This opinion will be unpublished and

may not be cited except as provided by

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




Advanced Concrete and Masonry,



Minnesota Workers' Compensation Assigned Risk Plan,

administered by OHMS,



Owners Insurance Company, an Ohio corporation,


Filed May 20, 1997


Amundson, Judge

Short, Judge, concurring in part and dissenting in part

Hennepin County District Court

File No. 9517993

John R. Crawford, Johnson & Lindberg, P.A., 8500 Normandale Lake Boulevard, Suite 1610, Minneapolis, MN 55437-3828 (for Appellant)

John H. Guthmann, David M. Reddan, Hansen, Dordell, Bradt, Odlaug & Bradt, P.L.L.P, 3900 Northwoods Drive, Suite 250, St. Paul, MN 55112-6973 (for Respondent OHMS)

Lawrence J. Skoglund, Paul D. Reuvers, Erstad & Riemer, P.A., 1000 Northland Plaza, 3800 West 80th Street, Minneapolis, MN 55431 (for Respondent Owners Insurance Company)

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



Appellant challenges the district court's grant of summary judgment in favor of respondents, arguing that respondents had a duty to defend appellant in a lawsuit commenced by one of appellant's employees. We affirm.


Joshua Wordes was hired as a laborer by appellant Advanced Concrete and Masonry (Advanced Concrete) on October 10, 1994. Upon hiring Wordes, Advanced Concrete informed Wordes that his wages would be $10.00 per hour, but if for any reason he quit during the first week of employment, he would only receive $4.25 per hour. Wordes worked for Advanced Concrete from October 10, 1994 to October 13, 1994, and then failed to show up for work thereafter. On October 27, 1994, Wordes contacted Tim Kopen, president of Advanced Concrete, and informed him for the first time that he had been injured on the job.

On November 2, 1994, Kopen prepared a payroll check for Wordes that reflected a wage of $4.25 per hour. On the following day, Kopen prepared a first report of injury, which noted Wordes's hourly wage of $4.25 per hour.

After recovering workers' compensation benefits, Wordes commenced a lawsuit against Advanced Concrete. Wordes claimed that Advanced Concrete violated Minn. Stat. § 176.82 by stating to its workers' compensation carrier that Wordes's hourly wage was $4.25 per hour rather than $10.00.

Advanced Concrete requested that its workers' compensation insurer, respondent Minnesota Workers' Compensation Assigned Risk Plan, administered by Occupational Healthcare Management Services (OHMS), defend Advanced Concrete in the action commenced by Wordes. OHMS declined to defend Advanced Concrete because Wordes did not allege a violation that resulted in bodily injury by accident or disease. Because of OHMS's refusal to defend, Advanced Concrete requested that its commercial general liability insurer, respondent Owners Insurance Company (Owners), defend it in the Wordes suit. Owners declined to defend because its policy excluded workers' compensation claims.

Advanced Concrete hired its own counsel and moved for a dismissal. On September 20, 1995, the action was dismissed in favor of Advanced Concrete. The time period in which Wordes could appeal expired thereafter.

Advanced Concrete then commenced a declaratory judgment action against OHMS and Owners. Advanced Concrete sought a judgment declaring that one or both of the insurers had a duty to defend Advanced Concrete in the Wordes action. Following cross- motions for summary judgment, the district court denied Advanced Concrete's motion for summary judgment and granted summary judgment in favor of OHMS and Owners. This appeal followed.


On appeal from summary judgment, we determine whether the district court erred in its application of the law and whether there are any genuine issues of material fact. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). We review questions of fact 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). Legal questions are subject to de novo review. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).

An insurer's duty to defend an insured is contractual; the duty to defend covers those claims that at least arguably fall within the scope or purview of the insurance policy. Inland Const. Corp. v. Continental Cas. Co., 258 N.W.2d 881, 883 (Minn. 1977). In determining the existence of such a duty, we will compare the allegations in the complaint in the underlying action with the relevant language in the policy. Ross v. Briggs and Morgan, 540 N.W.2d 843, 847 (Minn. 1995).

I. OHMS's Duty To Defend

Advanced Concrete argues that the district court erred in its conclusion that OHMS did not have a duty to defend Advanced Concrete in the Wordes action. We disagree.

The language of OHMS's workers' compensation insurance policy issued to Advanced Concrete does not mandate that OHMS defend Advanced Concrete in the Wordes action. OHMS's policy states that it applies "to bodily injury by accident or bodily injury by disease." Wordes, in his suit against Advanced Concrete, only claims financial injury due to Advanced Concrete's failure to indicate that Wordes earned an hourly wage of $10.00 rather than $4.25.

Further, OHMS's policy excludes coverage for actions that result because of the insured's "serious and willful misconduct." Wordes's claim alleged injury from Advanced Concrete's report that Wordes's hourly wage was $4.25, not $10.00. This action was intentional and willful. Injury resulting from this type of action is not contemplated by the OHMS policy and is excluded from coverage.

Additionally, the Wordes suit alleged that Advanced Concrete violated Minn. Stat. § 176.82 (1994), which states:

Any person discharging or threatening to discharge an employee for seeking workers' compensation benefits or in any manner intentionally obstructing an employee seeking workers' compensation benefits is liable in a civil action for damages incurred by the employee including any diminution in workers' compensation benefits caused by a violation of this section * * *.

Any action under this section is a common law cause of action outside the scope of the Workers' Compensation Act. Karnes v. Quality Pork Processors, 532 N.W.2d 560, 563 (Minn. 1995). Thus, because this type of action is beyond the scope of the Workers' Compensation Act, language in the workers' compensation insurance policy must be specific to include coverage for this type of claim. Without the specific language, OHMS's policy does not mandate that OHMS defend Advanced Concrete for claims arising under Minn. Stat. § 176.82. No such specific language is present in the OHMS policy.

II. Collateral Estoppel

Advanced Concrete argues that OHMS is collaterally estopped from claiming that Advanced Concrete acted intentionally in obstructing Wordes's claim for workers' compensation benefits. With regard to this argument, the district court found:

[C]ollateral estoppel does not apply because the issues are not identical, OHMS had no interest in the Wordes case, and there was no privity between the parties. Additionally, the issue decided does not address the issues now before this court. The present court is only concerned with the allegations in the Wordes lawsuit under the duty to defend action; and looks at any liability imposed when deciding the duty to indemnity issue.

Collateral estoppel may be invoked if: (1) the issue is identical with the one in the prior adjudication; (2) there was a final adjudication on the merits; (3) the estopped party was a party or a party in privity with a party in the previous adjudication; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue. Aufderhan v. Data Dispatch, Inc., 452 N.W.2d 648, 650 (Minn. 1990).

Here, the elements of collateral estoppel have not been met. Most significantly, the issues presented in the Wordes action are not present in this case. This case involves the interpretation of the OHMS policy and OHMS's duty to defend, while the Wordes action involved an alleged violation of Minn. Stat. § 176.82.

III. Owners' Duty to Defend

Advanced Concrete alternatively argues that if OHMS did not have a duty to defend, then Owners had a duty to defend Advanced Concrete in the Wordes action. We disagree.

The language of the Owners policy does not mandate that Owners defend Advanced Concrete in the Wordes action. The Owners policy only provides coverage for "damages because of 'bodily injury' or 'property damage.'" The Wordes action, which alleged violation of Minn. Stat. § 176.82, is beyond the purview of actions that the Owners policy covers. Because the Wordes action only claimed financial injury and did not allege bodily injury or property damage as defined by the Owners policy, Owners did not have a duty to defend Advanced Concrete in that action.

Also, the Owners policy, like the OHMS policy, has an intentional act exclusion. As stated above, this exclusion applies to Advanced Concrete's actions in the Wordes suit. Thus, the district court did not err in determining that Owners did not have a duty to defend Advanced Concrete in the Wordes action.

IV. Attorney Fees

Owners moves this court for an order awarding its costs and attorney fees, pursuant to Minn. Stat. § 549.21 (1996) and Minn. R. Civ. P. 11, incurred in having to defend a frivolous appeal. Because we agree with the arguments set forth by Owners, Owners is entitled to $1,000 in attorney fees.


SHORT, Judge (concurring in part and dissenting in part)

I concur in the judgment only insofar as it holds the general liability insurance carrier had no duty to defend Advanced Concrete against Wordes's lawsuit. I respectfully dissent, however, because the workers' compensation insurer is subject to a duty to defend. The relevant policy applies to "bodily injury by accident or bodily injury by disease" and also provides that the insurer will "pay promptly when due the benefits required of [the insured] by the workers' compensation law."

Wordes sued Advanced Concrete to recover what he claimed to be his rightful level of Temporary Total Disability benefits. Because Wordes sought statutory compensation for his workplace back injury, the workers' compensation insurer is required by law to defend and indemnify Advanced Concrete. See Minn. Stat. § 176.185, subd. 3 (1996) (mandating that workers' compensation policies "provide compensation for injury or death in accordance with the full benefits conferred by this chapter"); Wojciak v. Northern Package Corp., 310 N.W.2d 675, 679 (Minn. 1981) (concluding, under policy clause indistinguishable from clause herein, that workers' compensation insurer was bound to indemnify insured against all compensatory and punitive damages awarded in wrongful termination suit under section 176.82).

The trial court's reliance on our decision in State Fund Mut. Ins. Co. v. Enebo, 458 N.W.2d 161 (Minn. App. 1990), review denied (Minn. Sept. 20, 1990), is misplaced. The issue in that case was the validity of an express exclusion of coverage for damages arising from the employer's discharge of an employee in violation of chapter 176. Id. at 162. Noting the plaintiff did not seek compensation for injury or death, we held the clause valid. Id. at 163. Advanced Concrete's policy, by contrast, does not contain an applicable exclusion and Wordes seeks compensation for his back injury.

The trial court erred in concluding the workers' compensation insurer had no duty to defend Advanced Concrete against Wordes's suit. Therefore, I would reverse and grant summary judgment for the insured against the workers' compensation insurer.