Johnson v. St. Paul Ins. Co.

• Decision Date: 08 May 1981
• Docket Number: No. 50948.,50948.
• Citation: 305 NW 2d 571
• Parties: Dianne Leigh JOHNSON, by Harold R. Johnson, guardian, Appellant, v. ST. PAUL INSURANCE COMPANIES et al, Respondents.
• Court: Minnesota Supreme Court

305 N.W.2d 571 (1981)

Dianne Leigh JOHNSON, by Harold R. Johnson, guardian, Appellant, v. ST. PAUL INSURANCE COMPANIES et al, Respondents.

No. 50948.

Supreme Court of Minnesota.

May 8, 1981.

Lommen, Nelson, Sullivan & Cole, P. A., Phillip A. Cole and Sharon D. Nelson, Minneapolis, for appellant.

Geraghty, O'Loughlin & Kenney, James W. Kenney and Timothy R. Murphy, St. Paul, for respondents.

Considered and decided by the court en banc without oral argument.

AMDAHL, Justice.

Plaintiff Dianne Johnson appeals from a judgment entered in favor of defendants St. Paul Insurance Companies and St. Paul Fire and Marine Company and from an order of the district court denying her motion for amended and additional findings. We affirm.

The facts giving rise to the present action were the subject of a petition for approval of a minor settlement of a claim against defendants for benefits arising out of an accident which occurred in 1971. Johnson v. St. Paul Insurance Cos., No. 389175 (Minn. 4th Dist.Ct. Feb. 9, 1973) (order approving minor settlement). On November 15, 1971, plaintiff, then 14 years old, was struck while a pedestrian by an unidentified hit and run driver and sustained serious injuries. At the time of the accident, Mr. Johnson maintained a policy of automobile insurance issued by defendants under which plaintiff was an insured. The policy provided uninsured motorist coverage with limits of $100,000 per person and $300,000 per accident for which separate premiums were paid on each of two vehicles owned by Mr. Johnson.

During settlement negotiations, all parties believed that the maximum available coverage for the accident in question under the uninsured motorist provision of the subject policy was $100,000.¹ Mr. Johnson and representatives of defendants subsequently reached a settlement figure of $85,124.70. The settlement was approved by the district court on February 9, 1973. A release of defendants from all further liability for payment of uninsured benefits for the accident was executed on February 19, 1973 upon payment of the settlement amount.

On May 11, 1973, approximately three months after the minor settlement was approved, this court decided Van Tassel v. Horace Mann Mutual Insurance Co., 296 Minn. 181, 207 N.W.2d 348 (1973). In that case, we struck down policy provisions purporting to limit payment of uninsured benefits to coverage provided under one policy when more than one policy was applicable to the loss as repugnant to Minn.Stat. § 72A.149 (1967) (current version at Minn. Stat. § 65B.49 (1980)). Thus, available uninsured motorist coverage could be "stacked" to the extent of an insured's damages.

Mr. Johnson subsequently learned of the possibility of "stacking" coverages and on June 25, 1979, the present action was commenced to vacate the order of February 9, 1973 approving the minor settlement and to set aside the releases executed thereto on the grounds of mutual mistake and/or misrepresentation. Plaintiff also sought a determination that the policy issued by defendants provided $200,000 in uninsured motorist coverage for the accident in question and an order compelling defendants to arbitrate plaintiff's uninsured motorist claim. Defendants denied the allegations of the complaint and affirmatively alleged the defenses of accord and satisfaction, payment, release, laches and that the action was barred by the statute of limitations. Following a trial on the merits, the relief requested by plaintiff was in all respects denied and this appeal ensued.

Minn.R.Civ.P. 60.02 recognizes the district court's authority to "entertain an independent action to relieve a party from a judgment, order, or proceeding * * *." Resort to an independent action is available rarely, and then only under unusual circumstances.² In Eliseuson v. Frayseth, 290 Minn. 282, 288, 187 N.W.2d 685, 688, (1971), we stated that a party seeking relief from a minor settlement may proceed either by a motion to vacate under Rule 60.02 or by an independent action.

Although the motion procedure is subject to a one-year limitation period if the alleged reason for vacation is among those set forth in Rule 60.02(1), (2) or (3), there is no specific time limit in which an independent action in equity may be brought although the doctrine of laches is applicable and undue prejudicial delay may bar relief.

The trial court did not rule on the applicability of the doctrine of laches in this case nor have defendants asserted the defense on this appeal. We will therefore proceed to address the merits of plaintiff's request for a vacation of the minor settlement.

It is plaintiff's position that the settlement should be vacated upon either of two grounds: (1) mutual mistake of fact regarding the amount of available uninsured motorist coverage or (2) misrepresentation amounting to constructive fraud because Mr. Johnson reasonably relied upon representations made by defendants as to the maximum coverage applicable to the accident. Plaintiff's argument is premised on the theory that in view of the Van Tassel decision, the subject policy in fact provided a maximum of $200,000 as opposed to $100,000 of uninsured motorist coverage resulting in a settlement entered on the basis of a mistake of fact. Furthermore, it is argued that although the representations were innocently made, the statements made by defendants regarding available coverage were misrepresentations. It is conceded that there is no evidence of fraud or intent to deceive on the part of any agents of defendants in connection with the negotiations or the ensuing settlement.

Certain principles regarding whether and under what circumstances a settlement may be vacated are now well established. Settlement of disputes without litigation is highly favored, Schmidt v. Smith, 299 Minn. 103, 216 N.W.2d 669 (1974), and such settlements will not be lightly set aside by the courts. The party seeking to avoid a settlement has the burden of showing sufficient grounds for its vacation. Schoenfeld v. Buker, 262 Minn. 122, 114 N.W.2d 560 (1962). We have further noted that "vacating a stipulation of settlement rests largely within the discretion of the trial court, and the court's action in that regard will not be reversed unless it be shown that the court acted in such an arbitrary manner as to frustrate justice." Myers v. Fecker Co., 312 Minn. 469, 474, 252 N.W.2d 595, 599 (1977). These precepts apply with equal force to cases involving a minor's injuries. Id. 252 N.W.2d at 599.

In the case at bar, we hold that the trial court did not abuse its discretion in refusing to vacate the settlement. No mutual mistake of fact, misrepresentation, or other ground justifying a setting aside of the settlement existed in connection with this case. The requested relief was therefore properly denied.

Although decided in a different context, the case of Hall v. Wheeler, 37 Minn. 522, 35 N.W. 377 (1887) is instructive. In Hall, an owner of real property sought to avoid a deed transferring a part of the subject property to a purchaser of the property at a tax sale. Both parties believed and were advised by counsel that the time for redemption from the tax sale had expired and that therefore the purchaser had good title. The parties thereafter negotiated a settlement whereby the owner and the purchaser exchanged quitclaim deeds so that each owned a part of the land in question. Subsequently, a decision of this court held that a purported repeal of the statute requiring the service of notice of the period of redemption from tax sales was unconstitutional. Therefore, in the Hall case, the time to redeem from the tax sale had not expired because no notice...