bobich, 258 Minn. at 295, 104 N.W.2d at 24 (footnote omitted).  The assault and battery endorsement contains no limitations that would preclude coverage, in contrast to a number of other policy provisions that do contain limits.  Had the insurer intended to limit coverage only to assault and battery claims by nonemployees, it could have easily specified so in the endorsement, but it did not do so.  Consequently, we conclude the provisions of the assault and battery endorsement govern and the policy provides coverage.

            2.         United argues that even if this court concludes that the employer's liability exclusion and the employment-related practice exclusion endorsement do not apply, summary judgment is inappropriate because Borchardt did not establish that the assault and battery endorsement applies to the facts of this case.  But United declined to defend or indemnify Premier in the tort action, and judgment was entered against Premier pursuant to the Miller-Shugart settlement.  An insurer who fails to defend or indemnify may challenge the Miller-Shugart settlement only as being unreasonable, imprudent, or the product of fraud and collusion.  See Miller, 316 N.W.2d at 734-35.  United does not raise any of these grounds and cannot challenge the judgment now.