St. Paul Fire and Marine Ins. Co. v. National Chiropractic Mut. Ins. Co.

• Decision Date: 23 February 1993
• Docket Number: No. CX-92-1517,CX-92-1517
• Citation: St. Paul Fire and Marine Ins. Co. v. National Chiropractic Mut. Ins. Co., 496 N.W.2d 411 (Minn. App. 1993)
• Parties: ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Respondent, v. NATIONAL CHIROPRACTIC MUTUAL INSURANCE COMPANY, Appellant.
• Court: Minnesota Court of Appeals

Page 411

496 N.W.2d 411

ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Respondent, v. NATIONAL CHIROPRACTIC MUTUAL INSURANCE COMPANY, Appellant.

No. CX-92-1517.

Court of Appeals of Minnesota.

Feb. 23, 1993.

Review Denied April 29, 1993.

Syllabus by the Court

Both policies provide coverage when settlement is based upon negligent acts claimed to have occurred during the two insurer's policy periods.

William M. Hart, Thomas H. Crouch, Meagher & Geer, Minneapolis, for appellant.

Timothy P. Tobin, Laura L. Myslis, Gislason, Dosland, Hunter & Malecki, Minnetonka, for respondent.

Considered and decided by HUSPENI, P.J., and SCHUMACHER and AMUNDSON, JJ.

OPINION

HUSPENI, Judge.

Dr. Raymond Mielke and the Northwestern College of Chiropractic (the "college") were sued for malpractice. Both St. Paul Fire and Marine Insurance Company ("St. Paul") and National Chiropractic Mutual Insurance Company ("National"), which had issued professional liability policies covering Dr. Mielke and the college, provided defense. When the underlying action was settled shortly before submission to the jury, St. Paul contributed $700,000 and National Chiropractic contributed $100,000 to the settlement. Each insurer reserved the right to pursue indemnity or contribution claims against the other.

In the present action, each insurer seeks to recover its contribution to the settlement. The insurers stipulated to the appointment of the judge who presided at the trial of the underlying claim to serve as a special arbitrator. The special arbitrator determined that both policies provided coverage and ordered the insurers to divide the cost of the settlement evenly. The trial court adopted the findings and order of the special arbitrator, judgment was entered, and National appealed. St. Paul seeks review of the trial court's determination that its policy provided coverage. We affirm.

FACTS

Steven Feldman was a student at the college from September 1982 until November 1983. As a student at the college, Feldman was obligated to receive treatment at the college's student clinics, located both on and off the school campus, and staffed by more senior students who were supervised by licensed chiropractors.

Between December 21, 1982, and January 20, 1983, Feldman received treatment from Dr. Raymond Mielke and other personnel of the college in an effort to relieve symptoms of pain between his shoulder blades, leg weakness, inability to stand, difficulty with balance and inability to urinate. After January 29, 1983, Feldman visited the student clinic periodically for treatment of mid-thoracic muscle spasms.

Feldman was treated at home by clinic personnel on October 25, 1983, for mid-back pain. Later that same day he experienced sudden onset of ascending paralysis and was immediately hospitalized. A myelogram revealed an obstruction in the spinal cord and surgery ensued. Feldman's paralysis had been caused by the rupture of an arteriovenous malformation on his spine. He is permanently paralyzed from mid-chest down.

Feldman brought suit against the college, Dr. Mielke and others, alleging the college and Mielke failed to conduct accurate and adequate evaluations prior to October 26, 1983, failed to refer Feldman to a medical doctor for evaluation and treatment prior to October 26, 1983, and failed to act in other appropriate ways. The college and Dr. Mielke tendered defense of the suit to respondent St. Paul and appellant National.

The St. Paul policy, effective from April 1, 1982, to April 1, 1983, provided:

What This Agreement Covers

This agreement provides coverage for professional liability claims made against you--the person or persons named under "Individuals" in the Coverage Summary. It also covers professional liability claims made against any organization named in the Coverage Summary. To be covered, claims must be based on events that happen while this agreement is in effect and arise out of the profession named in the Coverage Summary.

The National policy effective from April 1, 1983, to April 1, 1984, provided:

Coverage Agreement

The company will pay on behalf of the insured up to the limits stated in the Declarations, all sums to which this insurance applies, and which the insured shall be legally obligated to pay as damages because of injury caused by accident arising out of the rendering of or failure to render professional services to a patient during the policy period.

National reserved its right to claim the injury to Feldman did not arise out of the rendering or failure to render professional services to him during National's policy period. St. Paul defended without reserving its right to deny coverage.

At trial, Feldman focused on the events of December 1982 and January 1983. Although he testified about treatment he received at the student clinic during the period January 1983 to October 1983, for symptoms similar to those experienced in December 1982 and January 1983, the emphasis at trial was on the failure of Dr. Mielke and the college to refer Feldman to a medical doctor when he was experiencing paralysis.

The parties settled all claims after both sides had presented their cases, but before the matter was submitted to the jury. Pursuant to the settlement, St. Paul contributed $700,000, National contributed $100,000. Each insurer reserved the right to seek indemnity from the other.

Subsequent to the commencement of the present action, both insurers stipulated to appointment as special arbitrator of the judge who had presided at the trial of Feldman's claim against the college and Dr. Mielke. In the findings, the special arbitrator stated:

Steven L. Feldman experienced seven separate episodes which were symptomatic of the arteria venous malformation which eventually ruptured and caused the pressure on his spinal column and consequent permanent paralysis. The episodes so experienced occurred as follows:

a. On or about December 5, 1982;

b. On or about December 20, 1982;

c. On or about January 10, 1983;

d. In the month of July 1983;

e. In the month of September 1983;

f. On or about October 23, 1983;

g. On or about October 25, 1983.

In an accompanying memorandum, the special arbitrator stated:

Unless the evidence offered during a trial is not germane to the issues in the action, or constitutes such surprise as to unduly prejudice the parties against whom it is being offered, the evidence submitted is received and constitutes the claim or claims being made and supersedes the otherwise defined stated claim of a party. * * * Clearly, such evidence included Steven L. Feldman's testimony that in July 1983 and in September 1983 he experienced symptoms of a like nature to those he had experienced beginning on or about December 5, 1982, and subsequently on or about December 20, 1982, on or about January 10, 1983, on or about October 23, 1983 and October 25, 1983. It was then a fact question for the jury to determine that if causal negligence did occur, whether it occurred on or about December 5, 1982, on or about December 20, 1982, on or about January 10, 1983, in the month of July 1983, in the month of September 1983, or whether it continued for the period from on or about December 5, 1982 through on or about October 23, 1983. At the time the settlement was negotiated, the policies of each insurance company were equally exposed to the risk, and therefore using the approach outlined immediately above, each company was subject to pay 50% of the settlement.

(Emphasis in original.) Based on the findings of the special arbitrator, National was required to reimburse St. Paul $300,000.

ISSUES

1. Did the trial court err in requiring National to provide indemnification for the claims brought by Feldman?

2. Did the trial court err in determining the St. Paul policy provides coverage for Feldman's claims?

ANALYSIS

1. Standard of Review

The parties stipulated to the appointment of a special arbitrator. An arbitrator's authority is determined by the arbitration agreement between the parties. See Johnson v. American Family Mut. Ins. Co., 426 N.W.2d 419, 420 (Minn.1988). The parties in this case agreed that the special arbitrator was to make findings and a decision, and the trial court would execute an order for judgment based on the special arbitrator's findings. The order appointing a special arbitrator provided:

the parties have reserved their appeal rights and shall be entitled to appeal this case as if it had been disposed of by summary judgment by the undersigned.

National alleges that it is a misnomer to treat the findings in this case as the findings of an arbitrator, and argues instead that the special arbitrator should have determined what claims Feldman actually made, rather than what claims Feldman might have made.

If the special arbitrator exceeded his authority by determining an issue not submitted, the resulting order may be vacated. David Co. v. Jim W. Miller Constr., Inc., 444 N.W.2d 836, 840 (Minn.1989). National bears the burden of demonstrating the special arbitrator exceeded his authority. Hilltop Constr., Inc. v. Lou Park Apts., 324 N.W.2d 236, 239 (Minn.1982).

We conclude National has not sustained its burden. While we agree the special arbitrator was asked to determine what claims Feldman made, we do not agree that the special arbitrator, in fact, determined what claims Feldman might have made. The special arbitrator's finding that Feldman presented a claim for negligence occurring during National's policy period merely recognizes that there was sufficient evidence of negligence during that period to go to the jury. We do not deem Feldman's concentration on the events of December 1982 and ...