Opinion
No. C0-98-1331.
Filed April 13, 1999.
Appeal from the District Court, Ramsey County, File No. C4977795.
Eric L. Crandall, (for appellants)
Ted E. Sullivan, William Lawrence Davidson, Lind, Jensen Sullivan, (for respondents)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
On appeal from summary judgment in favor of respondent Lyndon Life Insurance Company (Lyndon Life), R.T. Harper challenges the district court's dismissal of his breach of contract and deceptive trade practices claims. Harper and his lawyer Eric L. Crandall, also challenge the district court's sanction of attorney fees against Crandall. Harper's claims arose in connection with the cancellation of a life insurance policy he and his wife bought from Lyndon Life in conjunction with a mortgage refinancing loan. Because the undisputed facts in the record conclusively establish that Harper cancelled the policy he now seeks to enforce, we affirm the district court's grant of summary judgment in favor of Lyndon Life. We reverse the district court's sanction of attorney fees, however, because Harper and Crandall had a reasonable basis in law and fact to assert a claim against Lyndon Life.
DECISION I.
On appeal from summary judgment, we review the record to determine whether genuine issues of material fact remain for trial and whether the district court erred in its application of the law. Nicollet Restoration, Inc. v. City of St. Paul, 533 N.W.2d 845, 847 (Minn. 1995). No genuine issue of material fact remains for trial when the nonmoving party's evidence permits only one reasonable inference with respect to an essential element of its claim. DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997).
Breach of Contract
Harper first claims that Lyndon Life breached the life insurance contract by denying coverage upon his wife's death on the assumption that the contract had been effectively cancelled. Harper argues that the policy was in effect at the time his wife died because he never signed the request for cancellation form on the reverse side of the policy, as the express terms of the policy required him to do to effect cancellation. We disagree.
An insurance contract may be cancelled by mutual agreement, even where the parties fail to comply with the contract's cancellation requirements. McQuarrie v. Waseca Mut. Ins. Co., 337 N.W.2d 685, 688 (Minn. 1983) (holding parties cancelled insurance policy by mutual agreement where insurer sent cancellation notice that did not comply with policy terms and credited unearned premiums, and insureds responded by obtaining substitute coverage). Whether an insurance contract has been cancelled or rescinded depends upon the intent of the parties as evidenced by their acts. Id. at 687-88. Ordinarily, whether the parties intended cancellation is a question of fact for the jury. Merchants Farmers Mut. Cas. Co., v. St. Paul-Mercury Indem. Co., 214 Minn. 544, 546, 8 N.W.2d 827, 828 (1943). Where the undisputed facts in the record permit only one inference as to the parties' intent, however, the court may determine as a matter of law whether a policy has been cancelled. See DLH, 566 N.W.2d at 69 (stating summary judgment not appropriate when reasonable persons might draw different conclusions from evidence presented).
The undisputed facts in the record conclusively establish that Harper intended to cancel the policy he now seeks to enforce, even though he failed to comply with the policy's cancellation requirements. The parties do not dispute that Harper and his wife, faced with foreclosure proceedings, approached Lyndon Life for an additional loan. Instead of taking a loan, they signed a request for cancellation of insurance form for a life insurance policy that had previously expired. Upon signing the form, they obtained a check from Lyndon Life in the amount of the unpaid premiums, cashed the check, and used the proceeds to pay the arrears on their mortgage.
Harper admits that when he and his wife signed the request for cancellation form, he had only one life insurance policy in effect with respondent (a joint decreasing net pay policy). The policies he had previously obtained had been automatically cancelled, according to their express terms, when Harper repaid loans associated with them. Harper concedes knowing that that his previous policies were "off the table." By signing the request for cancellation form for one of the expired policies, therefore, Harper could only have intended to cancel the policy he now seeks to enforce. No other policy was in effect at the time.
Harper also admits knowing that his previous policies had been single, rather than joint decreasing net pay policies. Thus, had he intended to cancel a previous policy, there would have been no need for Mrs. Harper to sign the cancellation form. The fact that Harper had his wife sign the request for cancellation form suggests he intended to cancel the joint decreasing net pay policy, rather than one of the previous policies. Harper's acceptance and use of the premium refund check, although not dispositive, similarly manifests his intent to cancel the policy at issue in this case. See Mutual of Omaha Ins. Co. v. Korengold, 308 Minn. 457, 458, 241 N.W.2d 651, 652 (1976) (insured, a lawyer aware of insurer's claims, indicated intent to cancel policy by cashing premium refund check).
Thus, because the undisputed facts in the record conclusively establish that Harper intended to cancel the policy, we affirm the district court's grant of summary judgment dismissing Harper's breach of contract claim.
B. Deceptive trade practice
Harper next claims that Lyndon Life engaged in deceptive trade practices in violation of Minn. Stat. § 325D.44, subd. 1(13) (1998). Specifically, he argues that Lyndon Life created a likelihood of confusion or misunderstanding by telling him that his insurance policy "had expired."
The Deceptive Trade Practices Act prohibits people in the course of business from creating a likelihood of confusion or misunderstanding as to the source, affiliation, geographic origin, characteristics, or condition of goods or services. Minn. Stat. § 325D.44, subd. 1; Krueger v. State Farm Fire Cas. Co., 510 N.W.2d 204, 211 (Minn.App. 1993). Lyndon Life's statement regarding the actual status of Harper's policy did not concern the source, affiliation, origin, characteristics, or condition of its goods or services. Accordingly, it does not fall within the scope of the Deceptive Trade Practices Act. Cf. Krueger, 510 N.W.2d at 211 (holding that insured's confusion about which of two State Farm insurance companies issued policy "[did] not rise to the level of a deceptive trade practice").
Even if it Lyndon Life's statement came within the scope of the Deceptive Trade Practices Act, Harper's claim fails as a matter of law because the undisputed facts in the record do not support an inference that Lyndon Life's statement created a likelihood of confusion or misunderstanding. The statement was true, it was clear, and Harper engaged in no conduct reflecting confusion as to the current status of the policy. Harper's mere general assertions that he was confused were insufficient to preclude summary judgment for Lyndon Life. The district court did not err in granting summary judgment dismissing Harper's deceptive trade practices claim.
II.
Finally, Harper and Crandall argue the district court abused its discretion by imposing a sanction of attorney fees against Crandall.
We review the district court's decision to impose sanctions under an abuse of discretion standard. Cole v. Star Tribune, 581 N.W.2d 364, 370 (Minn.App. 1998). The district court may impose a sanction of attorney fees upon a finding that a party acted in bad faith, asserted a claim that was frivolous, or asserted an unfounded position solely to delay the proceedings. Minn. Stat. § 549.211 (1998).
Harper commenced the present action after discovering that he had not signed the correct cancellation form. Crandall, in zealous pursuit of his client's rights, relied on Bradshaw Bros. Co., v. Fire Ins. Co., 89 Minn. 334, 94 N.W. 866 (1903), in formulating Harper's claims. Bradshaw provides that insurance contracts can be cancelled by one party only by strict compliance with the contract's cancellation terms. Because in this case there was no compliance with the policy's cancellation terms, Harper and Crandall had a basis in fact and law to bring the present action. Although more recent cases suggest the weakness of Harper's claims, they cannot be characterized frivolous, and there is no evidence that the suit was brought in bad faith. We conclude that the district court abused its discretion in imposing a sanction of attorney fees on Crandall. Affirmed in part and reversed in part.
Because Harper does not challenge the district court's judgment for costs and disbursements against him personally, our decision does not affect that judgment.