Opinion
No. CX-00-642.
Filed September 26, 2000.
Appeal from the District Court, Ramsey County, File No. C9-99-1897.
William M. Hart and Melissa Dosick Riethof, Meagher Geer P.L.L.P., (for appellant)
John F. Angell and Louise A. Behrendt, Stich, Angell, Kreidler, Brownson Ballou, P.A., (for respondent Lumbermens Mutual Casualty Co.)
Janet Stellpflug and Krista L. Twesme, Aafedt, Forde, Gray Monson, P.A., (for respondent Corporate Express, Inc.)
Thomas J. Meiske, (pro se respondent)
Considered and decided by Toussaint, Chief Judge, Amundson, Judge, and Stoneburner, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Appellant lessor appeals from the district court's grant of summary judgment, arguing that the court erred in concluding that a lease provision purportedly requiring respondent lessee to obtain liability insurance for lessor's bodily injury arising from its own negligence inadequately detailed this intent. As a result, respondent insurer, from whom lessee obtained the liability insurance, had no duty to defend and indemnify lessor. We reverse and remand.
FACTS
On May 20, 1997, respondent Corporate Express, Inc. leased a forklift from appellant Lift-Stak Stor, Inc (Lift-Stak). A clause in the lease agreement required Corporate Express to purchase liability insurance on the forklift that would insure both Corporate Express and Lift-Stak. Corporate Express purchased this insurance from respondent Lumbermens Mutual Casualty Co. (Lumbermens).
On February 11, 1998, respondent Thomas Meiske, a contract employee of Corporate Express, injured his foot while operating the forklift. Meiske filed suit against Lift-Stak and Corporate Express alleging strict liability and negligence. By third-party complaint, Lift-Stak sought contribution from Corporate Express on the ground that Corporate Express had notice of a mechanical problem with the forklift but failed to warn Meiske or take the forklift out of service. Lift-Stak tendered defense to Lumbermens, but Lumbermens refused to defend or indemnify. Lift-Stak filed a complaint for declaratory judgment against Corporate Express and Lumbermens, asking the court to find that the insurance policy issued to Corporate Express also provided Lift-Stak coverage for Meiske's alleged injuries and claims. Lumbermens would, therefore, have a duty to defend and possibly indemnify Lift-Stak. Lift-Stak then moved for summary judgment, arguing that the terms of the forklift lease with Corporate Express, as well as the terms of the Lumbermens insurance policy, obligated Lumbermens to defend and indemnify Lift-Stak in regard to the claims asserted against it in the underlying Meiske litigation.
Following a hearing, the district court denied Lift-Stak's motion, finding that the insurance-procurement provision in the forklift lease was inadequate to require Corporate Express to obtain insurance that covered Lift-Stak for its own negligence. At a subsequent pretrial conference, the parties agreed that the denial of summary judgment left no factual issues for trial. Accordingly, the district court vacated the order for trial, granted respondents summary judgment, and dismissed Lift-Stak's claims with prejudice. This appeal followed.
DECISION
On appeal from summary judgment, we ask whether any genuine issues of material fact remain and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). In making this determination, we view the evidence in the light most favorable to the party against whom summary judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).
The interpretation of insurance contract language raises questions of law, which this court reviews de novo. Watson v. United Services Auto. Ass'n, 566 N.W.2d 683, 688 (Minn. 1987). But where contract language is clear and unambiguous, "the language used must be given its usual and accepted meaning." Bobich v. Oja, 258 Minn. 287, 294, 104 N.W.2d 19, 24 (1960). "The extent of the insurer's liability is governed by the contract entered into." Lobeck v. State Farm Muit. Auto. Ins. Co., 582 N.W.2d 246, 249 (Minn. 1998) (quotation omitted).
I. Insurance-Procurement Clause in the Lease
Lift-Stak argues that the district court erred in concluding that the language of the lease provision was insufficient to compel Corporate Express to purchase insurance covering claims from Lift-Stak's negligence. The relevant provision of the lease agreement between Lift-Stak and Corporate Express provides:
6. LESSEE * * * * shall carry for bodily injury and property damage insurance covering the Equipment in the combined amounts of not less than $500,000.00 for each occurrence. All such insurance shall insure both LESSOR and LESSEE.
Lease agreements obligating a lessee to carry liability insurance for the benefit of the lessor are valid under Minnesota law. Buckey v. Indianhead Truck Line, Inc., 234 Minn. 379, 389-90, 48 N.W.2d 534, 540 (1951). The supreme court has held an insurance-procurement agreement enforceable even though it did not expressly state that the lessor was to have the benefit of the insurance purchased by the lessee. Id.at 386-87, 48 N.W.2d at 538. This case presents an even stronger rationale for enforcement because the lease agreement expressly states that Lift-Stak is to have the benefit of all insurance.
In concluding that the lease provision was insufficient to require Corporate Express to procure insurance to cover Lift-Stak's negligence, the district court cited Katzner v. Kelleher Const., 545 N.W.2d 378, 382 (Minn. 1996). That case held that any "ambiguity in an indemnity contract is construed against the drafter." But, of course, there is a distinction between agreements to indemnify, which have been strictly construed, and agreements to procure insurance, which have been construed more broadly. This case presents the latter issue. See National Hydro Sys. v. M.A. Mortenson Co., 529 N.W.2d 690, 694 (Minn. 1995) (requiring express provision of indemnity for losses occasioned by negligence of the indemnitee), Fire Ins. Exchange v. Adamson Motors, 514 N.W.2d 807, 809 (Minn.App. 1994) (stating that "indemnity agreements are to be strictly construed when the indemnitee seeks to be indemnified for its own negligence"); see also Buckey, 234 Minn. 386-87, 48 N.W.2d at 538 (stating that absence of express language should not alone be despositive in an insurance-procurement case).
Because the lease provision clearly obligated Corporate Express to procure liability insurance for bodily injury covering Lift-Stak for claims arising out of Lift-Stak's negligence. The district court erred in granting summary judgment to Corporate Express and Lumbermens.
II. Duty to Defend and/or Indemnify
Lift-Stak argues that it is an "insured" under the policy Lumbermens issued to Corporate Express and that the district court erred in concluding that an examination of the insurance policy as a whole provided no coverage for Lift-Stak and therefore Lumbermens had no duty to defend and indemnify Lift-Stak.
Whether an insurer has a duty to defend an insured is a legal question, which this court reviews de novo. Metropolitan Property Cas. Ins. Co. v. Miller, 589 N.W.2d 297, 299 (Minn. 1999). An insurer's duty to defend arises when the underlying complaint against the insured alleges any facts that might fall within the coverage of the policy. Id. See also Garvis v. Employers Mut. Cas. Co., 497 N.W.2d 254, 256 (Minn. 1993) (stating that insurer's duty to defend is determined by comparing allegations of complaint with relevant policy language). Any doubts concerning the meaning of policy language must be resolved in favor of the insured, and the burden falls on the insurer to prove that a claim is not covered. Prahm v. Rupp Constr. Co., 277 N.W.2d 389, 390 (Minn. 1979).
Lift-Stak contends that Meiske's claims for bodily injury are covered by the Lumbermens policy, thus giving rise to Lumbermens duty to defend Lift-Stak. The relevant portion of the Lumbermens policy issued to Corporate Express and in effect at the time of Meiske's injury states:
COVERAGE A — BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend any "suit" seeking those damages.
Lift-Stak also argues that it is an "insured" under Endorsement 2026, which provides:
ADDITIONAL INSURED — DESIGNATED PERSON OR ORGANIZATION
* * * *
SCHEDULE
Name of Person or Organization:
Where required by written or oral contract
* * * *
WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule as an insured but only with respect to liability arising out of your operations or premises owned by or rented to you.
We agree. The Lumbermens policy obtained by Corporate Express clearly provides coverage for Lift-Stak as an "insured," as required by the lease contract, and clearly expresses Lumbermens duty to defend and indemnify Lift-Stak on Mieske's claims of bodily injury. The district court erred in granting summary judgment in favor of Corporate Express and Lumbermens on these issues. We reverse and remand for further proceedings consistent with this opinion, including a determination of Lift-Stak's damages.