Opinion
No. C9-01-27.
Filed June 26, 2001.
Appeal from the District Court, Hennepin County, File No. 9914561.
Christian A. Preus, Richard L. Pemberton, Jr., (for appellants)
Roger L. Rowlette, Susan E. Gustad, (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellants challenge the district court's grant of summary judgment in favor of respondent Monticello Insurance Company contending the district court erred in determining that the initial complaint in J.M.D.'s action against appellants did not invoke respondent's duty to defend appellants. Appellants also claim they are entitled to reasonable attorney fees for defending the underlying action and for this appeal. We reverse and remand.
DECISION
On appeal from summary judgment, the reviewing court asks "(1) whether there are any genuine issues of material fact to be determined, and (2) whether the district court erred in its application of the law." O'Malley v. Ulland Bros., 549 N.W.2d 889, 892 (Minn. 1996) (citation omitted). 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). This court need not defer to the district court's application of the law when the material facts are not in dispute. Hubred v. Control Data Corp., 442 N.W.2d 308, 310 (Minn. 1989).
I.
Appellants claim that respondent had a duty to defend Oakland Home, Inc. and Lee Slagter, Oakland Home's program director, based on the initial complaint in J.M.D.'s lawsuit. We agree.
Whether an insurer has a duty to defend is a question of law. Auto-Owners Ins. Co. v. Todd, 547 N.W.2d 696, 698 (Minn. 1996). An insurer has a duty to defend claims that are "arguably" covered by a policy. Jostens, Inc. v. Mission Ins. Co, 387 N.W.2d 161, 165 (Minn. 1986) (quotation omitted). The insurer claiming that it has no duty to defend has the burden of showing that each claim asserted in the lawsuit clearly falls outside the policy. Id. at 165-66. If the complaint alleges several causes of action, and one of the claims, if established, would require the insurer to indemnify, the insurer must provide a defense against all claims. Lanoue v. Fireman's Fund Am. Ins. Cos., 278 N.W.2d 49, 53 (Minn. 1979), overruled on other grounds by American Standard Ins. Co. v. Le, 551 N.W.2d 923, 927 (Minn. 1996). Doubts as to coverage must be resolved against the insurer issuing the policy in favor of coverage, and the burden rests with the insurer to prove the claim is not covered. Prahm v. Rupp Constr. Co., 277 N.W.2d 389, 390 (Minn. 1979).
The obligation to defend is generally determined by comparing the allegations in the complaint to the coverage afforded by the policy. Meadowbrook Inc. v. Tower Ins. Co., 559 N.W.2d 411, 415 (Minn. 1997). Once the insured presents facts that arguably demonstrate coverage or the insurer becomes aware of such facts, the insurer has the "heavy burden" of proving that no duty to defend exists. In re Liquidation of Excalibur Ins. Co., 519 N.W.2d 494, 497 (Minn.App. 1994) (citation omitted).
Monticello contends it had no duty to defend based on J.M.D.'s original complaint because the complaint alleged that Slagter had a "physical relationship" with J.M.D., a resident at Oakland Home, in violation of Minnesota laws prohibiting sexual assaults and Monticello's policy excluded claims arising from sexual molestation. But Monticello's insurance policy with Oakland Home provided broad coverage for damages "arising out of any negligent act, error, or omission in the rendering of or failure to render professional services." Moreover, the specific language in the policy only excluded any claims "arising out of or resulting from either Sexual Abuse or Licentious, immoral, or sexual act" while the original complaint alleged, inter alia, that: (1) Slagter's "dual" relationship with J.M.D. was contrary to all mental health therapist-patient standards; (2) Slagter's "physical relationship" with J.M.D. was "inappropriate and unethical"; (3) J.M.D.'s confusion about the relationship led to "self-abusive behavior"; (4) Oakland Home, as Slagter's employer, knew or should have known of his "dual" relationship with J.M.D.; and (5) Oakland Home's negligence was the direct cause of J.M.D.'s injuries. Although the complaint also alleged violations of criminal sexual conduct laws, the allegations regarding improper therapeutic techniques and Oakland Home's negligence in failing to correctly address Slagter's behavior are at least arguably covered by Monticello's insurance policy. We thus conclude that because there were sufficient facts in the complaint to alert Monticello that it owed appellants a duty to defend on at least some of J.M.D.'s claims, its duty to defend arose at the time it received notice of the original complaint.
Finally, because the original complaint invoked Monticello's duty to defend, we need not address appellants' challenge to the district court's determination that appellants did not properly tender a defense until it served respondent with the amended complaint.
II.
Appellants contend they are entitled to all attorney fees and expenses incurred in connection with the current lawsuit and J.M.D.'s lawsuit. We agree.
When an action leads to a determination that an insurer breached its duty to defend, the insured may recover from the insurer the legal fees incurred in bringing that action.
Redeemer Covenant Church v. Church Mut. Ins. Co., 567 N.W.2d 71, 82 (Minn.App. 1997), review denied (Minn. Oct. 1, 1997) (citation omitted). Because Monticello's duty to defend arose upon service of the original complaint, Monticello is responsible for its share of reasonable attorney fees dating back to October 6, 1995. We therefore remand for the district court to determine the amount of reasonable attorney fees Monticello owes to appellants. See Richards v. Richards, 472 N.W.2d 162, 166 (Minn.App. 1991).
In their brief appellants have also requested attorney fees for this appeal. But a party seeking attorney fees on appeal must submit a written motion with appropriate documentation. Minn.R.Civ.App.P. 139.06, subd. 1. Such a motion may still be made.