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be unpublished and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
Karen Posthumus and
both individually and
as parents and natural guardians of
Kayla Posthumus and Mariah Posthumus,
Paul Brey, et al.,
Tena Van Kampen,
Filed June 20, 2006
Freeborn County District
File No. C4-03-1572
Robert Bennett, Andrew J. Noel,
Flynn, Gaskins & Bennett, L.L.P., 333 South Seventh Street, Suite 2900,
Minneapolis, MN 55402 (for appellants)
Todd Lundquist, Lundquist Law Offices, 1019 South Front Street, P.O.
Box 3046, Mankato, MN 56002-3046; and
Deborah Eckland, Kenneth J. Mayer, Goetz & Eckland, P.A., Suite
400, 43 Main Street Southeast, Minneapolis, MN 55414 (for respondent)
Considered and decided by Lansing,
Presiding Judge; Stoneburner, Judge; and Collins, Judge.
U N P U B L I S H E D O P I N I O N
This appeal from a judgment taxing
costs and disbursements presents issues on the scope of an insured’s duty to
cooperate with an insurer and the determination of who is a prevailing
party. Because the duty to cooperate
under the insurance policy precludes an insured from waiving the right to tax
costs and disbursements and because the insured driver, rather than the
underinsured policyholder, is the prevailing party, we affirm.
A C T S
Tena Van Kampen was driving a motor vehicle
owned by her son-in-law, Jeffrey Posthumus, when it was struck by a vehicle
driven by Paul Brey and owned by Rispens Seeds, Inc. Posthumus’s wife, Karen Posthumus, and their
three daughters were passengers in Van Kampen’s car.
Karen and Jeffrey Posthumus, on behalf of the
injured family members, sued Brey,
Rispens Seeds, and Van Kampen for negligence. Van Kampen, as the driver of the Posthumus
vehicle, was an insured under the Posthumuses’ automobile insurance policy with
Westfield Insurance Company. The
Posthumuses notified Westfield of the suit, and Westfield provided
defense counsel for Van Kampen.
The Posthumuses negotiated a settlement with
Brey and Rispens Seeds’ insurer and dismissed both Brey and Rispens Seeds from
the action. At trial, Van Kampen was the
only remaining defendant. On the issue
of liability, the jury determined that Van Kampen was not negligent. The jury also determined that the
Posthumuses sustained approximately $1.7 million in damages. The district court ordered judgment for Van
Kampen, together with costs and disbursements. On the same day, the district court judge
received a letter from Van Kampen stating that, as the mother and grandmother
of the injured parties, she did not want to pursue costs and disbursements
against the Posthumuses. In light of the
damages determination, Westfield
tendered to the Posthumuses its policy limit of $50,000 for underinsured-motorist
on Van Kampen’s letter, the Posthumuses moved to amend the district court’s
findings of fact, conclusions of law, and order for judgment. They requested that the order reflect Van
Kampen’s waiver of costs and disbursements, state that Westfield
had no independent right to pursue costs and disbursements, and include Karen
Posthumus as a prevailing party because Westfield
had paid her $50,000 in underinsured-motorist coverage. The district court expanded the findings and
conclusions but reaffirmed its determination that Van Kampen was the prevailing
party. The district court also concluded
that, once Westfield undertook Van Kampen’s
representation, she had a duty to cooperate with Westfield and could not unilaterally waive
the prevailing-party right to pursue costs and disbursements. Following the issuance of the amended order,
Van Kampen’s attorney filed a notice of taxation of costs and disbursements.
Posthumuses raise two issues on appeal.
First, they contend that the district court erred by not recognizing Van
Kampen’s waiver of costs and disbursements, and, second, they contend that Karen
Posthumus is a prevailing party entitled to costs and disbursements from Westfield.
E C I S I O N
The prevailing party in a district court
action is entitled to recover costs and “reasonable disbursements paid or
incurred.” Minn. Stat. §§ 549.02, subd.
1, .04, subd. 1 (2004). Although
taxation of costs and disbursements is a waivable right, the district court
determined that Van Kampen could not unilaterally waive her right to pursue
costs and disbursements once Westfield undertook
her representation as an insured under the Posthumuses’ policy because the
policy required Van Kampen to cooperate with Westfield’s control of the litigation. See,
e.g., Fussner v. Andert, 261 Minn. 347, 362, 113 N.W.2d 355, 364 (1962) (addressing
party’s waiver of right to costs and disbursements after prevailing on appeal);
Elk River Enters., Inc. v. Adams, 357
N.W.2d 139, 141 (Minn. App. 1984) (addressing waiver of right to costs and
disbursements in context of new trial). Interpretation
of an insurance contract is a question of law, which we review de novo. Auto-Owners
Ins. Co. v. Forstrom, 684 N.W.2d 494, 497 (Minn. 2004).
As the driver of the Posthumus vehicle, Van
Kampen was an “insured” for purposes of coverage, and Westfield was obligated to “pay damages for
bodily injury or property damage for which any insured becomes legally
responsible because of an auto accident.”
In return Westfield
retained the right to “settle or defend, as [it] consider[s] appropriate, any
claim or suit asking for these damages.”
The policy further states that Westfield
will pay all defense costs incurred and that a person seeking coverage must
“[c]ooperate with [Westfield]
in the investigation, settlement or defense of any claim or suit.” Westfield’s
policy also provides that its terms cannot be waived without Westfield’s consent. We interpret language in an insurance
contract according to its plain meaning.
Thommes v. Milwaukee Ins. Co.,
641 N.W.2d 877, 879 (Minn.
insurance policy gives Westfield
the authority to decide whether to settle a claim for damages and requires Van
Kampen’s cooperation in settling any claim.
A settlement is generally viewed as an agreement for release of a
claim. Black’s Law Dictionary 1404-05 (8th ed. 2004). Costs and disbursements are not part of the
cause of action, but they constitute expenses incurred to litigate the cause of
action. Lienhard v. State, 431 N.W.2d 861, 864 (Minn. 1988).
The plain meaning of claim encompasses not only the aggregate cause of
action but also a subsidiary assertion of a legal right to payment that is
incorporated within the aggregate action.
See Black’s Law Dictionary 264
(defining claim to include any assertion of existing right to payment). The plain meaning of claim includes the
assertion of the right to payment of costs and disbursements.
Van Kampen prevailed against the Posthumuses’
negligence claim and was therefore entitled to tax costs and
disbursements. By waiving this right
without the agreement of Westfield,
Van Kampen essentially attempted to unilaterally settle the claim for costs and
disbursements. Because the insurance
policy requires Van Kampen to cooperate and expressly grants Westfield
the authority to settle a claim without limiting its power to preverdict
claims, Van Kampen had a duty to cooperate with Westfield
and could not waive payment of costs and disbursements without Westfield’s consent. See Steen
v. Those Underwriters at Lloyds, 442 N.W.2d 158, 162 (Minn. App. 1989)
(finding breach of cooperation clause when insured entered settlement agreement
without insurer’s consent), review denied
(Minn. Aug. 15, 1989). As required by
the policy, Westfield
provided defense counsel for Van Kampen, and Van Kampen, as the insured, was
therefore required to cooperate with attempts to recover the expenses of this
defense. Van Kampen did not have Westfield’s consent to waive
costs and disbursements. Westfield specifically notified
Van Kampen that her request to waive costs and disbursements would constitute a
breach of her obligations under the insurance policy.
The Posthumuses suggest that, as an insured,
Van Kampen’s decision to waive costs and disbursements should take priority
over the right of the insurer to recoup those expenses. But the insurer is not attempting to usurp
the role of the client; it only seeks to enforce the language of its insurance
policy. Although the duty to cooperate
is not absolute if it is against the insured’s interests, an insurer that has
provided a defense may reasonably expect cooperation when its actions are prudent
and not against the insured’s interests.
Id. Neither the Posthumuses nor Van Kampen herself
have argued that Westfield’s
attempt to recoup defense expenses is against Van Kampen’s interest. Van Kampen’s attempt to waive costs and
disbursements triggered Westfield’s
notice that it would pursue an action against Van Kampen for the amount
recoverable for costs and disbursements, approximately $18,000, for breaching
her duty as an insured. The record suggests
that it is against Van Kampen’s interest to invite litigation for failure to
Finally, the Posthumuses argue that the
district court was obligated to honor Van Kampen’s waiver because Minn. Stat. §
60A.41(a) (2004) and their insured-insurer relationship with Westfield
from a subrogation action. Section
60A.41 and Westfield’s
policy prohibit the insurance company from “proceed[ing] against its insured in
a subrogation action where the loss was caused by the nonintentional acts of
the insured.” Id. Westfield,
however, is not a party to the action and has not participated in a subrogation
action against the Posthumuses as prohibited by the statute.
To determine whether a party has prevailed in an action, the court considers
which party has generally succeeded in the action. Borchert
v. Maloney, 581 N.W.2d 838, 840 (Minn.
1998). When a party obtains a verdict in
its favor, it is ordinarily considered the prevailing party. Id. (focusing
on who prevailed on merits of underlying action). The district court determined that Van Kampen
was the prevailing party and rejected the Posthumuses’ argument that Westfield’s postverdict payment of underinsured-motorist
benefits made Karen Posthumus a prevailing party relative to Westfield. We review the district court’s determination
of the prevailing party for an abuse of discretion. Benigni
v. County of St.
Louis, 585 N.W.2d 51, 54 (Minn. 1998).
Westfield’s postverdict payment
did not make Karen Posthumus a prevailing party. Westfield
was not a party to the litigation. Although
the jury verdict determined the amount of the Posthumuses’ damages, Westfield’s payment of
underinsured benefits was based on its contractual obligation under the insurance
policy. See Gerdesmeier v. Sutherland, 690 N.W.2d 126, 131 (Minn. 2004) (holding that party status is not
prerequisite to binding effect of jury’s determination of damages). The district court did not abuse its
discretion by determining that Karen Posthumus was not a prevailing party
entitled to tax costs and disbursements against Westfield.