Bartell v. Tara Mut. Fire Ins. Co.

• Decision Date: 27 June 2022
• Docket Number: A21-1665
• Parties: Michael Bartell, Respondent, v. Tara Mutual Fire Insurance Company, Appellant, Donnelly Agency, Inc., Respondent.
• Court: Minnesota Court of Appeals

Michael Bartell, Respondent,
v.
Tara Mutual Fire Insurance Company, Appellant,

Donnelly Agency, Inc., Respondent.

No. A21-1665

Court of Appeals of Minnesota

June 27, 2022

This opinion is nonprecedential except as provided by Minn. R. Civ. App. P. 136.01, subd. 1(c).

Douglas County District Court File No. 21-CV-20-1531

William C. Weeding, Britton D. Weimer, Weimer &Weeding, PLLC, Bloomington, Minnesota (for respondent Michael Bartell)

John J. Neal, Boe M. Piras, Willenbring, Dahl, Wocken &Zimmermann, PLLC, Cold Spring, Minnesota (for appellant)

Robin C. Merritt, Hanft Fride, Duluth, Minnesota (for respondent Donnelly Agency, Inc.)

Considered and decided by Worke, Presiding Judge; Reilly, Judge; and Frisch, Judge.

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REILLY, JUDGE.

In this dispute arising from insurance coverage for a grain dryer damaged in a fire, appellant-insurer challenges the district court's grants of summary judgment to respondent insured and respondent-agent, as well as the district court's denial of summary judgment in favor of appellant-insurer. We conclude that genuine issues of material fact preclude summary judgment. Thus, we affirm the district court's decision to deny appellant insurer's summary-judgment motion against respondent-insured. We conclude that the district court erred by granting respondent-insured's summary-judgment motion against appellant-insurer for reformation of the contract, and we reverse and remand. Lastly, we conclude that the district court erred by granting respondent-agent's summary-judgment motion against appellant-insurer, and we reverse and remand.

FACTS

In 2016, respondent-insured Michael Bartell inherited farm property and equipment. Bartell approached respondent-insurance agency, Donnelly Agency Inc. (Donnelly), to discuss his insurance needs. Donnelly has an agency contract with appellant-insurer Tara Mutual Insurance Company (Tara Mutual), which sells insurance products in Minnesota.

Between October 2016 and May 2017, Bartell spoke with Donnelly's insurance agent (the agent) about his future insurance needs for the farm, vehicles, and farm equipment. Bartell compiled a list of the property he wanted insured, including a 2009 Grain Handler Model 2410 Grain Dryer (the grain dryer). In March 2017, Bartell provided the agent with an appraisal document containing a description and appraised value of each

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item, including the grain dryer. Bartell told the agent he wanted coverage for everything listed on the appraisal document. The agent agreed to bind coverage for the property and equipment listed in the appraisal document.

In June 2017, the agent sent a letter to Tara Mutual stating, "Effective 06/06/17 please add on the dwelling, outbuilding and bins as per the attached Delaware policy to the above referenced insured's policy." Bartell once had a policy with Delaware Mutual Insurance Company and the agent "went off the Delaware policy." The agent could not remember how she acquired the Delaware Mutual policy. In any event, the grain dryer was not included on that list.

In November 2018, the grain dryer was damaged in a fire. Bartell reported the damage to the agent, and she agreed to open a claim on the damaged item. Bartell submitted a claim for the grain dryer to Tara Mutual. Tara Mutual denied the claim because Bartell did not have coverage for the grain dryer. Donnelly conceded that it failed to include the grain dryer on Bartell's insurance policy. Donnelly's liability carrier agreed to pay Bartell for his loss. Bartell entered into a loan receipt agreement with the liability carrier permitting the liability carrier, through Bartell, to sue Tara Mutual to reform the insurance policy to include the grain dryer.

In October 2019, Bartell filed a complaint seeking reformation of the contract and monetary damages. Bartell alleged that the agent, as an authorized agent of Tara Mutual, agreed to bind coverage for the value of the grain dryer and that he relied on the agent to prepare the insurance policy. Tara Mutual filed a third-party complaint against Donnelly for indemnification. Donnelly moved for summary judgment to dismiss Tara Mutual's

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third-party complaint. Bartell also moved for summary judgment and sought to have the insurance policy equitably reformed to provide coverage for the grain dryer. Tara Mutual opposed these motions and cross-moved for summary judgment. Following a hearing, the district court granted Bartell's motion, reformed the insurance policy to include coverage for the grain dryer, and ordered Tara Mutual to pay damages. Based on this ruling, the district court denied Tara Mutual's summary-judgment motion against Bartell. The district court also granted Donnelly's summary-judgment motion against Tara Mutual and dismissed Tara Mutual's third-party complaint against Donnelly.

Tara Mutual now appeals.

DECISION

Summary judgment is appropriate if "there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Minn. R. Civ. P. 56.01. "A genuine issue of material fact exists if a rational trier of fact, considering the record as a whole, could find for the nonmoving party." Leeco, Inc. v. Cornerstone Bank, 898 N.W.2d 653, 657 (Minn.App. 2017), rev. denied (Minn. Sept. 27, 2017). A material fact is one that will affect the outcome or result of a case. O'Malley v. Ulland Bros., 549 N.W.2d 889, 892 (Minn. 1996). We review a grant of summary judgment de novo, viewing "the evidence in the light most favorable to the nonmoving party and resolv[ing] all doubts and factual inferences against the moving part[y]." Maethner v. Someplace Safe, Inc., 929 N.W.2d 868, 874 (Minn. 2019) (quotation omitted).

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I. The district court erred by granting Bartell's motion for summary judgment.

Tara Mutual argues the district court erred by granting summary judgment in Bartell's favor on his contract-reformation claim. Contract reformation "is an equitable remedy that is available when a party seeks to alter or amend language in a contract so that the contract reflects the parties' true intent when they entered into the contract." SCI Minn. Funeral Servs., Inc. v. Washburn-McReavy Funeral Corp., 795 N.W.2d 855, 864 (Minn. 2011). An appellate court reviews equitable determinations for an abuse of discretion. City of N. Oaks v. Sarpal, 797 N.W.2d 18, 23 (Minn. 2011). But "[t]he determination of whether a genuine issue of material fact exists is . . . subject to de novo review." Brookfield Trade Ctr., Inc. v. County of Ramsey, 609 N.W.2d 868, 874 (Minn. 2000); see also SCI, 795 N.W.2d at 861 (noting that an appellate court "review[s] legal decisions on summary judgment under a de novo standard" and that this "standard of review does not change simply because the claims at issue are for equitable relief").

Tara Mutual argues that Bartell has not satisfied his burden of establishing that Donnelly agreed to insure the grain dryer. A party seeking contract reformation must prove that:

(1) there was a valid agreement between the parties expressing their real intentions; (2) the written instrument failed to express the real intentions of the parties; and (3) this failure was due to a mutual mistake of the parties, or a unilateral mistake accompanied by fraud or inequitable conduct by the other party.

SCI, 795 N.W.2d at 865 (quotation omitted). These elements must be established through "evidence which is clear and consistent, unequivocal and convincing." Id. (quotation

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omitted). The party seeking reformation bears an "onerous" burden. Tollefson v. Am. Fam. Ins. Co., 226 N.W.2d 280, 284 (Minn. 1974).

Tara Mutual argues the district court erred by granting Bartell's claim for contract reformation for a mutual mistake of the parties because there are material facts in dispute and the district court improperly construed these facts in Bartell's favor.

We agree. In granting Bartell's contract-reformation claim, the district court determined that:

While the memories of the participants are not clear as to the order of events or the exact substance of the communications, there is certainty in both [the agent's] testimony and [Bartell's] testimony that a request for insurance was made, it was meant to include the dryer, and the intent of everyone was to bind insurance for the dryer in June of 2017 .... Despite the muddled memories evident in the depositions, this is a clear-cut case of mutual mistake.

Based on our review of the record, we conclude there are material facts in dispute and the district court erred by weighing and resolving the conflicting testimony and construing disputed facts in Bartell's favor. In March 2017, Bartell provided the agent with an appraisal document for the items he wanted insured. Bartell stated he told the agent he "wanted coverage for everything listed which included the house, the machine sheds, grain bins, grain legs, and the [grain dryer]." Bartell claims he and the agent "intended and agreed that she would bind coverage for the [grain dryer] which was listed in the inventory/appraisal."

Yet in his deposition Bartell testified that he could "not recall" whether, or when, he asked the agent to insure the grain dryer. During his deposition, Bartell stated that he

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sat down with the agent and "discussed the items[,] [or] at least the relevant pages." Counsel for Tara Mutual asked Bartell if he remembered telling the agent, "I have a 2009 grain dryer and it needs to be insured." Bartell responded, "I don't recall."...