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Leamington Co.

May 27, 2003

LEAMINGTON CO., APPELLANT,
v.
NONPROFITS' INSURANCE ASSOCIATION, AN INTERINSURANCE EXCHANGE, RESPONDENT.



Hennepin County District Court File No. 9712599

Considered and decided by Toussaint, Chief Judge, Lansing, Judge, and Huspeni, Judge.*fn1

SYLLABUS BY THE COURT

When a property owner recovers damages directly from a tortfeasor pursuant to a settlement and then sues the tortfeasor's insurer for those same damages, the common-law collateral-source rule does not apply, and any recovery from the tortfeasor's insurer must be offset by the amount of damages recovered from the tortfeasor.

The opinion of the court was delivered by: Toussaint, Chief Judge

Affirmed

OPINION

This is an appeal from a summary judgment in which the district court applying the comparative fault act, Minn. Stat. §á604.01, subd. 5 (2002), held that any damages appellant recovers from its lessee's property-damage insurer, respondent, must be offset by the amount of its settlement with its lessee for the same damages. Appellant contends that (a) neither the policy nor the comparative fault act supports this result, and instead the common-law collateral-source rule applies and (b)ágenuine issues of material fact exist as to whether the settlement compensated appellant for the same damages as those it sought to recover from the insurer. Because (a) the common-law collateral-source rule does not apply when a third party is not the source of funds and (b) no factual dispute exists as to which damages the settlement applies, we affirm the district court.

FACTS

Appellant Leamington Co., which owns the Francis Drake Building, leased the property to People Serving People, Inc. (PSP) from 1983 through May 1996 for use as a homeless shelter. During the lease period, the property was damaged by water and by vandalism and destructive acts by PSP's guests and invitees. Leamington sued PSP for damages.

PSP and Leamington reached a settlement that was read into the district court record in December 1996. The settlement provides in relevant part:

P.S.P., Inc. will tender payment to Leamington Company in the amount of $340,000 by cashier's check on December 23, 1996, at 10:30 a.m. in Mr. Anderson's office. That payment is hereby attributed by the parties to the tort waste claim in this litigation.

The settlement further provided that Leamington would "have the exclusive right to pursue and recover on any real property damage insurance claim" to the property.

During the relevant years, PSP had a property-damage insurance policy with respondent Nonprofits' Insurance Association (NIA). Leamington, as authorized by the settlement, brought an action for property damage against NIA under PSP's insurance policy. NIA asserted a number of defenses, including the argument that any judgment Leamington obtained should be offset by the $340,000 that PSP paid Leamington, which NIA contended was for the same tort-waste damages for which Leamington sought recovery in the insurance lawsuit.

The district court granted summary judgment to the insurer. In an earlier appeal, the supreme court reversed the summary judgment and remanded for further proceedings. Leamington Co. v. Nonprofits' Ins. Ass'n., 615 N.W.2d 349, 351 (Minn. 2000). On remand, the district court heard and denied additional motions for summary judgment from both parties. In the portion of the decision at issue here, the district court ruled that Leamington's $340,000 ...


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