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STATE OF MINNESOTA IN COURT OF APPEALS A07-1457

Tena V. Van Kampen, Appellant, vs. Waseca Mutual Insurance Company, n/k/a Austin Mutual Group, Respondent, Westfield Insurance, a/k/a Westfield Group, defendant and third party plaintiff, Respondent, vs. Rispens Seeds, Inc., et al., Third Party Defendants.

Filed August 5, 2008 Affirmed in part, reversed in part, and remanded Lansing, Judge Blue Earth County District Court File No. 07-CV-06-3202 John M. Riedy, Jorun Groe Meierding, Maschka, Riedy & Ries, 201 North Broad, #200, P.O. Box 7, Mankato, MN 56002-0007 (for appellant) James H. Turk, Blethen, Gage & Krause, 127 South Second Street, P.O. Box 3049, Mankato, MN 56002 (for respondent Austin Mutual Group) Richard P. Wright, Cheryl Hood Langel, McCollum, Crowley, Moschet & Miller, Ltd., 700 Wells Fargo Plaza, 7900 Xerxes Avenue South, Minneapolis, MN 55431 (for respondent Westfield Insurance) Peter C. Sandberg, Dunlap & Seeger, P.A., Suite 505, 206 South Broadway, P.O. Box 549, Rochester, MN 55904-0549 (for third party defendants Rispens Seeds, Inc.)

Considered and decided by Stoneburner, Presiding Judge; Lansing, Judge; and Worke, Judge. SYLLABUS Under the Schmidt-Clothier procedure, if an underinsured-motorist insurer fails to assert its subrogation rights, an insured does not forfeit underinsured-motorist benefits by settling claims against the tortfeasor without receiving payment. OPINION LANSING, Judge The district court granted summary judgment dismissing Tena Van Kampen's underinsured-motorist (UIM) claims because she failed to protect her UIM insurers' subrogation rights when she entered into a joint settlement under which her daughter, son-in-law, and grandchildren received the limits of the at-fault driver's liability policy and Van Kampen received no payment. Because Van Kampen did not forfeit her right to UIM coverage, and because a genuine issue of material fact remains on whether the UIM insurers were prejudiced by inadequate notice of the settlement, we reverse in part and remand. But because summary judgment was properly granted against the third-party claims brought by the UIM insurers, we affirm in part. FACTS Tena Van Kampen, her daughter, and her three grandchildren were severely injured in August 2000 when the car that Van Kampen was driving was struck by a

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vehicle driven by Paul Brey and owned by Rispens Seeds, Inc. Van Kampen's son-inlaw owned the car that Van Kampen was driving. Van Kampen's daughter, son-in-law, and three grandchildren sued Van Kampen, Brey, and Rispens Seeds. Before trial, the daughter, son-in-law, and grandchildren

reached a tentative settlement with Brey and Rispens Seeds. Under the terms of the settlement, Van Kampen's daughter, son-in-law, and three grandchildren would receive all of Brey and Rispens Seeds $1.5 million in insurance coverage. As part of the settlement, Van Kampen would receive no payment and would also release any claim against Brey and Rispens Seeds. Van Kampen sent notice of the settlement to her underinsured-motorist insurers on May 6, 2004. Van Kampen had UIM coverage from two sources. First, she had her personal coverage through Austin Mutual Group, which provided UIM coverage of $250,000 for each person. Second, because the car was owned by her son-in-law, each occupant was covered under the son-in-law's policy with Westfield Insurance. The Westfield policy had UIM coverage limits of $50,000 for each person and $100,000 for each occurrence. Van Kampen's notice informed the UIM insurers that Van Kampen's daughter, son-in-law, and grandchildren would receive the full policy limits and that Van Kampen would be limited to pursuing UIM and no-fault benefits. The letter gave the UIM insurers thirty days to substitute their own payment to preserve their right to sue Brey and Rispens Seeds themselves. On May 24, 2004, Austin Mutual indicated that it was approving the settlement. On that same day, Van Kampen, her daughter, her son-in-law, 3

and her grandchildren signed the settlement agreement. On June 10, 2004, thirty-five days after the settlement notice, Westfield also approved the settlement. Because Van Kampen's daughter and grandchildren had not settled with Van Kampen, their claim against Van Kampen proceeded to trial. A jury found that Van Kampen was not liable, that Brey and Rispens Seeds were completely at fault, and that Van Kampen's daughter, son-in-law, and grandchildren had sustained damages of $1,685,446. Because of the jury's damages determination, Westfield paid Van Kampen's daughter and son-in-law $50,000 in UIM benefits. Van Kampen then sued the UIM insurers to collect UIM benefits for herself. The UIM insurers moved for summary judgment against Van Kampen, arguing that Van Kampen forfeited her right to UIM coverage by settling her claims against Brey and Rispens Seeds without payment and that the settlement notice was inadequate. The district court granted summary judgment against Van Kampen. The district court also granted summary judgment against the UIM insurers' third-party claims against Brey and Rispens Seeds, which alleged that Brey and Rispens Seeds were responsible for the inadequate notice. challenged. The summary judgment dismissing the third-party claims is not

Van Kampen, however, appeals the district court's summary judgment

against her claim. ISSUES I. Did Van Kampen forfeit her right to UIM coverage by settling her claim against Brey and Rispens Seeds without receiving payment? Did Van Kampen forfeit her right to UIM coverage by failing to give the UIM insurers adequate notice of the proposed settlement? 4

II.

ANALYSIS On appeal from summary judgment, we determine whether there are any genuine issues of material fact and whether a party is entitled to judgment as a matter of law. Minn. R. Civ. P. 56.03; Yang v. Voyagaire Houseboats, Inc., 701 N.W.2d 783, 788 (Minn. 2005). In assessing the evidence, we take the view most favorable to the party against whom judgment was granted. Motorsports Racing Plus, Inc. v. Arctic Cat Sales, Inc., 666 N.W.2d 320, 323 n.1 (Minn. 2003). But if the nonmoving party fails to raise a material issue of fact on any element essential to establishing its case, summary judgment is appropriate. Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn. 1995). This case is about the subrogation rights of underinsured-motorist insurers. Subrogation is "the remedy by which, when the property of one person is used to discharge a duty of another . . . , under such circumstances that the other will be unjustly enriched by the retention of the benefit thus conferred, the former is placed in the position of the obligee." Restatement (Third) of Suretyship and Guaranty

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