In contrast to those cases, Murach alleges two bases of prejudice: 1) Transamerica's control of IBC's defense without reservation and 2) his reliance on Transamerica representations regarding its coverage when signing the bankruptcy stipulation. Continental Ins. Co. v. Bergquist, 400 N.W.2d 199 (Minn.Ct.App. 1987); Pedersen v. United Servs. Auto. Ass'n, 383 N.W.2d 427 (Minn.Ct.App. 1986); Malakowsky v. Johannsen, 374 N.W.2d 816 (Minn.Ct.App. 1985); Minnesota Fed. Sav. and Loan Ass'n v. Iowa Nat'l Mut. Ins. Co., 372 N.W.2d 763 (Minn.Ct.App.), pet. for rev. denied, (Minn. Nov. 1, 1985); Twin City Hide v. Transamerica Ins. Co., 358 N.W.2d 90 (Minn.Ct.App. 1984); Minnesota Mut. Fire Casualty Co. v. Rudzinski, 347 N.W.2d 848 (Minn.Ct.App.), pet. for rev. denied, (Minn.
However, estoppel cannot be asserted by third parties who have no rights under an insurance contract: "[e]stoppel can only affect rights reserved in the policy." Malakowsky v. Johannsen, 374 N.W.2d 816, 818 (Minn.App. 1985). Only Redeemer, as the insured, has standing to assert estoppel against Atlantic.
See generally Robert E. Keeton Alan I. Widiss, Insurance Law ยง 6.7(b) (1988); John A. Appleman Jean A. Appleman, Insurance Law and Practice ยง 9090 (1981 1993 Supp.). Although not argued by Federal, there is authority leading us to conclude this is the law in Minnesota. For example, the Minnesota Court of Appeals held in Malakowsky v. Johannsen, 374 N.W.2d 816 (Minn.Ct.App. 1985), that the insurer was not estopped from denying coverage based on a policy exclusion it did not include in its initial reservation of rights letter but that it referred to in a later letter. Id. at 817-18.
Cf. Nw. Airlines, 32 F.3d at 357 (citing Malakowsky v. Johannsen, 374 N.W.2d 816, 817-18 (Minn.Ct.App. 1985)). Nor does it increase the Policy's payout limits.
Moreover, General Casualty lacks standing to assert such a reliance โ based doctrine because it was a stranger to the transaction. See, e.g., Malakowsky v. Johannsen, 374 N.W.2d 816, 818 (Minn. Ct. App. 1985) (holding that stranger to an insurance contract cannot assert estoppel to keep insurer from denying coverage to the insured). Holicky has not submitted any evidence to this Court asserting its expectations regarding the Great West Policy. General Casualty offers no evidence that it somehow relied on Great West's actions. The reasonable expectations doctrine does not apply in this case.
As with assumption-of-defense estoppel, Minnesota courts routinely apply this rule. See, e.g., Continental Ins. Co. v. Bergquist, 400 N.W.2d 199, 201 (Minn.Ct.App. 1987) ("[E]stoppel may not be raised against an insurer if the estoppel would enlarge the coverage afforded by the policy."); Malakowsky v. Johannsen, 374 N.W.2d 816, 819 (Minn.Ct.App. 1985) ("It is undisputed that [the] exclusion bars coverage under the policy. Estoppel may not be used to create coverage where none is provided for under the contract.").
Litigants cannot claim estoppel based on policies to which they are not a party; nor can they claim waiver of a provision in a policy they have no right to enforce. Malakowsky v. Johannsen, 374 N.W.2d 816, 818 (Minn.Ct.App. 1985) (holding non-party to insurance contract cannot invoke estoppel; "[e]stoppel can only affect rights reserved in the policy"); W. Cas. &Sur. Co. v. Am. Nat'l Fire Ins. Co., 318 N.W.2d 126, 128 (S.D. 1982) ("Only the parties to the contract of insurance, or their privies, can claim the benefit of a waiver or an estoppel[.]"); Donovan v. New York Cas. Co., 94 A.2d 570, 571 (Pa. 1953) ("[A] stranger to a contract of insurance is not in a position to invoke an estoppel or waiver of a condition in the policy."); 46 C.J.S. Insurance ยง 1156 (March 2023 update) ("[O]nly the parties to the contract of insurance can claim the benefit of waiver or estoppel ...."). As we have noted, estoppel for purposes of insurance "involves the act or conduct of both parties to a contract."
Specifically in the insurance context, equitable doctrines "may not be used to create coverage where none is provided for in the contract." Malakowsky v. Johannsen, 374 N.W.2d 816, 819 (Minn.App. 1985) (stating it would be "wholly improper to impose coverage liability upon an insurer for a risk not specifically undertaken and for which no consideration has been paid"). A determination of damages may be disturbed only for clear abuse of discretion.
Respondent did not have full knowledge and appellant was not forthcoming on his application to the insurance company. See Malakowsky v. Johannsen, 374 N.W.2d 816, 818-19 (Minn.App. 1985) (stating this court does not impose liability on an insurer for a risk for which it did not bargain). When respondent learned of the misrepresentation, it asked appellants if it could amend its answer.
While it appears that Austin Mutual's election of the same counsel to represent three defendants who had conflicting interests was questionable, it is not the respondents who can argue estoppel. In Malakowsky v. Johannsen, 374 N.W.2d 816 (Minn.Ct.App. 1985), this court reaffirmed the long standing Minnesota rule that a stranger to an insurance contract may not set up estoppel as a defense to that contract to keep an insurer from denying coverage to its insured. Id. at 818.