This opinion will be unpublished and

may not be cited except as provided by

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






Wendell Daluge,


Fortis Insurance Company,
Schiller Insurance Agency, et al.,


Filed December 5, 2006


Stoneburner, Judge


Stearns County District Court

File No. C805307


Doreen A. Mohs, Diane B. Bratvold, Rider Bennett, L.L.P, 33 South Sixth Street, Suite 4900, Minneapolis, MN 55402 (for respondent Fortis)


Clarance E. Hagglund, William C. Weeding, Hagglund Law Offices, 3168 Dean Court, Minneapolis, MN 55416 (for appellants)


            Considered and decided by Randall, Presiding Judge; Willis, Judge; and Stoneburner, Judge.

U N P U B L I S H E D  O P I N I O N




            Appellants, an insurance agent and agency, challenge summary judgment enforcing an indemnity agreement between appellants and respondent insurer for the amount of a settlement paid by respondent on an insured’s claims against the agent, agency, and insurer.  Appellants argue that (a) the settlement and release between the insured and insurer resolved all issues; (b) the district court misapplied controlling law; (c) the settlement was collusive; (d) the insurer failed to properly defend the case; (e) the indemnity agreement between appellants and respondent was a one-sided contract of adhesion; (f) appellants were free of wrong doing and were entitled to attorney fees; (g) the comparative fault of the insured and insurer raises material fact issues to be resolved at trial, and (h) the insurer breached the insurance contract and should be estopped from denying coverage.  We affirm.



            When appellants Steve Schiller and the Schiller Insurance Agency (Schiller) became a general agent for respondent Fortis Insurance, the parties entered into an agreement that provided that Schiller “agree[s] to indemnify and hold [Fortis] harmless for any and all claims, expenses, costs, and damages which may be asserted by any third party . . . against [Fortis] arising from [Schiller’s] action or inaction.”  Under the agreement, Schiller was responsible to personally “ask all questions and correctly record all answers on all applications for insurance [Schiller] personally completes . . . .”  A choice-of-laws provision states that Wisconsin law governs the agreement.

            Wendell Daluge met with Schiller to buy a short-term medical policy.  At the time, Daluge was being treated for diabetes, but “No” was indicated on the insurance application in response to a question asking if Daluge had “received any medical consultation, diagnosis, or treatment, including medication for . . . diabetes . . . [.]”  Schiller “field issued” a policy to Daluge.  Coverage would not have been issued if the application indicated a “Yes” answer to the prior health questions.

            About two months after the policy was issued, Daluge injured his hand in a snow-blower accident and submitted a claim to Fortis.  Fortis made some payments on claims related to this injury, but then received a hospital bill for Daluge that included a secondary diagnosis of diabetes, triggering an investigation by Fortis.  Daluge told Fortis that he had informed Schiller of his diabetes at the time of the application.  Schiller could not recall the details of taking Daluge’s application and responded to Fortis’s inquiry that he could not dispute Daluge’s claim.  Schiller later stated in his deposition that although he could not recall much about the application process, he believed that Daluge had picked up an application and returned it completed to Schiller.  Schiller admitted that he had not reviewed the questions and answers on the application with Daluge.  After Fortis concluded that the question on the application had been answered incorrectly, Fortis rescinded coverage based on misrepresentation. 

            Daluge sued Schiller and Fortis, asserting that Schiller was negligent by failing to accurately complete the application and that Fortis was responsible for Schiller’s negligence under the doctrine of respondeat superior.  Daluge also asserted claims of misrepresentation against Schiller and breach of contract against Fortis.  In an amended complaint, Daluge asserted an alternative claim for promissory estoppel against both Schiller and Fortis.  Schiller denied liability and asserted as an affirmative defense that Daluge’s actions were the cause of any loss.  Schiller and Fortis cross-claimed against each other, and each tendered its defense to the other, Fortis under the indemnity agreement and Schiller under common-law indemnity.  Each denied the other’s tender of defense. 

            After mediation with all parties failed to result in settlement, Fortis entered into settlement discussions with Daluge.  Fortis settled with Daluge, reserving its claim for indemnity against Schiller.  Fortis then moved for summary judgment on its indemnity claim against Schiller and for dismissal of Schiller’s claims against Fortis.  The district court granted summary judgment to Fortis on the indemnity agreement, concluding that the agreement required indemnity without a formal finding of liability, that each allegation in Daluge’s complaint could be traced to Schiller’s acts in the application process, and that Schiller failed to raise a fact issue regarding reasonableness of the settlement.  The district court denied Fortis’s claim for attorney fees and, after further briefing by the parties, dismissed Schiller’s claims against Fortis.  Schiller appeals summary judgment against him, and Fortis filed a notice of review regarding denial of attorney fees.



            “On an appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the [district] court[] erred in [its] application of the law.”  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  For purposes of summary judgment, “the reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted.”  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).  “Interpretation of a written contract is a question of law reviewed de novo.”  Johanns v. Minn. Mobile Storage, Inc., 720 N.W.2d 5, 9 (Minn. App. 2006).  The parties agree their agreement is to be construed under Wisconsin law.

I.          Application of indemnity provision

            Wisconsin courts have “repeatedly held that indemnity agreements are valid and are not against public policy.”  Barrons v. J. H. Findorff & Sons, Inc., 278 N.W.2d 827, 831 (Wis. 1979).  “One party may indemnify another against liability for the indemnitor’s acts and those of his employees, agents and subcontractors as well as against liability for the indemnitee’s own acts.”  Id.  “The agreement will be broadly construed where indemnity is sought for liability based on the indemnitor’s negligence but will be strictly construed where the indemnitee is the negligent party.”  Id.

            Most of Schiller’s arguments on appeal are premised on his position that the indemnity provision of the agreement is not triggered until there has been a formal determination that Schiller caused any loss asserted by Daluge against Fortis.  But the district court held that “[i]t is clear from the indemnity provision that [Schiller’s] duty to indemnify was not just for a formal finding of liability.  It includes allegations and claims of harm.  If it did not, the references to ‘claims’ and ‘asserted’ would make no sense.”  We agree and conclude that the district court did not err by interpreting the plain language of the agreement to apply to claims asserted and not simply to determinations of liability arising from Schiller’s actions or inaction.

            Additionally, based on the record before it at the time of summary judgment, the district court concluded that each of Daluge’s claims “can be traced to the process of taking [Daluge’s] information for the insurance policy application—an act performed by Schiller.”  Schiller argues that the record does not support this conclusion, referencing his expert’s affidavit stating that Fortis’s improper underwriting practices, rather than any act of Schiller, was the “proximate cause” of Daluge’s damages.  But, as stated above, a finding of proximate cause is not what triggers the indemnity provision.  We conclude that the district court did not err in concluding that there are no genuine issues of material fact because all of Daluge’s claims stem from the application, for which Schiller was responsible under the agency agreement, and therefore arose out of Schiller’s actions or inactions.

II.        Effect of settlement between Daluge and Fortis on Schiller’s duty to       indemnify


            Schiller argues that the settlement agreement between Daluge and Fortis precludes Fortis from pursuing indemnity against Schiller.  Fortis argues that we should not address this issue because Schiller did not raise it in the district court until after the district court had granted summary judgment to Fortis on the indemnity issue.

            The record confirms that Schiller first raised this issue in supplemental briefing requested by the court after it had granted summary judgment on Fortis’s indemnity claim.  The issue was outside the scope of the supplemental briefing requested by the district court and was not addressed by the district court.[1]

            There is merit to Fortis’s claim that because Schiller did not timely submit this issue to the district court, we should not address it.  See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that this court generally will not consider matters not argued and considered in the district court).  Even if we were to address this claim, it is without merit because it rests primarily on Schiller’s continued assertion, which we have already rejected, that he is entitled to a determination of fault before being subject to the indemnity provision.  And Schiller ignores the fact that the release expressly reserves Fortis’s indemnification claim against Schiller.

III.       Fortis’s entitlement to indemnity for amounts paid in settlement

            Schiller argues that the district court erred in requiring Schiller to indemnify Fortis for the amount Fortis paid to settle Daluge’s claims.  Again, Schiller’s primary argument is that the indemnity clause does not apply until there is a determination of whose conduct caused Daluge’s claims to be asserted against Fortis and that such a determination cannot occur due to the settlement.  Schiller asserts that it is “axiomatic that Schiller cannot be made to pay indemnity to Fortis without an opportunity to defend against Daluge’s claims in order to prove that he was not at fault[.]”

            Under Wisconsin law, an indemnitee that gives the indemnitor the choice of approving the settlement or taking over the defense of the action need only show an indemnitor’s potential, rather than actual, liability to the plaintiff and that the settlement was reasonable to recover amounts paid by the indemnitee to settle.  See Barrons, 278 N.W.2d at 832 (citing Parfait v. Jahncke Serv., Inc., 484 F.2d 296, 305 (5th Cir. 1973)).  It is not disputed that Schiller refused Fortis’s tender of defense.  And the record before the district court at the time of summary judgment contained unrefuted evidence that Fortis notified Schiller of its settlement negotiations and gave him an opportunity to participate, but Schiller chose not to do so.

            On appeal, Schiller asserts that the district court’s belief that Schiller refused to participate in settlement efforts is “mistaken.”  Schiller asserts that Fortis and Daluge settled without Schiller’s knowledge or approval and that Schiller did not see the release until it was fully executed.  Fortis does not dispute that Schiller did not see the release until it was fully executed, but Wisconsin law does not require that the indemnitor see the actual written agreement prior to execution.  See id.  Rather it only requires that the indemnitor reject the settlement.  Id.  Here, the record contains the affidavit of Fortis’s attorney stating that she contacted Schiller’s counsel during the negotiations with Daluge to inform him of the negotiations between Fortis and Daluge.  The affidavit also states that Schiller’s attorney confirmed that Schiller would not participate in settlement and would not agree that the settlement amount Fortis was proposing was reasonable.  Nothing in the record at the time summary judgment was decided raises a genuine issue of material fact on this issue.  “[T]he party resisting summary judgment must do more than rest on mere averments.”  DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997).  Based on the record at the time summary judgment was granted, the district court did not err by concluding that there was no genuine issue of material fact that Schiller was given the option of approving the settlement or defending the action.[2]  The district court correctly determined that under Barrons, Fortis only needed to prove Schiller’s potential, not actual, liability to Daluge in order to recover amounts that Forits paid in settlement.

            A.        Evidence of Schiller’s potential liability

            Based on the record of Schiller’s limited recollection of the application process, Daluge’s detailed recollection that he told Schiller during the application process that he had diabetes, and Fortis’s expert affidavit, the district court concluded that Fortis successfully established Schiller’s potential liability.[3]  The Wisconsin cases do not illuminate the type or degree of showing of potential liability required by Barrons.  But from our review of the record, we agree with the district court that there is no genuine issue of material fact that Schiller was, prior to the settlement, potentially liable on Daluge’s claims of negligence in the application process.

B.        Reasonableness of the settlement

            Citing Deminsky v. Arlington Plastics Mach., 657 N.W.2d 411, 427 (Wis. 2003), the district court noted that under Wisconsin law it appears that the issue of the reasonableness of the settlement would normally be the subject of a limited hearing before the court.  But the district court concluded that Schiller failed to raise a genuine issue of material fact regarding the reasonableness of the settlement in this case.  Our review of the record confirms this conclusion.  Schiller mentioned the issue of reasonableness of the settlement once in his memorandum to the district court, noting that it is a fact issue, and once in his attorney’s affidavit, stating “the undersigned does not agree that the settlement is reasonable.”  But Schiller did not argue to the district court how or why the settlement amount is unreasonable.  On appeal, Schiller does not make any argument or provide any authority to suggest that the amount of the settlement is unreasonable.  Issues not briefed on appeal are waived.  Melina v. Chaplin, 327 N.W.2d 19, 20 (Minn. 1982).  Because Schiller is potentially liable and did not raise a genuine issue of material fact regarding the reasonableness of the settlement, the district court did not err in granting summary judgment to Fortis for the amount of the settlement.

IV.       Schiller’s additional claims

            Schiller argues for the first time on appeal that the agency agreement was an adhesion contract.  Appellate courts “must generally consider only those issues that the record shows were presented and considered by the trial court in deciding the matter before it.”  Thiele, 425 N.W.2d at 582 (Minn. 1988) (quotation omitted).  Furthermore, “[a] contract of adhesion is generally found under circumstances in which a party has, in effect, no choice but to accept the contract offered, often where the buyer does not have the opportunity to do comparative shopping or the organization offering the contract has little or no competition.”  Deminsky, 657 N.W.2d at 423.  Because Schiller admitted that he only sold a few of Fortis’s short-term policies, and he could have easily decided to not sell Fortis’s short-term insurance, his argument that the contract was one of adhesion is meritless.

            Schiller also claims a violation of due process and equal protection, collusion, and “unlitigated defense.”  Some of these claims were raised in Schiller’s supplemental brief to the court after summary judgment was granted on the indemnity provision, but none was raised before summary judgment was granted.  Therefore, none of these claims is properly before this court.  See Thiele, 425 N.W.2d at 582.

V.        Schiller’s common law indemnification claim against Fortis

            Schiller argues the district court erred in dismissing his common law indemnity claim against Fortis.  “Recovery under a contract providing for indemnity obviates any right to recovery under the common law theory of implied indemnity since by such an express contract the parties have already themselves determined how and under what circumstances losses shall be allocated.”  Rich Products Corp. v. Kemutec, Inc., 66 F. Supp. 2d 937, 981-82 (E.D. Wis. 1999), aff’d, 241 F.3d 915, 919 (7th Cir. 2001) (quotation omitted).  In this case, the agreement between Schiller and Fortis explicitly assigns a right of indemnification to Fortis, and this provision obviates Schiller’s common-law indemnity claim.  Furthermore, such a claim would arise only if Daluge recovered from Schiller, but Daluge recovered only from Fortis, not Schiller, so Schiller has no indemnity claim.  Because Schiller has no common-law indemnity claim, his claim for attorney fees under common-law indemnity is without merit.

VI.       Denial of Fortis’s claim for attorney fees                    

            Fortis filed a notice of review arguing that the district court erred in determining that Fortis is not entitled to attorney fees under the indemnity provision of the agency agreement.  Generally, “attorney fees are not allowable unless a statute or an agreement of the parties provides otherwise.”  Meas v. Young, 417 N.W.2d 55, 57 (Wis. Ct. App. 1987).  Contract interpretation is a question of law, which appellate courts review de novo.  Deminsky, 657 N.W.2d at 418.  The district court concluded that the indemnity provision of the agency agreement did not provide for attorney fees.

            Fortis argues that the provision that Schiller “indemnify and hold [Fortis] harmless for any and all claims, expenses, costs and damages” includes attorney fees.  But absent a specific reference to attorney fees, the language is, at best, ambiguous as to whether attorney fees and costs are included.  Ambiguous language in a contract is construed against the drafter of the contract, in this case, Fortis.  Wis. End-User Gas Ass’n v. Pub. Serv. Comm’n of Wis., 581 N.W.2d 556, 560 (Wis. Ct. App. 1998).  We conclude that the district court did not err when it denied Fortis’s request for fees and costs.

            Fortis also argues that it is entitled to relief under Wisconsin’s supplemental relief statute, Wis. Stat. § 806.04(8) (2004).  This argument was not presented to the district court, and we therefore decline to address it.  See Thiele, 425 N.W.2d at 582.

            Fortis also argues that it is entitled to attorney fees under an equitable exception.  Although statutory and contract interpretation are questions of law reviewed de novo, equitable determinations of attorney fees are reviewed for abuse of discretion.  See Becker v. Alloy Hardfacing & Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987) (stating that appellate courts “will not reverse a trial court’s award or denial of attorney fees absent an abuse of discretion”).  Here, the district court determined that because Fortis’s claim did not involve fraud or bad faith, it was not entitled to attorney fees under an equitable exception.  Fortis also relies on Meas, 417 N.W.2d at 56-57, for the proposition that fraud and bad faith are not necessary for an equitable award of attorney fees.  Although Meas dealt with claims of misrepresentation, those claims were similar to fraud.  Id. at 56-58.  The third-party defendants in Meas were “an elderly rural couple with eighth grade educations,” and during a one-minute phone call, they were tricked into agreeing to an express acreage warranty in a real estate contract.  Id. at 56.  Because Fortis is not in a similar position to the third-party defendants in Meas and Schiller did not act fraudulently or in bad faith, we conclude that the district court did not abuse its discretion in denying Fortis’s request for fees and costs.


[1] The supplemental briefs were to address only the issue of Schiller’s common law indemnity cross-claim against Fortis.

[2] Schiller argues that he was not required to accept Fortis’s tender of defense because he was, in fact, defending Fortis for all of the claims against Fortis that related to his conduct.  Schiller cites no authority for the proposition that because he was defending the claims against him, he was excused from accepting Fortis’s tender of defense, and we fail to see the relevance of this argument to the application of Barrons.

[3] Schiller agues that the possible comparative fault of Fortis and Daluge would affect his liability, but under Barrons, Fortis only needs to show potential liability.