This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2006).







Sander & Company, Inc.,





Northern Capital Insurance, et al.,



Integrity Mutual Insurance Company,





Northern Capital Insurance Group,

Third Party Plaintiff,




Integrity Mutual Insurance Company,

Third Party Defendant.



Filed July 3, 2007

Affirmed in part, reversed in part

Ross, Judge


Hennepin County District Court

File No. 27-CV-04-009828


Karl A. Oliver, The Oliver Group, PLC, 1935 West County Road B2, Suite 415, Roseville, MN 55113; and


Jerome S. Rice, Jerome S. Rice & Associates, P.A., 900 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondent)


Patrick H. Elliott, Elliott Law Offices, P.A., 2409 West 66th Street, Minneapolis, MN 55423 (for appellant)



Considered and decided by Peterson, Presiding Judge; Shumaker, Judge; and Ross, Judge.

U N P U B L I S H E D   O P I N I O N


ROSS, Judge


Integrity Mutual Insurance Company appeals from a jury verdict and posttrial orders in Sander & Company’s lawsuit alleging that Northern Capital Insurance Group failed to procure and Integrity Mutual failed to provide requested insurance coverage.  By notice of review, Sander & Company challenges the district court’s use of comparative fault to reduce its contract damages.  Integrity Mutual asserts that the district court incorrectly allocated the four categories of damages and that the record does not support the jury’s finding of roof damage or the amount of damages awarded for the roof.  The record supports the jury’s determination of roof damages.  But the district court erred by reducing Sander & Company’s contract damages based on its negligence and holding Integrity Mutual liable for damages traceable only to Northern Capital.  We therefore affirm in part and reverse in part.


This insurance-coverage dispute arises from a mistake concerning the type of coverage actually included in a policy that was issued after the applicant requested a different type of insurance coverage.  After a fire damaged a building owned by Sander & Company, Inc., a commercial real-estate company, Integrity Mutual Insurance Company refused to pay the full amount of the claim submitted by Sander & Company because the policy actually issued and in force did not cover all of the damage claimed.

The circumstances of the mistake are not presently disputed.  In early 2000, Gary Sander, the owner of Sander & Company, met with Karl Klein, an insurance agent at Northern Capital Insurance Group.  Northern Capital is a broker for Integrity Mutual.  Sander explained that he wanted to insure one of his buildings with a policy providing functional-replacement-value coverage with a limit of $2.5 million.  This coverage would mirror the policy he had through his former insurer.

Consistent with Sander’s request, Klein submitted an insurance application to Integrity Mutual for agreed-value coverage, and Integrity Mutual issued a temporary insurance binder that indicated that it was providing agreed-value coverage.  The term “agreed value” was both written out and designated as “AV” in the binder.  Integrity Mutual issued a policy for one year of coverage effective February 28,2000.  The Integrity Mutual policy stated a $2.5 million limit.  But the policy had no language indicating that it included agreed-value or functional-replacement-value coverage.  Rather, the policy provided coverage on an actual-cash-value basis.

The difference in terms can be significant.  On a policy that provides coverage according to “functional replacement value,” losses are reimbursed based on the cost to replace the property with functionally equivalent property of like kind and quality.  The parties do not dispute that agreed-value insurance would have functioned the same as functional-replacement-value insurance in this case.  A policy that provides coverage based on “actual cash value” will reimburse a loss based on the actual cost of replacing the property.

Sander renewed the policy in 2001 and again in 2002.  In July 2002, Sander & Company’s property sustained fire damage from arson.  Sander submitted a claim to Integrity Mutual, believing he had coverage for up to $2.5 million for property losses and up to $400,000 for lost rental income.  Integrity Mutual asserted that the policy on the property provided only actual-cash-value coverage.  Northern Capital contacted Integrity Mutual to object, reminding Integrity Mutual that Northern Capital had always intended to secure agreed-value coverage for Sander & Company.  Integrity Mutual maintained its position and paid Sander & Company based only on actual-cash-value coverage, which left a shortfall of approximately $700,000 in losses.

Sander & Company sued, accusing Northern Capital and Klein of breach of contract and negligence for their failure to obtain the requested insurance coverage.  Northern Capital filed a third-party complaint against Integrity Mutual, seeking indemnification or contribution for its potential liability to Sander & Company.  Sander & Company filed an amended complaint reasserting breach-of-contract and negligence claims against Northern Capital and Klein, and adding a breach-of-contract claim against Integrity Mutual.  The company alleged that, in addition to wrongly issuing an actual-cash-value policy, Integrity Mutual had not paid the claim for lost rental income.

Sander & Company moved for summary judgment.  The district court granted the motion in part and denied it in part.  The court relied on the doctrine of reasonable expectations and held that no factual disputes existed concerning the policy sought and the policy actually issued.  The court held that Northern Capital and Klein owed Sander & Company a duty to review its policies and ensure accuracy.  But the court denied summary judgment on the issues of how fault should be apportioned and the amount of damages.

After trial, the jury by special verdict found that the defendants were negligent and had breached their contracts with Sander & Company, causing damages.  The jury also found all parties at fault in causing the damages, with Sander & Company 7% at fault, Integrity Mutual 18% at fault, and Northern Capital and Klein 75% at fault.  The amount of damages for loss of depreciation and the amount necessary to comply with current ordinances and laws were undisputed at $415,105.77 and $284,789.07, respectively.  These damages represent deductions that would not have been made to Sander & Company’s claim if the policy had provided the type of coverage that the company had sought.  The jury found that $298,880 would compensate Sander & Company for lost business opportunities.  Sander & Company had introduced trial testimony that it had incurred $265,733 in roof damage in addition to the amount of damage the company included in its claim to Integrity Mutual.  The jury found that $162,500 would compensate the company for this additional roof damage.

Integrity Mutual and Sander & Company each filed posttrial motions.  Integrity Mutual moved for judgment as a matter of law, challenging the sufficiency of the evidence to support the jury’s finding of additional roof damages, and it also asked the court to clarify the special-verdict form, arguing that it should not be liable for all categories of damages.  Sander & Company moved the court to enter judgment based on an election of remedies under its breach-of-contract claims instead of its negligence claims.  The district court granted the motions in part and denied them in part.  The court denied the motion for judgment as a matter of law, finding that the evidence supported the verdict on the additional roof damage.  The court interpreted the special-verdict form to require entry of judgment based on a negligence theory.  After accounting for Sander & Company’s seven-percent contribution to its own injury, the court ordered Northern Capital and Klein to pay Sander & Company $524,921.13 for depreciation and ordinance-and-law-compliance damages.  The court ordered Integrity Mutual to pay $587,361.07 for depreciation, ordinance-and-law-compliance, lost-business-opportunity, and roof damages.  Northern Capital paid Sander & Company according to the district court’s judgment, and it later assigned its rights against Integrity Mutual to Sander & Company. Integrity Mutual has partially satisfied the judgment.

Integrity Mutual appeals, challenging the entry of judgment based on negligence rather than breach of contract and the jury’s finding of additional roof damages.  By notice of review, Sander & Company challenges the court’s comparative-fault-based reduction of its depreciation and ordinance-and-law-compliance damages by seven percent.



We first address Sander & Company’s argument that the district court erroneously applied comparative-fault principles rather than contract law by reducing the company’s depreciation and ordinance-and-law-compliance damages by seven percent.  The company contends that because it elected to have judgment entered on its breach-of-contract claims, Integrity Mutual and Northern Capital should be held jointly and severally liable for the damages.  Integrity Mutual concedes that the court should have honored Sander & Company’s request for contract damages, but it argues that it should not be held jointly and severally liable.  We agree that the district court erred by reducing the damages to reflect Sander & Company’s negligence, and that Integrity Mutual is not liable for the depreciation and law-and-ordinance-compliance damages.

When a party has a choice between coexistent and inconsistent remedies to enforce a right or redress a wrong, the election-of-remedies doctrine applies.  George A. Hormel Co. v. First Nat’l Bank, 171 Minn. 65, 70, 212 N.W. 738, 740 (1927).  That party may elect a remedy by “choosing between different remedies allowed by law on the same state of facts, where the party has but one cause of action, one right infringed, one wrong to be redressed.”  Id. at 70, 212 N.W. at 740–41 (quotation omitted).  Following the jury verdict finding Integrity Mutual and Northern Capital liable on both negligence and breach-of-contract grounds, by motion Sander & Company elected entry of judgment on a contract basis for its depreciation and ordinance-and-law damages. 

But the district court applied a negligence-based remedy rather than a contract-based remedy when it reduced the damages proportionate to Sander & Company’s fault.  When a court applies comparative fault, it reduces proportionately the amount of damages by the amount of fault attributable to the person recovering.  Minn. Stat. § 604.01, subd. 1 (2006).  The comparative-fault statute, however, does not apply to contract claims.  Leamington Co. v. Nonprofits’ Ins. Ass’n, 661 N.W.2d 674,677–78 (Minn. App. 2003); see also Lesmeister v. Dilly, 330 N.W.2d 95, 101 (Minn. 1983) (finding legislature did not intend for comparative-fault statute to apply to contract cases).  The district court therefore should not have reduced Sander & Company’s damages proportionately by seven percent, about $49,000 based on the comparative-fault statute.  We must still address whether Integrity Mutual may be liable on the basis of joint-and-several liability.

Joint-and-several liability applies in contract actions when “two persons independently and unintentionally breach separate contracts, closely related in point of time, to the same person, and it is not reasonably possible to make a division of the damages caused by the separate breaches.”  Duluth Superior Erection, Inc. v. Concrete Restorers, Inc., 665 N.W.2d 528, 538 (Minn. App. 2003).  In this case, the depreciation and ordinance-and-law-compliance damages are not traceable to a breach of contract by Integrity Mutual.  Although the jury found that both companies breached their contracts with Sander & Company, Integrity Mutual’s breach was limited to its failure to pay lost-business-opportunity and roof damages in accordance with the actual-cash-value policy.  The special-verdict form acknowledged the different nature of the two contracts, asking the jury whether Northern Capital and Klein breached their “contract to provide the type of insurance coverage sought by Sander & Co[mpany],” and, separately, whetherIntegrityMutual“breach[ed] its contract for insurance coverage with Sander & Co[mpany].”  (Emphasis added.)  Noparty objected to the special-verdict form and we read this different language to intentionally refer to different contracts with different obligations.  In closing arguments, Sander & Company argued that Integrity Mutual breached its contract with the company by failing to pay the lost-business-opportunity and roof damages.  Integrity Mutual otherwise complied with its contract with Sander & Company, which was the insurance policy providing actual-cash-value coverage.  The jury specifically found that Northern Capital breached its contract to provide the coverage Sander & Company sought.  Sander’s former insurance agent, Klein’s supervisor, and Integrity Mutual’s underwriter each testified that, had the requested agreed-value coverage actually been obtained, no deductions for depreciation or ordinance-and-law compliance would have been taken.  These damages are therefore traceable only to Northern Capital, and imputing any liability to Integrity Mutual is therefore inappropriate.


Integrity Mutual concedes that if the court imposes damages on a contract basis, it is liable for all of the lost-business-opportunity damages and the additional roof damages.  But it asserts that the district court erred by denying its motion for judgment as a matter of law because the evidence presented at trial was insufficient to support the jury’s finding of roof damages, or, alternatively, that the amount the jury found would compensate Sander & Company is unsupported and represents an impermissible compromise.

When considering a motion for judgment as a matter of law, the district court must view the evidence in the light most favorable to the nonmoving party to determine whether the verdict is manifestly against the evidence presented.  Pouliot v. Fitzsimmons, 582 N.W.2d 221, 224 (Minn. 1998).  We will affirm denial of judgment as a matter of law if the record includes “any competent evidence reasonably tending to sustain the verdict.” Id. (quotation omitted).  A plaintiff must establish damages to recover on a breach-of-contract claim.  Jensen v. Duluth Area YMCA, 688 N.W.2d 574, 578-79 (Minn. App. 2004).  A plaintiff need not prove damages with certainty, but it cannot recover when damages are remote, conjectural, or speculative.  Id. at 579.  The plaintiff must establish a reasonable basis for approximating a loss.  Id. We will set aside a damages award if it results from speculation rather than evidence actually presented at trial.  See Fifer v. Nelson, 295 Minn. 313, 318, 204 N.W.2d 422, 425 (1973) (noting appellate court may reverse award not justified by the evidence); Lind v. Slowinski, 450 N.W.2d 353, 358 (Minn. App. 1990) (reducing jury’s damages award to amount reasonably supporting evidence of plaintiff’s need for future medical care), review denied (Minn. Feb. 21, 1990).

We find that the record supports the jury’s finding that Sander & Company sustained the additional $162,500 in roof damages.  Gary Sander and his son, Jon Sander, who manages the damaged building, each testified to the existence of additional roof damages not included in the company’s signed statement of losses.  Gary Sander explained that he signed the statement because, at the time, the adjuster represented that he would not get any money unless he signed it, and also because Integrity Mutual indicated that he would need to bring a claim against Northern Capital to recover the additional damages.  He testified that, over time, they discovered more extensive damage to the roof caused by the firefighters, and that the approximately $265,733 the company was claiming represented the amount actually spent as it could finance the repairs.  JonSander supported his father’s testimony, testifying that roof damage existed and that the company had spent money to repair fire-related damage to the roof after Gary Sander signed the statement of loss.  Integrity Mutual’s adjuster disputed the Sanders’ recollection of events and testified that he was unaware of any additional roof damage before trial.  Because determinations of witness credibility are for the factfinder, we agree with Sander & Company that the jury reasonably could have found that the company incurred roof damages not yet paid by Integrity Mutual.  See Gada v. Dedefo,684 N.W.2d 512, 514 (Minn. App. 2004) (stating that witness-credibility determination is for factfinder).

We also are not persuaded by Integrity Mutual’s argument that the jury’s special-verdict-damages finding of $162,500 constitutes an impermissible compromise.  The district court may order a new trial on damages if the jury’s award of damages is inadequate and the award results from “a compromise between the right of recovery and the amount of damages.”  Seim v. Garavalia, 306 N.W.2d 806, 813 (Minn. 1981).  The concern in that situation is that the jury has impermissibly conflated into a single question the separate issues of liability and damages.  A compromise verdict that leads to inadequate damages demonstrates the jury’s “failure to give the case impartial and conscientious consideration.”  Kloos v. Soo Line R.R., 286 Minn. 172, 178, 176 N.W.2d 274, 278 (1970).  We cannot conclude in this case that the jury’s damages award constitutes an impermissible compromise between liability and damages because Integrity Mutual admits that it “does not complain that the damages awarded are inadequate,” and it acknowledges that at trial concerning the additional roof damages, “liability was not in question.  Rather, Integrity takes issue with the amount of damages” sought by Sander & Company.  It is true that the testimony concerning additional roof damage was not sufficiently detailed for this court to discern the basis upon which the jury chose to award only about sixty-one percent of the amount claimed by Sander & Company.  But the prohibition against compromise verdicts concerns the decision between the right to recover and the amount sought, not the decision between alternative damages amounts.  Integrity Mutual contends that because it had asked the jury to award no damages in contrast with Sander & Company’s request that the jury award $265,733, the jury had no choice but to decide the matter as “an all-or-nothing question.”  But having conceded that liability for additional roof damages was not in question and that the jury had only to decide the amount of damages, the jury was free to make any damages award supported by the evidence.

Affirmed in part, reversed in part.