Minn. Supreme Court: No Dismissal in Negligence Case Against Agent

The Minnesota Supreme Court has refused to dismiss a lawsuit against an insurance agent over “negligent procurement of insurance coverage.”

Robert M. Swendra of the Robert M. Swendra Agency Inc. representing American Family Insurance Group sold Curtis Graff, a police officer, an automobile policy that Graff believed contained $100,000 in underinsured motorist (UIM) coverage and an umbrella policy that included an additional $1 million in UIM coverage, according to Justice Page, who wrote the opinion of the Court.

Graff said he bought the coverage on Swendra’s advice. At court, Robert Swendra denied offering that advice.

After purchasing the policy, Graff injured his back in a traffic accident with an underinsured motorist. His career as a police officer ended and he underwent two surgical operations. After the second surgery he found that the umbrella policy did not include an additional $1 million in UIM coverage, “because Robert Swendra had not arranged for the necessary endorsement that would have provided the additional UIM coverage,” Page wrote.

Graff sued, alleging breach of contract against American Family and negligent procurement of insurance coverage against the Swendra Agency. He settled with American Family, releasing it from future claims, and the insurer was dismissed from the case.

The Swendra Agency also sought dismissal, “arguing that the release of American Family also released the Swendra Agency; or, in the alternative, that Graff’s claim failed because of circular indemnity,” Page wrote.

A trial jury sided with Graff, attributing 90 percent of the fault to Swendra and 10 percent to the insurer and awarding $753,000 in damages. The district court reduced the amount to $200,260, after considering settlements Graff made with American Family and two workers’ compensation insurers.

The district court refused to dismiss the case against Swendra, as did the appeals court. The state Supreme Court also refused to dismiss.

Graff’s claim against American Family was for breach of contract and against Swendra it was for negligence. “We fail to see how, in this case, Graff’s settlement releasing American Family and dismissing the breach-of-contract claim against American Family would, by itself, preclude the ongoing viability of Graff’s negligence claim against the Swendra Agency, particularly when Robert Swendra denied that he had made any representations to Graff about the UIM coverage in the umbrella policy,” Justice Page wrote.