State v. Joseph, C2-00-1364.
| Decision Date | 30 January 2001 |
| Docket Number | No. C2-00-1364.,C2-00-1364. |
| Citation | 622 N.W.2d 358 |
| Parties | STATE of Minnesota, Respondent, v. Barbara Mae JOSEPH, et al., Respondents, Church Mutual Insurance Company, Appellant, William Henry, Respondent. |
| Court | Minnesota Court of Appeals |
Byron M. Peterson, Tomsche, Sonnesyn & Tomsche, P.A., Minneapolis, MN, for respondent State of Minnesota.
Thomas D. Jensen, William L. Davidson, Lind, Jensen & Sullivan, P.A., Minneapolis, MN, for respondents Josephs.
Patrick T. Tierney, Thomas E. McEllistrem, Collins, Buckley, Sauntry & Haugh, P.L.L.P., St. Paul, MN, for appellant.
John M. Steele, John M. Steele, P.A., Minneapolis, MN, for respondent William Henry.
Considered and decided by WILLIS, Presiding Judge, SHUMAKER, Judge, and MULALLY, Judge.1
Appellant Church Mutual Insurance Company appeals from the district court's determination that the expiration of the statute of limitations and the application of collateral estoppel preclude appellant from raising the defense of lack of coverage in a proceeding to garnish insurance benefits. Because the district court erroneously applied the statute of limitations and collateral estoppel, we reverse and remand. Appellant moves that portions of respondent Henry's appendix be stricken; we grant the motion.
On November 27, 1992, Barbara Mae Joseph was driving a minivan owned by her husband, James Marshall Joseph, when she struck and injured state trooper William Henry as he was giving a traffic citation to another motorist.
Both Josephs were employed by Two Harbors Gospel Tabernacle (Tabernacle) as ministers. Both were insured under their own liability policy, issued by Royal Insurance Company, covering the minivan. Tabernacle carried an excess liability insurance policy, written by Church Mutual Insurance Company, that covered Tabernacle employees acting within the scope of their employment.
After receiving notice of a claim by Henry, Church Mutual reserved its right to deny coverage. Henry sued the Josephs for damages in October 1993. In January 1994, the Josephs and Royal Insurance entered a settlement with Henry whereby Henry would receive the $250,000 Royal policy limit, and would continue his lawsuit against the Josephs so as to attempt to reach the excess coverage provided by Church Mutual, but would not hold the Josephs personally liable for any damages beyond the Royal policy limit. The Josephs then tendered the defense of the action to Church Mutual, who accepted the tender but continued to reserve its right to deny coverage.
During the next five years there were two trials and two appeals in the Henry lawsuit; the State of Minnesota intervened as a plaintiff in that action to claim reimbursement for workers' compensation benefits it paid to Henry; Barbara Mae Joseph pleaded guilty to the petty misdemeanor offenses of operating the minivan with unsafe equipment and following too close at the time of the accident; and the Josephs, Henry, and the state engaged in a dispute with Church Mutual as to whether Barbara Mae Joseph was acting within the scope of her employment for Tabernacle when she struck Henry. Final judgment in the personal injury lawsuit was entered in July 1999 in favor of Henry and the State of Minnesota. No party appealed from this judgment.
On October 28, 1999, Church Mutual brought a declaratory judgment action in Washington County against Henry and the Josephs, seeking a determination that there was no coverage under the Church Mutual policy because Barbara Mae Joseph was not acting within the scope of her employment for Tabernacle at the time of the accident.
In January 2000, the State of Minnesota brought a garnishment proceeding against Church Mutual in Chisago County, seeking proceeds of the excess insurance policy. While that matter was pending, Henry moved to dismiss Church Mutual's declaratory judgment action.
The district court in Washington County entered its order on February 11, 2000, granting Henry's motion on the ground that the declaratory judgment action was time-barred. The court stated that a "cause of action for a declaratory judgment on coverage" accrued not later than the date of Henry's notice of claim to Church Mutual, and that the six-year statute of limitations for contract claims had expired prior to the commencement of the declaratory judgment action. Church Mutual did not appeal.
On July 14, 2000, the district court in Chisago County granted summary judgment in the garnishment proceeding in favor of Henry and the State of Minnesota. The court ruled that Church Mutual was not only time-barred from challenging coverage but was also collaterally estopped from doing so because of the judgment entered upon the dismissal order of February 11, 2000. Church Mutual appeals from the summary judgment.
1. Is there a statute of limitations for the commencement of a declaratory judgment
action by an insurer who seeks the court's determination as to the validity of a coverage defense?
2. Does collateral estoppel preclude the litigation of an issue as to which the party estopped had no opportunity to be heard in a prior action?
3. Does the law-of-the-case doctrine apply to an issue that has not been litigated?
On appeal from summary judgment, we determine whether any genuine issue of material fact exists and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990)
. The bases for the district court's summary judgment order were purely issues of law. We need not defer to the district court on questions of law. Hubred v. Control Data Corp., 442 N.W.2d 308, 310 (Minn.1989) (citation omitted).
In ruling that Church Mutual's declaratory judgment action was time-barred, the district court applied the six-year statute of limitations in Minn.Stat. § 541.05, subd. 1(a) (1998), for actions on contracts, and said: "The statute of limitations on an underinsured motorist claim begins to run on the accident date." The court then said that, by not bringing a declaratory judgment action within six years following the date of the accident, "Church Mutual should be barred from now asserting coverage defenses * * *."
The district court erred in two respects. First, there is no statute of limitations for declaratory judgment actions. Second, statutes of limitations apply to claims and not to defenses.
A declaratory judgment is an alternative and optional remedy available to parties who want the courts to declare their "rights, status, and other legal relations * * *." Minn.Stat. § 555.01 (1998). "A contract may be construed either before or after there has been a breach thereof." Minn.Stat. § 555.03 (1998); Harrington v. Fairchild, 235 Minn. 437, 441, 51 N.W.2d 71, 73 (1952) ().
We have held that, absent a statutory mandate, the commencement of a declaratory judgment action is not subject to any statute of limitations. Fryberger v. Township of Fredenberg, 428 N.W.2d 601, 605 (Minn.App.1988), review denied (Minn. Nov. 16, 1988).
Nothing in the Uniform Declaratory Judgments Act or in the caselaw interpreting that act suggests that anyone is ever required to bring a declaratory judgment action. Minn.Stat. § 555.01-555.16 (1998). Furthermore, the court may refuse to render a declaratory judgment if rendering a judgment would not resolve the uncertainty that precipitated the action. Minn.Stat. § 555.06 (1998). The district court here held that Church Mutual not only had to bring the action within six years after the accident but also had to obtain a favorable ruling. Implicit in this holding is the erroneous proposition that Church Mutual would have lost its coverage defense even if it had commenced the action within six years if the court then exercised its discretion not to render judgment.
It should be noted that a declaratory judgment action to determine the validity of an insurance coverage defense may become moot if the claimant has failed to commence its breach of contract action within the statute of limitations.
When a legal remedy is optional and a party elects not to pursue that remedy, logically the party cannot lose rights to pursue another available remedy. But the district court held to the contrary and we believe that was error.
The district court also applied to the declaratory judgment action a time limit for bringing an underinsured motorist claim. Church Mutual has not prosecuted a claim. Rather, it has raised a defense to a claim by other parties that the excess insurance contract covers Henry's accident.
We know of no law, and none has been cited to us, that applies a statute of limitations to a defense. A defense is a response to a claim and logically could not be asserted prior to a claim being made. If the defense is affirmative, as presumably Church Mutual's coverage defense is, it must be asserted responsively or it is deemed waived. See Minn.R.Civ.P. 12.02 (); Minn. R.Civ.P. 8.03 ().
There is no rational purpose for applying a statute of limitations to a defense. The question is whether...
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Weavewood, Inc. v. S & P Home Invs., LLC
...that Weavewood's complaint seeks declaratory relief, it is not barred by the statutes of limitations.” Id. (citing State v. Joseph, 622 N.W.2d 358, 362 (Minn.App.), rev'd on other grounds,636 N.W.2d 322, 326–27 (Minn.2001)). S & P petitioned this court for further review. We granted S & P's......
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State v. Joseph
...estopped from relitigating that issue. Church Mutual appealed. The court of appeals reversed and remanded. State v. Joseph, 622 N.W.2d 358, 364 (Minn.App.2001). The court held that the statute of limitations did not apply to declaratory judgment actions or defenses. Id. at 362. The court al......
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Weavewood, Inc. v. S & P Home Invs. LLC
...limitations for declaratory judgment actions" and the "statutes of limitations apply to claims and not to defenses." State v. Joseph, 622 N.W.2d 358, 362 (Minn. App. 2001), rev'd on other grounds, 636 N.W.2d 322, 326-27 (Minn. 2001) (noting that the court of appeals held that the statute of......