This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Steven Cook, et al.,



John Keister, individually, et al.,


Bill Phillips, d/b/a The Bill

Phillips Agency,


Filed February 18, 1997


Willis, Judge

Jackson County District Court

File No. C094148

J. Brian O'Leary, O'Leary & Moritz, Chartered, 102 North Marshall, Springfield, MN 56087 (for Appellants)

Clarance E. Hagglund, Britton D. Weimer, Hagglund & Weimer, 4000 Water Park Place, 5101 Olson Memorial Highway, Minneapolis, MN 55422 (for Respondents Keister and Minn-Iowa Agency)

James O. Redman, Charles E. Lundberg, Bassford, Lockhart, Truesdell & Briggs, P.A., 3550 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for Respondent Phillips)

Considered and decided by Willis, Presiding Judge, Peterson, Judge, and Foley, Judge.[*]


WILLIS, Judge.

Appellants Steven and Sally Cook appeal from the district court's judgment that the negligence of respondent Minn-Iowa Agency was not a proximate cause of their loss. We affirm.


In early 1991, Steven Cook sought to obtain automobile insurance coverage from a new insurance agent because he no longer did his banking at the bank that had acted as his agent. He spoke with his crop insurance agent, respondent Bill Phillips, who was licensed to sell auto insurance from the Grinnell Mutual Insurance Company (Grinnell) through the Minn-Iowa Agency (Minn-Iowa). Cook gave Phillips the declaration sheet from his family's existing policy with the Westfield Companies (Westfield), which carried bodily injury liability limits of $500,000 per person and $500,000 per accident, and requested identical coverage. Phillips and Minn-Iowa jointly prepared an application with Grinnell and bound coverage, listing Minn-Iowa as the agent of record. Phillips told Cook that obtaining coverage from Grinnell would not be a problem; subsequently, Cook, on his own initiative, cancelled his Westfield policy.

Because of two driving infractions on the record of Cook's 16-year-old daughter, Sally, Grinnell refused to issue Cook's policy. Cook then contacted Westfield about reinstating his original policy, but Westfield refused to reissue a policy with the limits Cook requested because of Sally Cook's driving record.

Minn-Iowa turned Cook's account over to its agent Russell Souba, who sought coverage through Allstate Indemnity Company (Allstate). Souba believed that he had authority from Allstate to bind a policy with the limits Cook requested, but under its licensure agreement with Minnesota, Allstate could not issue policies with liability limits over $100,000 per person and $300,000 per accident. Allstate issued a policy for $100,000/$300,000 and sent the declaration sheet to Minn-Iowa. For reasons not clear from the record, no one at Minn-Iowa noticed that the liability limits were lower than Cook's request, although it was normal company procedure to compare a declaration sheet with the original application to detect discrepancies. That summer, Minn-Iowa added a Chevrolet Durango pickup truck to Cook's policy, again not noticing the lower liability limits.

On October 24, 1991, while driving the Durango, Sally Cook struck and killed a pedestrian. The pedestrian's estate collected $135,000 in settlement from her life insurance carrier, State Farm Insurance, which sought indemnity from Steven and Sally Cook personally for the $35,000 by which the settlement exceeded the limit of Cook's Allstate policy.

Steven and Sally Cook brought a negligence action against Allstate, Minn-Iowa, Phillips, and Minn-Iowa's owner, John Kiester. The court dismissed Allstate before trial. Following a bench trial, the court held that neither Kiester nor Phillips had breached any duty of care to Cook. With respect to Minn-Iowa, the court held that Souba had been negligent in believing that he could bind a $500,000/$500,000 policy with Allstate and that Minn-Iowa had been negligent in failing to discover and to advise Cook that the Allstate policy had not been issued according to his directions. However, the court also found that the Cooks had presented no evidence establishing that they could have obtained $500,000/$500,000 coverage from any company and thus had failed to prove that Minn-Iowa's negligence was a proximate cause of their loss. The Cooks appeal from the court's judgment on the issue of causation.


In reviewing a question of law, an appellate court need not defer to the trial court's decision. Frost-Benco Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984). A district court's findings of fact will not be set aside unless they are clearly erroneous. In re Guardianship of Dawson, 502 N.W.2d 65, 68 (Minn. App. 1993), review denied (Minn. Aug. 16, 1993).

The plaintiff in a negligence action has the burden of proving four elements, including proximate causation. Marlow v. City of Columbia Heights, 284 N.W.2d 389, 392 (Minn. 1979). To prove causation in a negligence action against an insurance agent, a plaintiff must produce evidence demonstrating that absent the agent's negligence, the plaintiff either would have obtained coverage sufficient to prevent his or her loss, see Melin v. Johnson, 387 N.W.2d 230, 233 (Minn. App. 1980), review denied (Minn. July 31, 1986), or would not have engaged in the uninsured or underinsured activity, see Runia v. Marguth Agency, Inc., 437 N.W.2d 45, 49 (Minn. 1989).

The proximate cause inquiry here is whether the Cooks would have suffered the loss of $35,000 absent Minn-Iowa's negligence. See Restatement (Second) of Torts § 549 cmt. g (1977) ("the purpose of a tort action is to compensate for loss sustained and to restore the plaintiff to his former position, and not to give him the benefit of any contract he has made with the defendant."). Thus, to recover under Melin, the Cooks need only have demonstrated that they could have obtained coverage of at least $135,000 per injury.[1]

In this case, the record contains no evidence as to whether the Cooks could have obtained coverage in the amount of $135,000, and there is nothing in the record indicating the level of coverage Cook would have been willing to accept if he knew the liability limits he sought were not available. Instead, the Cooks' primary argument on appeal is that the previous Westfield $500,000/$500,000 coverage is proof of the availability of such coverage. However, Cook cancelled the Westfield policy before Minn-Iowa committed its negligence, and Westfield subsequently refused to reissue a $500,000/$500,000 policy.[2] Insurance companies frequently treat holders of existing policies differently from new applicants. See Melin, 387 N.W.2d at 231 (noting that plaintiff's policy limited benefits for those who became disabled within the first two years of coverage due to a pre-existing condition). The relevant question in this case is whether Cook, after cancelling his Westfield policy, could have obtained coverage adequate to prevent his monetary loss, but for Minn-Iowa's negligence regarding the Allstate policy.[3]

There is no evidence in the record from which the district court could have found proximate causation, either regarding the availability of coverage sufficient to prevent the injury to appellants or that the underinsured activity would have been avoided. The trial court did not err in finding that appellants failed to carry their burden of proving that Minn-Iowa's negligence was a proximate cause of their loss.


[ ]* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[ ]1 The trial court and the parties appear to have read Melin and Runia to require that the plaintiff prove his or her ability to obtain the full coverage sought, in this case $500,000 per injury. This reading is understandable because Melin was an action to recover the full value of the long-term disability benefits to which the plaintiff thought he was entitled, while Runia focused on whether a vehicle insurance policy extended to drivers other than the vehicle's owner. In both cases, the plaintiffs would have needed the full coverage originally sought in order to prevent the damage from the insurance agent's negligence.

[ ]2 The Cooks did not appeal the trial court's finding that Phillips had no affirmative duty to warn Cook not to cancel his existing policy after binding the Grinnell coverage. Due to its disposition of the case, the trial court did not reach the issue of whether Cook's cancellation of the Westfield policy was itself negligent, and we have no need to do so here.

[ ]3 Appellants' counsel theorizes in his brief that Cook, had he known that coverage at the requested level was not available, could have removed his daughter from his policy by placing a vehicle under her name alone. Cook, however, did not testify to this effect at trial, nor did he produce any evidence before the district court that he would have taken this course of action. Because the Cooks did not raise the issue below, they are barred from raising it on appeal. See Thiele v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988) (appellate court "may not consider matters not produced and received in evidence below.").