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Miller v. Shugart

Supreme Court of Minnesota
316 N.W.2d 729 (1982)


On June 19, 1976, Lynette Miller (plaintiff) was injured while riding a car owned by Barbara Locoshonas (defendant) and driven by Mark Shugart (defendant). Shugart hit a tree while driving. Locoshonas had an automobile-liability insurance policy with Milbank Mutual Insurance (Milbank). Milbank claimed that it was not required to cover the accident because Shugart, who was driving the car, was not an agent of Locoshonas, the policy holder. Milbank filed a declaratory-judgment action to determine whether Milbank was required to cover the accident. Milbank provided separate counsel to both Shugart and Locoshonas. On January 8, 1979, the court determined that Milbank was required to cover both Locoshonas and Shugart. On January 31, 1979, Miller sued the defendants for personal injuries. Although Milbank appealed the declaratory-judgment determination, Milbank’s appeal was denied. Twice while Milbank’s appeal was pending, the defendants’ attorneys notified Milbank that the defendants were negotiating a settlement with Miller. Milbank refused to participate in these settlement discussions. Miller and the defendants settled the personal-injury action with a stipulation of settlement. The defendants confessed judgment for $100,000, double the Milbank policy limit. The parties agreed that the $100,000 could only be collected from proceeds of insurance without personal liability to the defendants. Miller filed a garnishment action against Milbank to collect on the judgment. Milbank claimed it was not liable for satisfying the defendants’ judgment because the confession of judgment violated its policy. Miller moved for summary judgment for the policy limit, $50,000, plus interest and costs. Milbank also moved for summary judgment, in part, because it claimed the defendants had breached the cooperation clause of the policy and that the confession of judgment was not valid. The trial court granted Miller’s motion for summary judgment and awarded her $50,000 and interest on $100,000. Milbank sought review of the trial court’s decision.

Rule of Law


Holding and Reasoning (Simonett, J.)

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