Court Opinion

ID: 9699285
Source: CourtListenerOpinion
Date Created: 2023-08-25 20:18:12.479205+00
Date Added: 2024-06-11T18:20:48.546157
License: Public Domain

LARKIN, Judge
(dissenting).
I respectfully dissent. Every insurer owes its insured an independent duty to defend, and an insurer that provides a defense is not entitled to recover its costs from the insurers that did not provide a defense. Wooddale Builders, Inc. v. Maryland Cas. Co., 722 N.W.2d 283, 302 (Minn.2006) (citing Iowa Nat’l Mut. Ins. Co. v. Universal Underwriters Ins. Co., 276 Minn. 362, 367-68, 150 N.W.2d 233, 236-37 (1967)). Absent a loan-receipt agreement, an insurer that undertakes the defense of its insured may not seek recovery of defense costs from other insurers that failed to provide a defense. Id.
Due to the lack of contractual privity between Liberty Mutual and Cargill’s other insurers, Liberty Mutual has no right to contribution in the absence of a loan-receipt agreement. See Iowa Nat’l, 276 Minn. at 366-68, 150 N.W.2d at 236-37. A conclusion that principles of equity and fundamental fairness obligate Cargill to enter into a loan-receipt agreement with Liberty Mutual because Liberty Mutual offered to defend Cargill is inconsistent with the Iowa National holding, which specifically rejected an argument that equitable concerns justify an order allowing an insurer that defends its insured to recover its costs from other insurers. Id. at 365-69, 150 N.W.2d at 235-37 (considering whether a defending insurer should be allowed to recover its defense costs from another insurer based on an equitable principle arising out of a circumstance by which the non-defending insurer was said to have been unjustly enriched by reason of the expenses incurred by the defending insurer).
In Iowa National the supreme court concluded that the equities between a defending insurer and non-defending insurer were “at best equal,” reasoning that the *67expenses incurred by the defending insurer were expenses that it agreed to incur pursuant to its contract with its insured. Id. at 368-69, 150 N.W.2d at 237. The supreme court noted that the defending insurer received premiums from its insured in exchange for its agreement to assume the risk of insuring these expenses, stating, “These charges are not in the nature of a payment of a debt for which another was primarily liable. They are [the defending insurer’s] expense of doing business.” Id. at 369, 150 N.W.2d at 237-38; see Jostens, Inc. v. Mission Ins. Co., 387 N.W.2d 161, 166 (Minn.1986) (recognizing that Iowa National rejected the argument that equity compelled shared liability among insurers who were not in privity stating, “the insurer assuming the defense has no cause to complain because it is protecting its own interests and is only doing what it agreed and was paid a premium to do ”) (emphasis added). Thus, equity does not compel shared liability among multiple insurers with a duty to defend. Iowa Nat’l, 276 Minn. at 368, 150 N.W.2d at 237 (stating, “The obligation is several and the carrier is not entitled to divide the duty nor require contribution from another absent a specific contractual right.”).
Likewise, equity does not compel the imposition of contractual privity in an effort to achieve shared liability. See Cady v. Bush, 283 Minn. 105, 110, 166 N.W.2d 358, 362 (1969) (stating, “it must be kept in mind that the principle of unjust enrichment should not be invoked merely because a party has made a bad bargain” and “[c]ourts are not warranted in interfering with the contract rights of parties as evidenced by their writings which purport to express their full agreement”). And it is not within the purview of this court to extend the supreme court’s holding in Jos-tens, which is factually distinguishable given the existence of a loan-receipt agreement in that case. 387 N.W.2d at 164-65. We are an error-correcting court. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn.1988). “[T]he task of extending existing law falls to the supreme court or the legislature, but it does not fall to this court.” Tereault v. Palmer, 413 N.W.2d 283, 286 (Minn.App.1987), review denied (Minn. Dec. 18, 1987). Moreover, we are not a policy-setting court. Sefkow, 427 N.W.2d at 210 (“The function of the court of appeals is limited to identifying errors and then correcting them.”). And we have previously stated that public policy arguments, “while appealing, cannot overcome Minnesota’s express preference that each insurer fulfill its independent duty to cover a mutual insured.” Andrew L. Youngquist, Inc. v. Cincinnati Ins. Co., 625 N.W.2d 178, 187 (Minn.App.2001) (rejecting the argument that public policy mandates that one insurer should not profit from its wrongful failure to defend while another insurer is punished for performing its obligation).
Cargill has a contractual right to a defense from Liberty Mutual irrespective of other insurance. Iowa Nat’l, 276 Minn. at 367, 150 N.W.2d at 236-37; see also Nordby v. Atlantic Mut. Ins. Co., 329 N.W.2d 820, 824 (Minn.1983) (stating, “Each insurer’s obligation to defend is separate and distinct from its duty to provide coverage and pay a judgment, irrespective of other insurance and irrespective of whether it provides primary or excess coverage”). In the final analysis, Cargill is merely asking Liberty Mutual to provide it with a defense, as Liberty Mutual agreed and was paid a premium to do. This result is in no way harsh or unfair. The result is simply what both of these sophisticated parties bargained for. Liberty Mutual’s desire to seek contribution from other insurers cannot operate to alter its obligation to its *68insured. Iowa Nat’l, 276 Minn. at 367-68, 150 N.W.2d at 237.
The district court posited that Cargill’s refusal to cooperate with Liberty Mutual’s request for a loan-receipt agreement constituted a violation of its policy obligations to Liberty Mutual. But the district court stopped short of holding that Cargill is contractually obligated to execute a loan-receipt agreement under the terms of the Liberty Mutual insurance policy. The majority cites policy language regarding Car-gill’s obligation to assist Liberty Mutual in “enforcing any right of contribution or indemnity against any person or organization who may be liable to [Cargill].” Relying on this language, the majority opinion concludes that Cargill has a contractual obligation to cooperate with Liberty Mutual as its insurer and equates cooperation with execution of a loan-receipt agreement. This conclusion is flawed because it presumes that Liberty Mutual has a right of contribution. Liberty Mutual has no right of contribution given the lack of contractual privity between Liberty Mutual and Cargill’s other insurers. See Iowa Nat’l, 276 Minn. at 366-68, 150 N.W.2d at 236-37.
The policy language does not obligate Cargill to execute a loan-receipt agreement. And it is improper for courts to insert such a requirement into the policy. “[T]he law cannot finish what the parties have left unfinished and thereby create a contract where they intentionally omitted to make one for themselves.” Druar v. Ellerbe & Co., 222 Minn. 383, 396, 24 N.W.2d 820, 826 (1946); see also St. Paul Fire & Marine Ins. Co. v. Ruddy, 299 F. 189, 196 (8th Cir.1924) (“It is not within the province of the courts to create contracts.”).
Because (1) equity does not compel shared liability among multiple insurers with a duty to defend absent contractual privity between the insurers, (2) we are not a policy-setting court and it is not the role of this court to extend existing law, and (3) the district court may not impose extra-contractual terms, I would adhere to the holding in Iowa National. Liberty Mutual and Cargill entered into a contractual agreement, whereby Liberty Mutual was to undertake a defense of Cargill and for which Liberty Mutual received premium payments. It is inappropriate for the district court to impose a loan-receipt agreement when the parties’ contract does not require one. Absent such an agreement, Liberty Mutual is not entitled to contribution. Accordingly, I would answer the certified question in the negative.