Giersdorf v. A & M Constr., Inc.

Decision Date05 September 2012
Citation820 N.W.2d 16
PartiesRoger A. GIERSDORF, Respondent, v. A & M CONSTRUCTION, INC., Respondent, and The Hartford, Relator, and Merrimac Construction Company, Inc. and General Casualty Insurance Company, Respondents, and Rivers Edge Hospital & Clinic, New River Medical Center, Mayo Clinic, Minneapolis Clinic of Neurology, Minnesota Department of Labor & Industry/VRU, Minnesota Department of Human Services/BRS, Hennepin Faculty Associates, Consulting Radiologists, and HealthPartners, Inc., Intervenors–Respondents.
CourtMinnesota Supreme Court

OPINION TEXT STARTS HERE

Syllabus by the Court

The workers' compensation courts have subject matter jurisdiction to hear the respondent-employer's petition for a declaration of insurance coverage because the underlying claim in the petition involves insurance coverage, not breach of contract.

Thomas J. Peterson, McCollum, Crowley, Moschet & Miller, Ltd., Minneapolis, MN, for insurer-relator The Hartford.

Devin Murphy, Julia Douglass, Aafedt, Forde, Gray, Monson & Hager, P.A., Minneapolis, MN, for employer-respondent A & M Construction, Inc.

Jerry J. Lindberg, Lindberg Law, P.C., Sauk Rapids, MN, for employee-respondent.

David O. Nirenstein, Melissa S. Hareid, Fitch, Johnson, Larson & Held, P.A., Minneapolis, MN, for employer-respondent Merrimac Construction Company, Inc. and insurer-respondent General Casualty Insurance Company.

Carolyn Roach, St. Peter, MN, for intervenor-respondent Rivers Edge Hospital & Clinic.

Robert B. Hartley, Jr., Columbia Heights, MN, for intervenor-respondent New River Medical Center.

Jennifer Christie, Rochester, MN, for intervenor-respondent Mayo Clinic.

Ann Maike, Minneapolis, MN, for intervenor-respondent Minneapolis Clinic of Neurology.

Cherly D. Eliason, St. Paul, MN, for intervenor-respondent Minnesota Department of Labor & Industry/VRU.

Michael L. Schoff, St. Paul, MN, for intervenor-respondent Minnesota Department of Human Services/BRS.

Chris Rowe, Minneapolis, MN, for intervenor-respondent Hennepin Faculty Associates.

Sharon Hemmeke, Phoenix Management Systems, Inc., Minneapolis, MN, for intervenor-respondent Consulting Radiologists.

Christopher A. Seipel, Minneapolis, MN, for intervenor-respondent HealthPartners, Inc.

OPINION

STRAS, Justice.

The issue presented in this case is whether the workers' compensation courts have the authority to hear a petition filed by A & M Construction, Inc. (A & M) to determine whether The Hartford (Hartford) has a duty to defend and indemnify A & M under a policy for workers' compensation insurance. Hartford moved to dismiss A & M's petition, arguing that the compensation judge did not have subject matter jurisdiction to hear A & M's petition because the petition asserted a breach of contract claim rather than one arising under the workers' compensation laws. The compensation judge disagreed and denied Hartford's motion to dismiss. The Workers' Compensation Court of Appeals (“the WCCA”) affirmed the compensation judge's decision, concluding that A & M was seeking a declaration that its insurance coverage with Hartford was still “in effect,” a question within the compensation judge's authority to decide. We affirm and remand to the compensation judge for further proceedings.

I.

According to the facts alleged in A & M's petition, Hartford provided workers' compensation liability insurance to A & M from June 12, 2007, until June 12, 2008. Following an audit of A & M's financial records, Hartford increased A & M's annual premium by $8,242 for the period from June 12, 2008, to June 12, 2009. Hartford then billed A & M for the entire premium owed for the policy year, even though Hartford had allegedly agreed to bill A & M in equal installments over the remaining billing cycles of the policy year. When A & M failed to pay the annual premium, Hartford gave notice of its intent to cancel the policy. Hartford then purportedly cancelled A & M's policy on December 18, 2008.

On January 20, 2009, A & M employee Roger Giersdorf suffered an alleged work-related injury. Giersdorf later filed a claim for workers' compensation coverage with the Office of Administrative Hearings. The parties joined in the action included Giersdorf's employer, A & M; the general contractor on the project on which Giersdorf allegedly was injured, Merrimac Construction Company, Inc. (“Merrimac”); and Merrimac's insurer, General Casualty Insurance Company. A & M submitted Giersdorf's claim to Hartford, but Hartford denied the claim on the ground that it had cancelled the policy due to A & M's nonpayment of premiums. A & M thereafter filed the Petition for Declaration of Insurance Coverage” that is at issue here.

A & M's petition alleged that Hartford “wrongfully breached its insurance contract with [A & M] when it assessed the newly adjusted premium in one lump sum payment instead of prorated installments.” A & M further alleged that, if Hartford had prorated the additional premium in accordance with policy requirements, A & M would have fully paid the premium. A & M claimed that Hartford's breach of the policy caused it to incur “damages by defending and indemnifying itself in the workers' compensation claim filed by Roger Giersdorf.” In the prayer for relief, A & M sought a judgment “declaring that ... Hartford breached its contract with [A & M] and owes [A & M] duties of defense and indemnification for Roger Giersdorf's workers' compensation claim.”

Hartford moved to dismiss A & M's petition for lack of subject matter jurisdiction. Hartford acknowledged that the authority of Minnesota's workers' compensation courts “extends to addressing issues related to coverage under workers' compensation policies where such a determination is ancillary to adjudication of an employee's claim.” However, Hartford argued that A & M's petition raises a breach of contract claim, not a coverage dispute, the former of which is outside the authority of the workers' compensation courts to decide. According to Hartford, only district courts have “the jurisdiction to award damages and fashion appropriate relief” in a breach of contract action.

The compensation judge denied Hartford's motion to dismiss, concluding “it is well settled law that [the] workers' compensation courts in Minnesota have jurisdiction to determine issues related to coverage under workers' compensation insurance policies, when the determination is ancillary to the adjudication of the employee's claim.” The compensation judge reasoned that the question of whether Hartford had properly cancelled the policy was determinative of Hartford's duty to defend and indemnify A & M on Giersdorf's claim. “In essence,” the compensation judge explained, the breach of contract claim asserted by A & M was really a coverage issue.

Hartford filed an interlocutory appeal challenging the compensation judge's determination that it had jurisdiction over A & M's petition. The WCCA affirmed, concluding that A & M is “is actually asserting ... that ... Hartford's purported cancellation of the insurance contract was ineffective and that coverage therefore existed as of the date of the employee's injury [,] even though “some of the language of [A & M's] petition points to a breach of contract claim[.] Giersdorf v. A & M Constr. Inc., 2011 WL 4549155, at *3 (Minn. WCCA Sept. 20, 2011). Put differently, the WCCA viewed A & M's petition as raising the issue of “whether insurance coverage was in effect,” a question within the compensation judge's statutory authority to decide. Id. We affirm.

II.

At issue in this case is the subject matter jurisdiction of the workers' compensation courts to decide the legal questions presented by A & M's petition for declaration of insurance coverage. Subject matter jurisdiction refers to a court's authority “to hear and determine a particular class of actions and the particular questions” presented to the court for its decision. Robinette v. Price, 214 Minn. 521, 526, 8 N.W.2d 800, 804 (1943). Put differently, subject matter jurisdiction is a court's “statutory or constitutional power to adjudicate the case.” Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). The subject matter jurisdiction of the workers' compensation courts is a question of law that we review de novo. Hale v. Viking Trucking Co., 654 N.W.2d 119, 123 (Minn.2002).

A.

The scope of an administrative agency's authority, including the jurisdiction of executive branch courts, generally depends upon the language of the statute delegating authority to the agency. Frost–Benco Elec. Ass'n v. Minn. Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn.1984). Here, Minn.Stat. § 175A.01, subd. 5 (2010), broadly grants the WCCA the jurisdiction to hear and determine “all questions of law and fact arising under the workers' compensation laws of [Minnesota].”

The WCCA has construed the broad grant of authority in subdivision 5 to permit it to decide questions related to workers' compensation insurance coverage when such questions are ancillary to the adjudication of an employee's claim for compensation. See Peterson v. Vern Donnay Constr. Co., 48 Minn. Workers' Comp. Dec. 664, 669 (WCCA), aff'd without opinion,503 N.W.2d 792 (Minn.1993); see also Smith v. Integrity Plus, Inc., 61 Minn. Workers' Comp. Dec. 192, 205 (WCCA 2000) (“The [compensation] judge certainly had sufficient jurisdiction to review and interpret the contract to determine whether the contract provided coverage insuring the employer's risk under the Minnesota workers' compensation law.”), aff'd without

opinion,

625 N.W.2d 142, 143 (Minn.2001). In such cases, we have routinely affirmed the WCCA without questioning its authority to decide questions of insurance coverage. See, e.g., Ives v. Sunfish Sign Co., 275 N.W.2d 41, 43–44 (Minn.1979) (affirming a compensation judge's decision that an insurance policy remained in effect beyond its stated termination date because it was not terminated in accordance with Minn.Stat. § 176.185); Oster v....

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