This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. ' 480A.08, subd. 3 (1994).


Guy Chilton Smith,


Integrity Mutual Insurance Company,
a Wisconsin Corporation,

Jim Menden Insurance Company, et al.,

Filed July 16, 1996
Affirmed in part, reversed in part, and remanded
Stone, Judge*

Scott County District Court
File No. C9415010

David G. Newhall, Kim Ruckdaschel-Haley, Lindquist & Vennum, P.L.L.P., 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for Appellant)

Hal A. Shillingstad, Thomas F. Ascher, Cosgrove, Flynn & Gaskins, P.L.L.P., 2900 Metropolitan Centre, 333 South Seventh Street, Minneapolis, MN 55402 (for Respondent Integrity Mutual Insurance Company)

James O. Redman, Charles E. Lundberg, Bassford, Lockhart, Truesdell & Briggs, P.A., 3550 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for Respondents Jim Menden Insurance Company and Jami Menden)

Considered and decided by Harten, Presiding Judge, Willis, Judge, and Stone, Judge.


STONE, Judge

A property owner seeks recovery under a homeowner's insurance policy, identifying him as a contract holder, for a fire loss that occurred after his cancellation of a contract for deed. He challenges the district court's order granting summary judgment against him on his claim against the insurer for coverage under the policy, and on his claims of breach of contract, misrepresentation and negligence against the issuing insurance agency and agent who provided information to him about the policy before the loss.


Guy Smith, the owner of a parcel of real property, entered into a contract for deed in October 1987 with buyer Michael Taverna. The contract required Taverna to insure the property against loss by fire. Accordingly, Taverna obtained insurance through insurance agent Jami Menden (Menden) and the Jim Menden Insurance Agency (Menden Agency).

Taverna defaulted on the contract for deed with Smith by failing to make a scheduled balloon payment on April 1, 1994. Smith subsequently initiated proceedings to cancel the contract, giving Taverna until the end of the day on August 10, 1994, to cure the default.

On August 10, 1994, having not yet received the required payment from Taverna, Smith telephoned the Menden Agency and informed Menden of the cancellation proceedings and of the likelihood that the cancellation would take effect as of 12:01 a.m. on August 11, 1994. Smith also inquired about the policy with Integrity Mutual Insurance Company (Integrity) that Menden had issued to Taverna for the property. Menden informed Smith that the premiums for the policy had been paid up to October 1, 1994, and that the policy would be in effect until that date. After receiving Smith's call, Menden called the underwriter from Integrity, who verified the effective dates of the policy. Menden then called Smith on the same day and informed him of the confirmation.

Smith claims that he also instructed Menden, in their two telephone conversations on August 10, 1994, to ensure that no gaps in coverage would occur on the property as a result of the cancellation of the contract for deed. Smith further maintains that he requested that Menden reissue the policy in Smith's name alone. The Integrity policy that was in effect before the cancellation listed Taverna's name on the first sheet of the declarations page and listed Smith on the second sheet, identifying him as a "CONTRACT HOLDER." Smith asserts that he and Menden planned for Menden to inspect the property on August 15, 1994, by which time Smith expected Taverna to have vacated the property.

On August 12, 1994, three days before the inspection was scheduled to take place, a fire destroyed Smith's property. Integrity had not reissued the homeowner's policy for the property to Smith as the sole insured before the fire, and the insurer has since denied Smith's claim for the loss. Smith subsequently brought this action against Integrity for coverage. Smith also asserts claims of breach of contract, misrepresentation and negligence against Menden and the Menden Agency. Smith now appeals from the district court order granting summary judgment against him.


On appeal from summary judgment, the reviewing court determines (1) whether there are any genuine issues of material fact, and (2) whether the lower court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). We review the evidence in the light most favorable to the party against whom summary judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).

1.  The construction of an insurance policy presents a question of law which an appellate court reviews de novo. Haarstad v. Graff, 517 N.W.2d 582, 584 (Minn. 1994). Policy language is ambiguous if it is reasonably subject to more than one interpretation. Hammer v. Investors Life Ins. Co., 511 N.W.2d 6, 8 (Minn. 1994). Ambiguities as to the meaning of language in a policy should generally be resolved in favor of the insured. Bobich v. Oja, 258 Minn. 287, 294, 104 N.W.2d 19, 24 (1960).

Integrity and Smith dispute whether the policy that Integrity issued for Smith's property should provide coverage to Smith as an insured. Integrity argues that the policy's description of Smith as a contract for deed holder on the second sheet of the declarations page should limit his right of recovery. Smith, however, contends that the inclusion of his name on the declarations page was intended to signify that he was an insured under the policy. While the policy does not explicitly state that Smith is an insured, Smith notes that there is also "nothing on the declaration sheet that identifies Taverna as the `insured.'" We find that the policy, by listing Smith and Taverna in this manner, created an ambiguity as to Smith's status under the policy. As we are required to construe ambiguities against the insurer, we conclude that the policy was intended to include Smith as an insured. The parties' course of conduct following the issuance of the Integrity policy illustrates this intent: Menden notified Smith when Taverna had failed to make a timely premium, prompting Smith to submit a payment for the premium; Menden also informed Smith each time the policy was renewed. We reject Integrity's assertion that Smith had no insurable interest following the cancellation of the contract for deed and that, therefore, he could not have been insured under the policy. Smith had an insurable interest as the fee owner of the insured property.

We further conclude that Smith's conversations with Menden on August 10, 1994, gave him a reasonable expectation that coverage under the Integrity policy would continue until at least August 15, 1994. See Atwater Creamery Co. v. Western Nat'l Mut. Ins. Co., 366 N.W.2d 271, 278 (Minn. 1985) (doctrine of reasonable expectations places a burden on insurance companies to communicate policy coverage accurately and clearly). Smith claims that he called Menden on August 10, 1994, primarily to ensure that no gaps in coverage would occur as a result of his cancellation of the contract for deed with Taverna. Smith also requested that the policy be issued in his name alone. In response to Smith's inquiries, Menden declared, "[Y]ou are covered," and also arranged to inspect the property upon Taverna's departure on August 15, 1994. Under these circumstances, Smith's expectation of coverage as an insured was reasonable.

In addition, in view of the conversations between Menden and Smith on August 10, 1994, we conclude that Menden gave Smith an oral binder for coverage until August 15, 1994 at a minimum. Integrity concedes that Menden had authority to bind the insurer by making oral representations to a third party. See Minn. Stat. ' 65A.03, subd. 1 (1994) ("Binders or other contracts for temporary insurance may be made orally or in writing."). Absent any claim by Integrity that Menden acted outside the scope of his authority, we find that his communications to Smith orally bound the insurer to provide coverage until a new written policy could be issued.

2.  In addition to bringing a claim against Integrity, Smith asserted claims against Menden and the Menden Agency for breach of contract, negligence and misrepresentation. In doing so, Smith alleges that Menden and the Menden Agency breached an agreement or a duty to ensure against gaps in coverage, while falsely assuring Smith that there would be no gaps. We find that Menden breached no contract and there was no negligence or misrepresentation. Cf. Davis v. Re-Trac Mfg., 276 Minn. 116, 117, 149 N.W.2d 37, 38-39 (1967) (misrepresentation claim requires representation of information that the representor knows to be false). We therefore hold that the district court properly granted summary judgment for Menden and the Menden Agency on Smith's claims.

Affirmed in part, reversed in part, and remanded.


* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, ' 10.