Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Sharon Steinhofer Gertken, as parent
and natural guardian of Shannon Barthel,
Jessica Barthel, and Kristin Barthel,
Brian Barthel, et al.,
North Star Mutual Insurance Company, garnishee,
Filed February 3, 1998
Stearns County District Court
File No. C8-94-3873
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 appellant garnishee)
Michael J. Lieberg, Rinke-Noonan, 700 Norwest Center, P.O. Box 1497, St. Cloud, MN 56302 (for respondent judgment creditor)
Considered and decided by Crippen, Presiding Judge, Toussaint, Chief Judge, and Foley, Judge.[*]
After entry of a judgment, a garnishee who returns a disclosure is entitled to discharge 180 days after service of the garnishment summons unless the creditor moves for leave to file a supplemental complaint against the garnishee. Appellant North Star Mutual Insurance Company argues that the trial court erred in determining that the garnishment becomes a nullity, thus avoiding the discharge, if the underlying judgment represents a defective Miller-Shugart settlement, one that fails to allocate damages among several defendants. We reverse.
The underlying judgment, entered by consent as part of a Miller-Shugart settlement, provided that the three defendants were jointly liable to respondent for $1,000,000 in damages. Respondent discovered shortly after the garnishment summons was served that the settlement was flawed because it failed to allocate damages among the defendants. See Bob Useldinger & Sons v. Hangsleben, 505 N.W.2d 323, 331 (Minn. 1993) (affirming that agreements were unenforceable, unreasonable as a matter of law, because they failed to allocate damages between defendants). Respondent moved to vacate the consent judgment.
The trial court examined Useldinger and noted that it refers to the unreasonable Miller-Shugart settlement both in terms of "unenforceable" and "void." The court therefore determined that respondent's consent judgment was a nullity and that the garnishment proceedings, being ancillary to the main judgment, were also a nullity. On this premise, the court denied appellant's motion to confirm its discharge, evidently concluding that the garnishment action became a nullity before appellant could claim its 180-day discharge rights.
The usual force and effect of the garnishment statutes are not in dispute. See Lynch v. Hetman, 559 N.W.2d 124, 126 (Minn. App. 1996) (recognizing garnishee's entitlement to discharge from further obligation to creditor unless creditor follows statutory procedure for contesting disclosure), review denied (Minn. Mar. 26, 1997); In re Estate of Absey, 470 N.W.2d 713, 716 (Minn. App. 1991) (confirming lapse of garnishment proceedings after expiration of time permitted for further proceedings, because Minn. Stat. § 571.79 says that the garnishee "shall" be discharged in these circumstances).
As the trial court observed in its discussion of Useldinger, an insured may be entitled to vacation of a judgment that is premised on a defective Miller-Shugart agreement. But it does not follow that the consent judgment, along with its ancillary enforcement proceedings, disappears ab initio so that a creditor need not comply with laws governing garnishment proceedings when the creditor chooses to initiate a proceeding of that kind. In Useldinger, the supreme court did not treat the underlying garnishment action as a nullity or void; rather it remanded the case for a trial court determination on the coverage question raised in the garnishment proceedings. 505 N.W.2d at 332. There is no evident legal significance to the Useldinger court's transposing "void" and "unenforceable" in its lengthy discussion of an unreasonable Miller-Shugart agreement. If total disregard of a flawed judgment and the subsequent garnishment is to be a part of our law, it remains within the prerogative of the supreme court to announce such a principle.
We recognize that the garnishment statutes, formulated as part of the law of creditors' remedies, offer unusual hazards for a personal injury claimant who is using the proceeding solely as an avenue to bring a direct action against a defendant's insurer. But these hazards do not give us the authority to disregard statutory law, and our misapplication of the statute would create a serious risk of wrongfully disturbing settled practice in the field of creditors' remedies law.
2. Vacation of consent judgment
Appellant also disputes the trial court's decision to vacate respondent's original judgment. Because appellant's concern is ultimately confined to use of the vacation as a device to avoid requirements of the garnishment law, and because we have upheld the appellant's right to a garnishment discharge, we leave the vacation decision undisturbed.
The case is unnecessarily complex because appellant attempts in this case to resolve the question of whether the discharge under section 571.79 will preclude any future garnishment proceeding by respondent to determine whether the defendants have insurance coverage and whether respondent and the defendants have reached a reasonable settlement. To present this issue, appellant's motion to confirm its discharge claimed that the discharge would "prevent the judgment creditors from again proceeding against North Star Mutual in this court or any other court." Respondent successfully obtained vacation of her original judgment and proceeded to obtain a new judgment that she believes is enforceable. As of the time this appeal was filed, no garnishment proceedings had been attempted under the second judgment.
Given the parties' dispute on the question of whether a future garnishment would be precluded by a discharge of appellant under section 571.79, the trial court refused to confirm the discharge, based on its proposition that the original judgment and the garnishment proceeding were void before appellant became entitled to a discharge. In this fashion, the trial court avoided a holding on the res judicata effect of a discharge. Appellant nevertheless argues that that it should have its discharge confirmed with a declaration that this protects it from future claims of respondent.
As respondent contends, it is premature at this stage of the proceedings to address the question of whether the statutory discharge of appellant has a preclusive effect. No new garnishment proceedings having been attempted, the trial court correctly refrained from rendering a decision on the res judicata question and we cannot address the issue.
We have considered but find no merit in respondent's contention that the trial court's order denying appellant's motion to confirm its discharge is not appealable. Garnishment proceedings are "special proceedings," and this order is a "final" determination "affecting a substantial right." See Minn. R. Civ. App. P. 103.03(g); Johnson Motor Co. v. Cue, 352 N.W.2d 114, 115 (Minn. App. 1984) (garnishment is a "special proceeding"), review denied (Minn. Oct. 11, 1984).
The trial court's order denying appellant's motion to confirm its discharge is reversed.
[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.