Moundson v. Bitzan
| Decision Date | 12 January 1999 |
| Docket Number | No. C2-98-1251,C2-98-1251 |
| Citation | 588 N.W.2d 169 |
| Parties | Christy L. MOUNDSON, Respondent, v. Lucille I. BITZAN, et al., Respondents, Grinnell Mutual Reinsurance Company, Appellant. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. In a proceeding to recover underinsured motorist benefits, a prior jury verdict, as opposed to a judgment, does not conclusively establish damages and an insured may be required to relitigate damages.
2. A tortfeasor's insurance company may not defeat the underinsured motorist carrier's right of subrogation by claiming a Schmidt notice was given to the carrier, when the proposed settlement contained a contingency and when the injured insured rejected and disavowed that settlement after the contingency was not met.
3. Once a tort judgment establishes conclusively that an injured insured is legally entitled to recover damages exceeding the tortfeasor's liability limits, the underinsured motorist carrier becomes contractually liable to pay that excess to the extent of its coverage, and the carrier's right of subrogation accrues upon such payment.
Frederick L. Grunke, Rajkowski Hansmeier, Ltd., St. Cloud, for respondent Moundson.
John C. Lervick, Swenson, Lervick, Syverson, Anderson, Trosvig & Jacobson, P.A., Alexandria, for respondents Bitzans.
Ken D. Schueler, Dunlap & Seeger, P.A., Rochester, for appellant.
Considered and decided by PETERSON, Presiding Judge, KLAPHAKE, Judge, and ANDERSON, Judge.
O P I N I O N
Respondent Christy L. Moundson, f/k/a Christy L. Schmitz (Moundson), brought this declaratory judgment action against respondents Lucille I. Bitzan and Patrick J. Bitzan (the Bitzans) and against appellant Grinnell Mutual Reinsurance Company (Grinnell), the Bitzans' underinsured motorist (UIM) carrier. Moundson's complaint requested a declaration extinguishing Grinnell's subrogation rights against her, obligating Grinnell to pay UIM benefits to the Bitzans, prohibiting Grinnell from requiring the Bitzans to relitigate issues determined in the underlying tort action, and directing the Bitzans to execute a full and final release in her favor.
On cross-motions for summary judgment, the district court granted Moundson's motion and ordered Grinnell to pay UIM benefits to the Bitzans. Grinnell appeals, arguing that the district court erred in concluding (1) a settlement had been reached between the Bitzans and Moundson, of which Grinnell received constructive notice under Schmidt v. Clothier, 338 N.W.2d 256 (Minn.1983); and (2) Grinnell's subrogation rights against Moundson were waived and extinguished by Grinnell's failure to preserve those rights in accordance with Schmidt. We affirm that part of the district court's decision ordering Grinnell to pay UIM benefits to the Bitzans, but reverse its determination that Grinnell has waived its subrogation rights.
On August 14, 1992, Moundson was driving a motor vehicle insured by Allstate Insurance Company under a policy with liability limits of $100,000. She struck a vehicle driven by Lucille Bitzan, who had $100,000 in UIM coverage with Grinnell.
The Bitzans sued Moundson. On October 11, 1996, a jury returned a verdict in the Bitzans' favor for $140,365.68. On October 15, the Bitzans contacted Grinnell and notified it of their intent to claim UIM benefits.
After the verdict was returned, but before the trial court ruled on Moundson's new trial motion, Moundson offered to settle with the Bitzans. The parties agreed that the settlement "would be void in the event that [it] would entitle Grinnell to relitigate issues decided in the previous trial or otherwise jeopardize Bitzans' right to recover UIM benefits from Grinnell."
On November 7, the Bitzans informed Grinnell of their "tentative" settlement with Moundson and gave Grinnell Schmidt notice.
On November 15, the trial court denied Moundson's new trial motion, ordered judgment for the Bitzans for $140,365, and stayed entry of final judgment for 30 days.
That same day, after speaking with Grinnell, the Bitzans decided to withdraw their Schmidt notice. On November 19, the Bitzans contacted Moundson and explained that they could not release her and would wait until judgment was entered before accepting payment from her. Later that day, Moundson contacted the Bitzans, claiming that they had "a binding settlement agreement." The Bitzans again contacted Moundson and denied the settlement.
On November 22, the Bitzans advised Grinnell that their UIM claim would probably be $40,365, that they would seek entry of judgment in the underlying tort action "as soon as the thirty (30) day stay expires on December 15," and that they did not agree to settle with Moundson when they sent their Schmidt notice to Grinnell.
On December 5, Grinnell contacted the Bitzans and Moundson, stating it was "confused as to the status of this litigation," due to Moundson's claim that the matter had been settled and the Bitzans' denial of that settlement and withdrawal of their Schmidt notice. Moundson thereafter brought this declaratory judgment action against the Bitzans and Grinnell.
Judgment was entered in the underlying tort action on December 18; on February 12, Moundson made partial payment to the Bitzans of $100,944 and received a partial release. Moundson did not appeal from the trial court's denial of her new trial motion or from the final judgment.
In this declaratory judgment action, the district court determined that Grinnell was obligated to pay UIM benefits to the Bitzans, but that Grinnell had failed to preserve its subrogation rights against Moundson after receiving constructive notice under Schmidt that the Bitzans had settled with Moundson. Grinnell appeals.
1. Did the district court err in determining that Moundson and the Bitzans had settled?
2. Did the district court err in determining that Grinnell had failed to preserve its subrogation rights against Moundson because it had received constructive notice of that settlement under Schmidt?
3. Did the district court err in ordering Grinnell to pay UIM benefits to the Bitzans?
Summary judgment is properly granted when no genuine issues of material fact exist and either party is entitled to judgment as a matter of law. Minn. R. Civ. P. 56.03. Although Grinnell argues that factual issues exist involving the parties' settlement, the disputes here arise not from conflicting, material facts, but from the legal conclusions that may be drawn from those facts. When the material facts of a case are not in dispute, this court applies a de novo standard of review to determine whether the trial court erred in its application of the law. Washington v. Milbank Ins. Co., 562 N.W.2d 801, 804 (Minn.1997).
The proposed settlement between Moundson and the Bitzans specifically stated that it "would be void in the event that [it] would entitled Grinnell to relitigate issues decided in the previous trial or otherwise jeopardize Bitzans' right to recover UIM benefits from Grinnell." On appeal,...
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...particles? ANALYSIS This appeal from a stipulated judgment raises only a question of law, which we review de novo. Moundson v. Bitzan, 588 N.W.2d 169, 171 (Minn.App.1999). The district court held, among other things, that Badger had a duty to warn Gray of health hazards from exposure to sil......
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