This opinion will be unpublished and

may not be cited except as provided by

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




Paul B. Flagg, et al.,



David K. Nelson Agency,


Filed February 25, 1997


Amundson, Judge

Hennepin County District Court

File No. CT 96-001283

Mark W. Lee, Michael C. McCarthy, Maslon Edelman Borman & Brand, P.L.L.P., 3300 Norwest Center, 90 South Seventh Street, Minneapolis, MN 55402 (for Appellants)

R.D. Blanchard, William M. Hart, Jodi Mandel-Chall, Meagher & Geer, P.L.L.P., 4200 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for Respondent)

Considered and decided by Short, Presiding Judge, Amundson, Judge, and Harten, Judge.



Appellants challenge summary judgment against them in their case against their insurance agent, arguing that res judicata and collateral estoppel do not bar their claim and that a special relationship existed between them and the insurance agency. We affirm.


In 1987, shortly after moving to Minnesota from New York, the Flaggs purchased an State Farm umbrella insurance policy through the Nelson Agency. The policy was for one year, renewable upon payment of the annual premium. Because of employment relocation, the family had moved back to New York, but continued to register their motor home in Minnesota and maintained insurance on the vehicle through the Nelson Agency. The policy had been renewed through 1989. When the Nelson Agency did not receive the next annual premium, the policy lapsed. On or about December 27, 1990, the Flaggs' motor home caught fire in the storage facility where it was being kept in Owego, New York, resulting in damage to third parties' property. Numerous lawsuits against the Flaggs were filed for losses that the State Farm policy would have covered had it been renewed.

The Flaggs brought a suit against State Farm in New York, arguing that State Farm knew or should have known that they had moved and therefore should have sent the renewal statements and cancellation notification to their New York address. State Farm argued that the Flaggs failed to notify it of their address change, and it therefore sent all correspondence to their Minnesota address. The New York court found in favor of State Farm and that decision was affirmed on appeal. See Flagg v. State Farm Fire & Cas. Co., 613 N.Y.S.2d 502 (N.Y. App. Div. 1994).

Next, the Flaggs filed a suit against the Nelson Agency, making the same claim that the agency knew or should have known that the Flaggs had moved and should have sent any notices for payment or cancellation to their New York address. They also claimed that the agency was negligent, based on an alleged special relationship between them and the agency. The agency moved for summary judgment, arguing that the first issue was precluded based on the New York litigation against State Farm and that the second issue presented no genuine issue of material fact. The district court granted summary judgment in favor of the Nelson Agency. This appeal followed.


In an appeal from summary judgment, the reviewing court must ask whether there are any genuine issues of material fact and whether the lower court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).

I. Res Judicata

The principle of res judicata, or claim preclusion, bars all claims that were or should have been included in a claim already adjudicated. See Knutson v. Primeau, 371 N.W.2d 582 (Minn. App. 1985), review denied (Minn. Oct. 11, 1985). There are three elements necessary to trigger res judicata: (1) a final judgment on the merits; (2) a second suit involving the same cause of action; and (3) identical parties or parties in privity. Myers v. Price, 463 N.W.2d 773, 776 (Minn. App. 1990), review denied (Minn. Feb. 4, 1991).

There is no dispute that the Flaggs' case against State Farm reached a final judgment. The first question is whether the Flaggs' claims against the Nelson Agency stemmed from the same cause of action as that of the New York litigation. In the New York litigation, the Flaggs claimed that State Farm knew or should have known that they had a new address and therefore should have sent notification to their new address. They now claim that the Nelson Agency knew or should have known that they had a new address and therefore should have sent notification to their new address. One test for whether claims involve the same cause of action is whether the same evidence will sustain both actions. McMenomy v. Ryden, 276 Minn. 55, 58, 148 N.W.2d 804, 807 (1967). Here, it appears that the same evidence would support both claims. In fact, the New York litigation involves extensive testimony by David Nelson.

The next question is whether the Nelson Agency is in privity with State Farm. This court has held that an insurance agency is in privity with the insurance company whose policies it sells. Porta-Mix Concrete, Inc. v. First Ins. E. Grand Forks, 512 N.W.2d 119, 122 (Minn. App. 1994), review denied (Minn. April 28, 1994). Thus, we conclude that the district court properly found that privity existed between State Farm and the Nelson Agency.

Res judicata bars the Flaggs' claims against the Nelson Agency and thus the district court properly granted summary judgment.

II. Collateral Estoppel

Collateral estoppel and res judicata are related but distinct doctrines. If res judicata bars litigation, it becomes unnecessary to address the issue of collateral estoppel. However, we will briefly address it.

Collateral estoppel, or issue preclusion, differs from res judicata essentially in that the issue must have been actually adjudicated. The four elements of collateral estoppel are: (1) the issue was identical to one in a prior case; (2) there was a final judgment on the merits; (3) the estopped party was a party or in privity with a party to the earlier case; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue. Ellis v. Minneapolis Comm'n on Civil Rights, 319 N.W.2d 702, 704 (Minn. 1982).

Because the Flaggs were given a full and fair opportunity to be heard on the issue in the New York case (including an appeal), collateral estoppel also bars their claims against the Nelson Agency regarding the address change.

III. Special Relationship

The Flaggs claim that a special relationship existed between them and the Nelson Agency. This relationship, they argue, required special duty to them which, they allege, the agency did not fulfill and therefore the agency is negligent. The district court found that this claim, while not subject to the bar of res judicata, posed no genuine issue of material fact and ruled against the Flaggs on summary judgment.

The Minnesota Supreme Court has held that the circumstances of an insurance transaction and the relationship of the agent to the insured may result in creation of a duty to offer, advise, or furnish insurance coverage to an insured. Johnson v. Urie, 405 N.W.2d 887, 889 (Minn. 1987). "Special circumstances" (such as unsophisticated insureds or special reliance on the agent's expertise) may give rise to this affirmative common law duty to offer insurance coverage. Beauty Craft Supply & Equip. Co. v. State Farm Fire & Cas. Ins. Co., 479 N.W.2d 99, 101 (Minn. App. 1992), review denied (Minn. Mar. 19, 1992). However, this line of cases focuses on offering coverage to underinsured customers, as opposed to having an affirmative duty to maintain an insured's current mailing addresses. Further, the Flaggs had moved before and as the district court noted, they are "sophisticated and responsible people who are capable of appreciating the consequences if and when an insurance policy is not renewed."

After reviewing the record, the Flaggs' allegation of negligence does not pose a genuine issue of material fact. The Flaggs also raise a breach of contractual duty claim and a breach of fiduciary duty claim, both of which also lack merit. These additional claims are also barred by res judicata. They should have been raised in the New York litigation.

IV. Motion to Strike

Respondent also moved to strike appellants' reply brief, arguing that the brief was not a response to respondent's brief. We disagree and deny the motion to strike.