Id. at 788-89. While Drake did not involve umbrella coverage, the Minnesota Court of Appeals subsequently applied the reasoning of Drake in a case where it was in Cincinnati Ins. v. Franck, 644 N.W.2d 471 (Minn. Ct. App. 2002). And, just as the Minnesota Supreme Court had looked to Loy for guidance in Drake, the Minnesota Court of Appeals looked Teigen, which had applied Loy to a case involving umbrella coverage.
Evanston argues that the district court misapplied Drake v. Ryan, 514 N.W.2d 785 (Minn. 1994), and Cincinnati Ins. Co. v. Franck, 644 N.W.2d 471 (Minn. App. 2002), in concluding that the St. Paul settlement exhausted that policy. In Drake, the supreme court held that Minnesota public policy permits enforcement of a settlement in which the plaintiff fully releases the insured defendant and his primary liability insurer up to the limits of the primary liability coverage but expressly retains the right to pursue a claim for additional damages from the excess liability carrier.
But because the Court must interpret and enforce insurance policies as written, when the policy provides defense coverage even when it may not provide indemnification, the court enforces the policy as written. See, e.g. , Allen , 436 S.W.3d at 554 ; Cincinnati Ins. Co. v. Franck , 644 N.W.2d 471, 474 (Minn. Ct. App. 2002). Because the duty to defend is broader than the duty to indemnify—in that the duty to defend arises when the claim is even arguably covered by the policy—when no duty to defend exists, no duty to indemnify exists.
See, e.g., Booth v. Gades, 788 N.W.2d 701, 702 (Minn. 2010) (noting the Drake-Ryan Agreement was entered in May 2007 before trial in November 2007); Cincinnati Ins. Co. v. Franck, 644 N.W.2d 471, 472 (Minn. Ct. App. 2002) (discussing the Drake-Ryan Agreement then stating "[t]he Francks then sued the Pennistons"); Stan Koch & Sons Trucking, Inc. v. Great W. Cas. Co., No. 05-1225 (RHK/AJB), 2006 WL 2331181, at *2 (D. Minn. Aug. 10, 2006), aff'd, 517 F.3d 1032 (8th Cir. 2008) ("Immediately before the trial began, Sirius entered into a Drake v. Ryan release with Kelly . . . ."). This makes sense.
We cite the prior version of rule 56 because that is the version that applied at the time of proceedings in the district court. Because insurance coverage is primarily a matter of contract, Cincinnati Ins. Co. v. Franck, 644 N.W.2d 471, 473 (Minn. App. 2002), we begin by reviewing the language of the applicable insurance policies that State Farm issued to Cheryl. Each of the policies contains the following provision concerning injuries caused by an underinsured motorist:
"Where there is no ambiguity in an insurance policy, there is no room for construction." Cincinnati Ins. Co. v. Franck, 644 N.W.2d 471, 473 (Minn. App. 2002). "Where an agent has allegedly made a mistake in obtaining insurance, the insured's remedy is generally reformation of the contract."
In other words, the Court found that indemnity coverage (1) was triggered with (2) the umbrella carrier due a credit for the "gap." 644 N.W. 2d 471 (Minn. Ct. App. 2002). Id. at 473.
This court has stated that the issue of the existence of "a true primary/excess insurance situation" is not fundamental to the enforceability of a Drake v. Ryan agreement. See Cincinnati Ins. Co. v. Franck, 644 N.W.2d 471, 475 (Minn.App. 2002) (rejecting an umbrella carrier's attempt to distinguish Drake and approving the use of a Drake v. Ryan agreement to allow an insured to reach umbrella coverage despite a settlement for less than the limits of the underlying policy), review dismissed (Minn. Nov. 14, 2002) In Cincinnati we adopted the language and rationale of a post- Loy Wisconsin case, Teigen v. Jelco of Wisconsin, Inc., 124 Wis.2d 1, 367 N.W.2d 806, 809-10 (1985), that it is desirable to affirm such releases in order to encourage partial settlements in future cases that benefit the parties involved and the justice system as a whole. Id, Cincinnati emphasized Minnesota's history of approving and encouraging partial settlements of claims and fully compensating injured parties.