from the District Court of Grand Forks County, Northeast
Central Judicial District, the Honorable Donald Hager, Judge.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
E. Johnson (argued) and Jared J. Hines (appeared), Fargo, ND,
for creditor and appellee.
E. Olson (argued) and H. Morrison Kershner (appeared), Fergus
Falls, MN, for garnishee and appellant.
1] United Fire & Casualty Company appeals from a district
court judgment awarding Carol Forsman $249, 554.30 in her
garnishment action against United Fire, commenced after she
settled claims in the underlying suit against Blues, Brews
and Bar-B-Ques, Inc., d.b.a. Muddy Rivers. We conclude the
court erred in granting summary judgment because material
fact issues exist on whether exclusions for "assault and
battery" and "liquor liability" in the
commercial general liability ("CGL") policy exclude
coverage of Forsman's negligence claim against Muddy
Rivers. We further conclude the court properly granted
summary judgment to Forsman holding United Fire had a duty to
defend Muddy Rivers under the CGL policy in the underlying
suit. We affirm in part, reverse in part and remand for
2] Muddy Rivers is a bar in Grand Forks that was insured by
United Fire under a CGL policy. In 2010, Forsman sued Muddy
Rivers and Amanda Espinoza seeking damages for injuries to
her leg allegedly sustained while a guest at a February 2010
private party at Muddy Rivers. Muddy Rivers notified United
Fire of the suit and requested coverage. United Fire denied
defense and indemnification based on the policy's
exclusions for assault and battery and liquor liability. In
2011, the district court held a trial on Forsman's
claims. After Forsman rested her case, the district court
granted Muddy Rivers' motion for judgment as a matter of
law, dismissing Forsman's claims. Forsman appealed.
3] In Forsman v. Blues, Brews and Bar-B-Ques, Inc.,
2012 ND 184, ¶¶ 1, 19, 820 N.W.2d 748
("Forsman I"), we reversed and remanded, concluding
Forsman presented sufficient evidence on her dram shop and
premises liability claims to defeat Muddy Rivers' motion
for judgment as a matter of law. We summarized relevant facts
adduced at trial as follows:
"At trial, Forsman called several witnesses who were
present at the party. Forsman presented evidence that Muddy
Rivers provided an open bar for its off-duty employees and
guests, including a 'shot-drinking' contest that was
primarily participated in by off-duty employees. Solberg, the
bar manager, testified he was at the party and participated
in the contest. Solberg also testified Muddy Rivers used
three bartenders at the party, including a regular customer
and his son, but Solberg did not supervise the bartenders.
" Forsman testified she was helping Richard Martin,
a Muddy Rivers' employee attending the party, care for an
intoxicated person, Rose Christianson, when Espinoza's
actions resulted in Forsman being pushed to the ground.
Christianson was a Muddy Rivers' employee and had invited
Espinoza to the party. Forsman testified she was 'one
hundred percent sure' Espinoza pushed her off her chair
to the ground, resulting in a leg fracture. According to
Forsman, she was not able to get up and two Muddy Rivers'
employees thereafter grabbed Espinoza. Martin testified he
heard a 'voice say something to the effect of "What
are you doing to my friend?"' and heard a commotion
but did not see what happened. Martin testified he then heard
Forsman ask for help and saw her on the floor. Forsman
testified she saw Espinoza earlier at the party when there
was some 'commotion' and Solberg asked Espinoza to
leave the party, but she did not leave. Forsman also
testified she saw Espinoza drinking beer at Muddy Rivers
earlier that night and 'notice[d]... signs that would
suggest that [Espinoza] was obviously intoxicated.'
Forsman testified she filed a complaint against Espinoza with
the Grand Forks Police Department and two police officers,
Detective Travis Benson and Officer Holweger, investigated
the incident. However, the Grand Forks County State's
Attorney's Office declined to pursue aggravated assault
charges against Espinoza."
Forsman I, at ¶¶ 4-5 (emphasis added).
4] We reversed and remanded, holding Forsman's testimony
raised disputed fact issues under N.D.C.C. § 5-01-06.1
(dram shop law) about whether Muddy Rivers knowingly provided
alcoholic beverages to an obviously intoxicated Espinoza and
whether Espinoza caused Forsman's injuries. Forsman
I, 2012 ND 184, ¶ 11, 820 N.W.2d 748. We also
declined to hold as a matter of law, "on the record in
this case, " that Forsman failed to establish Muddy
Rivers breached a duty of care for premises liability under
N.D.C.C. § 9-10-06 (requiring a person to exercise
ordinary care or skill in the management of the person's
property). Forsman I, at ¶¶ 12-14. We
specifically held Forsman could pursue her negligence claim
for premises liability against Muddy Rivers on remand.
Id. at ¶ 14. Before a new trial was held on
remand, Forsman and Muddy Rivers settled the case with a
Miller-Shugart agreement, in which Muddy Rivers
admitted negligence and liability but limited collection on
the judgment to Muddy Rivers' insurer, United Fire.
See Miller v. Shugart, 316 N.W.2d 729
(Minn. 1982); Sellie v. N.D. Insur. Guar.
Ass'n., 494 N.W.2d 151 (N.D. 1992) (recognizing
Miller-Shugart settlements in North Dakota). The
district court entered judgment against Muddy Rivers based on
the agreement. Forsman subsequently obtained a default
judgment against Espinoza.
5] In April 2016, Forsman moved the district court for leave
to file a supplemental complaint seeking garnishment against
United Fire, which was granted. She moved for partial summary
judgment, asserting the United Fire CGL policy provides
coverage for her premises liability claim against Muddy
Rivers. United Fire made a cross-motion for summary judgment
on its duty to defend and indemnify under the CGL policy,
arguing no coverage exists based on the policy's assault
and battery exclusion. Forsman responded, contending coverage
was not precluded under either the assault and battery
exclusion or the liquor liability exclusion.
6] The district court granted partial summary judgment in
favor of Forsman, concluding the CGL policy provided coverage
for Forsman's claims against Muddy Rivers and obligating
United Fire to defend Muddy Rivers. The court based its
coverage decision on this Court's earlier decision in
Forsman I that held Forsman could pursue her
negligence claim for premises liability against Muddy Rivers.
2012 ND 184, 820 N.W.2d 748. In November 2016, the court held
a trial on the reasonableness of the Miller-Shugart
settlement. The court ruled in Forsman's favor, finding
the settlement amount was reasonable and entering judgment
against United Fire for $249, 554.30.
7] At the outset, we discuss the effect of the parties'
Miller-Shugart agreement and judgment establishing
Muddy Rivers' liability on the present garnishment
proceedings against United Fire. In Medd v. Fonder,
543 N.W.2d 483, 485 (N.D. 1996), we explained:
"Under Miller v. Shugart, 316 N.W.2d 729 (Minn.
1982), an insured defendant may stipulate for settlement of a
plaintiff's claims and stipulate judgment may be
collected only from the proceeds of any insurance policy,
with no personal liability to the defendant. The
stipulated judgment is not conclusive on the insurer.
The plaintiff judgment creditor must show the settlement was
reasonable and prudent."
(Emphasis added.) As the court in Nelson v. Am. Home
Assur. Co., 702 F.3d 1038, 1041 (8th Cir. 2012),
"While a Miller-Shugart judgment settles the
issue of the underlying defendant's liability to the
plaintiff, it does not resolve the question of whether the
insurance policy provides coverage for that liability.
Rather, coverage is a threshold issue that the court must
address before deciding whether the stipulated judgment is
enforceable. Corn Plus Coop. v. Cont'l Cas. Co.,
516 F.3d 674, 678-79 (8th Cir. 2008); Alton M. Johnson
Co. v. M.A.I. Co., 463 N.W.2d 277, 279 (Minn. 1990)
('[I]f there is found to be no coverage for the
Miller-Shugart judgment, that ends the
8] Even though Forsman and Muddy Rivers stipulated to the
underlying judgment resolving Forsman's negligence claim
against Muddy Rivers, this determination is not conclusive on
United Fire. See McPhee v. Tufty, 2001 ND 51, ¶
10 n.1, 623 N.W.2d 390; Rebel v. Nodak Mut. Ins.
Co., 1998 ND 194, ¶ 5 n.1, 585 N.W.2d 811. On
appeal, United Fire contends the CGL policy does not provide
coverage for Forsman's underlying claims, and United Fire
has not specifically raised any other issues regarding the
reasonableness of the settlement. Although United Fire has
not raised other issues about the settlement's
reasonableness, Forsman still must establish the CGL policy
provides coverage for her negligence claim against Muddy
9] Our standard for reviewing summary judgment is
"Summary judgment is a procedural device for the prompt
resolution of a controversy on the merits without a trial if
there are no genuine issues of material fact or inferences
that can reasonably be drawn from undisputed facts, or if the
only issues to be resolved are questions of law. A party
moving for summary judgment has the burden of showing there
are no genuine issues of material fact and the moving party
is entitled to judgment as a matter of law. In determining
whether summary judgment was appropriately granted, we must
view the evidence in the light most favorable to the party
opposing the motion, and that party will be given the benefit
of all favorable inferences which can reasonably be drawn
from the record. On appeal, this Court decides whether the
information available to the district court precluded the
existence of a genuine issue of material fact and entitled
the moving party to judgment as a matter of law. Whether the
district court properly granted summary judgment is a
question of law which we review de novo on the entire
K & L Homes, Inc. v. Am. Family Mut. Ins. Co.,
2013 ND 57, ¶ 7, 829 N.W.2d 724 (quoting Tibert v.
Nodak Mut. Ins. Co., 2012 ND 81, ¶ 8, 816 N.W.2d
10] Insurance policy interpretation is a question of law,
which is fully reviewable on appeal. K & L
Homes, 2013 ND 57, ¶ 8, 829 N.W.2d 724. This Court
independently examines and construes the insurance contract
to decide whether coverage exists. Id.; see also
Grinnell Mut. Rein. v. Thies, 2008 ND 164, ¶ 7, 755
N.W.2d 852. As with other contracts, this Court construes
insurance policy language to give effect to the parties'
mutual intention at the time of contracting:
"We look first to the language of the insurance
contract, and if the policy language is clear on its face,
there is no room for construction. If coverage hinges on an
undefined term, we apply the plain, ordinary meaning of the
term in interpreting the contract. While we regard insurance
policies as adhesion contracts and resolve ambiguities in
favor of the insured, we will not rewrite a contract to
impose liability on an insurer if the policy unambiguously
precludes coverage. We will not strain the definition of an
undefined term to provide coverage for the insured. We
construe insurance contracts as a whole to give meaning and
effect to ...