This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
STATE OF MINNESOTA
IN COURT OF APPEALS
Charles H. Reinhardt, et al.,
Cecil H. Bell,
Filed March 27, 2007
Hennepin County District Court
File No. 27-CV-05-016648
James H. Kaster, Sofia B. Andersson, Nichols, Kaster & Anderson, PLLP, 4600 IDS Center, 80 South 8th Street, Minneapolis, MN 55402 (for appellants Charles H. Reinhardt and Louise B. Reinhardt)
Richard T. Ostlund, Randy G. Gullickson, Janel M. Dressen, Anthony Ostlund & Baer, P.A., 90 South 7th Street, Suite 3600, Minneapolis, MN 55402 (for appellant Bell)
Alec J. Beck, Corie J. Tarara, Seaton Beck & Peters, P.A., 7300 Metro Boulevard, Suite 500, Minneapolis, MN 55439; and
Kari A. Timm, Walker Wilcox Matousek LLP,
Considered and decided by Halbrooks, Presiding Judge; Kalitowski, Judge; and Collins, Judge.*
Appellants challenge the district court’s decision to grant respondents’ motion for judgment on the pleadings, arguing that the district court erred (1) because issues of fact exist with regard to whether appellants were provided with “professional services” by Family Financial Strategies, Inc. (FFS), and (2) by granting respondents’ motion without oral argument on the motion. Because we conclude that the district court did not err, we affirm.
Charles H. Reinhardt and Louise Reinhardt are husband and wife. Prior to their marriage, Louise was known as
Louise Bell; appellant Cecil Bell is Louise’s brother. Louise and Cecil’s grandparents, James F.
Bell and Louise H. Bell, created trusts for the benefit of both Louise and
Cecil. Family Financial Strategies, Inc.
(FFS) is a
In December 2002, Cecil Bell sent a demand letter to FFS, asserting various claims against FFS and alleging that FFS’s actions and omissions resulted in damages estimated to be in excess of $75,000,000. Similarly, in March 2003, Charles and Louise Reinhardt brought suit against FFS and its President and CEO, John D. Wunsch, alleging that the market value of their trusts’ assets decreased from $32,660,290 in July 2000 to $7,172,106 in April 2002 as a direct result of improprieties committed by FFS.
FFS was insured by respondents Certain Interested Underwriters at Lloyd’s of London (Lloyd’s) and Wachovia Insurance Agency, Inc., d/b/a/ E-risk Services (E-risk). Respondents denied coverage for appellants’ claims, declining to either indemnify FFS for appellants’ losses or to defend FFS in the claims brought by appellants on the ground that the policy excluded coverage for claims arising out of “professional services.”
The renewal application for insurance was completed by FFS’s Chief Operating Officer on March 11, 2000. The application provides, in relevant part:
The undersigned declares that to the best of his/her knowledge the statements herein are true. Signing of this Application does not bind the undersigned to complete the insurance, but it is agreed that this Application shall be the basis of the contract should a Certificate be issued, and this application will be attached to and become a part of such Certificate, if issued.
The application allowed an applicant to request up to five separate types of coverage, including: (1) Employment Practices Coverage; (2) Directors & Officers and Assured Organization Coverage; (3) Fiduciary Coverage; (4) Crime Coverage; and (5) Miscellaneous Professional Services Coverage. FFS completed only the “Employment Practices Coverage Section” and the “Directors & Officers and Assured Organization Coverage Section” and did not fill out the “Miscellaneous Professional Services Coverage Section.” Further, the “Directors & Officers and Assured Organization Coverage Section” asked in question 4: “Does the Assured Organization render any professional services for others for a fee or compensation?” FFS checked “No,” but qualified its answer by writing in “No one outside of our client base.”
Based on the application completed by FFS, respondents issued an insurance policy, which states in pertinent part:
DIRECTORS & OFFICERS AND ASSURED ORGANIZATION COVERAGE SECTION
. . . .
A. INSURING CLAUSES
1. Underwriters shall pay on behalf of the Directors and Officers Loss resulting from any Claim first made against the Directors and Officers during the Certificate Period for a Wrongful Act.
2. Underwriters shall pay on behalf of the Assured Organization Loss which the Assured Organization is required or permitted to pay as indemnification to any of the Directors and Officers resulting from any claim first made against the Directors and Officers during the Certificate Period for a Wrongful Act.
3. Underwriters shall pay on behalf of the Assured Organization Loss resulting from any Claim first made against the Assured Organization during the Certificate Period for a Wrongful Act.
Endorsement No. 1 is a professional services errors-and-omissions exclusion which states:
1. Underwriters shall not be liable to make any payment under this Coverage Section in Connection with any Claim:
. . . .
q) based upon, arising out of, directly or indirectly resulting from or in consequence of, or in any way relating to any act, error or omission in connection with performance of any professional services by or on behalf of any of the Assureds for the benefit of any other entity or person; provided, however, this exclusion shall not apply to any such Claim brought directly, derivatively or otherwise by one or more securities holders of the Assured Organization.
FFS entered into a Miller-Shugart agreement with appellants, assigning appellants its right to commence suit against respondents to obtain a declaration of coverage for the trust damages. The agreement also assigned appellants the right to bring suit against respondents for any bad-faith claims that FFS may have had against respondents for their refusal to provide coverage or to negotiate a settlement of appellants’ claims against FFS. An order for judgment was subsequently entered pursuant to the agreement in the amount of $15,000,000. The district court later amended the caption of the order for judgment to include Cecil Bell as a plaintiff in addition to Charles and Louise Reinhardt.
Appellants brought a declaratory-judgment action seeking, among other things, (1) a declaration that the insurance policy required respondents to defend FFS in the action brought against it by appellants; (2) a declaration that the insurance policy provided liability coverage for the acts committed by FFS up to the policy limit; (3) a declaration that respondents were liable for an additional amount as a result of their bad faith in refusing to provide FFS with coverage or to negotiate a settlement of appellants’ claims; and (4) a declaration that the Miller-Shugart agreement was reasonable when entered into.
Respondents requested the district court’s permission to file a rule 12.03 motion to be considered without oral argument due to the district court’s busy schedule and respondents’ desire to save the available hearing date for a potential summary-judgment motion. A few days later, the district court delivered a letter giving permission for respondents to “bring a motion to dismiss without oral argument.”
Respondents subsequently moved for judgment on the pleadings under Minn. R. Civ. P. 12.03, arguing that the “professional services” exclusion of the insurance policy excluded coverage for appellants’ claims against FFS, and therefore respondents were not liable for appellants’ losses. Appellants filed a memorandum in opposition to respondents’ motion, arguing that FFS did not provide “professional services” to appellant and requesting oral argument on the motion.
Without oral argument, the district court issued an order granting respondents’ motion, concluding: “[b]ecause of the plain language of the Application, Declarations, Policy, and Endorsements, it is clear that FFS did not seek and [respondents] did not provide any coverage for actions arising out of FFS providing professional services to either clients or non-clients.” The district court specifically noted that FFS, in its application, checked the box stating that it did not render any professional services for others for a fee or compensation, but later qualified its answer by writing in “No one outside of our client base.” The district court reasoned that, “[e]ven liberally construing the pleadings in favor of [appellants], it is clear that by qualifying its answer, FFS admitted that it provided professional services to those within its client base,” and that appellants were clearly “members of FFS’s client base.”
This appeal follows.
district court may dismiss a claim on the pleadings when a plaintiff fails to
set forth a legally sufficient claim for relief.
On appeal from
judgment on the pleadings, this court focuses on the pleadings’
Here, in their motion for judgment on the pleadings, respondents relied on the relevant insurance policy and accompanying documents, all of which were either referred to within or attached to the complaint or answer. Therefore, respondents did not rely on matters outside of the pleadings, and the district court properly treated respondents’ motion as a motion for judgment on the pleadings.
Appellants do not dispute that the insurance policy excludes coverage for “professional services.” They argue that the district court erred when it granted respondents’ motion for judgment on the pleadings because genuine issues of material fact exist with regard to whether FFS actually provided appellants with “professional services.”
construing a contract, a court must “give effect to the intention of the
parties as expressed in the language they used in drafting the whole contract.” Art
Goebel, Inc. v. N. Suburban Agencies, Inc., 567 N.W.2d 511, 515 (
an insurance policy, a court should examine the insurance policy, together with
any endorsements.” Steele v. Great W. Cas.
Appellants point to the section on the renewal application where FFS checked the box indicating that it did not render “professional services for others for a fee or compensation,” arguing that “[b]ecause the insurance policy should be construed against the insurer, and in favor of the insured, the Court can easily find that a question of fact exists as to whether FFS rendered professional services” to appellants. But, as the district court noted, appellants “ignore the fact that FFS qualified its answer by writing in ‘No one outside of our client base,’” thereby admitting that FFS did in fact provide “professional services” to those within its client base, a group that included appellants.
caselaw supports the district court’s determination that FFS provided
appellants with “professional services.”
The pleadings and accompanying insurance documents, even when construed in favor of appellants, support the district court’s conclusion that FFS provided “professional services” to appellants. Because FFS provided “professional services” to appellants and because the insurance policy issued by respondents clearly excludes coverage for “professional services,” we conclude that the district court did not err when it granted respondents’ motion for judgment on the pleadings.
Appellants also contend that they were entitled to oral argument on respondents’ motion for judgment on the pleadings under Minn. R. Civ. P. 7.02(a) and that the district court committed reversible error in granting respondents’ motion without such a hearing.
Minn. R. Civ. P. 7.02(a) provides, in relevant part:
Motions provided in these rules are motions requiring a written notice to the party and a hearing before the order can be issued unless the particular rule under which the motion is made specifically provides that the motion may be made ex parte. The parties may agree to written submission to the court for decision without oral argument unless the court directs otherwise.
that appellants waived their right to oral argument by failing to object to
respondents’ initial request that the district court consider its motion for
judgment on the pleadings without oral argument, failing to object when the
district court gave its approval, and failing to independently schedule oral
argument on the motion. Parties may
waive oral argument on a motion. Thompson v. Thompson, 359 N.W.2d 311,
The only case
appellants cite for the proposition that a district court’s refusal to hear
oral arguments constitutes reversible error is Thompson. But in Thompson, the motion was not one for
judgment on the pleadings, and the district court there committed reversible
error because it issued an order on the basis of only one of the parties’
affidavits. 359 N.W.2d at 313. On review, this court stated that the order
was improper because both parties were not given an equal opportunity to be
heard or to present their positions.
The facts here are distinguishable from Thompson. Appellants had an equal opportunity to present their position, despite the absence of a hearing, as they submitted a memorandum in opposition to respondents’ motion, which the district court had the opportunity to consider before issuing its order. This is not a case like Thompson where the district court granted a motion ex parte or where appellants were not given an opportunity to respond.
In addition, Minn. R. Civ. P. 61 states:
No error in either the admission or the exclusion of evidence and no error or defect in any ruling or order or in anything done or omitted by the court or by any of the parties is ground for granting a new trial or for setting aside a verdict or for vacating, modifying, or otherwise disturbing a judgment or order, unless refusal to take such action appears to the court inconsistent with substantial justice. The court at every stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties.
also Bloom v. Hydrotherm, Inc., 499 N.W.2d 842, 845 (
Therefore, we conclude that the district court did not commit reversible error when it granted respondents’ motion for judgment on the pleadings without oral argument on the matter.
* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.
 Specifically, the Reinhardts brought claims for breach of fiduciary duty, violation of Minn. Stat. §§ 501B.151, .152(b) (2002), fraud, and negligent misrepresentation.
 Wachovia acquired E-risk Services in October 2002.
 The Declarations page for Certificate Number 90005697 identifies coverage for “Employment Practices” and “Directors & Officers and Assured Organization” in the coverage-description section but does not describe any coverage for professional services.
 In addition, it appears that FFS had initially checked the “Yes” box and later whited-out the check mark. But because the district court did not make a determination regarding the fact that the “Yes” box appeared to have been checked and whited-out, we decline to address that issue.