King’s Cove Marina, LLC, Appellant,

STATE OF MINNESOTA
IN COURT OF APPEALS
A24-0767

King’s Cove Marina, LLC,
Appellant,

vs.

Lambert Commercial Construction LLC.,
doing business as Lambert Construction, et al.,
Defendants,

United Fire & Casualty Company,
Respondent.

Filed May 12, 2025
Affirmed
Wheelock, Judge

Washington County District Court
File No. 82-CV-14-527

Mark R. Bradford, Nicole S. Frank, Elizabeth Euller, Bradford Andresen Norrie &
Camarotto, Bloomington, Minnesota; and

Stephen P. Watters, Watters Law Office, Waconia, Minnesota (for
appellant/cross-respondent King’s Cove Marina, LLC)

Kay Nord Hunt, Michelle K. Kuhl, Keith J. Broady, Lommen Abdo, P.A., Minneapolis,
Minnesota (for respondent/cross-appellant United Fire & Casualty Company)

Considered and decided by Connolly, Presiding Judge; Worke, Judge; and
Wheelock, Judge.
SYLLABUS
A district court’s findings of the reasonableness and allocation of an unallocated
Miller-Shugart settlement agreement under King’s Cove Marina, LLC v. Lambert
2
Commercial Construction LLC, 958 N.W.2d 310 (Minn. 2021) (King’s Cove II), are
reviewed for clear error.
OPINION
WHEELOCK, Judge
King’s Cove Marina LLC, appellant and cross-respondent, brought an action against
defendant Lambert Commercial Construction LLC, alleging construction defects. After
entering into a Miller- Shugart settlement agreement with Lambert, King’s Cove filed a
supplemental complaint for garnishment against Lambert’s liability insurer, United Fire &
Casualty Company, respondent and cross-appellant. The district court approved the
Miller-Shugart settlement agreement. On appeal, this court reversed the district court’s
approval of the Miller-Shugart settlement agreement because King’s Cove and Lambert
had not allocated damages between those that were covered by Lambert’s insurance
policies with United Fire and those that were not. After King’s Cove petitioned for further
review, the supreme court reversed this court and announced a two-step inquiry for
assessing reasonableness and making allocation findings for an unallocated Miller-Shugart
settlement agreement. The supreme court, and this court in turn, remanded the matter to
the district court for application of the new analytical framework. King’s Cove and United
Fire now seek review of the district court’s findings, pursuant to this framework, of the
reasonableness and allocation of the Miller-Shugart settlement agreement. Specifically,
King’s Cove challenges the district court’s allocation findings, including by arguing about
the remedy to which it is entitled, and it challenges one of the district court’s evidentiary
3
rulings on remand. In its cross-appeal, United Fire challenges the district court’s
reasonableness finding.
We affirm.
FACTS
In 2011, King’s Cove, a full-service marina on the Mississippi River in Hastings ,
began a remodeling and facilities-expansion project. King’s Cove Marina, LLC vs.
Lambert Com. Constr. LLC, 937 N.W.2d 458, 462 (Minn. App. 2019) (King’s Cove I),
aff’d in part and rev’d in part, 958 N.W.2d 310. It contracted with Lambert for some of
the work on the project. Id. King’s Cove later alleged construction defects and sued
Lambert and other contractors. Id. at 462-63. Lambert tendered its defense to its liability
insurer, United Fire, which denied coverage and filed a declaratory-judgment action,
seeking to establish that Lambert’s policies with it do not cover King’s Cove’s claims. Id.
at 463. This case arises out of the Miller-Shugart settlement agreement1 between King’s
Cove and Lambert and subsequent garnishment action by King’s Cove against Lambert’s
insurer, United Fire, to collect the judgment pursuant to the agreement.

1 In a Miller-Shugart settlement, the insured, having been denied
any [insurance] coverage for a claim, agrees claimant may
enter judgment against him for a sum collectible only from the
insurance policy. To be binding on the insurer if policy
coverage is found to exist, the settlement amount must be
reasonable.
Alton M. Johnson Co. v. M.A.I. Co., 463 N.W.2d 277, 278 n.1 (Minn. 1990).
4
Marina Remodeling and Expansion Project
The 2011 project remodeled the marina’s main building to create a new second-level
mezzanine space for offices, which entailed installing a new steel roof, new steel exterior
walls, and new windows. King’s Cove I, 937 N.W.2d at 462; King’s Cove II, 958 N.W.2d
at 313. King’s Cove hired Lambert, in part, to perform work on the roof and siding, frame
the window openings, install window trim, and install wood flooring on the second level.
King’s Cove II, 958 N.W.2d at 313. Lambert subcontracted with another company to
perform concrete work. Id. During the building-permit application process, the City of
Hastings added the requirement that a weather-resistant barrier (WRB) be installed before
the building’s new exterior siding could be installed. Lambert used a steel siding product2
for the new siding. King’s Cove I, 937 N.W.2d at 462. Based on its experience, Lambert
believed that the product would meet the city code requirements for installing a
weather-resistant barrier; Lambert did not install a separate weather-resistant barrier when
it installed the siding product.
In 2012, King’s Cove notified Lambert and other contractors that large cracks had
appeared in the concrete on the first and second floors of the building and that the walls
and roof were leaking, which was causing damage to the building’s interior. King’s Cove
II, 958 N.W.2d at 313. King’s Cove refused to pay Lambert’s outstanding invoices due to

2 Throughout the record, the parties refer to the prefabricated steel siding materials used in
this remodeling project as “Butler-building materials.” “Butler” appears to refer to a brand
of siding products called Butler MFG Parts, which are made by MAR Building Solutions.
5
these problems, and Lambert stopped performing work on the project, which was not yet
complete. Id. at 313-14.
Marina Project Litigation
In 2013, King’s Cove sued Lambert and other contractors that had worked on the
project for breach of contract and negligence. Id. at 314. Lambert tendered its defense to
United Fire pursuant to two commercial liability insurance policies.3 Id. at 314. A central
issue throughout the litigation was King’s Cove’s assertion that Lambert’s failure to use a
separate weather-resistant barrier when it installed new siding on the building caused water
damage and violated the city code’s requirement to install a weather-resistant barrier. In
August 2015, amid the litigation, a city official sent Lambert’s attorney a letter
(2015 Bakken letter) stating that it was his “determination that, if the [steel siding product]
was installed per the manufacturer’s specifications, it would meet the intent of the code for
an exception to the need for a separate weather resistive barrier.” King’s Cove and United
Fire dispute the effect of this letter on the litigation.
Another issue central to the dispute is the potential application of flood plain
regulations in the city code. See Hastings, Minn., Code of Ordinances (HCO)
§§ 151.01-.13 (2021). The marina is located in a “flood fringe district.” HCO
§§ 151.02(H), .03(A)(2). Buildings located in a flood fringe district are subject to a
provision stating that, if the cost of structural alterations and additions exceeds 50% of the

3 The supreme court noted that Lambert’s umbrella policy with United Fire is, in relevant
part, the same as its commercial general liability policy with United Fire. Id. at 316 (noting
that the two policies “contain[] the same relevant provisions”).
6
building’s market value, then the structure must be brought into compliance with the
provision’s requirements for new structures constructed in the flood fringe district . HCO
§ 151.11(A)(3) (flood plain compliance provision). 4 The undisputed market value of the
marina’s main building is between $1,600,000 and $1,700,000. King’s Cove estimated
that the total cost to repair the damages to this building was $1,085,000. King’s Cove II,
958 N.W.2d at 314. Th erefore, throughout the litigation, King’s Cove has argued that,
because the estimated total repair cost was $ 1,085,000, which is more than 50% of the
building’s market value, the flood plain compliance provision is triggered. And, King’s
Cove argues, since that provision is triggered, it must bring its facility into compliance with
HCO § 151.05, which entails tearing down the building and reconstructing it, raising its
foundation by several feet, and making changes to other areas of the marina property.
King’s Cove asserts that it would cost between $4,500,000 and $5,200,000 to comply with
the city code’s flood plain regulations—a significantly higher cost than the estimated cost
to simply repair the damages. Id. at 315.

4 The flood plain compliance provision reads as follows:
The cost of all structural alterations or additions to any
nonconforming structure over the life of the structure shall not
exceed 50 percent of the market value of the structure unless
the conditions of this Section are satisfied. The cost of all
structural alterations and additions must include all costs such
as construction materials and a reasonable cost placed on all
manpower or labor. If the cost of all previous and proposed
alterations and additions exceeds 50 percent of the market
value of the structure, then the structure must meet the
standards of § 151.04 or § 151.05 of this Ordinance for new
structures depending upon whether the structure is in the
Floodway or Flood Fringe District, respectively.
Id.
7
The Miller-Shugart Settlement Agreement
In July 2015, while King’s Cove was in litigation with Lambert and the other
contractors, United Fire brought a declaratory-judgment action, seeking a ruling that it did
not have a duty to defend or indemnify Lambert for the claims King’s Cove asserted. Id.
at 314. Soon thereafter, King’s Cove and Lambert entered into settlement negotiations.
Id. King’s Cove sent a demand letter in February 2016 seeking $2,000,000 to settle its
claims against Lambert. In June 2016, Lambert accepted this settlement offer, and they
entered into a Miller-Shugart settlement agreement. Id.
When an insurer disclaims coverage, litigants may enter into a Miller-Shugart
settlement agreement whereby “a plaintiff and insured defendant stipulate to a judgment
against the defendant on the condition that the plaintiff releases the defendant from any
personal liability and agrees to seek recovery solely from the insurer,” after which the
plaintiff proceeds against the insurer in a garnishment proceeding. Id. at 320-21
(explaining the settlement process the supreme court approved in Miller v. Shugart,
316 N.W.2d 729 (Minn. 1982)). The insurer may challenge the scope of coverage and the
reasonableness of the settlement in the subsequent garnishment proceeding. See Alton M.
Johnson Co., 463 N.W.2d at 278 (describing the two issues presented in the garnishment
proceeding following a Miller-Shugart settlement as coverage and reasonableness).
In their Miller-Shugart settlement agreement, King’s Cove and Lambert stipulated
that the cost to repair the building was $1,085,000,5 and that, if the flood plain compliance

5 The Miller-Shugart settlement agreement estimated that $317,000 of the total cost to
repair the building was attributable to “general damages” that applied to all areas of the
8
provision applied and King’s Cove was required to demolish and reconstruct its facility ,
the estimated cost was up to $5,200,000 . King’s Cove II, 958 N.W.2d at 314-15. King’s
Cove and Lambert agreed that Lambert could be responsible for between $2,426,000 and
$2,870,000 of this amount. Id. at 315. They therefore agreed to settle for $2,000,000. Id.
at 314. The settlement agreement settled only the claims King’s Cove alleged against
Lambert, stating that it “relates to the claims and damages for the work provided by
Lambert, including the roof and siding.”6 Id. King’s Cove agreed to obtain satisfaction of
a judgment entered pursuant to the agreement against only United Fire “from any insurance
coverage provided to Lambert for [King’s Cove’s] claims under” the insurance policies
Lambert carried with United Fire. King’s Cove and Lambert submitted the Miller-Shugart
settlement agreement to the district court.
After the district court approved King’s Cove and Lambert’s Miller-Shugart
settlement agreement and entered judgment against Lambert, King’s Cove served a
garnishment complaint on United Fire. King’s Cove I, 937 N.W.2d at 463. United Fire
then “denied that insurance coverage exists for the claims of King’s Cove” and asserted
“that the Miller-Shugart settlement agreement is unreasonable to the extent that the
settlement fails to allocate damages between covered and uncovered claims.” King’s Cove
II, 958 N.W.2d at 315.

main building. Further, King’s Cove and Lambert agreed that Lambert was responsible
for 55.2% of the total cost.

6 The Miller-Shugart settlement agreement expressly excluded recovery from Lambert for
its subcontractor’s concrete work on the project.
9
The district court determined on summary judgment “that there is insurance
coverage under the terms of the United Fire and Casualty Company policies issued to
Defendant Lambert . . . for the claims and damages at issue in this action.”
During discovery in the garnishment action, United Fire deposed a city building
official, Lambert’s owner, and the owner of King’s Cove. Lambert’s owner was asked if
he was “ever concerned that the consent judgment amount proposed in the [demand] letter
was unreasonable.” He responded, “I have thought this entire case has been unreasonable
since day one.” When asked if he would “pay $2 million of his own money to settle the
claims,” he responded, “No.”
After United Fire and King’s Cove completed discovery, the district court held a
two-day evidentiary hearing to evaluate the reasonableness of the Miller-Shugart
settlement agreement, ultimately finding that it was reasonable.
King’s Cove I and II: The Supreme Court Announces a New Analytical Framework for
Unallocated Miller-Shugart Settlement Agreements
United Fire and King’s Cove filed cross-appeals in this court regarding the extent
of coverage available for King’s Cove’s claims under Lambert’s insurance policies with
United Fire given the exclusions contained in the policies. In particular, they disagreed
about whether an exclusion in the policies (exclusion l) operated to exclude from coverage
all property damages that “arose out of Lambert’s own work” as the insured but did not
exclude “a claim for damages caused by Lambert’s work to preexisting structures located
adjacent to the work performed by Lambert.” King’s Cove I, 937 N.W.2d at 468. T his
court reversed the district court, in part because we concluded that the agreement’s failure
10
to “allocate between covered and non-covered damages” was “unreasonable as a matter of
law.” Id. at 470 (considering persuasive federal caselaw).
King’s Cove petitioned for further review in the supreme court, which granted
review on two issues: (1) the scope of coverage under Lambert’s policies with United Fire
and (2) the reasonableness of King’s Cove and Lambert’s Miller-Shugart settlement
agreement. King’s Cove II, 958 N.W.2d at 313. With respect to the scope of coverage, the
supreme court affirmed this court’s determination “that the claimed property damage to
Lambert’s own work on the roof and siding of the main building of the marina is not
covered under United Fire policies based on the plain language of exclusion l” and
observed that “United Fire has not challenged the court of appeals’ conclusion that damage
to ‘existing sheetrock, tiles, carpet, and the floor’ of the main building, which was ‘adjacent
to the work performed by Lambert would, if proven, be covered under the insurance
policy.’” Id. at 319-20 (quoting King’s Cove I, 937 N.W.2d at 468). However, it disagreed
that the lack of allocation between covered and uncovered claims rendered the
Miller-Shugart settlement agreement unreasonable as a matter of law in a case involving a
single defendant.7 Id. at 321-22 (explaining that, although it had held in Bob Useldinger
& Sons, Inc. v. Hangsleben, 505 N.W.2d 323, 331 (Minn. 1993) , that a Miller-Shugart

7 We observe that, in its first appeal, King’s Cove urged the supreme court “to adopt a new
rule in cases involving a single defendant” to allow district courts “to determine the
reasonableness of a Miller-Shugart settlement agreement based on the value of the covered
claims,” stating that “there is no factual or legal basis to assume that district courts are
incapable, in every case of determining the reasonableness of unallocated settlements.” Id.
at 322. The supreme court agreed that it should “reject the rigidity of a per se allocation
rule,” id., and fashioned the test we apply now.
11
settlement agreement that failed to allocate damages among multiple defendants was
unreasonable and unenforceable against the insurer, it had not yet considered a failure to
allocate when a single defendant was involved). In its decision , the supreme court
announced a new two-part inquiry—the King’s Cove II framework—for reviewing
unallocated Miller-Shugart settlement agreements with one defendant. Id. at 320-25. This
framework requires district courts first to make findings as to the reasonableness of the
settlement and second to review the applicable insurance policy or policies and then make
allocation findings between covered and uncovered claims .8 Id. at 323-25. It also
explicitly provided that King’s Cove would bear the burden of proof on the allocation issue.
Id. at 325. The supreme court then remanded the case to this court, id., and this court
remanded to the district court to apply the new analytical framework, King’s Cove Marina,
LLC v. Lambert Commercial Construction LLC, No. A19-0078, 2021 WL 4259025, at *4
(Minn. App. Sept. 20, 2021) (King’s Cove III).
On remand, the district court reopened the record to receive evidence that would
facilitate further analysis of the reasonableness issue and enable it to make its allocation
finding in light of King’s Cove II. King’s Cove sought admission of two exhibits that
related to the flood plain compliance provision: a February 17, 2023 Building Permit
Application and a related March 10, 2023 City of Hastings letter, but the district court

8 The supreme court indicated that, in the second step, “the district court then makes an
allocation ruling in light of the ultimate coverage determination.” Id. at 324. In King’s
Cove II, the supreme court made this coverage determination by analyzing what property
damage was not covered under the policies in light of exclusion l. Id. at 317-20. Similarly,
before making an allocation ruling, a district court will first need to determine what is
covered and not covered under the applicable policies.
12
excluded them. The district court also held a two-day evidentiary hearing at which the
parties called expert witnesses. King’s Cove called an engineer and a forensic building
analyst; United Fire called a restorative contractor. The engineer testified about the
applicability of the flood plain compliance provision. The forensic analyst testified about
data that supported King’s Cove’s theory for allocating the covered and uncovered
damages under the settlement agreement and provided costs of repair using “2016
valuation.” United Fire’s expert testified that King’s Cove’s repair estimates were
excessive and that, in his opinion, repairs would cost approximately $75,000.
The district court found that the unallocated Miller-Shugart settlement agreement
was reasonable, but it rejected King’s Cove’s allocation theory, ultimately finding that the
relative value of the covered claims was only $174,350 and that, therefore, United Fire
owed that amount to King’s Cove pursuant to the Miller-Shugart settlement agreement. In
conducting its analysis under the King’s Cove II framework, the district court found that
the settlement agreement estimated the costs of repair for Lambert’s “own work,” for the
work of other contractors on the project, and for the total general damages to the building
for which all of the contractors on the project shared responsibility. It concluded that the
only covered damages identified in the settlement agreement were Lambert’s share of the
general damages because those damages were not Lambert’s “own work” and thus fell into
the category of damage to preexisting structures caused by Lambert. The district court
determined that Lambert’s proportional share of the cost of repair for general damages to
the building was 55% of $317,000, which equals $174,350. The district court reasoned
that, under the language of the Miller- Shugart settlement agreement, King’s Cove and
13
Lambert agreed that Lambert’s insurer— United Fire— would pay only covered damages
and, after allocating between covered and uncovered damages as directed by the supreme
court, that amount was $174,350.
King’s Cove and United Fire appeal.
ISSUES
I. What standard of review applies to a district court’s findings of the
reasonableness and allocation of an unallocated Miller-Shugart settlement
agreement under the King’s Cove II framework?
II. Did the district court clearly err in finding the reasonableness and allocation
of King’s Cove and Lambert’s unallocated Miller-Shugart settlement
agreement?
III. Did the district court abuse its discretion when it excluded King’s Cove’s
exhibits related to the application of the flood plain compliance provision?
ANALYSIS
This appeal requires us to review the district court’s decision, pursuant to the King’s
Cove II framework, in which it found that the Miller-Shugart settlement agreement here is
reasonable and allocated $174,350 as the relative value of the settled claims covered by the
United Fire insurance policies. This appeal presents a question of first impression for our
court regarding the appropriate standard of review to apply when reviewing the district
court’s decisions under the framework.
In King’s Cove II, the supreme court announced a new, two- part analytical
framework that district courts must use to assess the reasonableness and allocation of
unallocated Miller-Shugart settlement agreements. 958 N.W.2d at 323. In the first step of
the King’s Cove II framework, district courts evaluate “the overall reasonableness of the
14
settlement.”9 Id. at 323. In considering the issue of reasonableness, “ [t]he test is ‘what a
reasonably prudent person in the position of the defendant would have settled for on the
merits’ of plaintiff’s claims at the time of the settlement.” Id. (quoting Miller, 316 N.W.2d
at 735). “This is a multi-factor objective test, which requires the district court to consider
‘the facts bearing on the liability and damage aspects’ of the plaintiff’s claims.” Id.
(quoting Miller, 316 N.W.2d at 735). As such, the supreme court set forth five factors
relevant to the reasonableness finding: (1) “the customary evidence on liability and
damages”; (2) “the risks of going to trial”; (3) “the likelihood of favorable or unfavorable
rulings on legal defenses and evidentiary issues if the tort action had been tried”;
(4) “expert legal opinions”; and (5) “other factors of forensic significance.” Id. (quoting
Alton M. Johnson Co., 463 N.W.2d at 279). If the settlement is reasonable, district courts
continue to the second step to determine what insurance coverage exists and to make
findings of fact regarding the allocation of the covered and uncovered claims.
In considering the issue of allocation, “[ t]he test is how a reasonable person in the
position of the insured would have valued and allocated the covered and uncovered claims
at the time of the settlement.” Id. at 323-24 (citing UnitedHealth Grp. Inc. v. Exec. Risk
Specialty Ins. Co., 870 F.3d 856, 863 (8th Cir. 2017)). The supreme court explained, “Like
the reasonableness inquiry, the allocation inquiry is a multi -factor objective test, which
requires the consideration of ‘any facts that bear on the issues of liability, damages, and

9 If the settlement agreement is unreasonable but coverage exists, “the default rule is that
the parties to the settlement agreement are returned to the even footing of a trial on the
merits of the main action.” Id. at 321 (quotation omitted).
15
the risks of trial.’” Id. at 324 (quoting Jorgensen v. Knutson, 662 N.W.2d 893, 904 (Minn.
2003)). It then set forth four nonexclusive categories of evidence relevant to the allocation
determination:
(1) information that was available to the parties at the time of
the settlement regarding the underlying facts; (2) materials
produced in discovery and any court rulings in the underlying
litigation; (3) evidence of how the parties and their attorneys
evaluated the claims at the time of the settlement; and
(4) expert testimony about the value of the settled claims.
Id.
We note an important observation the supreme court made when it explained this
new framework:
Because the relevant evidence on reasonableness and
allocation overlaps, we contemplate that the district court
typically will consider the reasonableness and allocation issues
at the same time. If the district court finds that the unallocated
settlement is reasonable, the district court then makes an
allocation ruling in light of the ultimate coverage
determination.

Id. While the supreme court acknowledged “that a post-hoc allocation of covered and
uncovered claims may in some circumstances be a difficult task for district courts,” it
nonetheless expressed its confidence that district courts are well-equipped to engage in this
task. Id. (“As long as the parties present sufficient evidence, the district court has the
expertise and authority to determine post-hoc allocations in the Miller-Shugart settlement
agreement context . . . .”).
On remand, the district court applied the King’s Cove II framework and found, first,
that the unallocated Miller-Shugart settlement agreement here is reasonable and, second,
16
that a reasonable person in Lambert’s position would have valued and allocated the covered
and uncovered claims at the time of the 2016 settlement such that only $174,350 of the
settlement amount w as covered rather than the full amount of the settlement agreement.
These findings are the subject of King’s Cove’s and United Fire’s challenges in this appeal.
We begin our analysis with a discussion of the standard of review that applies to a
district court’s findings under the King’s Cove II framework. Once we have established
the appropriate standard of review, we consider the merits of the parties’ arguments as to
each step of the framework to discern whether the district court erred when it found that
the Miller-Shugart settlement agreement was reasonable and then whether the district court
erred in its allocation when it found that only $174,350 of the settled claims were covered
by Lambert’s insurance policies with United Fire. We then consider King’s Cove’s remedy
argument, and finally, we consider whether the district court abused its discretion by
excluding two of King’s Cove’s exhibits on remand.
I. Appellate courts review a district court’s reasonableness and allocation
findings for clear error.
The supreme court in King’s Cove II did not specifically articulate the standards of
review that apply to a district court’s findings of the reasonableness and allocation of an
unallocated Miller-Shugart settlement agreement. Because it set forth two inquiries, we
consider the standard of review that should apply to each step.
A. Reasonableness Inquiry
As explained above, the first step of the King’s Cove II framework requires a district
court to find whether the settlement is reasonable by applying “a multi-factor objective
17
test” to examine “‘the facts bearing on the liability and damage aspects’ of the plaintiff’s
claims” and the value of both the covered and uncovered claims. 958 N.W.2d at 323
(quoting Miller, 316 N.W.2d at 735) (explaining that the reasonableness requirement is
intended to discourage possible overreaching in Miller- Shugart settlement negotiations).
“The plaintiff judgment creditor bears the burden of showing that ‘the settlement is
reasonable and prudent’” based on “‘what a reasonably prudent person in the position of
the defendant would have settled for on the merits’ of the plaintiff’s claims at the time of
the settlement.” Id. (quoting Miller, 316 N.W.2d at 735). The supreme court then
articulated five nonexhaustive factors, or categories of evidence, that a district court must
consider when making this finding. Id. The supreme court explained that
“[r]easonableness is ‘a question of fact’ for the district court to resolve as the fact-finder.”
Id. at 321 (quoting Alton M. Johnson Co., 463 N.W.2d at 279). The supreme court in Alton
M. Johnson Co. noted that, in this context, “[t]he decisionmaker is being asked to apply its
sense of fairness to evaluate a compromise of conflicting interests, a characteristic role for
equity.” 463 N.W.2d at 279 (explaining that the district court is the fact-finder when a n
issue is “equitable”).
Because the first step of the two-step King’s Cove II framework mirrors the
reasonableness inquiry that district courts have typically undertaken when reviewing
Miller-Shugart settlement agreements, we discern no reason to conclude that the applicable
standard of review should be different as to the first step. We therefore conclude that the
supreme court’s explanation that reasonableness is a question of fact continues to apply to
18
this first step. Accordingly, we hold that the reasonableness of an unallocated
Miller-Shugart settlement agreement should be reviewed for clear error.
B. Allocation Inquiry
Next, we turn to the standard of review for the second step. “If the district court
finds that the unallocated Miller-Shugart settlement agreement is reasonable, the district
court then considers the issue of allocation.” King’s Cove II, 958 N.W.2d at 323.
In the second step of the King’s Cove II framework, a district court makes findings
of fact as to the allocation of a Miller-Shugart settlement agreement that is unallocated
between covered and uncovered claims by applying a “multi-factor objective test”
examining “any facts that bear on the issues of liability, damages, and the risks of trial.”
Id. at 324 (quoting Jorgensen, 662 N.W.2d at 904). The plaintiff judgment creditor
“bear[s] the burden of proof on allocation,” given the general rule that “the burden of proof
rests upon the party claiming coverage under an insurance policy” and the specific rule that
the plaintiff judgment creditor bears the burden of proof on the reasonableness inquiry for
a Miller-Shugart settlement agreement. Id. at 325.
In setting forth the new framework, the supreme court emphasized the similarity
between the reasonableness inquiry and the allocation inquiry, including the overlap in the
evidence a district court should consider when conducting both inquiries. Id. (stating that,
“[l]ike the reasonableness inquiry, the allocation inquiry is a multi-factor objective test”
and that, because the relevant evidence overlaps, both inquiries will likely occur at the
same time). The plaintiff judgment creditor also bears the burden of proof for both issues.
Id. The striking similarity between both inquiries and the supreme court’s directives to the
19
district courts about how to resolve them persuades us that, although appellate courts still
interpret insurance policies de novo, id. at 316, allocation is a “question of fact for the
district court to resolve as the fact-finder,” Alton M. Johnson Co., 463 N.W.2d at 279, and
the standard of review for the reasonableness and allocation inquiries should be consistent.
Because we conclude that a district court’s allocation of an unallocated Miller- Shugart
settlement agreement is a finding of fact, we hold that appellate courts review a district
court’s allocation of an unallocated Miller-Shugart settlement agreement for clear error.
It is already well settled that appellate courts review a district court’s findings of
fact for clear error. In re Civ. Commitment of Kenney, 963 N.W.2d 214, 221-23 (Minn.
2021); Rasmussen v. Two Harbors Fish Co ., 832 N.W.2d 790, 797 (Minn. 2013). In
conducting clear-error review, “we examine the record to see if there is reasonable
evidence in the record to support the [district] court’s findings.” Rasmussen, 832 N.W.2d
at 797. “[T]he role of an appellate court is not to weigh, reweigh, or inherently reweigh
the evidence when applying a clear-error review; that task is best suited to, and therefore
is reserved for, the factfinder.” Kenney, 963 N.W.2d at 223. “Instead, it is the duty of an
appellate court to fully and fairly consider the evidence, but so far only as is necessary to
determine beyond question that it reasonably tends to support the findings of the
factfinder.” Id. (quotation omitted). To conclude that “[f]indings of fact . . . are clearly
erroneous,” appellate courts must be “left with the definite and firm conviction that a
mistake has been made.” In re Stisser Grantor Tr., 818 N.W.2d 495, 507 (Minn. 2012).
Having established the appropriate standard s of review, we now turn to the merits
of the parties’ arguments.
20
II. The district court did not clearly err in its findings of the reasonableness and
allocation of King’s Cove and Lambert’s unallocated Miller-Shugart settlement
agreement.
The parties raise the following challenges regarding the district court’s findings :
United Fire argues that the district court erred by finding that the Miller-Shugart settlement
agreement was reasonable; King’s Cove argues that the district court erred in its allocation;
and King’s Cove further argues that the district court erred by awarding it $174,350 in
covered damages because it is entitled to either enforcement of the full amount—
$2,000,000—from United Fire pursuant to the Miller-Shugart settlement agreement or to
reinstatement of a trial on the merits as if no claims had been settled with Lambert (the
remedy argument). We consider each of these arguments in turn.
A. The district court did not clearly err when it found that the
Miller-Shugart settlement agreement was reasonable.
We first consider whether the district court erred in finding that the unallocated
Miller-Shugart settlement agreement was reasonable. United Fire argues that the district
court erred for three reasons: first, no reasonable person would have thought that a separate
weather-resistant barrier was required; second, the flood plain compliance provision would
not have applied; and third, the Miller-Shugart settlement agreement was the product of
collusion. King’s Cove argues that the district court correctly determined that the
Miller-Shugart settlement agreement was reasonable.
We review the district court’s reasonableness finding for clear error, then we
consider the three specific arguments that United Fire raises on appeal, concluding that the
district court did not clearly err in its factual findings.
21
1. The district court considered the relevant evidence as to
reasonableness.
King’s Cove II requires that the district court consider what a reasonably prudent
person in the position of the defendant—Lambert—would have settled for on the merits of
the plaintiff’s—King’s Cove’s—claims at the time of settlement, and in doing so, that the
district court consider evidence relevant to that finding. 958 N.W.2d at 323. Here, the
district court considered the five factors relevant to the reasonableness determination listed
in the King’s Cove II opinion.
The district court considered the customary evidence on liability and damages. In
its order , the district court found that “Lambert was facing a minimum of $599,000 in
damages and, if the floodplain ordinance was triggered, over $2 million in damages.” It
noted that Lambert’s failure to complete the work “allowed water intrusion into the
property” and that Lambert faced potential liability “for failing to install a separate WRB.”
The district court concluded that, “[d]epending on the evidence admitted at trial, Lambert
could have been facing significant damages totaling millions of dollars.”
The district court considered Lambert’s risk of going to trial. In its order, the district
court concluded that “[t]here was a real risk of going to trial. There were conflicting expert
reports and material issues to be resolved.”
The district court considered the likelihood of favorable or unfavorable rulings on
legal defenses and evidentiary issues had the action been tried. In its order, the district
court concluded, “There was significant discovery and litigation regarding the necessity of
a WRB and whether the floodplain ordinance would be triggered.” The district court
22
determined that neither party knew “whether a jury would hear evidence about the
floodplain ordinance,” but if that issue “was given to the jury, then Lambert would have
faced significantly higher damages.” The district court also observed that it was not settled
whether the parties’ respective experts’ opinions regarding the need for a separate
weather-resistant barrier were admissible.
The district court considered the expert s’ legal opinions. In its order, the district
court concluded that the opinions conflicted regarding the need for a separate
weather-resistant barrier. King’s Cove sought to present expert testimony about the need
for a separate weather -resistant barrier. “Lambert had expert opinions that no separate
[weather-resistant barrier] was necessary, and that the floodplain ordinance would not be
triggered.”
The district court considered other factors of forensic significance. In its order, the
district court concluded that, when Lambert and King’s Cove entered into the unallocated
Miller-Shugart settlement agreement, “United Fire had begun a declaratory judgment
action, and it was unresolved whether Lambert had insurance coverage for the potential
damages [it] was facing.”
Based on the above, the district court found that “the overall agreement is
reasonable, when viewed from the perspective of Lambert.” The district court observed
the following:
There were unresolved competing legal theories regarding the
floodplain ordinance and whether an appropriate WRB was
installed. Lambert was facing damages that could possibly
exceed $2 million dollars and did not have a determination of
insurance coverage. It was reasonable for Lambert to accept
23
the $2 million settlement considering the substantial liability
and the uncertainty regarding which legal theory a jury would
accept.

Thus, the district court concluded that it was reasonable for Lambert to agree to a
$2,000,000 settlement.
Aside from its collusion argument, United Fire contends that the district court erred
in concluding that the agreement is reasonable for two reasons. First, United Fire argues
that it was not reasonable for Lambert to be concerned about facing liability for failing to
install a separate weather-resistant barrier. Second, United Fire argues that it was not
reasonable for Lambert to be concerned that the flood plain compliance provision may
require the demolition and reconstruction of King’s Cove’s building. Based on its position
that neither of these liability risks were reasonable, United Fire argues that the settlement
amount is unjustifiable and, therefore, that the district court erred when it found that the
settlement was reasonable. Third, returning to its collusion argument, United Fire argues
that the Miller-Shugart settlement agreement was the product of collusion and that this is
an independent basis on which the district court erred in finding the settlement agreement
reasonable.
2. United Fire’s first challenge: whether t he district court clearly
erred when it determined that a reasonable person in Lambert’s
position faced potential liability by not installing a separate
weather-resistant barrier.
United Fire argues that Lambert faced no risk of a court determining that Lambert
caused damages to King’s Cove’s building by failing to install a separate weather-resistant
barrier. Specifically, it argues that the 2015 Bakken letter, which a city building official
24
provided to Lambert’s attorney prior to the execution of the Miller-Shugart settlement
agreement, was a final determination of the issue: “[I]t is my determination that if the [steel
siding product] was installed per the manufacturer’s specifications it would meet the intent
of the code for an exception to the need for a separate weather resistive barrier.” United
Fire highlights that the district court found that “[i]t is undisputed that the wall siding and
panels were installed per the manufacturer’s specifications.” Based on these facts, United
Fire argues that, under State v. Arkell, 672 N.W.2d 564, 568 (Minn. 2003), and Centra
Homes LLC v. City of Norwood Young America, 834 N.W.2d 581, 584-85 (Minn. App.
2013), the 2015 Bakken letter was a binding and final determination, appealable only to
the city’s board of appeals.
We are not persuaded. In 2011, the city expressly required King’s Cove to install a
weather-resistant barrier. The 2015 Bakken letter said, “[I]f the [siding] system was
installed per the manufacturer’s specifications it would meet the intent of the code for an
exception to the need for a separate weather resistive barrier.” In 2016, King’s Cove and
Lambert entered into the Miller-Shugart settlement agreement. Then, in a 2018 deposition,
Lambert testified that his employees installed the siding in accordance with the
manufacturer’s specifications. Much later, in the 2023 order from which King’s Cove and
United Fire bring this appeal, the district court cited Lambert’s 2018 deposition testimony
to support its finding of fact that it was “undisputed the siding and wall panels were
installed per the manufacturer’s specifications and Lambert would so testify.”
We review a district court’s finding of fact for clear error. Kenney, 963 N.W.2d at
221-23; Rasmussen, 832 N.W.2d at 797. We conclude that the district court clearly erred
25
when it found that it was “undisputed the siding and wall panels were installed per the
manufacturer’s specifications” because the evidence in the record demonstrates that, when
King’s Cove and Lambert signed their Miller-Shugart settlement agreement in 2016,
Lambert’s allegedly defective installation of the siding was one of the disputed issues
between the settling parties. The record supports that Lambert believed it had installed the
siding correctly. However, the record shows that King’s Cove did not agree because it was
in active litigation against Lambert for what it alleged were related claims. We conclude
that, insofar as the district court’s finding that it was “undisputed the siding and wall panels
were installed per the manufacturer’s specifications” pertains to King’s Cove’s and
Lambert’s positions in 2016, this finding is clearly erroneous. Because we conclude that
this finding of fact as it pertains to King’s Cove’s and Lambert’s positions in 2016 was
clear error and that whether installation was correct was an issue in dispute, we are not
persuaded by United Fire’s argument that the 2015 Bakken letter renders unreasonable any
perceived liability risk that Lambert faced due to failing to install a separate
weather-resistant barrier. In drawing this conclusion, we observe that, when “a decisive
finding of fact is supported by sufficient evidence and is adequate to sustain the conclusions
of law, it is immaterial whether some other findings are not so sustained.” Hanka v.
Pogatchnik, 276 N.W.2d 633, 636 (Minn. 1979).
Finally, United Fire argues that, regardless of the 2015 Bakken letter, there was
ample evidence contradicting the need for a separate weather-resistant barrier, which
supports a finding that Lambert was not acting reasonably when it entered into the
settlement agreement. United Fire supports this argument by showing that Lambert had
26
extensive professional experience using this siding material, had not encountered a project
requiring a separate weather-resistant barrier before, and had prepared expert witnesses to
testify that King’s Cove did not require Lambert to install a separate weather-resistant
barrier before they entered into the Miller-Shugart settlement agreement.
We are not persuaded. The district court correctly applied the relevant law, and
reweighing evidence is outside the scope of our review. Kenney, 963 N.W.2d at 223.
Evidence in the record, including the city’s requirement to add a weather-resistant barrier
during the building- permit application process coupled with the claims King’s Cove
alleged against Lambert, supports the district court’s determination that Lambert faced
potential liability for damages to the building due to its failure to install a separate
weather-resistant barrier. We therefore conclude that the district court did not clearly err
with respect to the potential liability Lambert faced due to not installing a separate
weather-resistant barrier.
3. United Fire’s second challenge: whether the district court clearly
erred when it found that a reasonable person in Lambert’s
position faced potential liability through the application of the
flood plain compliance provision.
United Fire also argues that a reasonable person in Lambert’s position at the time of
settlement should not have been concerned about the flood plain compliance provision
potentially increasing the scope of Lambert’s liability. The relevant provision of the
ordinance reads as follows:
The cost of all structural alterations or additions to any
nonconforming structure over the life of the structure shall not
exceed 50 percent of the market value of the structure unless
the conditions of this Section are satisfied. The cost of all
27
structural alterations and additions must include all costs such
as construction materials and a reasonable cost placed on all
manpower or labor. If the cost of all previous and proposed
alterations and additions exceeds 50 percent of the market
value of the structure, then the structure must meet the
standards of § 151.04 or § 151.05 of this Ordinance for new
structures depending upon whether the structure is in the
Floodway or Flood Fringe District, respectively.

HCO § 151.11(A)(3).
When King’s Cove and Lambert entered into the Miller-Shugart settlement
agreement, it was not clear whether the flood plain compliance provision required King’s
Cove to demolish and reconstruct the building and make other changes to comply with the
ordinance. The undisputed market value of the building is between $1,600,000 and
$1,700,000. King’s Cove and Lambert stipulated in the settlement agreement that it would
cost King’s Cove $1,085,000 to repair the building, inclusive of costs to repair damages
attributable to all of the contractors that worked on the project that were included in King’s
Cove’s underlying lawsuit. Because $1,085,000 is more than half of the building’s
undisputed market value, King’s Cove argued that the flood plain compliance provision
required it to tear down and reconstruct the building at a higher elevation to bring it into
compliance with city code. King’s Cove and Lambert therefore agreed that King’s Cove
faced up to $5,200,000 in damages if the flood plain compliance provision required
demolition and reconstruction of the building.
On appeal, United Fire argues that the flood plain compliance provision could not
have applied because it does not contemplate applying to repairs “at all.” United Fire
further argues that Lambert’s work cannot fall within the scope of “structural alterations”
28
because Lambert worked on only the building’s siding and roofing and these are not
structural components of the building.
But when King’s Cove and Lambert entered into their Miller-Shugart settlement
agreement, it was not clear whether the flood plain compliance provision would apply to
the building.
First, United Fire’s argument that it was not possible for the flood plain compliance
provision to apply because it does not contemplate applying to repairs is not persuasive
because it applies to “[t]he cost of all structural alterations or additions to any
non-conforming structure.” HCO § 151.11(A)(3). Based on the plain language of the flood
plain compliance provision, we conclude that it was not apparent, at the time of settlement,
that the provision would not apply to King’s Cove’s building because King’s Cove was
repairing it.
Second, we are not persuaded by United Fire’s argument that the flood plain
compliance provision could not apply to Lambert’s work because Lambert worked on only
the building’s siding and roofing and these parts of a building are not “structural.” The
flood plain compliance provision applies to “structural alterations.” The city code does not
define “structural alterations,” HCO § 151.02(H), however, and it was therefore
undetermined at the time of settlement whether the roof and siding work falls within the
scope of structural alterations and, thus, whether the flood plain compliance provision
would apply.
The district court was tasked with finding whether the Miller-Shugart settlement
agreement was reasonable from the perspective of a reasonably prudent person in
29
Lambert’s position. King’s Cove II, 958 N.W.2d at 323. We review that finding for clear
error. See i d. at 321. Based on our review of the record and the flood plain compliance
provision, we conclude that the district court did not clearly err because, at the time of
settlement, a reasonable person in Lambert’s position may have had genuine concerns
about the flood plain compliance provision increasing their potential liability.
4. United Fire’s third challenge: whether the district court clearly
erred when it found that the Miller-Shugart settlement agreement
was not a product of collusion.
We address United Fire’s argument that the Miller-Shugart settlement agreement
was a product of collusion and that, therefore, it is unenforceable. On remand, the district
court rejected this argument, concluding that the record includes no evidence of collusion.10
We review a district court’s finding that a settlement agreement is enforceable, and
thus not a product of collusion, for clear error. See Indep. Sch. Dist. No. 197, 525 N.W.2d
at 607 (applying clear-error review to a district court’s summary-judgment determination
that a Miller-Shugart settlement agreement was not collusive). “[T]he role of an appellate
court is not to weigh, reweigh, or inherently reweigh the evidence when applying a
clear-error review; that task is best suited to, and therefore is reserved for, the factfinder.”

10 King’s Cove contends that United Fire failed to preserve this issue for appeal because
United Fire did not raise collusion in its initial appeal. We first observe that the issue of
collusion was presented to and considered by the district court on remand in the parties’
posttrial motions. Notwithstanding that this court concluded that United Fire did “not
claim the settlement was obtained through fraud or collusion” and “the sole issue presented
[was] whether the settlement was reasonable, ” King’s Cove III, 2021 WL 4259025, at *3
n.2, because “[c]ollusion would make a facially reasonable settlement unreasonable in
fact,” Indep. Sch. Dist. No. 197 v. Accident & Cas. Ins. of Winterthur, 525 N.W.2d 600,
607 (Minn. App. 1995), rev. denied (Minn. Apr. 27, 1995), and the parties disputed this
issue on remand to the district court, we address this argument on its merits.
30
Kenney, 963 N.W.2d at 223. “Collusion, for purposes of a Miller-Shugart settlement, is a
lack of opposition between a plaintiff and an insured that otherwise would assure that the
settlement is the result of hard bargaining.” Indep. Sch. Dist. No. 197, 525 N.W.2d at 607.
United Fire claims that the settlement here was not the result of a hard bargain,
pointing to the following deposition testimony taken in the garnishment action: Lambert’s
owner said that he “thought this entire case has been unreasonable since day one” and
agreed that he would not “pay $2 million of his own money to settle.”
In finding that the Miller-Shugart settlement agreement here was reasonable, the
district court found that no collusion occurred: “[T]here has been no evidence put forth that
Lambert committed fraud or colluded with [ King’s Cove] when entering into the 2016
Miller-Shugart Agreement.” In addition, the district court already considered and rejected
United Fire’s collusion argument in its 2018 order that led to the initial appeal, saying,
“United Fire has no evidence of collusion. The facts show that this is a typical
Miller/Shugart agreement. . . . [T]here is no fraud and collusion simply because defendant
believes the amount is too high.” Because we will not reweigh the evidence and we discern
no clear error in the district court’s factual findings, we conclude that the district court did
not clearly err by determining that the Miller-Shugart settlement agreement was
reasonable.
B. The district court did not clearly err in its allocation of the unallocated
Miller-Shugart settlement agreement.
We next consider whether the district court erred in allocating the unallocated
Miller-Shugart settlement agreement. Because King’s Cove and Lambert did not allocate
31
between claims that were covered and not covered by Lambert’s insurance policies with
United Fire, the district court was tasked on remand with applying the King’s Cove II
framework to allocate the settlement between covered and uncovered claims.
King’s Cove argues that the district court erred in making its allocation finding by
excluding from its allocation assessment covered damages to other property and property
adjacent to Lambert’s work and by failing to consider the flood plain compliance
provision’s impact on allocation. United Fire argues that the allocation is reasonable.
We first review the district court’s allocation finding for clear error, and then we
consider the specific arguments that King’s Cove raises on appeal, concluding that the
district court did not err in its factual findings.
1. The district court did not clearly err when it made its allocation
finding.
King’s Cove II requires that the district court consider how a reasonably prudent
person in the position of the defendant—Lambert—would have valued and allocated the
covered and uncovered claims at the time of settlement and, in doing so, that the district
court consider evidence relevant to that determination. 958 N.W.2d at 323. Here, the
district court considered the four categories of evidence relevant to the allocation
determination listed in the King’s Cove II opinion.
The district court considered information that was available to King’s Cove and
Lambert at the time of the settlement regarding the underlying facts. The district court
explained that, although there were many expert reports from both Lambert and King’s
Cove, the settlement agreement “relied on Plaintiff’s Supplemental Response to
32
Defendant’s Interrogatories and Requests for Production of Documents to Plaintiff,
March 6, 2015, and Report of [a city building official] dated September 24, 2015.”
The district court considered materials produced in discovery and court rulings in
the underlying litigation, observing the “hundreds of exhibits totaling thousands of pages
produced in this litigation.” The district court noted that, before settling, “the parties had
exchanged interrogatories, requests for documents, and expert reports.” Importantly, the
district court explained that the appellate courts “determined that there was no insurance
coverage for Lambert’s ‘own work’ under exclusion l.”11
The district court considered evidence of how King’s Cove, Lambert, and their
attorneys evaluated the claims at the time of the settlement, noting that, when King’s Cove
and Lambert evaluated them, the damages “were categorized by different areas of the
building instead of by which entity performed the work that led to damage.” The district
court proceeded to explain how King’s Cove and Lambert calculated the general and
location-based damages in the settlement agreement. The district court then noted that,
despite Lambert’s expert reports “opining that a separate [weather- resistant barrier] was
not required, and that the floodplain ordinance would not be triggered,” the settlement
agreement showed that both King’s Cove and Lambert “acknowledge[d] that there was
potential for Lambert to be held liable for significant damages” if the flood plain ordinance
was triggered.

11 We acknowledge that, in other cases, the legal issue of coverage should be determined
by the district court in conjunction with its allocation finding.
33
The district court considered expert testimony about the value of the settled claims.
In considering this, the district court noted that it admitted evidence “based on information
available to the parties at the time of the settlement but was not necessarily available in the
form of an expert report” into the record.
We conclude that the district court did not clearly err in its allocation finding. The
district court stated that King’s Cove and Lambert “entered into the agreement with the
understanding, but not the assurance, that there was insurance coverage for the claims.” It
then explained that King’s Cove “assumed the risk by agreeing to a settlement with
Lambert that was completely reasonable for Lambert to accept” and stated that, “in 2016,
Lambert would have had no knowledge that on appeal in 2021 the higher courts would
overturn this Court’s determination that there was in fact insurance coverage for these
claims.” Therefore, we turn to the specific arguments raised by King’s Cove.
2. King’s Cove’s first challenge: whether the district court clearly
erred by relying on the Miller-Shugart settlement agreement to
exclude from its allocation covered damages to other property
and property adjacent to Lambert’s work.
King’s Cove asserts that the district court clearly erred in its allocation finding by
relying on the unallocated Miller-Shugart settlement agreement’s identification of
damages because, in doing so, the district court erroneously excluded covered damages to
other property and property adjacent to Lambert’s work. This argument is premised on
King’s Cove’s assertion that the district court should have accepted its allocation theory on
remand, in which it sought to maximize its recoverable claims by establishing that the
34
damages it sought were both within the scope of the settlement agreement and covered by
the insurance policies.
On remand, King’s Cove claimed that the total damages to its building amounted to
$1,041,387 and that the damages that were attributable to Lambert’s own work, and thus
excluded under exclusion l, were limited to $379,928.91. The district court observed that
this was a substantial reduction from the amount that the original Miller-Shugart settlement
agreement allocated to Lambert’s own work. King’s Cove argued that, under its new
allocation theory, the United Fire insurance policies covered $661,457 because that was
the amount of damages that were not related to Lambert’s “own work.” But the district
court rejected this allocation theory.
In its order, the district court pointed out that King’s Cove conceded that the full
amount of damages attributed to Lambert in the Miller-Shugart settlement agreement
would not be covered because of exclusion l, that King’s Cove did not put forward any
argument that the amount of damages attributable to others that worked on the project
would be covered under Lambert’s policies with United Fire, and that any amount of
damages attributable to Lambert’s subcontractor that provided concrete work were
specifically excluded from the Miller-Shugart settlement agreement. Thus, the only
remaining damages that could possibly be covered were the “general damages.”
After rejecting King’s Cove’s allocation theory and reviewing the supreme court’s
coverage determination, the district court allocated the Miller -Shugart settlement
agreement by looking at all claims with which it had been presented that were attributable
to Lambert: claims for damages to the roof, claims for damages to the siding, and claims
35
for Lambert’s portion of general damages to the building. The district court was bound by
the conclusions of this court and the supreme court that exclusion l in the policies operated
to exclude from coverage all property damage to Lambert’s own work that “arose out of
Lambert’s own work” as the insured but did not exclude “a claim for damages caused by
Lambert’s work to preexisting structures located adjacent to the work performed by
Lambert.” King’s Cove II, 958 N.W.2d at 317-18 (quotation omitted). The district court
applied that prior coverage ruling and found that claims for the roofing and siding were not
covered; accordingly, it excluded claims for the roofing and siding from its allocation of
covered damages.
Then, relying on the supreme court’s conclusion that Lambert’s insurance policies
with United Fire covered other damages attributable to Lambert, such as “damage to
existing sheetrock, tiles, carpet, and the floor ,” id. at 317 (quotation omitted), the district
court used the settlement agreement’s general damages estimation of $317,000 in its
allocation finding. And because King’s Cove and Lambert stipulated in their
Miller-Shugart settlement agreement that Lambert was responsible for 55% of the general
damages to the building, the district court calculated 55% of the general damages amount
in the settlement agreement. The result was $174,350. Thus, the district court allocated
$174,350 to King’s Cove as the sum of covered damages recoverable from United Fire.
The district court’s finding is supported by the record, which includes the
Miller-Shugart settlement agreement, and we discern no clear error in its allocation finding
that the amount of general damages proportional to Lambert’s share of the total damages
identified by King’s Cove are the only covered damages.
36
3. King’s Cove’s second challenge: whether the district court clearly
erred by failing to consider the flood plain compliance provision’s
impact on allocation.

It is clear that the district court considered the flood plain compliance provision
throughout its order, including by making findings that “Lambert faced potential liability
for substantial costs to repair the building in compliance with City Ordinances through the
operation of the floodplain ordinance” and recounting expert testimony on this topic. The
district court weighed the flood plain compliance provision in favor of a finding that the
Miller-Shugart settlement agreement was reasonable.
The district court also concluded, however, that King’s Cove did not carry its burden
of proof on allocation . King’s Cove argues that it was not required “to prove that each
contribution to the whole of damages is covered because the cost to comply with laws (e.g.,
ordinances or building codes) may be covered even if both covered and uncovered causes
contributed” to the damage. King’s Cove supports this argument by citing federal caselaw:
Cincinnati Insurance Co. v. Rymer Cos., 41 F.4th 1026, 1029-30 (8th Cir. 2022), and
Regents of Mercersburg College v. Republic Franklin Insurance Co., 458 F.3d 159 (3d Cir.
2006). Federal caselaw can be persuasive, but not binding, authority. State v. McClenton,
781 N.W.2d 181, 191 (Minn. App. 2010), rev. denied (Minn. June 29, 2010). We are not
persuaded that the district court erred in its allocation findings as King’s Cove argues. The
supreme court gave plaintiff judgment creditors the burden to prove allocation because “the
burden of proof rests upon the party claiming coverage under an insurance policy.” King’s
Cove II, 958 N.W.2d at 325 (quoting Boedigheimer v. Taylor, 178 N.W.2d 610, 614 (Minn.
1970)).
37
King’s Cove did not identify legal errors made by the district court that this court
can review de novo, nor did it establish that there was coverage for this claim such that the
district court’s allocation finding is erroneous. We therefore conclude that the district court
did not clearly err when it applied the supreme court’s multi- factor allocation inquiry as
stated in King’s Cove II and awarded King’s Cove $174,350.
C. King’s Cove is not entitled to either enforcement of the full
Miller-Shugart settlement agreement or reinstatement of a trial on the
merits.
King’s Cove next argues that the district court erred by revising the amount of the
Miller-Shugart settlement agreement and substituting its allocation of the covered claims
for the parties’ stipulated judgment. King’s Cove contends that it is entitled to full recovery
of the Miller-Shugart settlement amount. Alternatively, King’s Cove argues that, if the
settlement is not fully enforced without allocating any amounts to uncovered claims,
King’s Cove and Lambert should be returned to their presettlement positions and its claims
reinstated for a trial on the merits. United Fire argues that the district court did not err
because it followed the supreme court’s instructions in King’s Cove II to allocate between
covered and uncovered amounts and to allow recovery only to the extent that amounts set
forth in the settlement agreement are covered by Lambert’s insurance policies with United
Fire.
Whether King’s Cove is entitled to reinstatement of a trial on the merits when the
full settlement amount will not be enforced is a question of law that requires us to interpret
caselaw. Appellate courts review the interpretation of caselaw de novo. State v. Robideau,
796 N.W.2d 147, 150 (Minn. 2011).
38
In King’s Cove II, the supreme court expressly directed the district court to engage
in post hoc allocation of covered and uncovered claims—empowering the district court to
determine that not all of the amounts agreed to in a Miller-Shugart settlement agreement
are covered by the insurance policy or policies at issue. 958 N.W.2d at 324-25. This is
neither a revision of the amount of the settlement nor a substitution of the parties’ stipulated
judgment, as King’s Cove contends; rather, it is an enforcement of the parties’ agreement
to have United Fire pay only for those damages that are covered by Lambert’s policies with
it.
Although prior to King’s Cove II, district courts may not have allocated
Miller-Shugart settlement agreements for parties, the supreme court adopted a rule
directing district courts to allocate an unallocated Miller-Shugart settlement agreement
through the course of this litigation. Id. at 325. We are thus not persuaded by the argument
that King’s Cove is entitled to either enforcement of the full value of its unallocated
Miller-Shugart settlement agreement or reinstatement of its claims against Lambert
because it disregards the supreme court’s holding in King’s Cove II.
III. The district court did not abuse its discretion when it excluded two exhibits
related to the application of the flood plain compliance provision.
The final issue on appeal is whether the district court abused its discretion when it
declined to admit two exhibits—a 2023 City of Hastings building permit application and a
related letter from a city official—into evidence at the hearing it held on remand . The
district court declined to admit these exhibits into the record because neither document
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would “have been contemplated at the time of the 2016 Miller-Shugart Agreement” and,
therefore, they were not relevant.
“We afford the district court broad discretion when ruling on evidentiary matters,
and we will not reverse the district court absent an abuse of that discretion.” Doe 136 v.
Liebsch, 872 N.W.2d 875, 879 (Minn. 2015). Relevant evidence is any evidence that has
a “tendency to make the existence of any fact that is of consequence to the determination
of the action more probable or less probable than it would be without the evidence.” Minn.
R. Evid. 401. In reviewing both the reasonableness and allocation of a Miller-Shugart
settlement agreement, district courts must consider the insured defendant’s position, when
faced with the plaintiff’s claims, at the time of the settlement. King’s Cove II, 958 N.W.2d
at 323-24.
On remand, United Fire submitted evidence to support its argument that the
damages arising out of the 2011 project did not trigger the flood plain compliance provision
and King’s Cove sought to admit two related exhibits to rebut that evidence. These were
a 2023 building permit application and a letter dated March 10, 2023, that states that the
building permit is incomplete “pending conformance to the Flood Plain Regulations
outlined in this letter.” King’s Cove asserts that these documents reflect the city official’s
position on whether the flood plain compliance provision was triggered and that this
position had changed between when the 2015 Bakken letter was issued and 2023. United
Fire opposed the admission of these exhibits, arguing that the evidence was irrelevant
because it was created in 2023—seven years after King’s Cove and Lambert entered into
the Miller-Shugart settlement agreement—and thus was not available to the parties at the
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time they entered into the agreement. Because the evidence did not exist at the time the
agreement was executed, it could not be used to determine how the “insured would have
valued and allocated the covered and uncovered claims at the time of the settlement.” Id.
(emphasis added). The district court agreed that the exhibits would not have been
contemplated at the time of settlement in 2016 and thus that they were not relevant, and it
excluded both of the exhibits. And, as to King’s Cove’s assertion that the evidence was
admissible as impeachment evidence, the district court determined that the 2023 letter
could not be used to impeach statements from 2015.
Here, the district court was charged with evaluating both the reasonableness and
allocation of the Miller-Shugart settlement agreement, and in doing so, it was to consider
how a reasonable person in the position of the insured would have valued and allocated the
covered and uncovered claims at the time of the settlement. Given the definition of relevant
evidence, we must consider whether the district court abused its discretion in determining
that the 2023 building permit application and 2023 letter were not relevant to the issues
before it. The district court’s reasoning that two documents created seven years after the
execution of the settlement agreement were not relevant is sound because they did not have
a “tendency to make the existence of any fact that is of consequence to the determination
of the action more probable or less probable than it would be without the evidence.” Minn.
R. Evid. 401. As the Eighth Circuit explained, “Events and circumstances happening after
settlement are relevant only insofar as they inform how a reasonable party would have
valued and allocated the claims at the time of settlement.” UnitedHealth Grp. Inc.,
870 F.3d at 864. Although we do not foreclose the possibility that a document that was
41
created after a Miller-Shugart settlement agreement was executed could have some bearing
on how reasonable persons in the position of the insured would have valued and allocated
the covered and uncovered claims at the time of the settlement, we discern no abuse of
discretion in the district court’s determination here regarding documents created long after
the settlement agreement and the events surrounding the negotiation of the settlement
agreement concluded. Moreover, we discern no abuse of discretion in the district court’s
additional reasons for deciding that the two exhibits were not relevant and thus not
admissible.
“We afford the district court broad discretion when ruling on evidentiary matters,
and we will not reverse the district court absent an abuse of that discretion.” Doe 136,
872 N.W.2d at 879. The district court did not abuse its discretion when it excluded the
2023 building permit application and 2023 letter because the evidence would not have been
contemplated when King’s Cove and Lambert entered the 2016 Miller-Shugart settlement
agreement and was therefore not relevant.
DECISION
When reviewing a district court’s findings of fact pursuant to the two- step
framework for determining the reasonableness of an unallocated Miller-Shugart settlement
agreement set forth in King’s Cove II, appellate courts review the district court’s
reasonableness findings for clear error and its allocation findings for clear error.
The district court did not clearly err when it found that the Miller-Shugart settlement
agreement was reasonable pursuant to the King’s Cove II framework, in which “[t]he test
is what a reasonably prudent person in the position of the defendant would have settled for
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on the merits of the plaintiff’s claims at the time of the settlement.” King’s Cove II,
958 N.W.2d at 323. The district court properly considered the relevant nonexclusive
factors in making its finding. Id. Therefore, the district court did not clearly err when it
found that the agreement was reasonable.
The district court did not clearly err in finding the allocation of covered and
uncovered claims pursuant to the King’s Cove II framework, in which “[t]he test is how a
reasonable person in the position of the insured would have valued and allocated the
covered and uncovered claims at the time of the settlement.” Id. at 323-24. Here, the
district court properly considered relevant evidence regarding allocation, including the four
nonexclusive factors provided by the supreme court. Id. at 324. Therefore, the district
court did not clearly err when it ordered United Fire to pay $174,350 to King’s Cove for
its covered claims under the settlement agreement.
Because, under King’s Cove II, district courts are explicitly tasked with allocating
covered and uncovered claims in unallocated Miller-Shugart settlement agreements, we
reject the argument that, if King’s Cove does not receive the full value of the settlement, it
is entitled to reinstatement of a trial on the merits. Finally, the district court did not abuse
its discretion when it excluded two of King’s Cove’s exhibits after remand.
Affirmed.