This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
William Edward Bieloh, et al.,
First National Insurance Services,
Reversed and Remanded
Cass County District Court
File No. C7-04-853
Nicholas Ostapenko and Roy J. Christensen, Johnson, Killen & Seiler, P.A., 230 West Superior Street, Suite 800, Duluth, MN 55802 (for respondent)
Susan Bowden, Crabtree Law Firm, P.A.,
Considered and decided by Wright, Presiding Judge; Toussaint, Chief Judge; and Ross, Judge.
This case arises from a head-on automobile collision between a vehicle stolen from the “Moondance Jam” music festival and a vehicle heading to that festival. In this appeal from summary judgment on negligence and breach of contract claims, appellants argue that the district court erred by ruling that a Miller-Shugart agreement shields appellants from liability and prevents them, as a matter of law, from being able prove damages. Because we conclude that the district court’s decision that appellants cannot prove damages is based on an incorrect measure of damages, we reverse and remand.
William and Kathy Bieloh own and operate appellant Northern J & B
Enterprises, Inc. (collectively referred to as “appellants”). Appellants sponsor and host the Moondance Jam
summer music festival in
Mikesh commenced a lawsuit against Imgrund and Northern J & B to recover damages from the collision. All but one of Northern J & B’s insurance providers denied coverage; Allstate Insurance paid $500,000. The parties to that lawsuit executed an agreement in which they stipulated that Mikesh suffered $3 million in damages and they agreed to the entry of judgment against Northern J & B and Imgrund for that amount. In a separate Miller-Shugart agreement, William Bieloh and Northern J & B assigned to Mikesh the right to prosecute any claims they may have against their insurance providers arising from the collision, including failure to provide coverage, and they agreed to cooperate fully with Mikesh in any proceeding against these insurance providers. As consideration for this cooperation with Mikesh in these potential lawsuits against Bieloh’s and Northern J & B’s insurance providers, Mikesh agreed to “not execute on [their] personal, individual, or business assets . . . , or on any judgment that may be or has heretofore been obtained” against them.
But the potential suit contemplated by the agreements was not merely theoretical; in addition to the usual terms of the Miller-Shugart agreement, Bieloh and Northern J & B agreed to bring a negligence action against their insurance agency for failing, among other things, to provide adequate coverage and to properly evaluate their insurance needs. Bieloh and Northern J & B assigned to Mikesh any proceeds, after fees and costs, from the litigation against their insurance agency. Based on the parties’ stipulation, the district court in the Mikesh lawsuit ordered the entry of a $3 million judgment against Northern J & B and Imgrund.
Consistent with their agreements, appellants filed this lawsuit against their insurance agency, respondent First National Insurance Services, in January 2003. The complaint alleges that First National negligently failed to inform appellants about optional business coverage, to acquire coverage, to properly evaluate appellants’ insurance needs, to choose a responsible carrier, and to avoid lapses in coverage. The complaint also alleges that First National’s failure to procure umbrella coverage and full insurance coverage constituted a breach of contract.
First National moved for summary judgment, arguing that because appellants have no liability by virtue of the Miller-Shugart agreement, they cannot show that they suffered damages as a result of First National’s alleged negligence. The district court ruled that the Miller-Shugart agreement prevents appellants, as a matter of law, from being able to establish damages, and it granted First National’s motion for summary judgment. This appeal follows.
D E C I S I O N
appeal from summary judgment, this court determines whether the district court
applied the correct legal standard and whether there are genuine issues of
material fact. Gradjelick v. Hance, 646 N.W.2d 225, 231 (
argue first that because a determination of the damages amount is a question of
fact for the jury, the district court’s conclusion that appellants failed to
show damages is erroneous. Generally,
the amount of damages sustained by a plaintiff is a question of fact to be
determined by the jury.
next argue that the district court’s ruling that they cannot establish damages is
based on an incorrect measure of damages.
The district court concluded as a matter of law that appellants cannot
prove damages because the Miller-Shugart agreement shields them from
liability. The Miller-Shugart agreement
prohibits Mikesh from executing the $3 million judgment against
appellants. But in a claim against an
insurance agent alleging negligent failure to obtain coverage, the right to damages
is not determined on a separate agreement between the alleged tortfeasor and
the injured person. Instead, damages are
determined based on the amount of insurance coverage the plaintiff would have
purchased but for the agent’s negligence.
did not submit any evidence showing how much coverage they would have obtained but
for the alleged negligence. But nothing
in the record indicates that the district court applied or considered the
The district court raised public policy concerns challenging the viability of appellants’ claims against First National in light of the Miller-Shugart agreement. The court opined that
[i]f the assignment of potential claims against an insurer were permitted, it would lead to a significant number of cases against insurers. The insured would be tempted to obtain a minimal amount of insurance coverage, then agree to allow a suit against the insurer. A standard part of any policy limit settlement would be to assign the right to sue the insurer. This type of settlement would encourage prolonged litigation and would not serve the public interest.
We do not find the district court’s public policy assessment to be persuasive. In any event, the Miller-Shugart agreement between appellants and Mikesh concerns the coverage litigation against appellants’ insurance providers. In contrast, this appeal concerns a separate lawsuit alleging different claims against a different party—the insurance agent. The Miller-Shugart agreement has no effect on appellants’ negligence claims against the agent. We therefore reject First National’s argument that allowing appellants to pursue this claim gives “a plaintiff two bites at the apple.” Allowing a plaintiff to pursue a coverage claim against an insurer and then to be assigned damages recovered in a negligence claim by tortfeasors against their insurance agency does not give that plaintiff a second bite at the same apple.
We conclude that the district court erred by ruling that appellants could not prove damages as a matter of law. Appellants raised alternative arguments on appeal, but our conclusion that the district court erred by applying the incorrect measure of damages renders discussion of those arguments unnecessary. We reverse the district court’s summary judgment decision and remand for further proceedings.
Reversed and remanded.