Nicollet County District Court File No. C2-01-771
Considered and decided by Peterson, Presiding Judge, Harten, Judge, and
A district court has subject-matter jurisdiction to review a coverage decision by a joint-powers board formed pursuant to Minn. Stat. §á471.59 (2002) to provide self-insurance and risk-management services to its members.
The opinion of the court was delivered by: Halbrooks, Judge
Respondent counties (the counties) brought a breach-of-contract and declaratory-judgment action against appellant Minnesota Counties Insurance Trust, seeking a declaration that appellant was obligated to defend and indemnify respondents in a lawsuit relating to housing bonds. Appellant moved for dismissal based on lack of subject-matter jurisdiction. Appellant contends that its decision to deny coverage was a quasi-judicial decision made by an administrative body that is reviewable only through certiorari. Because the district court correctly determined that it had subject-matter jurisdiction, we affirm the district court's denial of appellant's motion to dismiss.
In the early 1990s, the South Central Minnesota Multi-County Housing and Redevelopment Authority (HRA) issued bonds for the development of a multi-county housing project called the Amberfield Project. The counties entered into an operating-deficit agreement providing that the counties would exercise their "best efforts" to obtain approval for a special tax levy if revenue from the housing program was not adequate to repay the bonds. When the project generated insufficient revenue, the HRA asked the counties to approve a tax levy. Pursuant to decisions by their boards of commissioners, the counties rejected the proposal. As a result, the bonds went into default.
The Franklin High-Yield Tax-Free Income Fund, which had purchased many of the bonds, sued the counties and their commissioners, alleging breach of contract and misrepresentation. The counties submitted the complaint to appellant Minnesota Counties Insurance Trust (MCIT), a joint-powers entity that provides self-insurance and risk-management services to its members, including the counties.
The claims manager for MCIT notified the counties that, because several exclusions applied, MCIT would not provide coverage. The counties appealed the decision to the MCIT board pursuant to the dispute-resolution provision in the MCIT bylaws. Following a hearing, the MCIT board affirmed the denial of coverage.
Between May 1996 and July 2000, the counties proceeded in the litigation with Franklin. The claims were ultimately settled, but resulted in legal fees to the counties in excess of $500,000. The terms of the settlement included a cash payment of $525,000 for the alleged breach of contract and fraud claims along with an agreement by the counties to approve levy requests for support of the Amberfield project through the remaining years of the bond obligations.
The counties then brought this declaratory-judgment and breach-of-contract action in district court, seeking a declaration that MCIT must provide coverage for the claims in the Franklin action. MCIT moved to dismiss, arguing that, because the challenged decision was a quasi-judicial one made by an administrative body, the counties must seek review through certiorari. The district court denied MCIT's motion, concluding that MCIT was not a political subdivision whose decisions were subject to certiorari review and that the court had subject-matter jurisdiction over the claims. This appeal follows.
Is a joint-powers board, formed under Minn. Stat. §á471.59 (2002) to provide self-insurance and risk-management services to its members, an administrative body whose ...