Gabrielson v. Warnemunde

• Decision Date: 01 November 1988
• Docket Number: No. C6-88-1011,C6-88-1011
• Citation: 430 N.W.2d 866
• Parties: Timothy D. GABRIELSON, et al., Appellants, v. James L. WARNEMUNDE, d/b/a Warnemunde Insurance Agency, Respondent.
• Court: Minnesota Court of Appeals

Page 866

430 N.W.2d 866

Timothy D. GABRIELSON, et al., Appellants, v. James L. WARNEMUNDE, d/b/a Warnemunde Insurance Agency, Respondent.

No. C6-88-1011.

Court of Appeals of Minnesota.

Nov. 1, 1988.

Review Granted Jan. 3, 1989.

Syllabus by the Court

The trial court erred in concluding that an insurance agent could not be found negligent for failing to inform the insured of need for additional coverage for liability arising out of the use of a motorboat with an outboard motor of more than 25 horsepower.

Terence L. Meany, Leighton, Meany, Cotter, Enger & Seibel, Ltd., Austin, for Timothy D. Gabrielson.

John D. Hagen, Jr., Minneapolis, for Gayle Gabrielson.

Frederick R. Jacobberger, Gilsdorf & Jacobberger, St. Paul, for James L. Warnemunde.

Heard, considered and decided by HUSPENI, P.J., and NORTON and HACHEY, ^* JJ.

OPINION

NORTON, Judge.

Timothy and Gayle Gabrielson appeal the summary judgment dismissing their negligence claim against insurance agent James L. Warnemunde. We reverse and remand.

FACTS

Respondent Warnemunde and James LaCanne have known each other most of their lives. They attended the same schools in Morristown, Minnesota, from grades K-12 and graduated together in 1973 from the same high school class of about 30 students. Although they never were close friends, they would occasionally run into each other in a local Morristown bar.

Throughout his childhood, LaCanne lived in a home on Cedar Lake where his parents owned and operated a lake resort. The LaCannes rented out numerous boats to vacationers and Warnemunde agreed that the LaCanne family could be characterized as "boat people." The LaCannes sold their resort in 1974 and soon thereafter LaCanne purchased his own home.

Sometime in early 1978, LaCanne learned that Warnemunde had recently purchased and was operating an insurance agency. LaCanne already had a homeowners insurance policy through another agent, but was willing to switch agents to support Warnemunde in his new business endeavor. LaCanne thus talked with Warnemunde and they subsequently met at LaCanne's house in the spring of 1978 to finalize the deal. Neither can remember the details of the discussion, but they agree Warnemunde asked many questions about the house and about LaCanne's personal property. Warnemunde used a checklist and one of the questions on the checklist was: "Is insurance to apply to watercraft?" The box "no" after the question was checked. LaCanne admits he owned no boat in 1978 and thus did not at that time need liability coverage for boat accidents. Warnemunde did not tell him, however, that a special endorsement would be necessary if LaCanne acquired a boat equipped with an outboard motor of over 25 horsepower.

Warnemunde subsequently procured a homeowner's policy for LaCanne, effective May 28, 1978, through May 28, 1979. The policy was subsequently renewed for one year terms beginning May 1979, 1980, 1981 and 1982. LaCanne claims that Warnemunde never spoke with him or came out to his home prior to any of the policy renewals. Although Warnemunde disputes these claims, he has agreed for purposes of this motion that he did not go out to LaCanne's house when the policy was renewed. Thus, Warnemunde agreed for purposes of this motion that the policy was renewed simply by his mailing of a statement to LaCanne and LaCanne's subsequent mailing of the annual premium.

Sometime in April 1982 LaCanne purchased a boat with a 50 horsepower outboard motor. He did not tell Warnemunde about the boat because he was not aware his policy excluded coverage for bodily injury or liability "arising out of the ownership, maintenance, use, loading or unloading of: * * * a watercraft * * * powered by one or more outboard motors with more than 25 total horsepower * * *."

LaCanne admitted he did not thoroughly read his policy. Warnemunde said that homeowners normally do not understand the provisions of their policies, however, and thus rely on him, as an insurance professional, to make sure they are adequately covered.

On August 7, 1987, while operating his motorboat, LaCanne injured Timothy Gabrielson. The Gabrielsons subsequently brought an action against LaCanne. The homeowner's insurance carrier, Gopher State Mutual, moved for and obtained a declaratory judgment that it was not liable to defend or indemnify LaCanne because coverage was excluded by the policy. The Gabrielsons and LaCanne then entered into a stipulation whereby LaCanne admitted negligence and confessed judgment for $125,000. However, the Gabrielsons agreed they could recover on the judgment only to the extent Warnemunde was liable to LaCanne for negligence in procuring and servicing LaCanne's insurance policy. LaCanne then assigned his cause of action to the Gabrielsons and the Gabrielsons commenced this action against Warnemunde.

In his own defense, Warnemunde testified at length in his deposition about how he was trained as an insurance agent and about his standard procedures for selling and renewing policies. He said that since 1975 he has been an independent insurance agent licensed to write fire, casualty, auto, life, health and homeowners insurance. Before being licensed, he attended classes at a school for insurance agents where he learned how to write and sell the various types of policies.

He said that after he sold a homeowners' policy, his standard procedure was to go out to the insured's home every year to renew the policy. He said he did not have a written checklist, but would basically go out to the home and see if there had been any additions or remodeling done. He said the way to "get the best grip on what was happening [was] by going out and just eyeballing what was going on and talking to them." He did not, however, make specific inquiries to see if there might be items which came within exclusions to the policy.

Warnemunde moved for summary judgment, arguing that he had no duty to each year determine whether or not LaCanne had purchased a motorboat with an engine over 25 horsepower. The record for the motion consisted of Warnemunde's and LaCanne's depositions and an affidavit by a Certified Property Casualty Underwriter (CPCU). The affidavit recited the facts of the case and expressed the opinion that Warnemunde "did not exercise the standard of skill and care that others in the business would have exercised."

The trial court granted Warnemunde's summary judgment motion. In its supporting memorandum, it reasoned:

LaCanne, as the purchaser of personal property and purchaser of the homeowner's policy, is in a much better position to notify the insurance carrier of his purchases and of his protection requests than placing that burden on the insurance carrier.

While it is an excellent suggestion that an insurance agent have a yearly consultation with their policyholders regarding their insurance needs, absent a legal duty to do so, there is no legal liability if they do not do so.

The Gabrielsons appeal from this summary judgment.

ISSUE

Did the trial court err in concluding that, as a matter of law, Warnemunde could not have been negligent for failing to offer additional coverage?

ANALYSIS

The moving party is entitled to summary judgment if, based on the entire record, there is no issue of material fact and the moving party is entitled to judgment as a matter of law. Minn.R.Civ.P. 56.03; Bixler by Bixler v. J.C. Penney Co., Inc., 376 N.W.2d 209, 215 (Minn.1985). The parties have stipulated, for the purposes of this motion, to any facts which might be disputed at trial. Therefore, the only issue is whether the trial court...