Arndt v. American Family Ins. Co.

• Citation: 394 N.W.2d 791
• Decision Date: 24 October 1986
• Docket Number: No. C5-85-1342,C5-85-1342
• Court: Supreme Court of Minnesota (US)
• Parties: Jeffrey ARNDT, et al., Petitioners, Appellants, v. AMERICAN FAMILY INSURANCE COMPANY, Respondent, Ronald Kieffer, Defendant.

Page 791

394 N.W.2d 791

Jeffrey ARNDT, et al., Petitioners, Appellants, v. AMERICAN FAMILY INSURANCE COMPANY, Respondent Ronald Kieffer, Defendant.

No. C5-85-1342.

Supreme Court of Minnesota.

Oct. 24, 1986.

Syllabus by the Court

1. Court of Appeals properly declined to address issue where respondent insurer failed to file a notice of review.

2. Exclusion in insurance policy applies to bar recovery against insurer.

Thomas Laughlin, St. Paul, for appellants.

Willard L. Converse, St. Paul, for respondent.

Heard, considered, and decided by the court en banc.

AMDAHL, Chief Justice.

Appellants Jeffrey and Beverly Arndt filed suit to determine whether respondent-insurer American Family Insurance Company (American) is obligated to pay appellants' insurance claim, which was based on a farm family liability policy issued by American to the defendant, Ronald Kieffer (Kieffer). The trial court determined that the policy excluded coverage for the injuries sustained by appellants and granted summary judgment to American. The Court of Appeals, 380 N.W.2d 885, reversed, holding that exclusion 1(d) cited by the trial court did not preclude coverage. The Court of Appeals also determined that Coverage B, "Personal Liability Coverage," was applicable to the occurrence but further held that exclusion 4, which excluded Coverage B for any insured who resided off the insured premises, precluded such coverage. The Court of Appeals further held that since exclusion 4 precluded coverage only under Coverage B, Coverage C, providing for medical expense coverage, was applicable and awarded Kieffer that coverage. Our holding that exclusion 1(d) is effective excludes all coverage, and we therefore reverse the Court of Appeals determination that medical expense coverage existed under Coverage C and its holding that exclusion 1(d) is not applicable and we thus affirm, although on other grounds, its holding that coverage under Coverage B was excluded.

On New Year's Day 1983, Jeffrey Arndt was assisting his friend Ronald Kieffer manually unload frozen cornstalks from a farm implement called a chopper box. The shredded stalks were to be used as bedding in the barn located on the premises. While unloading the stalks, Arndt was caught in the machine's beaters and seriously injured.

Kieffer, along with his father Raymond and brother Daniel, are the named insureds on a "farm family liability policy" issued by American and in effect at the time of the accident. The policy lists the insured premises as consisting of 127.6 acres of property in Abbotsville, Wisconsin, where the farm's main dairy operations are located. The policy also lists a house on the Abbotsville plot as "additional premises covered." Though the policy only describes 127.6 acres, the total family farm consists of 210 acres of land owned by the Kieffers and 60 more acres which they rent. Daniel and Ronald are in the process of purchasing the farm from their father and operate it as a partnership.

The accident in question occurred on a 5-acre parcel of land in Dorchester, Wisconsin, where defendant was residing at the time. The Dorchester property is about 4 miles north and 3 miles east of the insured property and is not listed in the insurance policy. Title to the Dorchester property is in Ronald Kieffer's name alone. The Dorchester property has a house, a barn and a shed, and Kieffer has homeowner's insurance for the Dorchester house with a different insurer than American.

Following the accident, appellants filed a personal injury suit against Kieffer. Those parties subsequently entered into a stipulation and confession of judgment on the condition that it be satisfied only from the proceeds of insurance policies in effect at the time of the accident. Appellants commenced a garnishment action against American to satisfy the judgment, but abandoned the action after American denied liability. Appellants then filed a declaratory judgment action against American, seeking to determine if it was obligated to pay on the policy. Both the appellants and American moved for summary judgment. The trial court dismissed the declaratory judgment action, holding that appellants had no standing to contest the meaning of the insurance contract to which they were not a party. The trial court allowed appellants to orally amend their garnishment action, however, and adjudicated on the merits.

Before examining the language of the policy, we will address an issue raised by American. In the Arndts' appeal to the Court of Appeals, American argued that the trial court improperly allowed appellants to amend their garnishment complaint. The Court of Appeals refused to address the issue, finding that insurer had failed to file a notice of review as required under Minn.R.Civ.App.P. 106. ¹ We think the Court of Appeals properly applied Rule 106.

We have previously applied Rule 106 to bar respondents from presenting issues not raised by a notice of review. In Pine River State Bank v. Mettille, 333 N.W.2d 622, 632 (Minn.1983), the court refused to address whether respondent was entitled to show additional damages for mental anguish because respondent filed no notice of review. Similarly, in Ford v. Chicago, Milwaukee, St. Paul and Pac. R.R. Co., 294 N.W.2d 844, (Minn.1980), we refused to review the trial court's denial of a motion to join another defendant because respondents "did not file a notice of review to preserve this issue as required by Minn.R.Civ.App.P. 106 * * *." Id. at 845.

We find unpersuasive American's argument that it was not required to file a notice of review because the judgment was entirely in its favor. The issue of whether appellants could amend their garnishment action was decided adversely to American, but American did not file a notice of appeal because the trial court ultimately decided against coverage. This is the exact situation Rule 106 is intended to cover. See 3 E. Magnuson, D. Herr & R. Haydock, Minnesota Practice: Appellate Rules Annotated 250 (2d.ed. 1985). The policy for Rule 106 is to avoid piecemeal decisions and allow an appellate court to resolve all issues in one proceeding. Id. at 251; see Kostelnik v. Kostelnik, 367 N.W.2d 665, 669-70 (Minn.App.1985).

We also reject the insurer's argument that it was excused from filing a notice of review because the trial court order was not appealable. We have not addressed this exact issue; however, in Kostelnik, the Court of Appeals stated that "Rule 106 does not condition the right to file a notice of review on the order being an appealable order as to respondent * * *. Its purpose is to allow a matter that the appellate court will be hearing anyway to be heard in its entirety." 367 N.W.2d at 670. If the right to file a notice of review is not dependent on the order being appealable, it is logical that the requirement of filing a notice of review is not conditional on the order being appealable. American was thus not excused from filing a notice of review to present the issue arising from the trial court's memorandum order.

American correctly points out that the Court of Appeals and this court both have authority under Minn.R.Civ.App.P. 102 and Minn.R.Civ.App.P. 103.04 to suspend the rules or address specific issues despite a party's failure to satisfy the procedural rules. The decision whether to exercise that power was within the sound discretion of the Court of Appeals, however. We believe the enforcement of Rule 106 will encourage future respondents to file notices of review, thus providing the court and all parties with notice of all issues to be addressed on appeal.

We now turn to the issue of whether exclusion 1(d) in the policy bars coverage for the injuries suffered by Jeffrey Arndt. Under the policy, the Kieffers subscribed to three types of coverage: Coverage A under the policy is "Farm Liability Coverage", Coverage B is entitled "Personal Liability Coverage", and Coverage C is described as "Medical Expense Coverage to the Public." The policy limits insurer's liability, however, by specifying exclusions to coverage. Exclusion 1(d), the exclusion at issue, states: "All coverages under this policy do not apply to any bodily injury or property damages: * * * arising out of the ownership, use or control by or rental to any insured of any premises, other than insured premises." The trial court found this exclusion to prohibit recovery against American. The Court of Appeals reversed, citing our decision in Lanoue v. Fireman's Fund Am. Ins. Co., 278 N.W.2d 49 (Minn.1979).

In Lanoue, the plaintiff-insured stored bottles of whiskey at a superette he owned. The liquor was his personal property; the store did not sell whiskey. Some minors took and drank the whiskey without plaintiff's knowledge or consent and were later involved in a car accident. The defendant-insurer, which issued a homeowner's policy to plaintiff, denied coverage or defense of plaintiff based on an exclusion that barred coverage for injuries or damage " 'arising out of any premises, other than an insured premises, owned, rented or controlled by the insured.' " Id. at 53. In determining that the insurer was obligated to defend, we analyzed the "other premises" exclusion and stated:

[T]he premises must bear some causal relationship to the liability. Such a relationship is apparent when a claimant trips over improperly maintained steps. In this case, however, causation is more difficult to perceive. The fact that something occurs at a place is not sufficient by itself to imply causation as to that place. It is more appropriate under the facts of ...