may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Jennifer J. Bryan,
Bernard Anfield, et al.,
Filed January 5, 1999
Reversed and remanded
Hennepin County District Court
File No. 982899
Frank Abramson, Lapp, Laurie, Libra, Abramson & Thomson, Chartered, One Financial Plaza, Suite 2500, 120 South Sixth Street, Minneapolis, MN 55402 (for respondent)
David D. Alsop, Anne T. Johnson, Anne M. Tofteland, Gislason, Dosland, Hunter & Malecki, P.O. Box 5297, Minnetonka, MN 55343-2297 (for appellants)
Considered and decided by Kalitowski, Presiding Judge, Shumaker, Judge, and Holtan, Judge.[*]
The trial court held that a liability insurer, not being a party to a tort action arising from an automobile accident, had no standing to bring a motion on behalf of its insureds to vacate a default judgment against them because there was no showing that the insureds agreed to or supported the motion. We reverse and remand.
Respondent sued both appellants. Neither answered nor notified Farmers of the lawsuit. Respondent obtained a default judgment of $75,000 against appellants.
When Farmers learned of the judgment against its insureds, it moved to vacate on their behalf. As of the date of the motion, Farmers had had no contact with the insureds in the past 18 months.
Farmers and respondent argued the merits of the motion under Minn. R. Civ. P. 60.02, the rule for vacating a final judgment. The trial court, however, determined that Farmers had no standing to bring the motion in the first place because Farmers was not a party and there was no evidence that the insureds wanted the judgment against them vacated.
Under Minnesota law, a person injured in an automobile accident has no right of direct action against the tortfeasor's liability insurer, but rather may sue only the tortfeasor. Rinn v. Transit Casualty Co., 322 N.W.2d 357, 358 (Minn. 1982). In essence, this means that a liability insurer cannot be a proper party to such a tort action.
The liability insurer has a duty to defend the action within the terms and limits of the insurance contract. Prahm v. Rupp Const. Co., 277 N.W.2d 389, 390 (Minn. 1979). The duty to defend continues through all proceedings unless and until it is determined that no coverage exists. Economy Fire and Cas. Co. v. Iverson, 445 N.W.2d 824, 826-27 (Minn. 1989); Lanoue v. Fireman's Fund Am. Ins. Co., 278 N.W.2d 49, 52 (Minn. 1979).
Accompanying the duty to defend is the insurer's right to exclusive control over the litigation. Hooper v. Zurich American Ins. Co., 552 N.W.2d 31, 36-37 (Minn. App. 1996) (insured's failure to give sufficient notice of lawsuit prejudiced insurer by depriving it of opportunity to control litigation); Nandorf v. CNA Insurance Cos., 479 N.E.2d 988, 991 (1985) ("Generally, the insurer's duty to defend includes the right to assume control of the litigation"); 14 George E. Couch, Couch on Insurance 2d § 51:35 (rev. ed. 1982). One significant purpose of the insurer's right of control is the prevention of collusion between a claimant and an insured. Id. at § 51:131.
Appellant Moore's insurance policy requires Farmers to defend any liability claim or lawsuit and reserves to Farmers the right to "settle when we consider it appropriate." The policy also requires the insured to cooperate with and assist Farmers in carrying out its duty to defend.
The duty to defend logically and necessarily includes the insurer's right to bring appropriate motions on behalf of the insured to protect the insured's interests. One such interest is the prevention of the award of a liability judgment against the insured. Generally, we would expect the respective interests of the insured and the insurer in the defense of a tort action to be compatible. The right of Farmers to bring a motion in the insureds' names to vacate a default judgment against them is implied by the duty to defend and the authority to control the litigation. This implication is particularly strong in states that prohibit the insurer from becoming an actual party to the tort action. We hold, therefore, that the trial court's ruling was erroneous as a matter of law.
Respondent and Farmers also argue the merits of the motion to vacate. On appeal, however, this court will not consider issues not decided by the trial court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). Although the trial court heard arguments on the merits of the motion, it did not rule on the merits. Accordingly, this issue must be remanded for further consideration and determination.
Reversed 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.