State Farm Fire and Casualty Company, Respondent,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-0672

State Farm Fire and Casualty Company,
Respondent,

vs.

Courtney Thompson,
defendant,

Gabriela Von Mende, et al.,
defendants/counterclaim plaintiffs/third party plaintiffs,
Appellants,

vs.

Mark F. Busch, et al., third party defendants,
Respondents,

Gerald Michael Stanke a/k/a Jerry Stanke of Jerry Stanke Insurance,
third party defendant,
Respondent.

Filed April 8, 2019
Affirmed in part, reversed in part, and remanded
Ross, Judge

Anoka County District Court
File No. 02-CV-17-467

Katherine A. McBride, Leatha Grein Wolter, Tamara L. Rollins, Meagher & Geer,
P.L.L.P., Minneapolis, Minnesota (for respondent State Farm)

Jenneane L. Jansen, Kris E. Palmer, Jansen & Palmer, LLC, Minneapolis, Minnesota; and
Richard A. Dahl, Pequot Lakes, Minnesota (for appellants)

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Steven L. Viltoft, La Bore, Giuliani & Viltoft, Ltd., Hopkins, Minnesota (for respondents
Busch, Nack, and Stanke)

Considered and decided by Ross, Presiding Judge; Johnson, Judge; and Jesson,
Judge.
U N P U B L I S H E D O P I N I O N
ROSS, Judge
A collision totaled Gabriela Von Mende’s car two months after Gabriela’s husband
Heinrich told their State Farm agent that they wanted to insure the car, but the Von Mendes
had not, by the time of the collision, paid the premium. State Farm and the Von Mendes
each s ought a declaratory judgment deciding coverage. The Von Mendes also filed a
third-party complaint against their agent, Jerry Stanke Insurance, contending that the
agency negligently failed to add the car to Heinrich’s State Farm policy as Heinrich
allegedly requested. The district court granted summary judgment against the Von Mendes
on all claims. Because State Farm’s declarations page on the policy covering Hei nrich’s
car put the Von Mendes on notice that State Farm had not added Gabriela’s new car to
Heinrich’s policy, any preliminary binder between State Farm and Heinrich terminated.
We therefore affirm in part. But because the district court never addressed the Von Mendes’
negligent procurement claim and Jerry Stanke Insurance’s argument on appeal fails to
include legal support for summary judgment on that claim, we reverse in part and remand.
FACTS
Before September 2015, Heinrich and Gabriela owned two cars, each insured under
a separate State Farm automobile policy: Gabriela drove a 2006 Hyundai Tucson insured
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under her name, and Heinrich drove a 2006 Hyundai Sonata insured under his name. In
September 2015, Heinrich purchased a Nissan Pathfinder as a gift for Gabriela, trading in
the Tucson. The Von Mendes did not immediately communicate with their State Farm
agent about insuring the Pathfinder.
Three months after purchasing the Pathfinder, Heinrich telephoned their State Farm
insurance agent, Jerry Stanke Insurance, and spoke with representative Mark Busch.
Heinrich told Busch that he had purchased the Pathfinder in September, that the Pathfinder
was replacing Gabriela’s Tucson, and that the Pathfinder needed to be insured. According
to Heinrich, Heinrich told Busch that he wanted the Pathfinder to be added to his policy,
not to Gabriela’s. Busch does not recall Heinrich making that request. Either way, Busch
and Heinrich exchanged emails discussing coverage terms for the Pathfinder and coverage
terms for the Sonata. The emails do not expressly indicate which of the Von Mendes’
policies would cover the Pathfinder. But they do indicate that the new coverage for the
Pathfinder and Sonata would require a higher premium than the coverage for the Tucson
and Sonata. In one of those emails Heinrich specified his coverage preferences for the
Pathfinder and the Sonata, and Busch communicated the request to State Farm.
Within two days after the telephonic and email communication between Busch and
Heinrich, State Farm mailed three documents to the Von Mendes’ home. The first two
documents were addressed to Gabriela—a declarations page and a balance-due notice for
the Pathfinder coverage that Heinrich had requested. The amount due was the difference
between the lower premium the Von Mendes had paid for the Tucson policy and the higher
premium necessary to cover the Pathfinder. The declarations page identified the Pathfinder
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as the only covered vehicle under that policy and stated that the policy replaced the
previous policy covering the Tucson. The balance-due notice indicated that the Pathfinder
was insured in Gabriela’s name and that the policy required a premium payment of $81.94
to be made to State Farm by January 10 , 2016. The Von Mendes allege that they never
received the Pathfinder’s declarations page, but they do not dispute that they received the
Pathfinder policy’s balance-due notice. The third document was addressed to Heinrich—a
declarations page for the Sonata. The Von Mendes do not deny receiving that document.
The Von Mendes did not immediately pay the premium due on the Pathfinder
policy. State Farm sent Gabriela a cancellation notice on January 19, 2016, warning that
the policy would be cancelled if the balance due was not paid by February 3. The Von
Mendes deny receiving that notice. Jerry Stanke Insurance office manager Gary Nack sent
an email to one of Heinrich’s email addresses on January 19 also informing him of the
pending cancell ation. Heinrich denies reading the email , saying that it was sent to the
address he uses to receive promotional material rather than the email address he uses for
business correspondence like his recent email discussion with Busch. On February 3, when
State Farm still had received no premium payment for the Pathfinder policy, it cancelled
the policy.
Gabriela drove the Pathfinder through a red light three weeks later, on February 24,
2016, colliding with another car. The collision severely damaged the Pathfinder.
Heinrich and Gabriela went to the Jerry Stanke Insurance office the day of the
collision and spoke with Nack. Nack said that the Pathfinder’s policy had been cancelled
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due to nonpayment. The Von Mendes paid the premium , and State Farm reinstated the
policy effective the following day.
This coverage lawsuit ensued. State Farm filed a civil complaint against the Von
Mendes seeking a declaratory judgment that it has no duty to defend or indemnify the
couple in any action arising from the collision. The Von Mendes filed a counterclaim
seeking a declaratory judgment that State Farm must cover the collision. They based their
counterclaim on theories of contract reformation, negligent failure to procure coverage,
negligent misrepresentation, and fraud and misrepresentation. They filed a third- party
complaint against Jerry Stanke Insurance and its principals, Busch, Nack, and Jerry Stanke,
alleging failure to procure coverage, negligent misrepresentation, and fraud and
misrepresentation.
The district court granted summary judgment to State Farm and the Jerry Stanke
Insurance defendants, declaring that State Farm had no duty to defend or indemnify the
Von Mendes because State Farm had cancelled the Pathfinder policy before the collision
and that the Von Mendes offered no evidence of negligence or fraud.
The Von Mendes appeal.
ANALYSIS
The Von Mendes challenge the district court’s summary judgment decision. We
review summary judgment de novo, determining if there are genuine issues of material fact
and if the district court correctly applied the law. Montemayor v. Sebright Prods., Inc., 898
N.W.2d 623, 628 (Minn. 2017); see also Minn. R. Civ. P. 56.01 (providing summary
judgment standard). “We base our review on the undisputed facts and construe any
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disputed evidence in favor of the nonmoving party.” Scheffler v. City of Anoka, 890 N.W.2d
437, 443 (Minn. App. 2017), review denied (Minn. Apr. 26, 2017).
I
The Von Mendes argue that the district court erred by granting summary judgment
to State Farm. They do not contend that the insurance policy actually issued by State Farm
on the Pathfinder in Gabriela’s name was in effect at the time of the collision. They argue
instead that Heinrich’s request that Busch add the Pathfinder to his policy triggered a
preliminary insurance contract binding State Farm to provide coverage. An insurance
binder is a preliminary contract between an individual and an insurer created by the
individual’s application for insurance. Rommel v. New Brunswick Fire Ins. Co., 8 N.W.2d
28, 33–35 (Minn. 1943) (citing Koivisto v. Bankers’ & Merchs. Fire Ins. Co., 181 N.W.
580, 582 (Minn. 1921)). But a preliminary contract arising from an application for
insurance is not permanent. It extends coverage only until either a written insurance policy
memorializing the agreement is issued by the insurer or the insurer rejects the insurance
application and expressly notifies the applicant of the rejection. Id.
The Von Mendes maintain that Heinrich directed Busch to secure State Farm
insurance on the Pathfinder by adding the Pathfinder to his policy, not to Gabriela’s. Based
on this assertion, the Von Mendes argue further that the preliminary contract was between
Heinrich and State Farm rather than between Gabriela and State Farm . And on these
assertions they contend that State Farm’s cancellation notices written to Gabriela, which
were not also addres sed to Heinrich, were ineffective. See Minn. Stat. § 65B.16 (2018)
(requiring insurers to mail or deliver cancellation notices so as to notify “the named
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insured” to be effective). The Von Mendes conclude that the Pathfinder’s preliminary
insurance contract therefore continued in force at the time of the collision, never having
been properly cancelled under the statute.
State Farm counters by standing on the cancellation notice it sent to Gabriela. And
the Jerry Stanke Insurance defendants counter by disputing whether Heinrich instructed
Busch to add the Pathfinder to his policy and by disputing whether oral and email
communications can ever establish a binder. We need not resolve the effect of the written
cancellation notice mailed to Gabriela or the broader legal question of whether oral and
email communications can establish a binder. This is because, even assuming that the
informal communications did establish a binding preliminary insurance contract adding the
Pathfinder to Heinrich’s policy, the declarations page that State Farm addressed and mailed
to Heinrich after his telephone and email discussion with Busch immediately terminated
that alleged contract.
The declarations page has a practical effect that compels our conclusion. A
declarations page defines the scope of an individual’s insurance coverage. 16 Williston on
Contracts § 49:25 (4th ed. 2014). And it is the insured party’s responsibility to read the
insurance policy. See Hubred v. Control Data Corp., 442 N.W.2d 308, 311 (Minn. 1989).
The declarations page that State Farm provided Heinrich just after his discussion with
Busch about insuring the Pathfinder identifies the Sonata, not the Pathfinder, as the only
vehicle covered on the policy held in Heinrich’s name. By omitting the Pathfinder, the
declarations page had the same practical effect as the rejection notice discussed in Koivisto
and Rommel, ending any preliminary contract. If Heinrich in fact made the request to Busch
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that he alleges, State Farm’s declarations page promptly notified Heinrich that State Farm
had rejected his request. This renders immaterial the Von Mendes’ theories arising from
their allegedly not having read the notices that State Farm mailed to Gabriela or the notice
sent to Heinrich by email; those purportedly overlooked or unrelated communications are
merely corroborative, but not essential, to our conclusion that State Farm’s contractual duty
to cover the Pathfinder terminated before Gabriela’s collision.
II
We reach a dif ferent conclusion as to the Von Mendes’ argument that the district
court erred by granting summary judgment to State Farm and the Jerry Stanke Insurance
defendants based on the agency’s alleged negligent procurement of insurance by securing
the Pathfinder’s coverage under the wrong policy. To succeed on this claim, the Von
Mendes must show that the Jerry Stanke Insurance defendants owed them a duty “to
exercise reasonable skill, care, and diligence in procuring insurance,” that they breached
that duty, and that the breach caused damages. See Graff v. Robert M. Swendra Agency,
Inc., 800 N.W.2d 112, 116 (Minn. 2011). The Von Mendes argue that they presented
evidence on each element, the defendants presented no argument addressing any of the
elements during the summary judgment proceeding, and the district court inadequately
addressed the claim by erroneously rejecting the affidavits the Von Mendes submitted to
oppose summary judgment. The record supports the argument.
The record is at best thin on the matter of the Von Mendes’ negligent procurement
claim. The Jerry Stanke Insurance defendants offered no brief in support of their motion
for summary judgment, choosing instead to rely on State Farm’s memorandum. The
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difficulty is that State Farm’s memorandum did not address negligent procurement, arguing
instead that State Farm was entitled to summary judgment because it validly cancelled
Gabriela’s policy on the Pathfinder after the Von Mendes failed to timely pay the premium.
State Farm’s memorandum did not discuss whether the Jerry Stanke Insurance defendants
owed the Von Mendes a duty to exercise reasonable care and diligence in procuring
insurance, or whether they breached that duty, or whether the alleged breach caused the
Von Mendes any damages. And neither counsel for State Farm nor counsel for the Jerry
Stanke In surance defendants addressed these elements during the summary judgment
hearing.
By contrast, in contesting summary judgment the Von Mendes submitted and relied
on their own affidavits outlining the alleged communication between Heinrich and Busch.
They also provided the affidavit of an expert witness who opined that, based on those
discussions and the industry standards, the Jerry Stanke Insurance defendants had (and
breached) a duty to secure insurance for the Pathfinder specifically under Heinrich’s policy
rather than under Gabriela’s. The Von Mendes’ memorandum presented their case for
damages, focusing on their lack of insurance at the time of the collision.
The district court based summary judgment in part on a rationale that we do not
endorse. It observed that the affidavits the Von Mendes submitted were written from a
third-person perspective and that they included factual descriptions identical to those found
in the Von Mendes’ supporting memorandum. From the illeistic syntax and verbatim
statements, the district court concluded, apparently as a matter of law, that the affidavits
could not have been written on the affiants’ personal knowledge. See Minn. R. Civ.
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P. 56.03(d) (stating that “an affidavit used to support or oppose a motion [for summary
judgment] must be made on personal knowledge”). The district court therefore rejected the
affidavits and granted summary judgment on that ground, saying, “[T]he affidavits signed
by Heinrich Von Mende, Gabriel[ a] Von Mende and [their] alleged expert, Debra M.
McLain, JD, CPCU, all fail to satisfy the requirements of [rule] 56.05, and cannot form the
basis of any alleged dispute as to any material facts.”
But third-person syntax is merely a style of communication, and it might or might
not indicate third-person origin. Richard Nixon himself announced, for example, “You
[w]on’t have Nixon to kick around anymore,” while Bob Dole recounted, “That was Bob
Dole’s early life, and I’m proud of it.” And nothing in rule 56.05 suggests that an affiant’s
sworn factual statement is invalid if it is pasted into (or from) a corresponding brief or
another affidavit. The practice might reflect a drafter’s lack of carefulness without
necessarily reflecting the affiant’s lack of personal knowledge. The practice violates no
authority cited by the district court or the respondents. During the summary judgment
hearing, counsel for the Jerry Stanke Insurance defendants referenced the affidavit of the
Von Mendes’ expert witness by making comments critical of her qualifications as an expert
in the insurance field. But he never formally sought her disqualification nor offered any
expert testimony or other evidence contesting her opinion that the agency breached a duty
of care in procuring insurance for the Pathfinder. And the d istrict court never disqualified
her expert opinion on the merits.
The district court does offer an alternative basis for summary judgment, adding that,
“[e]ven if the affidavits were in compliance with the rules, nothing contained in [them]
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creates a genu ine issue as to any material fact.” The district court does not mention
“negligent procurement,” and it seems to attempt to address the claim only by stating,
“Even if Heinrich had requested that he be listed as the named insured, the Von Mendes
received notice that Gabriela was the named insured.” The district court does not explain
how it is applying this fact to any of the elements of the negligent procurement claim. The
Von Mendes do not dispute that Gabriela became the named insured; they argue that Busch
failed in his duty to make Heinrich the na med insured. The district court seems to further
address the negligent procurement claim by resolving a fact dispute against the Von
Mendes rather than in their favor:
While Heinrich argues that he told Mr. Busch to put the [Pathfinder]
on his policy for the Sonata, the record is void of evidence regarding
a date through which the premium had been paid on the Sonata policy
(and likewise, when such additional amounts owed would have been
added to the “next six mo nth insurance period”). It is clear that the
discussion presumed a policy would issue replacing the Tucson
policy—not that the [Pathfinder] would be added to the Sonata policy.

(Emphasis omitted.) By deeming it “clear” that Heinrich’s discussion with Busch
“presumed a policy would issue replacing the Tucson policy —not that the [Pathfinder]
would be added to the Sonata policy,” the district court relied on a negative implication
from the documents to draw an inference contrary to Heinrich’s express allegation in his
affidavit. The district court construed the primary disputed fact against the Von Mendes
and then granted summary judgment against them. This approach was improper, because
courts considering summary judgment must resolve all factual inferences in favor of the
nonmoving party. Nord v. Herreid, 305 N.W.2d 337, 339 (Minn. 1981).
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The Jerry Stanke Insurance defendants argue that it would have been unlawful and
contrary to industry practice for State Farm to have added the Pathfinder to Heinrich’s
policy rather than Gabriela’s because this would have essentially terminated Gabriela’s
policy merely on a phone call from Heinrich. We need not consider the accuracy of the
premise because the argument does not address the Von Mendes’ contention that Busch
was negligent. Their theory is that Busch was negligent either by failing to procure the
insurance in the manner Heinrich requested or by agreeing to procure the insurance in a
manner that State Farm could not provide. And the Jerry Stanke Insurance defendants do
not address, even on appeal, any of the elements of negligent procurement, rendering
further proceedings in the district court necessary. They focus instead entirely on what they
consider to be the sole question, “Was there a policy of auto insurance in force on [the day
of the collision]?” They then declare that “[t]his is a very simple case” and fail even to refer
to “negligent procurement” anywhere in their brief on appeal. The Jerry Stanke Insurance
defendants insist that “there are simply no material facts [that] defeat the policy expiration
on February 23, 2016 [the day before the collision],” but they fail to address the Von
Mendes’ theory that, but for the Jerry Stanke Insurance defendants’ negligence, the Von
Mendes would have taken the steps necessary to maintain the coverage.
The Jerry Stanke Insurance defendants assume that Heinrich and Gabriela, as a
married couple, were each constructively notified through the various documents
addressed to the other, and the district court seems implicitly to have decided the case based
on that same assumption. But no one has analyzed the premise or provided authority for it.
We will not analyze it sua sponte, leaving it and other undeveloped issues and arguments
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to be presented and addressed first in t he district court. See Thiele v. Stich, 425 N.W.2d
580, 582 (Minn. 1988).
We do not suggest that the record reveals a clear p ath to success at trial on the
attenuated negligent procurement theory. Among other things, the Von Mendes will have
to prove that the insurance-procurement discussion occurred as Heinrich alleges and that
the industry standards imposed a professional duty for Jerry Stanke Insurance to have
added the Pathfinder to Heinrich’s policy or informed Heinrich otherwise. They will also
have to prove that the breach of that duty directly caused damages to the Von Mendes in
the face of Heinrich’s and Gabriela’s potential negligence in failing to investigate after
Heinrich received the declarations page and after Gabriela was sent the cancellation notice.
In our error-correcting role, we conclude only that the district court did not properly dispose
of the negligent procurement claim by summary judgment. And we conclude that the
respondents have not offered a sufficient argument why we, in our de novo review, should
affirm that decision.
We therefore affirm the district court’s summary judgment decision except to the
extent it dismisses the Von Mendes’ claim of negligent procurement of insurance.
Affirmed in part, reversed in part, and remanded.