Hugh Alan Kantrud, 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This opinion will be unpublished and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
A19-0628

Hugh Alan Kantrud,
Respondent,

vs.

Minnesota Lawyers Mutual Insurance Company,
Appellant.

Filed November 25, 2019
Affirmed
Klaphake, Judge*

Washington County District Court
File No. 82-CV-18-1246

Kris E. Palmer, Jansen & Palmer, LLC, Minneapolis, Minnesota; and

Scott Wilson, Scott Wilson Law Firm, PLLC, Minneapolis, Minnesota (for respondent)

Richard J. Thomas, Chad J. Hintz, Burke & Thomas, PLLP, Arden Hills, Minnesota (for
appellant)

Considered and decided by Worke, Presiding Judge; Connolly, Judge; and
Klaphake, Judge.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.

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U N P U B L I S H E D O P I N I O N
KLAPHAKE, Judge
Appellant Minnesota Lawyers Mutual Insurance Company ( MLM) challenges the
district court’s grant of partial su mmary judgment in favor of respondent Hugh Alan
Kantrud, which requires MLM to defend Kantrud against a malpractice claim under a
professional-liability insurance policy . MLM argues that the policy excludes coverage
because the claim was “deemed made” in a prior policy period . Because the record does
not conclusively establish that MLM does not have a duty to defend, we affirm.
D E C I S I O N
I. Standard of review.

Summary judgment is only granted when “there is no genuine issue as to any
material fact and the movant is entitled to judgment as a matter of law.” Minn. R. Civ. P.
56.01. This court reviews a district court’s summary -judgment decision de novo to
“determine whether the district court properly applied the law and whether there are
genuine issues of material fact that preclude summary judgment.” Riverview Muir Doran,
LLC v. JADT Dev. Grp., LLC, 790 N.W.2d 167, 170 (Minn. 2010).
Because the parties agreed to a stipulated record on summary judgment , the facts
are undisputed , and the only issue on appeal is whether the district court erred in its
determination that MLM had a legal duty to defend Kantrud.

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II. The district court did not err in granting partial summary judgment in favor
of Kantrud.

Since 2010, MLM has insured Kantrud under a policy for lawyer’s professional -
liability insurance. A new policy period begins each year. To obtain coverage, t he policy
requires Kantrud to report claims “deemed made” in a given policy period before the policy
period ends o r within 60 days after the policy period. The relevant policy language for
coverage provides that a “claim” is “deemed made” when:
(1) a demand is communicated to an INSURED for
DAMAGES resulting from the rendering of or failure to
render PROFESSIONAL SERVICES; or
(2) an INSURED first becomes aware of any actual or alleged
act, error or omission by any INSURED which could
reasonably support or lead to a CLAIM.

Kantrud renewed his insurance policy with ML M in July 2016 , triggering a new
policy period. In November 2016, more than 60 days a fter the prior policy period ended,
Kantrud’s former clients sued him for legal malpractice; Kantrud reported the malpractice
lawsuit to MLM several days later. The clients alleged that Kantrud, as their attorney in a
collection case in 2014 and 2015, had negligently missed discovery deadlines and ignored
court orders , resulting in the district court entering a default judgment against them.
Kantrud’s clients, a business owner and his business, were defendants in the collection
case. A third defendant, who was an attorney, was separately represented.
MLM denied coverage to Kantrud because he did not report the claim until after the
clients formally sued hi m despite being aware of acts or errors that could “reasonably
support” the malpractice claim before his policy renewed in July 2016 or with in 60 days
after the prior policy period ended.

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Kantrud sued MLM for breach of contract after it denied coverage . Kantrud and
MLM filed cross-motions for summary judgment. MLM argued that it had neither a duty
to defend nor indemnify Kant rud. Kantrud moved for partial summary judgment on the
duty to defend only. After the district court granted Kantrud’s motion, MLM agreed to
waive all remaining defenses “other than those asserted in the district court” in the parties’
stipulation to amend the order, which the district court subsequently signed.
On appeal, MLM argues that it has no duty to defend Kantrud because the clients’
malpractice claim was “deemed made” well before Kantrud’s prior policy period ended.
MLM contends that Kantrud was aware that the district court entered a default judgment
against his clients because of his “inaction in 2015.” Given this knowledge, MLM argues
that “a reasonable lawyer would conclude that . . . facts existed beginning in the year 2014
which would reasonably support [the] malpractice claim.” Kantrud argues that the district
court correctly determined that MLM had a duty to defend because the policy language is
ambiguous, does not meet an insured’s r easonable expectations, and that the undisputed
facts do not establish that all reasonable attorneys would have anticipated the malpractice
lawsuit.
We first review the policy language . Parties to insurance contracts are generally
“free to contract as they see fit, and the extent of liability of an insurer is governed by the
contract they enter into.” Lang v. Gen. Ins. Co. of Am., 127 N.W.2d 541, 544 (Minn. 1964).
When the language of an insurance policy is clear and unambiguous, appellate courts
“effectuate the intent of the parties by interpret[ing] the policy according to plain, ordinary
sense.” Eng’g & Constr. Innovations, Inc. v. L.H. Bolduc Co., 825 N.W.2d 695, 704 (Minn.

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2013). An insurance policy is ambiguous, however, “if it is susceptible to two o r more
reasonable interpretations.” Id. at 705. Courts resolve ambiguous terms against the insurer.
Id.
Here, the district court determined that “MLM’s [policy] language regarding when
a claim is deemed made [was] confusing, ambiguous, and circular,” and that the language
did not meet Kantrud’s reasonable expectations. We need not resolve these issues.1 We
assume without deciding that the policy language is unambiguous and excludes coverage
when one of two elements is present : (1) the insured is subj ectively aware of an actual
demand for damages; or (2) the insured is subjectively aware of acts or omissions that could
objectively support a future claim for damages.
We next consider whether the polic y requires MLM to defend Kantrud. “The duty
to defend is broader than the duty to indemnify,” because it extends to “claims that arguably
fall within the scope of the policy.” Meadowbrook, Inc. v. Tower Ins. Co. , 559 N.W.2d
411, 415 (Minn. 1997) . “[I]n determining whether there is a duty to defend, a court m ust
give the benefit of the doubt to the insured.” John Deere Ins. Co. v. Shamrock Indus., Inc.,
929 F.2d 413, 418 (8th Cir. 1991) (applying Minnesota law) . When an insurer “has no
knowledge to the contrary, it may make an initial determination of whether or not it is
obligated to defend from the facts alleged in the complaint against its insured.” Garvis v.
Emp’rs Mut. Cas. Co., 497 N.W.2d 254, 258 (Minn. 1993). But “if the insurer is aware of

1 If we were to decide that the policy’s definition of a claim “deemed made” was susceptible
to two or more reasonable interpretations, we would construe the ambiguity in favor of
coverage, and our decision would not change . See id. at 705. We also need not decide
whether the policy meets the insured’s reasonable expectations.

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facts indicating that there may be a claim, either from what is said directly or inferentially
in the complaint, or if the insured tells the insurer of such facts, or if the insurer has some
independent knowledge of such facts, then the insurer must either accept tender of the
defense or further investigate the potential claim.” Id.; see also St. Paul Fire & Marine Ins.
Co. v. Nat’l Comput. Sys., Inc., 490 N.W.2d 626, 632 (Minn. App. 1992) (“[I]f the insurer
is aware of facts outside of the complaint which conclusively establish that the acts giving
rise to the claim a re not covered under the policy, the insurer is not obligated to defend. ”
(emphasis added)), review denied (Minn. Nov. 17, 1992). An insurer seeking 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.” Westfield Ins. Co. v. Kroiss , 694 N.W.2d 102, 106 -07
(Minn. App. 2005). “Generally where questions of fact need to be discovered to determine
if an insurer has a duty to indemnify, a duty to defend exists.” Id.
Here, the complaint in the malpractice case alleged that Kantrud had committed
malpractice by failing to notify his clients about discovery requests. Kantrud also allegedly
failed to review draft documents in January 2015, failed to pay attorney fees to the opposing
party, and failed to “request a hearing objecting to the default” as instructed by the district
court. Attached to the complaint was an affidavit that Kantrud wrote in the collection case,
and the complaint alleges that Kantrud admitted he “was responsible for all deficiencies in
discovery production that eventually led to the default judgment.”
But MLM has access to information outside of the malpractice complaint that does
not conclusively establish it has no duty to defend . MLM’s coverage den ial letter
specifically referenced this court’s opinion in the collection case. And in that opinion, this

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court addressed whether Kantrud’s former clients were “innocent client[s]” who were
being punished with a default judgment for their attorneys’ misconduct. See First Am. Title
Ins. Co. v. Nat’l Title Res. Corp., No. A15-0664, 2016 WL 363477, at *4 (Minn. App. Feb.
1, 2016), review denied (Minn. Apr. 19, 2016). Although we determined that this issue was
not properly raised in district court, we stated:
the record does not conclusively establish that the [defendants]
were innocent in failing to adequately and timely respond to
First American’s discovery requests. This is especially the case
given that [one of the defendants] is an attorney, and the fact
that [Kantrud’s client] signed discovery responses that were
deemed inadequate by the district court.

Id. This language does not suggest that anything was conclusive about Kantrud’s
negligence. Further, when the district cour t denied Kantrud’s request to move for
reconsideration in the collection case, it specifically detailed a “pattern of misconduct” that
is at least partially attributable to the clients, such as “attempts to evade service.”
Finally, Kantrud’s affidavit, wh ich MLM argues provides evidence of his
misconduct, does not admit negligence. It provides that “to the extent discovery was
properly served,” Kantrud was responsible for ensuring proper responses. Kantrud also
states that he and opposing counsel “resolved any outstanding discovery issues in February
2015.” At the end of the affidavit, he states that his clients “are completely innocent of any
deficiencies in the discovery responses filed on January 15, 2015.”
We conclude that the facts outside the complai nt do not “conclusively establish”
that Kantrud was aware of acts or omissions that a reasonable attorney would conclude
could support a claim for damages. See St. Paul Fire, 490 N.W.2d at 632. For the purpose

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of the duty to defend, all that is needed is that the claim “arguably” falls within the scope
of the policy. Meadowbrook, 559 N.W.2d at 415. On the limited record available in this
case, this standard is met here, and we therefore must give “the benefit of the doubt to the
insured.” See John Deere, 929 F.2d at 418.
Affirmed.