This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
Bureau Mutual Insurance Company,
Star Mutual Insurance Company,
Filed November 22, 2005
Red Lake County
Richard C. Mollin,
118 North Johnson Avenue,
Fosston, MN 56542
Cahill, 403 Center Avenue, Suite 200, Post Office Box 1238, Moorhead, MN 56561-1238 (for respondent)
Considered and decided by Hudson, Presiding
Judge, and Wright,
P U B L I S H E D O P I N I O N
Farm Bureau Mutual Insurance Company challenges the district court’s order (1) denying
its request for attorney fees and costs incurred in this declaratory judgment
action and in the underlying lawsuit; and (2) awarding respondent North Star
Mutual Insurance Company statutory costs and court fees of $405.
there is no contractual obligation between the insurers that would make one
accountable to the other for breach of its independent obligation to an
insured, and because the district court did not abuse its discretion by
determining that respondent was the prevailing party and therefore entitled to statutory
and court costs, we affirm.
brought a declaratory judgment action against respondent, seeking to determine
respondent’s coverage obligations to Brad Nelson. Nelson,
who was insured by appellant with a farm owner’s policy, was sued by a party
injured during installation of a steeple on Oak Park Church;
Nelson was a church member who volunteered
to assist in the installation.
Respondent insured Oak
whose policy included coverage for volunteers acting under the direction of the
undertook Nelson’s defense under a
reservation of rights and made a formal tender of defense to respondent, who
declined to represent Nelson. After Nelson was dismissed from the lawsuit,
appellant brought this declaratory judgment action, seeking a determination
that respondent had a duty to defend Nelson and requesting an award of attorney
fees and costs for both its defense of Nelson and the declaratory judgment
the district court granted summary judgment to respondent, concluding that
appellant was collaterally estopped from raising the issue of duty to
defend. On appeal, this court reversed
and remanded. Farm Bureau Mut. Ins. Co. v. North Star Mut. Ins. Co., 2004 WL
App. July 13, 2004). On remand, the
district court concluded that respondent had a duty to defend Nelson, but denied appellant attorney fees and costs,
and awarded respondent statutory costs and court fees of $405.
D E C I S I O N
1. Denial of Attorney Fees and Costs
declaratory judgment action, the district court’s findings of fact are reviewed
for clear error, but its determination on questions of law is subject to de
novo review. Rice Lake Contr. Corp. v. Rust Env’t & Infrastructure, Inc.,
549 N.W.2d 96, 98-99 (Minn. App. 1996), review denied (Minn. Aug. 20, 1996). Although an award of attorney fees is within
the district court’s discretion, whether a party is entitled to fees is a
question of law. See Becker v. Alloy Hardfacing & Eng’g Co., 401 N.W.2d 655, 661
In re L-tryptophan Cases, 518 N.W.2d
616, 619 (Minn. App. 1994).
insurer wrongfully refuses to defend, its insured may recover attorney fees
from his or her insurer based on breach of contract. Am.
Standard Ins. Co. v. Le, 551 N.W.2d 923, 927 (Minn. 1996).
This principle does not provide a basis for recovery by one insurer from
another insurer when they share a mutual obligation to an insured. See
Nordby v. Atl.
Mut. Ins. Co., 329 N.W.2d 820,
1983). In denying the primary insurer
reimbursement of its costs from the co-insurer, the supreme court stated:
Each insurer’s obligation to defend is separate and
distinct from its duty to provide coverage and pay a judgment, irrespective of
other insurance and irrespective of whether it provides primary or excess
coverage. An insurer has no right of
action against another insurer to recover the cost of defending the insured,
since there is no contractual obligation between insurers.
. . . .
“[N]o contractual obligation
[exists] to make one insurer accountable to the other for a breach of its
independent obligation to the insured.
The obligation of defending an insured and paying for the defense is a
separate obligation existing exclusively between the insurer and the insured.”
at 824 (quoting St. Paul Sch. Dist. No.
625 v. Columbia Transit Corp., 321 N.W.2d 41, 48 (Minn. 1982)). The supreme court further noted that the
insured, like Nelson in this matter,
incurred no costs or fees that would have made him the real party in interest
in the action to recover costs and fees.
Thus, absent a statutory or contractual basis for recovery of fees,
respondent has no obligation to reimburse appellant for its fees and costs.
states that it undertook representation of Nelson
under a reservation of rights and that no court has determined that it had a
duty to defend Nelson, whereas the
district court found that respondent had a duty to defend Nelson
and breached that duty. Because no court
has determined that appellant had a duty to defend, appellant reasons that it
should not be responsible for the costs of defense. Appellant, however, neither denied coverage
nor brought a declaratory judgment action to determine the extent of its duty,
despite its reservation of rights.
there was no contractual obligation between the parties, we conclude that the
district court did not abuse its discretion by denying appellant’s request for
attorney fees and costs.
2. Prevailing Party
district court’s determination of who is the prevailing party in an action will
not be reversed absent an abuse of discretion.
Bachovchin v. Stingley, 504
N.W.2d 288, 290 (Minn.
App. 1993). The district court must
consider the overall result and decide who, in the eyes of the law, has
succeeded in the action. Borchert v. Maloney, 581 N.W.2d 838, 840
1998). A party who prevails on the
merits, but fails to prove damages, may not be the prevailing party when the
results are considered as a whole. Luna v. Zeeb, 633 N.W.2d 540, 543-44 (Minn. App. 2001).
declaratory judgment action, appellant sought two things: (1) a determination
that respondent had a duty to defend Nelson;
and (2) recovery of its costs and fees incurred in the underlying action and
the declaratory judgment action. The
district court concluded that respondent had a duty to defend Nelson, but this action was not brought until after Nelson had been dismissed from the underlying action,
and that dismissal had been affirmed by this court and the supreme court had
denied review. See Hamm v. Oak
Park Lutheran Church, 2002 WL 31171760 (Minn.
App. Oct. 1, 2002), review denied (Minn. Dec. 30, 2002). Respondent’s duty to defend was a moot point,
except as it related to appellant’s attempt to recover fees and costs. The district court denied appellant’s request
to recover fees and costs; when viewed as a whole, although appellant prevailed
on the merits, the final result is that appellant did not recover what it
sought—reimbursement for fees and costs.
court’s conclusion that respondent was the prevailing party is supported by the
record and is therefore not an abuse of discretion.
3. Motion to Strike
moves to strike portions of appellant’s appendix that contain an e-mailed offer
of settlement and reply, and any argument based on these e-mails. Respondent’s motion was deferred to this
compromise or for settlement are not admissible to prove “liability for or
invalidity of the claim or its amount.” Minn. R. Evid.
408. Rule 408 is considered to be a rule
of exclusion, which means that the district court does not have discretion to
admit a statement that violates the rule.
C.J. Duffey Paper Co. v. Reger,
588 NW.2d 519, 524 (Minn. App. 1999), review denied (Minn. Apr. 28, 1999). Evidence must be excluded if (1) it is an
offer to compromise a claim disputed as to either validity or amount; (2) if it
is offered to prove liability or invalidity of a claim or its amount; and (3)
there is no other legitimate purpose for the offered evidence. Id. In Minnesota,
settlement proposals are admissible if they predate the disagreement or dispute
between the parties, but not if there is an actual controversy in existence at
the time of the alleged offer. Id.
use of the e-mails falls squarely within the prohibitions of rule 408; the
e-mails are stricken on that basis.
Affirmed; motion granted.