Opinion
No. C6-97-237, C8-97-238, C9-97-314.
Filed October 28, 1997.
Appeal from the District Court, Hennepin County, File No. 91-8197.
Kay Nord Hunt, Lommen, Nelson, Cole Stageberg, P.A., Ronald E. Martell, Leonard W. Glewwe, Moore, Costello Hart, P.L.L.P., (for National Union).
John E. Simonett, Greene Espel, P.L.L.P., James H. Kaster, Nichols Kaster Anderson, (for Lundman).
John F. Angell, Leo I. Brisbois, Stich, Angell, Kreidler, Brownson Ballou, P.A., (for Liberty Mutual).
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
These consolidated appeals concern a petition by Douglass Lundman to collect on supersedeas bonds issued by Liberty Mutual Insurance Company and National Union Fire Insurance Company. We affirm the entry of summary judgment against Lundman on the Liberty Mutual bond and reverse the entry of summary judgment in favor of Lundman on the National Union bond.
FACTS
Ian Lundman died following care by members and representatives of The First Church of Christ, Scientists (the church). Ian's natural father, Douglass Lundman, sued the church and six other defendants, alleging negligence.
A jury found all defendants negligent and awarded Lundman $5,200,000 in compensatory damages. In a separate proceeding, the jury awarded Lundman $9,000,000 in punitive damages against the church alone. On September 27, 1993, the district court issued an order for judgment on both verdicts.
Following post-trial motions, the court reduced the award of compensatory damages to $1,500,000, but refused to reduce the $9,000,000 punitive damages award against the church. The court thereafter awarded costs and disbursements in the amount of $13,743.39 against all defendants and $300 against the church on the punitive damages award, bringing the total punitive damages award to $9,000,300.
Liberty Mutual issued a supersedeas bond in the amount of $1,733,343.93 to assure the church's payment of compensatory damages. National Union issued a supersedeas bond in the amount of $9,000,300. This bond characterized all defendants as "defendant," stated that the "defendant" intended to appeal from a September 27, 1993, "judgment," and assured payment of the judgment by the "defendants."
The district court approved the two bonds, and final judgment was entered on April 1, 1994. All defendants appealed from the April 1 judgment. While the appeals were pending, an attorney for one of the non-church defendants wrote a letter to the church's attorney, with copies to all counsel of record, stating that the court had approved bonds "by Liberty Mutual Insurance Company for compensatory damages, and by National Union Fire Insurance Company, covering punitive damages."
By motion dated July 26, 1994, Lundman moved the district court to clarify the Liberty Mutual bond, asking that the court either "declare the construction of the bond so [as] to allow the enforcement of the judgment against all defendants, or deny a stay of execution for those defendants not insured under the bond." Lundman did not move for clarification of the National Union bond. At the motion hearing, Lundman's attorney stated that he believed he could execute on the non-church defendants during the pendency of the appeal, despite the existence of the Liberty Mutual bond. In opposition to the motion, an attorney for one of the non-church defendants submitted a memorandum describing the Liberty Mutual bond as covering the church's portion of the compensatory damages and describing the National Union bond as covering the award of punitive damages against the church.
The district court concluded that it lacked jurisdiction to clarify the Liberty Mutual bond, due to the pending appeals. The court, however, referred in its order to a bond from Liberty Mutual as insurer of the church "for the compensatory damages portion of the judgment" and a bond from National Union as surety for the church "for the punitive damages portion of the judgment." Lundman did not seek review of the district court's determination that it lacked jurisdiction to address the bond issue.
Ultimately, this court reversed the punitive and compensatory damage awards against the church, but affirmed the compensatory damage award against four non-church defendants. Lundman v. McKown , 530 N.W.2d 807 (Minn.App. 1995), review denied (Minn. May 31, 1995).
This court's decision became final on June 21, 1995. Prior to that time, Lundman began discovery and garnishment proceedings against the non-church defendants, asserting that the Liberty Mutual bond did not cover the non-church defendants. By order dated July 12, 1995, the district court concluded that the stay had not expired until June 21, 1995. The court therefore quashed any discovery and garnishment proceedings prior to June 21, 1995. The court concluded that "[Lundman] may take all appropriate steps to execute on the judgment herein unless and until such time as an order for stay of proceedings is entered by a court of appropriate jurisdiction." On July 6, 1996, the district court heard Lundman's motions to enforce the Liberty Mutual and National Union bonds against the non-church defendants. The district court concluded that the National Union bond, but not the Liberty Mutual bond, covered the non-church defendants.
DECISION
1. Liberty Mutual bond.
A supersedeas bond is a contract, which should be construed "to carry out the intentions of the parties." Peterson v. Peterson , 395 N.W.2d 443, 446 (Minn.App. 1986). Particularly in situations involving supersedeas bonds, sureties must not be held liable "beyond the strict letter of their contract." Union Sewer-Pipe Co. v. Olson , 82 Minn. 187, 189, 84 N.W. 756, 757 (1901). The Liberty Mutual bond on its face was intended as surety for compensatory damages awarded against the church. The bond identifies Liberty Mutual as insurer for the church and refers solely to compensatory damages.
Lundman argues, however, that Liberty Mutual should be judicially estopped from denying bond coverage for the non-church defendants, based on prior representations that the bond was a stay of all proceedings against all defendants. We agree that judicial estoppel, or the closely analogous theory of estoppel by inconsistent positions, forbids a party from assuming inconsistent or mutually contradictory positions during the course of a lawsuit. Wipper v. Wipper , 176 Minn. 206, 209, 222 N.W. 922, 923 (1929). See Tozer v. Ocean Accident Guar. Corp. , 94 Minn. 478, 483-84, 103 N.W. 509, 511 (1905) (where contract unambiguously excluded coverage but party indicated throughout trial that it was liable for coverage, party could not thereafter change positions where opponent had relied to his prejudice on party's position). We disagree, however, with Lundman's characterization of Liberty Mutual's representations. The record indicates that Liberty Mutual consistently took the position throughout all proceedings that its bond covered only the church regarding payment of the compensatory damage award, but that the bond should operate as a stay of all proceedings against all defendants. Because Liberty Mutual never changed this position, judicial estoppel is inapplicable.
Furthermore, Lundman has not established that he relied on Liberty Mutual's position to his prejudice. Liberty Mutual claimed that its bond stayed proceedings against all defendants; Lundman's attorney nevertheless stated to the district court that he believed he could execute on the judgment against the non-church defendants during the pendency of the appeal, despite the existence of the Liberty Mutual bond. Lundman did, in fact, attempt such execution before the appeal became final.
2. National Union bond.
National Union claims that its bond was void because it was for an appeal from a non-existent September 27, 1993, "judgment" and cites in support of its position Hampshire Arms Hotel Co. v. St. Paul Mercury Indemnity Co. , 215 Minn. 60, 9 N.W.2d 413 (1943). There, a supersedeas bond referred to an appeal from a "judgment," but the defendant actually appealed before the judgment was entered, resulting in the dismissal of the appeal as premature. The supreme court concluded that the bond was void because the premature appeal was in effect a nullity. Id. at 63, 9 N.W.2d at 415. The case before us is distinguishable. Although the National Union bond referred to a non-appealable order dated September 27, 1993, the defendants actually appealed later from a valid judgment. The appeal was not a nullity and the bond is not void.
We agree with the district court's conclusion that reference to the September 27, 1993, "judgment" was a scrivener's error, probably attributable to boilerplate language, and did not render the bond ambiguous. The district court's conclusion of non-ambiguity went further, however. The court found no ambiguity regarding either the identity of the insured or the scope of coverage in the National Union bond. The court concluded that because the $9 million bond did not specifically limit its scope to the church or to punitive damages, the bond covered the non-church defendants' compensatory damages. We disagree.
The general rule is that a court may not consider extrinsic evidence unless a contract is ambiguous. See, e.g. , American Commerce Ins. Brokers, Inc. v. Minnesota Mut. Fire Cas. Co ., 551 N.W.2d 224, 227-28 (Minn. 1996) (stating that if contract language is not ambiguous, there is no reason for construction). In certain situations, we may examine extrinsic evidence even if a contract is not ambiguous on its face. See Anderson v. Kammeier , 262 N.W.2d 366, 370 n. 2 (Minn. 1977) (noting that, for purposes of determining whether a contract has been integrated, court may examine extrinsic evidence). We need not here apply or extend this exception to the general rule, however, because we conclude that there is an ambiguity in the National Union bond.
Ambiguity in the National Union bond is evidenced, we believe, through use of the terms "defendant" and "defendants," which render the bond reasonably susceptible of more than one interpretation. See In re Hennepin County 1986 Recycling Bond Litigation , 540 N.W.2d 494, 498 (Minn. 1995) (stating that contract is ambiguous "if it is susceptible of more than one construction"). The caption of the bond recites the names of the seven defendants, but incorrectly refers to them as "defendant." The bond states that the "defendant" intended to appeal, but later provides assurance that the "defendants" would pay the amount of the judgment. On its face, this language does not indicate which "defendant" or "defendants" were the subject of the bond. See Koch v. Han-Shire Investments, Inc. , 273 Minn. 155, 166, 140 N.W.2d 55, 63 (1966) (stating that court may consider evidence that is offered to explain meaning of language used in contract). Because the bond is ambiguous, we shall examine extrinsic evidence.
When construing a contract, we should ascertain and give effect to the parties' intention. Metropolitan Sports Facilities Comm'n v. General Mills, Inc. , 470 N.W.2d 118, 122-23 (Minn. 1991). Here, the evidence clearly establishes that the National Union bond was intended to cover only the church's punitive damages.
The amount of the bond itself is particularly telling. The bond was for $9,000,300.00, which was the exact amount of the punitive damages award against the church. Moreover, the conduct of all parties, including that of Lundman, indicates that the bond was intended to cover only the punitive damages awarded against the church. See J.J. Brooksbank Co. v. Budget Rent-A-Car Corp. , 337 N.W.2d 372, 376 (Minn. 1983) (recognizing that interpretation of parties' contract may be assisted by examining the parties' conduct during the performance of the contract); Cut Price Super Markets v. Kingpin Foods, Inc. , 256 Minn. 339, 353-54, 98 N.W.2d 257, 267-68 (1959) (stating that where parties' conduct has given contract practical construction, court may consider such conduct).
In contrast, the Liberty Mutual bond stated that it covered the "judgment inasmuch as it related to compensatory damages."
A letter from one non-church defendant, a copy of which was sent to all counsel, stated that the district court had approved bonds by Liberty Mutual for compensatory damages and by National Union for punitive damages. No contradiction was raised by any party. In opposition to Lundman's motion to clarify the Liberty Mutual bond, an attorney for one of the non-church defendants submitted a memorandum describing the Liberty Mutual bond as covering the church's portion of the compensatory damages and describing the National Union bond as covering the award of punitive damages against the church. The district court judge originally approved both bonds; he referred in his order to a bond from Liberty Mutual as insurer of the church "for the compensatory damages portion of the judgment" and a bond from National Union as surety for the church "for the punitive damages portion of the judgment."
See Minn.R.Civ.App.P. 108.01 (requiring that district court approve supersedeas bond).
Lundman, in seeking clarification of provisions of the stay, addressed only the Liberty Mutual bond. We believe this was an indication that Lundman looked solely to the Liberty Mutual bond in connection with any compensatory damage award. His intent, clearly, was to ascertain the extent of the coverage afforded to non-church defendants. Only compensatory damages had been awarded against these non-church defendants. Surely, if Lundman interpreted or relied on the National Union bond as providing compensatory award coverage, he would have included that bond in the motion to clarify.
There is no indication anywhere in the voluminous record before us that any of the parties interpreted or relied on the National Union bond to provide any protection other than that we conclude it provided: coverage to the church for the punitive damage award.