Mark D. Pilon, Hanft, Fride, O'Brien, Harries, Swelbar & Burns, P.A., 1000 First Bank Place, 130 West Superior Street, Duluth, MN 55802-2094 (for respondent)

James B. Peterson, Falsani, Balmer, Berglund & Peterson, 1200 Alworth Building, 306 West Superior Street, Duluth, MN 55802 (for appellant)

Considered and decided by Amundson, Presiding Judge, Huspeni, Judge, and Kalitowski, Judge.

Appellant James Salo challenges the district court's determination that he misrepresented his employment status to his disability insurance carrier, respondent Ohio Casualty Group. Appellant contends the district court erred by (1) calling for and considering evidence after the conclusion of the trial; and (2) concluding appellant's silence constituted an intentional misrepresentation to respondent. We reverse.

Appellant argues the district court erred by sua sponte requesting and accepting into evidence respondent's no-fault automobile insurance policy. We agree. The court must base its decision solely upon the evidence admitted at trial.

It is elementary that a finding by a trier of fact must be based exclusively upon evidence received in the course of trial and that it is not permissible to obtain or consider other evidence.

Green v. Independent Consol. Sch. Dist. No. 1, 252 Minn. 36, 46, 89 N.W.2d 12, 19 (1958). Because respondent specifically elected not to introduce the insurance policy, we conclude the district court erred in considering it.

Respondent contends that even if the district court erred, the error was not prejudicial because, as in Green, the district court indicated its decision was based only on evidence received in the course of the trial. We disagree. The district court referenced the insurance contract several times in its initial order for judgment, and cited the contract's subrogation clause as creating a duty to disclose on the part of appellant. Although in an order responding to appellant's motion for amended findings, the district court removed all references to the insurance contract, the court stated its findings "for the most part" were based on the testimony of appellant, who was the only witness at trial. On this record we cannot conclude the district court's consideration of evidence not presented at trial was not prejudicial.

A reparation obligor may bring an action to recover benefits which are not payable, but are in fact paid, because of an intentional misrepresentation of a material fact, upon which the reparation obligor relies, by the claimant or by a person providing products or services for which basic economic loss benefits are payable. The action may be brought only against the person providing the products or services, unless the claimant has intentionally misrepresented the facts or knew of the misrepresentation. A reparation obligor may offset amounts the reparation obligor is entitled to recover from the claimant under this subdivision against any basic economic loss benefits otherwise due the claimant.

(Emphasis added.)

Respondent overpaid appellant's wage-loss benefits in the amount of $3,394 because respondent did not know that appellant had resumed his employment. At no time after appellant began working full time did a representative of respondent ask him whether he had resumed his job, and appellant did not volunteer that information. There is no evidence that appellant lied to respondent about his working status. Thus, the issue is whether the evidence in the record, which does not include the insurance contract, supports a conclusion that appellant had a duty to inform respondent that he had resumed employment.

"Generally, the existence of a legal duty is an issue for the court to determine as a matter of law." Larson v. Larson, 373 N.W.2d 287, 289 (Minn. 1985). A reviewing court need not give deference to a district court's decision in an application of law. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).

Fraudulent misrepresentation is an intentional tort for which scienter is an essential element. Florenzano v. Olson, 387 N.W.2d 168, 173 (Minn. 1986). Although it is undisputed that appellant made no affirmative misrepresentation to respondent, culpability for fraudulent misrepresentation also can be found if appellant breached a duty to speak. Boubelik v. Liberty State Bank, 553 N.W.2d 393, 398 (Minn. 1996).

Since respondent chose not to introduce the insurance contract into evidence, respondent cannot assert a duty to speak based on contract but must look to equity. "As a general rule, one party to a transaction has no duty to disclose material facts to the other." Klein v. First Edina Nat'l Bank, 293 Minn. 418, 421, 196 N.W.2d 619, 622 (1972). While there is normally no such duty to disclose, the Klein court discussed three special circumstances in which that duty may be imposed:

(a) One who speaks must say enough to prevent his words from misleading the other party.

(b) One who has special knowledge of material facts to which the other party does not have access may have a duty to disclose these facts to the other party.

(c) One who stands in a confidential or fiduciary relation to the other party to a transaction must disclose material facts.

Id. (citations omitted).

The first circumstance does not apply here because appellant said nothing. The special knowledge exception applies only if appellant had actual knowledge of a material fact to which respondent did not have access. The district court relied on Richfield Bank & Trust Co. v. Sjogren, 309 Minn. 362, 244 N.W.2d 648 (1976), and determined this exception was applicable. The court in Richfield, however, applied the exception to circumstances it called "unique and narrow." Id. at 369, 244 N.W.2d at 652. Further, Richfield is distinguishable because access to the bank records would have been much more difficult for those plaintiffs to obtain than respondent's access to information concerning appellant's employment status here. Respondent could have acquired the information by simply asking appellant or inquiring of appellant's employer concerning appellant's employment status. Further,

[w]hen a concealed fact is not peculiarly within a defendant's knowledge and is readily ascertainable, the failure to disclose that fact does not amount to fraud.

Boubelik, 553 N.W.2d at 400. Thus, Boubelik restricted the already narrow Richfield Bank holding to eliminate recovery by parties with access to information through ordinary channels. We conclude the second exception does not apply.

The third exception stems from the requirement that one who stands in a confidential or fiduciary relationship to the other party in a transaction must disclose any material facts. Such relationships could include general partners to limited partners, attorney to client, and trustee to beneficiary. Under these facts and without any additional circumstances, there is no support for a finding that the policyholder was a fiduciary to the insurance agent or company. See Stark v. Equitable Life Assurance Soc'y, 205 Minn. 138, 145, 285 N.W. 466, 470 (1939) (noting that absent additional factors, the insured should know that the insurance agent represents adverse interests). Following the reasoning of Stark, the insurer should recognize that its interests are adverse to the policyholder's, and thus, no fiduciary relationship exists. Because none of the special circumstances apply, we conclude appellant had no equitable duty to disclose his working status to respondent.

Finally, we note that respondent presented no evidence that it relied on appellant's silence to determine appellant had not resumed full-time employment. Thus, even if we were to conclude that appellant's silence constituted an intentional misrepresentation, absent evidence of reliance on the alleged misrepresentation, respondent's claim under Minn. Stat. § 65B.54 fails.

Reversed.