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Nordstrom v. Eaton

October 10, 2002

ANGELA MARIE NORDSTROM, PLAINTIFF/CREDITOR, APPELLANT,
v.
CONNIE J. EATON D/B/A LAKESIDE MUSIC CAFE, DEFENDANT/DEBTOR (C7-01-2200),
FIREMAN'S FUND INSURANCE CO. OF WISCONSIN, RESPONDENT,
DOLLIFF, INC., ET AL., RESPONDENTS (C3-02-339).



Pine County District Court File Nos. C5001116, C501736

Considered and decided by Harten, Presiding Judge, Willis, Judge, and Shumaker, Judge.

SYLLABUS BY THE COURT

When a creditor serves a garnishment summons on an insurer to collect insurance proceeds, the insurer serves a disclosure under Minn. Stat. §á571.79(a) (2000) denying that it is indebted to the debtor or possesses any money or other property belonging to the debtor, and the creditor fails to serve a motion within 20 days after the date of service of the disclosure for leave to serve a supplemental complaint, the insurer is discharged only from any further retention obligation to the creditor with regard to that garnishment summons and the discharge is not determinative of the rights of the creditor with regard to the putative insurance policy.

The opinion of the court was delivered by: Willis, Judge

Reversed and remanded

OPINION

In these consolidated appeals, appellant creditor challenges the district court's decisions (1)ádenying her motion for leave to file a supplemental complaint against respondent insurer after the insurer's disclosure in response to a second garnishment summons and (2)ágranting respondent insurer's motion for summary judgment in a declaratory-judgment action. Because appellant's failure to timely move the district court for leave to file a supplemental complaint against insurer after disclosure by the insurer in response to a first garnishment summons discharged insurer only from any further retention obligation that it might have had to appellant but was not determinative of appellant's rights, we reverse and remand.

FACTS

In October 1998, Angela Marie Nordstrom was injured in a motor-vehicle accident. She sued Connie J. Eaton, doing business as the Lakeside Music Cafe (Lakeside), under Minnesota's dram-shop act, alleging that despite his obvious intoxication, Lakeside had continued to serve alcoholic beverages to the person who subsequently drove the vehicle in which Nordstrom was a passenger. Eaton tendered her defense to Fireman's Fund Insurance Company of Wisconsin (Fireman's). Fireman's denied coverage, contending that although it had provided liquor-liability insurance to Pokegama Lakeside Cafe, Lakeside's predecessor, it had cancelled Lakeside's liquor-liability policy because Lakeside failed to pay the premiums.

In July 2000, Nordstrom and Eaton entered into a Miller-Shugart settlement agreement by which Eaton stipulated to a $900,000 judgment, and Nordstrom agreed to seek satisfaction of the judgment solely from Fireman's, Eaton's insurance agent, or Eaton's insurance agency. The court approved the settlement and entered judgment.

On January 3, 2001, Nordstrom served a garnishment summons on Fireman's to collect on the putative insurance policy and on January 19, 2001, Fireman's served a disclosure on Nordstrom denying that it was indebted to Eaton or possessed any money or property belonging to Eaton. Nordstrom did not move for leave to file a supplemental complaint against Fireman's within 20 days after the date of service of the disclosure, as provided by Minn. Stat. § 571.79(h) (2000). Instead, in April 2001, Nordstrom commenced a declaratory-judgment action against Fireman's, seeking a determination that Fireman's had issued a dram-shop policy to Eaton that was in effect on the date of the accident. Later in April 2001, Nordstrom served a second garnishment summons on Fireman's, again seeking to collect on the putative insurance policy. Responding to the second garnishment summons, Fireman's again served a disclosure denying that it held any assets belonging to Eaton and objecting on the ground that Nordstrom's failure to timely move for leave to file a supplemental complaint after the first garnishment disclosure discharged Fireman's from any obligation that it might have had to Nordstrom. Nordstrom moved the district court for leave to file a supplemental complaint against Fireman's. In September 2001, the district court denied that motion, ruling that because Fireman's had been discharged, Nordstrom was unable to show probable cause that Fireman's was liable for the judgment debt.

Meanwhile, Fireman's moved for summary judgment in the declaratory-judgment action on the ground that it was discharged from any further obligation to Nordstrom by operation of the garnishment statute. In October 2001, the district court granted Fireman's motion. Nordstrom appealed from both the district court's denial of her motion for leave to file a supplemental complaint and from the adverse summary judgment in the declaratory-judgment action. This court consolidated the appeals.

ISSUE

When a creditor serves a summons to garnish an insurance policy and the insurer discloses under Minn. Stat. ยงรก571.79(a) (2000) that it is not indebted to the debtor and does not possess any property of the debtor, does the creditor's failure to timely move for leave to file a supplemental complaint against the insurer discharge the insurer completely ...


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