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Two guaranty associations agreed to provide coverage and defense for an
insured (in an underlying action) of the insolvent insurer Excalibur Insurance
Co. That insured’s claim for defense and indemnity in the underlying action
was denied, and the court in that case found they had no duty to indemnify
the insured. The two guaranty associations attempted to subrogate and to
recover defense costs, but the lower court denied their motions. In the
present case on appeal, the court affirmed the lower court’s findings that
there was no coverage for the insured under the policy. The appellants also
were unsuccessful in their argument that the Minnesota Commerce
Commissioner was estopped from recommending the denial of their
reimbursement claim. The Court found that public policy compelled no such
application of estoppel, because the ultimate determination of coverage
belonged to the trial court, not the Commissioner.
Maxwell Communications, et al. v. Webb Publishing Co., 518 N.W.2d 830
(Minn. 1994). Four employees sustained compensable injuries and received
workers’ compensation from their employers’ insurance carriers. Each
employee had also been injured previously during another period in which
his or her employer had been covered by a carrier that became insolvent.
The solvent carriers sought reimbursement or contribution for the claims
they covered. The Supreme Court found that all claims in the appeal were
made after a 1988 amendment to the state’s guaranty statute. The statute
excluded from the definition of “covered claim” those claims due to a
reinsurer, insurer, insurance pool, or underwriting association. The Court
found that the amounts claimed as reimbursement or contribution were also
excluded from the statute.
Wirth, et al. v. M.A. Mortenson/Shal Associates., 520 S.W.2d 173 (Minn. Ct.
App. 1994). The Plaintiff in the trial action was injured while on a work site.
His subcontractor‐employer was covered by an insurer who became
insolvent. A second insurer assumed the carrier’s obligations. The Plaintiff
later sued the general contract of the work sit where he was injured for
negligence. The new insurer intervened and asserted a subrogation claim
against the contractor. The Defendant‐Appellant later filed a third‐party
contribution/indemnity action against the original subcontractor‐employer.
Because the subcontractor’s initial insurer was insolvent, the Minnesota
Insurance Guaranty Association assumed the insurer’s defense and won
summary judgment against the Defendant‐Appellant.
The Court, in this appeal by the Defendant, found that the Guaranty
Association had the statutory right to pursue subrogation claims and that
the district court did not err in allowing them to do so in the present case.
Furthermore, the Court found that federal and state due process
requirements were met and there was no violation of Defendant’s equitable
rights.
Missouri
Alvey Inc. v. Missouri Ins. Guar. Ass’n, 922 S.W. 2d 804 (Mo. Ct. App. E.D.
1996). The insured of insolvent insurer Integrity Insurance Company was not
barred from settling a claim and seeking recovery from the Missouri
Insurance Guaranty Association. The court held that the Integrity policy
provision requiring the Integrity’s consent to settlement of the claim did not
bar the insured from settling and seeking reimbursement from MIGA from
the portion of the settlement for which MIGA is liable. The court held that
“where the potential for liability of the insured has differed from MIGA’s
obligations under the statute so that no reasonable person could expect
MIGA to effect a settlement, the underlying provision of the policy which
requires consent of the insurer to settle does not provide a policy defense to
MIGA on a claim arising from a settlement so long as the claim has been
presented to MIGA prior to settlement and it has been afforded the