Fischer Sand and Aggregate, LLP, Appellant,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A16-0988

Fischer Sand and Aggregate, LLP,
Appellant,

vs.

Old Republic National Title Insurance Company,
Respondent.

Filed April 10, 2017
Affirmed
Smith, Tracy M., Judge

Dakota County District Court
File No. 19HA-CV-15-2172

Aaron R. Hartman, Matthew S. Duffy, Mae J. Beeler, Monroe Moxness Berg P.A.,
Minneapolis, Minnesota (for appellant)

Thomas B. Olson, Katherine L. Wahlberg, Olson, Lucas, Redford & Wahlberg, P.A.,
Edina, Minnesota (for respondent)

Considered and decided by Reilly, Pr esiding Judge; Hooten, Judge; and Smith,
Tracy M., Judge.
U N P U B L I S H E D O P I N I O N
SMITH, TRACY M., Judge
This case involves an in surance-coverage dispute between a title-insurance
company and the insured property owner. Ap pellant Fischer Sand & Aggregate, L.L.P.,
(Fischer) owns property comprised of two parcels, one of which is referred to as the East

2
50 parcel. The title to Fischer’s property is insured by respondent Old Republic National
Title Insurance Company (Old Republic). From 2009 to 2 015, Fischer was embroiled in
protracted litigation with a neighboring property owner, Gene Rechtzigel, over the western
boundary of the East 50 parcel. Old Republic refused to defend Fischer in this litigation,
arguing that the policy’s defective-description and survey exceptions excluded coverage.
Fischer filed a breach-of-contract claim ag ainst Old Republic for its refusal to
defend. The district court granted Old Republic’s motion fo r summary judgment,
concluding that the policy excluded coverage under the defective-description exception
and thus the duty to defend was not triggered. Fischer argues on appeal that the district
court (1) failed to view the fact s in the light most favorable to Fischer, (2) misinterpreted
the defective-description exception, and (3) in terpreted the policy in a way that results in
illusory coverage. Because we conclude that, based on the und isputed material facts, the
defective-description and survey exceptions apply to exclude coverage, and because the
coverage is not illusory, we affirm.
FACTS
The Property
In 1998, Fischer Market Place, L.L.P., Fischer Sand’s predecessor in interest
(collectively referred to as Fischer), bought a piece of property, which includes the East 50
parcel. The East 50 parcel’s western boundary borders a sma ll parcel, referred to as the
“gap parcel,” which separates the East 50 parcel from the West 30 parcel. Fischer does not

3
own the gap parcel or the West 30 parcel. Aside from several exceptions not relevant here,
Fischer’s land is legally described in the deed as follows:
The South 1/2 of the SE 1/4 exce pt the East 1645 feet thereof
and the East 50 acres of the SW 1/4; all in Section 35,
Township 115, Range 20, Dakota County, Minnesota . . . .

Apart from the exceptions, which are descri bed in metes and boun ds, the property is
described in acreage and not in metes and bounds.
The Policy
Before buying the property, Fischer sought title insurance from Old Republic. Old
Republic provided Fischer with a commitment to insure, noting a number of exceptions.
One of the exceptions in the commitment to insure was a defective-description exception.
The property description in the proposed policy was the sa me as in the deed. The
commitment to insure excepted coverage based on that description:
Defective description: We [cannot] insure a description based
on acreage. We require a metes and bounds description and a
survey to determine if there is an overlap with property
described as the West 30 acres of the East 1/2 of the Southwest
1/4 of Section 35, Township 115, Range 20.

The commitment to insure also included a survey exception, which stated that the policy
does not cover “[f]acts which would be disclo sed by an accurate survey of the premises
herein described.”
Fischer cured some of the other exceptions in the commitment to insure before Old
Republic issued the final policy, but it did no t cure the defective-description and survey
exceptions, and both were incorporated into the final policy.

4
The Rechtzigel Litigation
In 2009, Fischer filed a Torrens petition, se eking to register its property and the gap
parcel, which Fischer claimed based on adverse possession. Gene Rechtzigel objected to
Fischer’s registration of the ga p parcel, claiming that the Ev elyn I. Rechtzigel Trust and
Frank H. Rechtzigel Charitable Remainder Unitrust owned the gap parcel.1
Rechtzigel’s objection trigge red protracted litigation. Initially, Rechtzigel objected
to Fischer’s registration of the gap parcel, but he neither sought to register the gap parcel
nor contested the boundaries of the East 50 parcel. In April 2 012, the Dakota County
District Court granted Fischer’s registration of its property but denied Fischer’s registration
of the gap parcel. Rechtzigel moved for amended findings, claiming an overlap of the gap
parcel and the East 50 parcel. Rechtzigel ar gued that the boundary line of the gap parcel
extended to a historic fence line on the East 50 parcel. The district court reserved Fischer’s
application for registration of the East 50 parcel until Rechtzigel applied for registration of
the gap parcel, at which point the district court would consider the applications for
registration of both parcels concurrently. Rechtzigel never sought registration but,
nevertheless, continued to litigate his objecti ons. In November 2013 , the district court
concluded that even if Rechtzigel had acquired the gap parcel through adverse possession,
the boundary of the gap parcel did not extend into the land Fischer sought to register as the
East 50 parcel. This court affirmed. In re Application of Fi scher Sand & Aggregate,

1 The Rechtzigel Trust had owned the West 30 parcel but had sold it around the time that
Fischer purchased its property. Rechtzigel acknowledged that the trust had sold the West
30 parcel but claimed continued ownership of the gap parcel.

5
L.L.P., No. A14-0735, 2015 WL 1128658 (Minn. Ap p. Mar. 16, 2015), review denied
(Minn. May 27, 2015).
Fischer sent Old Republic a letter on Augu st 20, 2013, seeking reimbursement for
attorney fees and expenses incurred in the Rechtzigel litigation. Old Republic denied the
claim, citing the defective-de scription and survey exceptions. In its denial letter, Old
Republic stated that, “[w]ithout allegations of evidence of a record deed overlap,” it would
deny the claim because the “f ence encroachment would show on a survey and would not
be detected in a search of the public records.” Fischer clarified that the Rechtzigel litigation
“does involve an allegation of an overlap in the legal descriptions and is therefore a covered
event.” Old Republic again denied the cl aim, asserting that the documents Fischer
provided to Old Republic did not show allegations of a record overlap.
Fischer filed this lawsuit, alleging that Old Republic breached its obligations under
the insurance contract by refusi ng to defend Fischer in the Rechtzigel litigation. Old
Republic moved for summary judgment, which the district court granted. The district court
concluded that the defective-description ex ception applied and excluded coverage. The
district court acknowledged Old Republic’s survey-exception argument but did not further
consider it.
Fischer appeals.
D E C I S I O N
On appeal from a grant of summary judgment, we review de novo (1) whether the
district court properly applied the law and (2) whether there are any genuine issues of
material fact that prec lude summary judgment. Riverview Muir Doran, L.L.C. v. JADT

6
Dev. Grp., L.L.C., 790 N.W.2d 167, 170 (Mi nn. 2010). “A material fact is one of such a
nature as will affect the result or outcome of the case depending on its resolution.” Zappa
v. Fahey , 310 Minn. 555, 556, 2 45 N.W.2d 258, 259-60 (1976 ). No genuine issue of
material fact exists where “the record taken as a whole could not lead a rational trier of fact
to find for the nonmoving party.” DLH, Inc. v. Russ , 566 N.W.2d 60, 69 (Minn. 1997)
(quotation omitted). We view the evidence in the light most favorable to the party against
whom summary judgment was entered. STAR Ctrs., Inc. v. Faegre & Benson, L.L.P., 664
N.W.2d 72, 76-77 (Minn. 2002).
Interpretation of an insurance policy is a question of law that we review de novo.
Franklin v. W. Nat’l Mut. Ins. Co., 574 N.W.2d 405, 406 (Minn. 1998). “General principles
of contract interpretation ap ply to insurance policies.” Lobeck v. State Farm Mut. Auto.
Ins. Co., 582 N.W.2d 246, 249 (Minn. 1998). The reviewing court must “give effect to the
intention of the parties as it a ppears from the entire contract.” Bobich v. Oja, 258 Minn.
287, 294, 104 N.W.2d 19, 24 (1960). When its language is clear and unambiguous, the
reviewing court must give effect to the policy’s plain language. Id. “A clear and
unambiguous contract is enforced in accordance with the plain language of the contract; a
reviewing court considers parol evidence or matters outside of the contract only when the
contract terms are ambiguous.” Terminal Transp., Inc. v. Minn. Ins. Guar. Ass’n , 862
N.W.2d 487, 489 (Minn. App. 2015), review denied (Minn. June 30, 2015). Ambiguities
regarding coverage are resolved in favor of the insured, but the reviewing court cannot read
an ambiguity into the plai n language of the policy. Hubred v. Control Data Corp. , 442
N.W.2d 308, 310 (Minn. 1989). The insurer bears the burden of proving that an exception

7
bars coverage. Smith v. State Farm Fire & Cas. Co. , 656 N.W.2d 432, 436 (Minn. App.
2003). Once the insurer shows that an exception bars coverage, the burden of proof shifts
back to the insured. Id.
I. The Rechtzigel litigation concerned challenges to bo th the East 50
parcel’s boundary line and its legal description.

Fischer argues that Old Republic had a du ty to defend Fischer in the Rechtzigel
litigation. Old Republic argues that it did not because one of two exceptions under the
policy excludes coverage. If Rechtzigel challenged the East 50 parcel’s legal description,
Old Republic argues that the defective-desc ription exception excludes coverage. If
Rechtzigel challenged the bound ary line between the East 50 parcel and the gap parcel,
Old Republic argues that the survey exception excludes coverage. As a threshold issue,
we must determine the crux of Rechtzigel’s claims.
The duty to defend “arises when any part of the claim is ‘arguably’ within the scope
of the policy’s coverage.” Jostens, Inc. v. Mission Ins. Co., 387 N.W.2d 161, 165 (Minn.
1986). “Usually, a duty to defend is determined by co mparing the comp laint with the
policy language.” Westfield Ins. Co. v. Kroiss, 694 N.W.2d 102, 106 (Minn. App. 2005),
review denied (Minn. June 28, 2005). An insurer who seeks to avoid the duty to defend
has the “burden of showing that all parts of the cause of action fall clearly outside the scope
of coverage.” Jostens, 387 N.W.2d at 165-66.
Characterizing Rechtzigel’s claims is not as simple as examining the complaint
because Rechtzigel’s arguments evolved continuously throughout the litigation. Initially,
Rechtzigel objected only to Fischer’s registra tion of the gap parcel, but he later claimed

8
that the gap parcel’s boundary line extended into a portion of the East 50 parcel claimed
by Fischer. In the Rechtzigel-litigation appeal, this court described Rechtzigel’s challenges
to the initial determination of the boundary lin e as arguing that (1) “the fence line should
be given priority over the line provided in the legal description,” (2) “the fence line should
control because it is a ‘legal and sufficient’ statutory partition fence,” (3) “the legal
description [of the East 50 parcel] is ambiguo us and defective becaus e it is inconsistent
with the purported fence line, ” and (4) the “district court erred in not establishing a
boundary by practical location.” In re Application of Fischer Sand & Aggregate, 2015 WL
1128658, at *3-6. In (1) and (3), Rechtzigel challenged the legal description of the East 50
parcel because it did not reflect the historic fence line. In (2) and (4), Rechtzigel argued
that the proper boundary between the gap par cel and the East 50 parcel was the historic
fence line. The Rechtzigel litigation thus co ncerned challenges to th e sufficiency of the
East 50 parcel’s legal description and challenges to the boundary line of the East 50 parcel.
Old Republic has the burden of showing th at the policy excludes coverage for
Rechtzigel’s boundary-line and legal-description claims. Jostens, 387 N.W.2d at 165-66.
The district court only considered whether the defective-description exception excludes
coverage; however, “we may affirm a grant of summary judgment if it can be sustained on
any grounds.” Doe 76C v. Archdiocese of St. Paul , 817 N.W.2d 150, 16 3 (Minn. 2012).
Because interpretation of the policy is a ques tion of law, we review each exception to
determine whether the policy excludes covera ge for both of Rechtzigel’s claims. See
Franklin, 574 N.W.2d at 406.

9
II. The defective-description exception ex cludes coverage of Rechtzigel’s
legal-description claims.

We first address whether the policy exclud es coverage for Rechtzigel’s claims
relating to the legal description of the East 50 parcel. Fischer argues that (1) the defective-
description exception only excludes coverage for claims related to an overlap between the
East 50 parcel and the West 30 parcel and (2) Fischer had a reasonable expectation of
coverage. Old Republic responds that the policy unambiguously excludes all claims
related to the legal description. The district court concluded that the plain language of the
policy excluded coverage for all claims related to the legal description of the property.
A. The plain language of the defectiv e-description exception excludes
claims related to the legal description.

The defective-description exception states that Old Republic will not insure against
claims related to the legal description because the property is described only in acreage:
Defective description: We [cannot] insure a description based
on acreage. We require a metes and bounds description and a
survey to determine if there is an overlap with property
described as the West 30 acres of the East 1/2 of the Southwest
1/4 of Section 35, Township 115, Range 20.

To cure the defective-description exception, Fischer was required to provide Old Republic
with (1) a metes-and-bounds description and (2) a survey. Metes and bounds are
“measured by distances and angles from designated landmarks and in relation to adjoining
properties.” Black’s Law Dictionary 1141 (10th ed. 2014).

10
Fischer did not provide Old Republic with a metes-and-bounds description of the
property.2 On all relevant documents, including the deed, the commitment, the final policy,
and the Schwanz survey, the property is described in acreage and not in metes and bounds.
The policy unambiguously states that Old Republic cannot “insure a description based on
acreage.” Fischer had notice pr ior to closing that Old Repu blic considered the legal
description of the property defective but nevertheless accepted the policy without arranging
to have the acreage description changed to a metes-and-bounds description. Therefore, the
defective-description exception excludes covera ge for any claims related to the legal
description.
Fischer argues that the exception excludes only claims related to a potential overlap
of the West 30 parcel and East 50 parcel.3 It derives this reading from the second sentence

2 Fischer argues that it provided a metes-and- bounds description to Old Republic in the
form of the Schwanz survey. A legal description and a survey are two different things. To
cure the defective-description exception, Fischer had to provide both a metes-and-bounds
description and a survey. While Fischer may have provided Old Republic with a metes-
and-bounds survey, it did not provide Old Republic with a metes-and-bounds description.
Moreover, even if Fischer had provided Old Republic with a metes-and-bounds
description, the defective-description exception nevertheless was unambiguously included
in the final policy, and we cannot consider parol evidence suggesting that the parties meant
to exclude the exception. See Terminal Transport, 862 N.W.2d at 489.

3 Relatedly, Fischer argues that the district co urt failed to view the facts in the light most
favorable to the nonmoving part y because, according to Fischer, the district court found
that the West 30 and East 50 parcels overlapped. Although the district court acknowledged
that the Rechtzigel ligation arose from a possible overlap of the gap parcel and the East 50
parcel, the district court did not find that the West 30 parcel and East 50 parcel overlapped.
Fischer reads the district court’s order too narrowly. Regardless, it is immaterial whether
the West 30 parcel and the East 50 parcel overlapped, because the defective-description
exception excluded coverage for any claims rela ted to the legal description, not just an
overlap between the West 30 parcel and the East 50 parcel.

11
of the defective-description exception: “We require a metes and bounds description and a
survey to determine if there is an overlap with property described as the West 30 acres of
the East 1/2 of the Southwest 1/4 of Sectio n 35, Township 115, Ra nge 20.” But Fischer
ignores the first sentence of the exception: “We [cannot] insure a description based on
acreage.” Both sentences must be given effect. See Bobich, 258 Minn. at 294-95, 104
N.W.2d at 24. The first sentence describes the exception, affirming that Old Republic will
not insure against any claim related to the legal description. In order to cure the exception,
the second sentence instructs Fi scher to provide Old Republic with (1) a description in
metes and bounds and (2) a survey showing that the West 30 parcel does not overlap with
the East 50 parcel. The second sentence does not narrow the application of the exception.
Therefore, the exception applies.
B. Fischer did not have a reasonable expectation of coverage.
Fischer further argues that it had a reas onable expectation that the policy would
cover the legal description. The district court acknowledged that it “understands
[Fischer’s] position that no one would purchase title insurance expecting that it would not
cover the legal description of the property, ” but found that the defective-description
exception “is not hidden in fine print but is in stead included with material that is specific
to the property at issue in the transaction.”
Under the reasonable-expectations doct rine, the court honors the “objectively
reasonable expectations of a pplicants and intended beneficiaries regarding the terms of
insurance contracts . . . even though painstaking study of the policy provisions would have
negated those expectations.” Atwater Creamery Co. v. W. Nat’l Mut. Ins. Co., 366 N.W.2d

12
271, 277 (Minn. 1985) (quotation omitted). Ambiguity is not a condition precedent to the
application of the reasonable-expectations doctrine. Id. at 278.
In Frey, this court affirmed a district cour t’s grant of summary judgment after
concluding that the insured did not have a reasonable expectation of coverage. Frey v.
United Servs. Auto. Ass’n, 743 N.W.2d 337, 342-43 (Minn. App. 2008). First, this court
determined that the exclusion was not ambiguous. Id. at 343. Second, this court
determined that the exclusion was not hidde n because the exclusio n was contained in a
section labeled “exclusions.” Id. Finally, this court agreed with the district court that the
exclusion “may be a surprise to most policy holders,” but concluded that “in the absence
of an ambiguity, a hidden major exclusion, or other special circumstances, the doctrine of
reasonable expectations is inapplicable.” Id.
Similarly, the exception here was unambig uous and was clearly presented in a list
of exceptions on two pages of a three-page document. In addition, Fischer has presented
no evidence of special circumstances. While most individuals would expect title insurance
to cover the legal description, the reasonable-expectations doctrine is inapplicable in the
absence of an ambiguity, a hidden exclusion, or other special circumstances. See id.
Because the plain language of the defective-description exception excludes
coverage of any claim related to the legal description, and Fischer did not have a reasonable
expectation of coverage, the defective-desc ription excludes coverage with respect to
Rechtzigel’s claims challenging the East 50 parcel’s legal description.

13
III. The survey exception excludes cove rage of Rechtzigel’s boundary-line
claims.

We turn to whether the policy excluded cove rage for Rechtzigel’s claims that the
boundary line between the gap parcel and the East 50 parcel was determined by the historic
fence line. Fischer argues that (1) Old Republic’s survey-exception argument is not within
our scope of review and (2) a survey would not have revealed the boundary dispute alleged
by Rechtzigel. Old Republic argues that the survey exception excludes coverage for the
Rechtzigel litigation because an accurate survey would have disclosed the boundary line
between the gap parcel and th e East 50 parcel. The dist rict court acknowledged Old
Republic’s survey-exception argument, but did not rule on it.
A. Old Republic’s survey-e xception argument is within our scope of
review.
As a threshold issue, Fischer argues that we cannot review Old Republic’s survey-
exception argument because Old Republic did not file a notice of related appeal. A
respondent is barred from presenting issues not raised by a notice of related appeal. Arndt
v. Am. Family Ins. Co. , 394 N.W.2d 791, 793 (Minn. 19 86). But a respondent is not
required to file a notice of related appeal wh ere the respondent “advances on appeal an
argument that was presented to, but was not ruled on by, the district court and is an
alternative ground that supports affirmance of a judgment or order that was entered in
respondents’ favor.” Day Masonry v. Indep. Sch. Dist. 347, 781 N.W.2d 321, 332 (Minn.
2010). The district court acknowledged but did not decide the survey-exception issue. We
therefore conclude that Old Republic was not required to file a notice of related appeal and
the survey-exception issue is within our scope of review.

14
B. The plain language of the survey exception exclude s coverage of
Rechtzigel’s boundary-line claims.

Under the survey exception, Old Republic will not insure against loss by reason of
“[f]acts which would be disclosed by an accurate survey of the premises herein described.”
Fischer argues that the boundary between the East 50 parcel and the gap parcel
would not have been di sclosed by an accurate survey because finding the historic fence
line required the use of radar. We disagree. The relevant fact for purposes of the survey
exception is the location of the western boundary line of the East 50 parcel. An accurate
survey would have disclosed this boundary. The district court in the Rechtzigel litigation
made its boundary determination relying on survey evidence that revealed that no historic
fence line encroached on the East 50 parcel’s western boundary.
Fischer had an opportunity to cure the survey exception. At oral argument, Old
Republic suggested that, if Fi scher had provided a satisfactory survey before issuance of
the final policy, it probably would have cured the survey exception. Fischer argues that it
cured the exception by providing Old Republic with the Schwanz survey. But the
exception remains in the policy. We need not speculate wh y the Schwanz survey did not
cure the exception. “A clear and unambiguous contract is enforced in accordance with the
plain language of the contract; a reviewing court considers parol evidence or matters
outside of the contract only when the contract terms are ambiguous.” Terminal Transport,
862 N.W.2d at 489. The survey exception was unambiguously included in the final policy,
and therefore we cannot consider parol ev idence suggesting that Fischer cured the
exception.

15
Because the western boundary of the East 50 parcel would have been revealed by
an accurate survey, the survey exception excludes coverage of Rechtzigel’s boundary-line
claims.
IV. The district court did not err in co ncluding that the exceptions do not
render insurance coverage illusory.

Fischer argues that enforcement of the defective-description and survey exceptions
would render coverage under the policy illuso ry. Old Republic argues that the policy
covers other adverse claims and Fischer pro duced no evidence that any of the premium
was specifically allocated to c overage for a defective legal de scription or for facts that
would have been disclosed in an accurate survey. The district court concluded that “there
are a number of other title challenges that would be covered, including a forged deed or an
earlier judgment with priority,” and determined that coverage was not illusory.
The illusory-coverage doctrine is “an independent means to avoid an unreasonable
result when a literal reading of a po licy unfairly denies coverage.” Jostens, Inc. v.
Northfield Ins. Co. , 527 N.W.2d 116, 118 (Minn. App. 1995), review denied (Minn.
Apr. 27, 1995). The doctrine applies “where part of the premium is specifically allocated
to a particular type or period of coverage and that coverage turns out to be functionally
nonexistent.” Id. at 119. Absent “extra-contractual evidence” that the insured reasonably
thought a “specific part of its premium was allocated” toward the particular coverage, the
court bases its decision “on a reading of th e policy language under the usual rule of
insurance contract interpretation—an insurer’s liability is governed by the parties’ contract
and the court’s function is to enforce that agreement.” Id.

16
Fischer did not produce any evidence that it reasonably believed that a specific part
of its premium was allocated toward coveri ng the legal description or the western
boundary. The policy clearly st ates that Old Republic woul d not cover claims like those
in the Rechtzigel litigation— there was no illusion of covera ge. Moreover, the policy
covered other actions not related to the legal description or to facts that would have been
disclosed in a survey. Therefore, there appe ars to be “no basis to invoke the illusory
coverage doctrine and to depart from the policy as written.” Id.
Fischer argues in its illuso ry-coverage-doctrine secti on that changing the legal
description of the property would have required a quiet-title action, that the policy did not
instruct Fischer to complete a quiet-title action, and that Fischer could not have pursued a
quiet-title action without ownership. But the inability of Fischer to cure an exception does
not create an illusion of coverage; if anything, it placed Fischer on notice that Old Republic
would not insure against partic ular claims. Fischer had thr ee options: find a different
insurer, find a way to cure the exceptions, or accept the exceptions. Fischer chose to accept
the exceptions.
Because we conclude that the policy excl uded coverage of the Rechtzigel litigation
under the defective-description and survey exceptions, and because we conclude that
enforcement of the exceptions does not render coverage illusory, we affirm.
Affirmed.