author: DANIEL F. FOLEY, Judge.

text:
    Dipchan KISSOONDATH, Ann Kissoondath and Michael Heinonen, as assignees of James LaBosco, J.D. Sandstone, and J.D. Sandstone, Inc., Appellants, v. UNITED STATES FIRE INSURANCE COMPANY, d/b/a Crum & Forster Commercial Insurance Company, a foreign corporation, Respondent.
    No. C4-00-698.
    Court of Appeals of Minnesota.
    Jan. 23, 2001.

      Michael Lewis Weiner, Christopher J. Moreland, Yaeger, Jungbauer, Barczak, Roe & Vucinovich, PLC, Minneapolis, MN, for appellants.
    William M. Hart, Richard L. Pemberton, Jr., Melissa Dosick Riethof, Erica Gut-mann, Strohl, Meagher & Geer P.L.L.P., Minneapolis, MN, for respondent.
    Considered and decided by TOUSSAINT, Chief Judge, STONEBURNER, Judge, and FOLEY, Judge.
   OPINION

DANIEL F. FOLEY, Judge.

Appellants assert that the district court committed reversible error in their bad faith claim against respondent insurer by not instructing the jury on the fiduciary duty owed by an insurer to the insured and by giving the jury an erroneous instruction on “good faith.” Appellants also argue the district court committed prejudicial error when it: (1) excluded this court’s opinion affirming the verdict in the underlying case; (2) admitted evidence of appellants’ underinsured motorist benefits; (3) admitted evidence of an edited videotape of one of the appellants; and (4) permitted respondent’s expert to impeach this court’s opinion that the evidence supported the damages awards in the underlying case. Lastly, appellants argue that the district court committed reversible error when it failed to grant a new trial on the basis that the evidence did not justify the verdict. Because the district court committed reversible and prejudicial error in several respects, we reverse and remand for a new trial.

FACTS

James LaBosco d/b/a J.D.Sandstone, Inc. (insured) was insured by respondent United States Fire Insurance Company d/b/a Crum & Forster Commercial Insurance Company in July 1990 when a taxi owned by J.D. Sandstone, Inc. ran into a parked pickup truck occupied by appellants Dipchan Kissoondath and Michael Heinonen. Appellants (and Kissoondath’s wife, who claimed loss of consortium) sued the taxi driver and J.D. Standstone, Inc. for injuries they allegedly sustained in the accident. Respondent accepted the defense of the claims against insured.

Respondent knew insured would most likely be found liable, but the extent of appellants’ damages was hotly contested. Respondent offered the Kissoondaths $35,000 and $12,000 to Heinonen. Appellants were willing to settle for the $350,000 policy limits. The consolidated cases went to trial. A jury found the taxi driver 100 percent at fault and awarded $1,675,868.00 to Dipchan Kissoondath, $175,000 to Ann Kissoondath, and $432,758.14 to Heinonen. On appeal the verdict was affirmed and we stated: “Although the verdict is large, totaling more than $2 million, the evidence, when viewed in the light most favorable to [appellants], supports the amounts awarded.” Kissoondath v. Ammerman, Nos. C0-95-1346, C7-95-128, 1995 WL 756840, at *2, -N.W.2d-, - (Minn.App. Dec.26, 1995), review granted (Minn. Feb. 12, 1996) and order granting review vacated (Minn. June 19, 1996) (Kissoondath I).

Insured assigned his “bad faith” cause of action against respondent, for failure to protect him from personal liability by settling within policy limits, to appellants. Thereafter, appellants sued respondent, alleging that respondent had breached the fiduciary duty of good faith owed to its insured.

Before trial, respondent moved to exclude evidence of this court’s decision in Kissoondath I, which affirmed the underlying verdict for appellants. Appellants moved to exclude evidence regarding appellants’ underirisured motorist benefits (UIM). Both motions were granted.

At trial, over appellants’ objections, the district court allowed respondent’s expert, Peter Grottodden, to testify that “[t]he [underlying] jury verdict is not supported by the evidence * * ⅜.” Respondent was also allowed to question appellants’ expert witness with respect to the availability and amount of UIM benefits. In addition, over appellants’ objection, the district court allowed the jury to see an edited surveillance video of Heinonen that showed him working. This video had not been shown to the jury in the underlying trial because it consisted of only about 40 minutes edited from five hours of tape. In the underlying trial, the district court had ruled that the jury should see all five hours or nothing, whereupon counsel for insured opted not to introduce the tape.

Appellants submitted a proposed jury instruction on “good faith” that included (1) language concerning the insurer’s fiduciary duty to an insured; (2) a definition of a fiduciary relationship and a fiduciary duty; and (3) a list of the insurer’s specific obligations. The instruction concluded with, “[respondent] failed to act in good faith towards its insureds if it failed to perform any of the above duties.” The district court denied the requested instruction. The “good faith” instruction given by the district court omitted any reference to fiduciary duty, listed the specific duties of the insurer, and concluded:

No one factor in and of itself is determinative of a breach. All factors taken together must lead you to believe that the insurance company breached its duty of good faith in order to answer question number 1 on the jury verdict form “yes.”

By special verdict, the jury concluded that respondent did not breach its duty of good faith by failing to settle appellants’ claims within the policy limits of the insured.

Appellants moved for a new trial arguing that the district court erred (1) in its instruction with regard to an insurer’s duty to its insured under Minnesota law; (2) by admitting the edited surveillance video; (3) by excluding the court’s underlying decision stating that there was substantial evidence supporting the damages award; and (4) by allowing evidence of appellants’ UIM benefits and amounts. Lastly, they argued that the evidence did not justify the verdict. The district court denied appellants’ motion for a new trial and this appeal followed.

ISSUES

I. Did the district court commit reversible error by failing to instruct the jury on “fiduciary duty” in connection with instructing the jury on “good faith” and by implying that an insurer must fail to perform more than one of its obligations to an insured before it can be found not to have acted in good faith?

II. Did the district court commit prejudicial error by permitting respondent’s expert to impeach this court’s opinion affirming the verdict in the underlying case, excluding evidence of this court’s opinion affirming the verdict in the underlying personal injury case, admitting evidence of appellants’ UIM benefits and amounts, and admitting the edited surveillance video?

III. Did the district court commit reversible error by failing to grant a new trial on the basis that the evidence did not justify the verdict in the instant case?

ANALYSIS

We are mindful that a district court’s discretion to grant a new trial will not be disturbed absent a clear abuse of that discretion. Halla Nursery, Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905, 910 (Minn.1990). However, for the reasons stated in this opinion, we hold that the district court abused its discretion by denying appellants’ motion for a new trial. Accordingly, we reverse and remand for a new trial.

I.

Appellants argue that the district court committed reversible error in making certain evidentiary rulings and selecting the language in the jury instructions because the district court failed to follow established case law. Generally, a district court has broad discretion in making evi-dentiary rulings and selecting language in jury instructions. See Kroning v. State Farm Auto. Ins. Co., 567 N.W.2d 42, 45-46 (Minn.1997) (question of whether to admit or exclude evidence is within district court’s discretion); Alholm v. Wilt, 394 N.W.2d 488, 490 (Minn.1986) (allowing trial court’s considerable latitude in determining jury instructions). Nevertheless, a trial court is bound to follow established case law in rendering decisions with regard to the admission or exclusion of evidence and selecting the language in jury instructions. See Greenbush State Bank v. Stephens, 463 N.W.2d 303, 306 n. 1 (Minn.App.1990), review denied (Minn. Feb. 4,1991) (district courts must decide issues in manner consistent with case law).

A. Fiduciary Duty

Appellants argue that the district court committed reversible error when it (1) failed to instruct the jury that an insurer has a fiduciary duty to its insured, and (2) made evidentiary rulings that failed to take into consideration the fiduciary relationship between an insured and its insurer. An “insurer owes a fiduciary duty to the insured to represent his or her best interests and to defend and indemnify.” Short v. Dairyland Ins. Co., 334 N.W.2d 384, 387 (Minn.1983). More importantly, an

insurer’s right to control the negotiations for settlement must be subordinated to the purpose of the insurance contract — to defend and indemnify the insured within the limits of the insurance contract.

Id.

Here, the district court stated that the term “fiduciary duty” in Short was dicta and, therefore, the term was excluded from all aspects of the trial, including expert testimony and jury instructions. See Pecinovsky v. AMCO Ins. Co., 613 N.W.2d 804, 808 (Minn.App.2000), revieiv denied (Minn. Sept. 26, 2000) (dicta not controlling). We disagree with the district court.

Dicta are expressions in a court’s opinion that go beyond the facts before the court and therefore are the individual view of the author of the opinion and not binding in subsequent cases.

Id. (quoting K.R. v. Sanford, 588 N.W.2d 545, 548 (Minn.App.1999), aff'd, 605 N.W.2d 387 (Minn.2000)). The statement in Short that an insurer has a fiduciary duty is more than mere dicta because (1) the issue of what duty is owed to an insured by an insurer was squarely before the court in Short, and (2) the supreme court clearly expressed its opinion. Cf. Pecinovsky, 613 N.W.2d at 808 (language in established case law was dicta where issue was not before, and had not been briefed to, the court). Therefore, we conclude, as stated in Short, that an insurer owes its insured a fiduciary duty to represent the insured’s best interests.

Furthermore, the conclusion that an insurer owes its insured a fiduciary duty is supported by case law in other jurisdictions.

The standard of conduct on the part of the insurer when dealing with claims arising under an insurance policy is shaped by, and must reflect, the quasi-fiduciary relationship that exists between the insurer and the insured by virtue of the insurance contract. Particularly when handling claims of third persons that are brought against the insured, an insurance company stands in a position similar to that of a fiduciary.

Farmers Group, Inc. v. Trimble, 691 P.2d 1138, 1141 (Colo.1984); see also Haddick v. Valor Ins., 315 Ill.App.3d 752, 248 Ill.Dec. 812, 735 N.E.2d 132, 135 (2000) (citing Cernocky v. Indemnity Ins. Co. of North Am., 69 Ill.App.2d 196, 216 N.E.2d 198 (1966) (insurer owes its insured a fiduciary duty)); Overton v. Consolidated Ins. Co., 101 Wash.App. 651, 6 P.3d 1178, 1183 (2000) (same). The fiduciary duty arises because

[i]n the insurance context a special relationship arises out of the parties’ unequal bargaining power and the nature of insurance contracts which would allow unscrupulous insurers to take advantage of their insureds’ misfortunes in bargaining for settlement or resolution of claims.

Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex.1987).

Because case law establishes that an insurer owes its insured a fiduciary duty, the district court was required to make evidentiary rulings and select language for the jury instructions that reflected the fiduciary relationship between an insured and its insurer. See Greenbush, 463 N.W.2d at 306 n. 1 (requiring district courts to render decisions consistent with established case law). The jury had to know about the relationship between the insurer and the insured in order to properly understand the case. The trial court thus committed reversible error when it failed to recognize the law established in Short. See Lindstrom v. Yellow Taxi Co., 298 Minn. 224, 229, 214 N.W.2d 672, 676 (1974) (citations omitted) (error in instructing jury warrants new trial if it “ ‘destroy[s] the substantial correctness of the charge as a wthole,’ cause[s] a miscarriage of justice, or result[s] in substantial prejudice.”); Cloverdale Foods of Minn., Inc. v. Pioneer Snacks, 580 N.W.2d 46, 51-52 (Minn.App.1998) (reversing and remanding for new trial where evidentiary rulings were inconsistent with established law resulting in prejudicial error). Accordingly, we reverse and remand for a new trial.

B. Good Faith

Appellants also argue that the district court erroneously instructed the jury on “good faith.” A jury instruction “must be construed as a whole and tested from the standpoint of its total impact on the jury.” Lindstrom, 298 Minn, at 229, 214 N.W.2d at 676.

The fiduciary duty owed by an insurer to its insured is measured by the standard of “good faith.” Short, 334 N.W.2d at 387.

This duty to exercise “good faith” includes an obligation to view the situation as if there were no policy limits applicable to the claim, and to give equal consideration to the financial exposure of the insured.

Id. at 388. An insurer’s duty of “good faith” is breached when the insured is clearly liable, as here, and when the insurer’s refusal “to settle within the policy limits is not made in good faith and is not based upon reasonable grounds to believe that the amount demanded is excessive.” Id.

In its instruction to the jury on “good faith,” the district court stated:

In order to carry out this duty, the insurer should: fully investigate a claim, fairly evaluate the claim against the insured, inform the insured of the consequences of a judgment that exceeds the limits of the policy, inform the insured of the potential conflict of interest of the insured and the insurer if the case has a settlement value in excess of the policy limits, and inform the insured of settlement offers, and other pertinent information of the claim to the insured.
A mere error in judgement by the insurer does not in and of itself constitute a breach of the duty of good faith. No one factor in and of itself is determinative of a breach. All factors taken together must lead you to believe that the insurance company breached its duty of good faith in order to answer question number 1 on the jury verdict form “yes.”

Appellants argue that the court’s instruction that “no one factor in and of itself is determinative of a breach,” is an incorrect statement of law.

In cases where the insured is clearly liable, it has been established that any one factor in and of itself may be determinative of a breach of the duty of good faith. See Short, 334 N.W.2d at 389 (evidence of failure to communicate settlement offer to insured supports finding of bad faith by insurer); see also Lange v. Fidelity & Cas. Co., 290 Minn. 61, 67-68, 185 N.W.2d 881, 885-86 (1971) (same); Boerger v. American Gen. Ins. Co., 257 Minn. 72, 76-77, 100 N.W.2d 133, 136-37 (1959) (finding insurer breached duty of good faith where attorney for insurer failed to properly evaluate claim). Because case law has established that the failure of an insurer to perform any one factor alone may constitute a breach of the duty of good faith, the district court was required to instruct the jury as such. See Kirseborn v. Connelly, 486 N.W.2d 172, 175-76 (Minn.App.1992) (district court required to instruct jury on applicable law).

Here, however, the instruction given by the district court erroneously implied that the jury had to find that the insurer failed to perform more than one of its obligations before it could be found to have acted in bad faith. This implication destroyed the substantial correctness of the instruction. Accordingly, the district court committed substantial prejudicial error by failing to properly instruct the jury and a new trial is warranted.

II.

In addition to the previously discussed evidentiary errors, appellants argue that the district court erred when it admitted the following into evidence: (1) expert testimony that attempted to impeach this court’s ruling in Kissoondath I; (2) a videotape that attempted to impeach this court’s ruling in Kissoondath I; and (3) testimony regarding the existence of, and the amount of, underinsured motorist (UIM) coverage available. As previously stated, a district court has broad discretion in making evidentiary rulings. Kroning, 567 N.W.2d at 45-46. “Entitlement to a new trial on the grounds of improper evi-dentiary rulings rests upon the complaining party’s ability to demonstrate prejudicial error.” Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn.1990) (citation omitted).

A. Expert Testimony

Appellants argue that the district court committed prejudicial error by permitting respondent’s expert to testify that the evidence did not support the jury verdict in the underlying case when this court, in Kissoondath I, had affirmed the jury verdict.

[W]hen a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.

In re Welfare of M.D.O., 462 N.W.2d 370, 375 (Minn.1990) (quoting Arizona v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 1391, 75 L.Ed.2d 318 (1983)). Therefore, when an appellate court has ruled on an issue, “the issue decided becomes the ‘law of the case’ and may not be relitigated * * * or re-examined * * Sylvester Bros. Dev. Co. v. Great Cent. Ins. Co., 503 N.W.2d 793, 795 (Minn.App.1993), review denied (Minn. Sept. 30, 1993) (citations omitted).

In an unpublished opinion, this court concluded that there was evidence reasonably tending to support the damage awards in the underlying case. See Kis-soondath I, Nos. C0-95-1346, C7-95-128, 1995 WL 756840 at *5, — N.W.2d -. That is the law of this case and, therefore, the issue of whether the evidence supported the damages award may not be reexamined. See Sylvester, 503 N.W.2d at 795-96 (“conclusion that the triggering event was the release of contaminants” could not be re-examined because it had been previously decided upon in earlier appeal).

Respondent, however, called its expert, Peter Grottodden, to testify that “[t]he jury verdict is not supported by the evidence in the tax returns.” In light of the fact that Grottodden’s testimony contradicted this court’s conclusion in Kis-soondath I, the district court should have admitted into evidence this court’s unpublished opinion and given a cautionary instruction. Cf. Regents of Univ. of Minn. v. Medical, Inc., 382 N.W.2d 201, 208-09 (Minn.App.1986), review denied (Minn. Apr. 18, 1986) (upholding district court’s decision to exclude court’s opinion where expert’s testimony consistent with decision reached in court’s opinion). Without this evidence, the jury was left with the impression, as provided by Grottodden, that the evidence did not support the underlying verdict. Not only is Grottodden’s opinion contrary to the law of this case, but the opinion had nothing to do with the respondent’s knowledge prior to the underlying personal injury trial and this was clearly known by the insurance company. Because Grottodden’s testimony was allowed to impeach this court’s prior decision in the underlying personal injury cases, the district court committed reversible and prejudicial error.

B. Edited Surveillance Video

For the same reasons that Grot-todden’s testimony re-examining the issue of the damages award in the underlying trial was prejudicial error, the admission of the edited surveillance tape, which challenged the underlying damages award, constituted prejudicial error. Respondent clearly used the video to attempt to show that the evidence did not support the damages awarded in the underlying case. But, as previously stated, once an issue has been reviewed and decided upon by this court, the issue may not be re-examined in district court. Sylvester, 503 N.W.2d at 795. Because this court had already determined in Kissoondath I that the evidence supported the damages awarded in the underlying case, a videotape challenging that conclusion should not have been admitted into evidence. Moreover, there is no evidence to support the proposition that respondent was justified in relying on an edited version of the tape in evaluating appellants’ claims. Therefore, we conclude that the admission of the videotape resulted in prejudice to appellants because it invited the jury to conclude, contrary to the holding of this court, that the evidence did not support the underlying verdict.

C. UIM Evidence

Appellants argue that the district court erred and prejudiced them by permitting the introduction of evidence of appellants’ UIM benefits, despite a pretrial motion in limine ruling excluding all reference to such benefits during trial. It has been established that where the existence of insurance is irrelevant to the issues being considered, the admission of evidence regarding the existence of insurance may serve as a basis for a new trial. Jeddeloh v. Hockenhull, 219 Minn. 541, 554, 18 N.W.2d 582, 589 (1945) (reversing and remanding for new trial where district court erroneously admitted evidence of insurance); see also Minn.R.Evid. 411 (proscribing reference to insurance where it is not related to issues before court).

Here, the district court, over strenuous objection, permitted respondent to question one of appellants’ experts regarding the availability of UIM benefits. The following is only a portion of the testimony related to UIM benefits:

[RESPONDENT’S COUNSEL]: Did you review the file to confirm that indeed there was $500,000 in underinsured motorist coverage?
[APPELLANTS’ EXPERT]: I don’t know what the number was.
[RESPONDENT’S COUNSEL]: Mr. Nolan, if indeed the case has an actual value in excess of $350,000.00, does not the [appellant] benefit from taking the case to trial, collecting an excess verdict, and then having a binding judgment that would be enforceable against the under-insured motorist carrier?

[OBJECTION].

Respondent also referred to UIM benefits in closing arguments, stating:

Keep in mind in this case that the [appellants] * ⅜ ⅜ did have available to them underinsured motorist coverage, that is coverage that comes into play if there is an excess verdict, a verdict in excess of the available policy limits. But in this case, if they had gone to excess verdict, they would have had an airtight ease against the underinsured motorist carrier to settle that claim.

However, appellants’ UIM benefits played no role in respondent’s investigation or evaluation in the underlying case, and there is no evidence in respondent’s files or in the trial testimony in the previous trial to show otherwise. Therefore, appellants’ UIM benefits were irrelevant and were properly excluded by a pretrial order. See Jeddeloh, 219 Minn. At 554, 18 N.W.2d at 589 (testimony regarding insurance to be irrelevant and prejudicial where it did not relate to issue before jury).

The district court gave a watered-down cautionary instruction concerning other coverage available to a party, but then it permitted respondent’s counsel to continue the reference to UIM coverage by cross-examination and final argument. As a result, the introduction of the UIM evidence inescapably influenced the jury to believe that appellants could pursue UIM benefits, and thus, would be adequately compensated. This evidence unquestionably prejudiced appellants. See id. (finding testimony related to insurance prejudicial because jury was led to believe that injured party would be adequately compensated by insurance proceeds). Accordingly, allowing respondent to present evidence on the availability and amounts of appellants’ UIM benefits was clear error by the district court compelling a new trial.

III.

Appellants further argue that the district court committed reversible error by failing to grant a new trial on the basis that the evidence did not justify the verdict. A new trial may be granted on the ground that the evidence does not justify the verdict. Minn.R.Civ.P. 59.01(g) (2000); Hauenstein v. Loctite Corp., 347 N.W.2d 272, 275 (Minn.1984). The evidence must be viewed in “the light most favorable to the verdict,” and must be viewed as a whole. Hauenstein, 347 N.W.2d at 275.

Here, the evidence, even when viewed in a light most favorable to the verdict, does not support the jury’s special verdict that respondent did not breach its duty of good faith by failing to settle appellants’ claims within the policy limits of insured. The record demonstrates that respondent failed to materially inform and continually communicate with insured regarding the settlement offer and the likelihood of an excess verdict. Respondent’s counsel only advised insured of a “theoretical risk” of an excess verdict, when in fact he was obligated to advise insured, in detail, as to the implications of an excess verdict. See Lange, 290 Minn, at 68, 185 N.W.2d at 886 (Minn.1971). In Lange, the supreme court stated:

This obligation of counsel retained by the insurer is not fulfilled merely by an explanation which amounts to no more than assurances to the insured that his interests are being zealously and faithfully protected by experienced counsel, but rather by laying bare the truth — not only of the potential consequences of a deficiency judgment but of the potential conflict between the interests of the carrier and the insured — in the manner in which the insured would be advised if he consulted private counsel.

Id. Because respondent did not inform its insured of (1) the estimated dollar amount that the insured would be exposed to in the event of an excess judgment, and (2) the likelihood of an excess judgment, respondent did not proceed in good faith. See id. (finding lack of good faith by insurer where insurer did not inform its insured that he would be exposed to an excess judgment of $4,000). Accordingly, the district court committed reversible error and a new trial is warranted.

DECISION

In denying appellants’ motion for a new trial, the district court erred in (1) failing to instruct the jury on “fiduciary duty,” and implying that an insurer must fail to perform more than one of its obligations to its insured to be found to have acted in bad faith; (2) allowing evidence that attempted to impeach this court’s prior decision in Kissoondath I; (3) allowing evidence of appellants’ UIM benefits to be presented and argued to the jury; and (4) finding that there was substantial evidence to support the verdict. The errors were prejudicial; therefore, a new trial is required.

Reversed and remanded.

       Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const, art. VI, § 10.


source: Caselaw Access Project

author: CRIPPEN, Judge

license: Public Domain

text:
    In re the Marriage of Kjersti Susanna HARDING, n/k/a Kjersti Harding Francis, Petitioner, Appellant, v. Thomas Leigh HARDING, Respondent.
    No. C3-00-918.
    Court of Appeals of Minnesota.
    Jan. 23, 2001.

      Susan M. Lach, Messerli & Kramer, P.A., Minneapolis, MN, for appellant.
    Eric J. Magnuson, Steven B. Schmidt, Gregory P. Wilken, Rider, Bennett, Egan & Arundel, L.L.P., Minneapolis, MN, for respondent.
    Considered and decided by CRIPPEN, Presiding Judge, RANDALL, Judge, and KALITOWSKI, Judge.
   OPINION

CRIPPEN, Judge

Kjersti Susanna Harding’s appeal requires that we address the right of a party to obtain the reopening of a divorce judgment under Minn.Stat. § 518.145, subd. 2(5) (2000), which states that the court may relieve a party from a marriage-dissolution decree where “it is no longer equitable that the judgment and decree or order should have prospective application.” The trial court denied appellant’s motion to reopen the dissolution judgment and she now asserts that she is entitled to a reopening because a post-judgment, income-tax determination substantially altered the tax consequences anticipated by the parties and, more importantly, the actual value of the principal marital assets that were the subject matter of the marital-termination agreement. We reverse and remand for further proceedings.

FACTS

The parties were married in 1990 and started a business that was organized as a Subchapter S corporation. Each party received a 50% share of the corporate profits, and appellant wife served as the company’s chief financial officer.

In October 1997, appellant petitioned to dissolve the marriage. Shortly thereafter, the parties negotiated a martial-termination agreement, which they signed in January 1998, and on which judgment was entered in April 1998. The judgment awarded appellant $224,000 for her 50% share of the business and provided that the parties would file joint state and federal income tax returns for 1997, sharing equally any resulting refunds or liabilities, which typically amounted to a small refund.

In May 1999, the Internal Revenue Service audited the business, causing the company to change its method of accounting from the cash method to the accrual method. This change resulted in a federal tax liability of $56,229.86 for 1996 and $89,785.03 for 1997, including interest through August 6, 1999, and a state tax liability of $25;000. Because the parties had filed joint income tax returns through 1997, the tax liability on the business for the years 1996 and 1997 became a joint liability.

In December 1999, appellant brought a motion to vacate the marital-termination agreement and reopen the judgment alleging that she entered into the agreement under “severe duress and threat, which misled the Court and render[ed] the settlement unreasonable and unfair.” Appellant also sought court permission to conduct discovery regarding the value of the business and to reserve the issue of reopening the judgment pending discovery.

In March 2000, the trial court denied appellant’s motion. The court found that the circumstances of the case did not “compel reopening the Decree on the grounds of duress” and stated that there was “no evidence indicating that [husband] committed a fraud on the Court.” This appeal followed.

ISSUE

Did the trial court err by refusing to reopen the divorce judgment on the basis that it is no longer equitable that the judgment have prospective application?

ANALYSIS

The trial court’s decision refusing to reopen a judgment “will not be disturbed absent an abuse of discretion.” Kornberg v. Kornberg, 542 N.W.2d 379, 386 (Minn.1996) (citations omitted). When a divorce judgment is entered pursuant to a stipulation, the stipulation merges into the judgment and decree and “finality becomes of central importance.” Shirk v. Shirk, 561 N.W.2d 519, 522 (Minn.1997). “The sole relief from the judgment and decree lies in meeting the requirements of Minn.Stat. § 518.145, subd. 2 [ (2000) ].” Id. MinmStat. § 518.145, subd. 2 elaborates slightly on the traditional standards of “mistake, fraud, or duress.” Hestekin v. Hestekin, 587 N.W.2d 308, 310 (Minn.App.1998) (citation omitted).

Although Minnesota courts have routinely considered the appropriateness of vacating or reopening a divorce decree under clauses (l)-(3) of the statute, no court has needed to address this course of action under clause (5) of the statute.

In 1988, the Minnesota legislature incorporated language from Minn.R.Civ.P. 60.02 to create what is now subdivision 2 of Minn.Stat. § 518.145. As a result, subdivision 2 is virtually identical to rule 60.02 except that it does not contain a provision giving the court the open-ended power to grant relief as justice requires. See Shirk, 561 N.W.2d at 522 n. 3 (stating Minn.Stat. § 518.145, subd. 2 “significantly, omits [60.02](f), a provision permitting relief from a final judgment for ‘[a]ny other reason justifying relief from the operation of the judgment’ ”). But the statute incorporates clause (e) of the rule, which allows the court to grant relief if “it is no longer equitable that the judgment * * * have prospective application.” Minn.Stat. § 518.145, subd. 2(5). Because of the similarities between rule 60.02 and subdivision 2, cases citing to rule 60.02 are often used when addressing the application of the statute. See, e.g., Peterson v. Eishen, 512 N.W.2d 338, 341 (Minn.1994) (comparing the rule and statute for purposes of determining whether a motion to vacate was timely), modified on other grounds by Federal-Hoffman, Inc. v. Fackler, 549 N.W.2d 93 (Minn.App.1996), review denied (Minn. Aug. 20,1996).

In the first Minnesota case to address rule 60.02(e), this court looked to federal case law to determine that the provision applied to a judgment involving an injunction where “a significant change in circumstances ma[de] the continued application of the judgment inequitable and turn[ed] the decree into an instrument of wrong.” Jacobson v. County of Goodhue, 539 N.W.2d 623, 625 (Minn.App.1995) (quotation and citations omitted), review denied (Minn, Jan. 12, 1996). The Jacobson court further noted that the provision gave it “broad equitable discretion to modify a judgment in light of changed circumstances.” Id. (citations omitted). Federal courts have interpreted the clause to apply “only ‘to cases where a judgment which was valid and equitable when rendered is rendered prospectively inequitable by subsequent events.” Federal Deposit Ins. Corp. v. Alker, 234 F.2d 113, 116 n. 4 (3d Cir.1956) (citations omitted); see also Zimmerman v. Quinn, 744 F.2d 81, 83 (10th Cir.1984) (affirming lower court’s modification of defendant’s tax liability because it “was necessary to accomplish justice”).

Before us here is the proposition that the divorce judgment should be reopened under Minn.Stat. § 518.145, subd. 2(5), the justification for which is integrated with an argument of mutual mistake. Although appellant largely relies on subdivision 2(5), she uses cases dealing with newly discovered information demonstrating mutual mistake. See Newman v. Fjelstad, 271 Minn. 514, 137 N.W.2d 181 (1965) (personal-injury claim); Spaulding v. Zimmerman, 263 Minn. 346, 116 N.W.2d 704 (1962) (personal-injury claim).

We are mindful that the trial court ordinarily does not have continuing jurisdiction to modify the property division in a divorce judgment due to a change of circumstances. Graff v. Graff, 472 N.W.2d 882, 883-84 (Minn.App.1991) (“Except in cases of fraud or mistake, property divisions are final and not subject to modification.” (citations omitted)), review denied (Minn. Sept. 13, 1991). And mere unforeseen circumstances will not permit a reopening of the judgment. Hestekin, 587 N.W.2d at 310. In this case, appellant contends correctly that something more must be at stake and points to precedent where courts have allowed the reopening of a judgment by reason of mutual mistake where the parties did not intend the release to be final as to unknown injuries. See Newman, 271 Minn, at 519, 137 N.W.2d at 184 (declining to set aside settlement, but reiterating rule that a release for damages may be set aside on the ground of mutual mistake “where it clearly appears that a substantial injury, not discovered until after the settlement, had in fact been sustained in the accident and existed at the time of settlement” (citing Richardson v. Chicago, Milwaukee & St. Paul Ry. Co., 157 Minn. 474, 196 N.W. 643 (1924))).

After scrutinizing the nature of the issue in this case, it is evident that appellant has presented a change in circumstances that is not merely a new set of circumstances or an unforeseen change of a known circumstance. Appellant maintains that the value of the corporate business was different from what it was believed to be when the parties entered into the stipulation. The considerations here concern not just the circumstances of the tax change after the judgment was entered, but rather a tax determination that seriously contradicts what the parties knew about the property when the judgment was made.

Clause (5) is not a catchall provision. But due caution in its application nevertheless leaves us with the conviction that the rule must be employed when injustice in the prospective application of a divorce decree is due to the development of circumstances substantially altering the information on a topic that was accepted earlier, when the subject was addressed in a marital-termination agreement and in an ensuing judgment.

DECISION

We reverse and remand to permit the reopening of the divorce judgment solely to determine a fair and equitable distribution of the corporate stock in Infinity Direct, Inc.

Reversed and remanded for reopening.

      . Before the audit, the parties received tax refunds of $721 for 1996 and $44 for 1997.

      . The trial court did not specifically address the question of whether a post-judgment tax determination had rendered the dissolution judgment inequitable under Minn.Stat. § 518.145, subd. 2(5) (2000). Although this can be explained by the content of appellant's plea to the trial court, we are satisfied that appellant also raised the question of whether the tax determination had rendered the judgment so inequitable that it should have no further application. Appellant initially presented the matter on the theory that relief should be granted based on duress or that duress constituted fraud on the court. See Minn.Stat. § 518.145, subd. 2 (2000) (permitting relief for “other misconduct of an adverse party" or for “fraud upon the court”). The trial court properly determined that no duress or fraud on the court had occurred. But appellant’s duress claim further concluded that "the settlement [was] unreasonable and unfair.” Moreover, she expressly cited to subdivision 2(5) at the hearing on her motion because she was aware that her initial claim based on duress was time-barred. See id. (providing that motions under subdivision 2 must be made within a reasonable time period, except for reasons under clauses (l)-(3), which include mistake, duress, or fraud, that must be brought within a year after entry of the judgment or decree). Finally, appellant fully disclosed to the trial court her concern that a tax determination had rendered mistaken the parties' expectation regarding their income-tax liability and, more importantly, the value of the principal marital assets they had divided by agreement.

      . Minn.R.Civ.P. 60.02 specifies the conditions or situations under which a party may seek relief from a final judgment but specifically excludes marriage-dissolution decrees.

      . Subdivision 2 provides in full:
      On motion and upon terms as are just, the court may relieve a party from a judgment and decree, order, or proceeding under this chapter, except for provisions dissolving the bonds of marriage, annulling the marriage, or directing that the parties are legally separated, and may order a new trial or grant other relief as may be just for the following reasons:
      1. mistake, inadvertence, surprise, or excusable neglect;
      2. newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under the rules of civil procedure, rule 59.03;
      3. fraud, whether denominated intrinsic or extrinsic, misrepresentation, or other misconduct of an adverse party;
      4. the judgment and decree or order is void; or
      5. the judgment has been satisfied, released, or discharged, or a prior judgment and decree or order upon which it is based has been reversed or otherwise vacated, pr it is no longer equitable that the judgment and decree or order should have prospective application.
      The motion must be made within a reasonable time, and for a reason under clause (1), (2), or (3), not more than one year after the judgment and decree, order, or proceeding was entered or taken. A motion under this subdivision does not affect the finality of a judgment and decree or order or suspend its operation. This subdivision does not limit the power of a court to entertain an independent action to relieve a party from a judgment and decree, order, or proceeding or to grant relief to a party not actually personally notified as provided in the rules of civil procedure, or to set aside a judgment for fraud upon the court. Minn.Stat. § 518.145, subd. 2.


author: STONEBURNER, Judge.

text:
    STATE of Minnesota, Respondent, v. Gerard J. COSTELLO, Appellant.
    No. C7-00-436.
    Court of Appeals of Minnesota.
    Jan. 23, 2001.

      Mike Hatch, Attorney General, St. Paul, MN; and Christopher D. Cain, Attorney at Law, Mankato, MN, for respondent.
    John M. Stuart, State Public Defender, Theodora Gaitas, Assistant Public Defender, Minneapolis, MN, for appellant.
    Considered and decided by TOUSSAINT, Chief Judge, STONEBURNER, Judge, and FOLEY, Judge.

       Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const, art. VI, § 10.

   OPINION

STONEBURNER, Judge.

Appellant Gerard J. Costello challenges his convictions of drinking and driving offenses and giving a false name to a peace officer, arguing that he was deprived of a fair trial by an impartial jury because the district court allowed jurors to submit questions for witnesses. Costello also argues that the evidence was insufficient to support his conviction of giving a peace officer a false name. Because we conclude that the questioning process did not violate Costello’s rights and the evidence at trial was sufficient to support his conviction for giving a false name to a peace officer, we affirm.

FACTS

Appellant Gerard J. Costello was charged with two counts of aggravated driving under the influence of alcohol, three counts of driving under the influence of alcohol, driving after cancellation, and giving a false name to a peace officer. During his trial, Costello admitted he drank alcohol and drove his vehicle but raised the defense of necessity, arguing that he left his boarding house in his vehicle to escape an assault. Costello also admitted that he gave a police officer a false name when he was stopped, but claimed he did not intend to obstruct justice because he immediately gave his correct name when the officer warned him that giving a false name to a peace officer was a chargeable offense.

At a pretrial conference, counsel for Costello noted and objected to the district court’s occasional practice of permitting jurors to question witnesses. The prosecutor did not oppose the objection. At Costello’s trial, the district court gave the following preliminary instruction to the jury:

Questions by jurors. In this trial you will be allowed to submit questions for the witnesses. This is a procedure that I’m applying on a case by case basis, so if you’re in another trial, you may not be provided this opportunity. If you have a question for a particular witness, you must write it down. Unless your handwriting is very legible, please print. Don’t sign the question. Signal the bailiff, Who will bring your question to me. Now, keep in mind that your question must be submitted before the particular witness leaves the witness stand. In order to be sure that I’ll not miss a question, before I excuse a witness I’ll try to remember to make a general inquiry of you as to whether you have any questions. Sometimes I forget, so the final burden is on you if you have a question, to make sure that I see your hand. But I also want to stress that it’s not necessary for you to ask any questions, and I’ve had more than one trial where not one question was asked by a juror. All right? So, just an opportunity, that’s all it is. I’ll apply the same rules of evidence to any of your questions that I apply to those asked by the attorneys. If I decide that a particular question cannot be asked, I’ll tell you. You shouldn’t speculate as to why your question was not asked. And if I decide not to ask a particular question, I hope you won’t interpret it as some sort of an adverse reflection upon you or the person asking it. Like I say, it’s an opportunity. You may avail yourself of it; a lot of folks don’t. And if you do, then the same rules apply and I’ll let you know.

The jurors submitted four questions during the trial. The prosecutor objected to one question and it was not asked. The other questions were asked by the district court. The arresting officer was asked:

Q: Officer, when you first saw the pickup, did it appear to be moving with any urgency as if to get away in a hurry?
A: No, it just appeared to be — it just had completed, it looked like, back — when I came around the corner of the house, the stalls are right in the back of the house. There’s like three stalls, apparently, for parking at that house, and I just saw it backing, and then it stopped, and it was just going into gear to go forward, and I put my hand up. And no, it didn’t seem to be moving in any urgency.

Costello’s girlfriend was asked:

Q: I think you answered this question,but did you ever talk to Gerard Costello or warn him in regard to this threat from the Schneider brother[s]?
A: I warned him, yes.

This question was followed up with questions from the district court:

Q: How did you do that?
A: Through his boss, Tim Hansen.
Q: Oh, you talked to Hansen?
A: Yeah.

Costello was asked:

Q: What was your intended destination when you were attempting to leave the parking lot before Officer Padilla stopped you?
A: I had told Padilla that I was only going to go down about a half a block and park the truck and walk from there.

Counsel for Costello did not object to any of the questions submitted by jurors and was allowed to engage in follow-up questioning in response to juror’s questions. He argued in closing with regard to the question about urgency, that Costello was “just starting out.” The prosecutor made no reference to the juror’s questions in closing argument.

Costello was convicted of aggravated driving under the influence of alcohol (driving under the influence of alcohol within five years of a prior conviction), driving with an alcohol concentration of .20 or more as measured within two hours of driving, driving after cancellation, and giving a false name to a peace officer. He appeals, arguing that the process of allowing jurors to question witnesses deprived him of a fair trial and that the evidence was insufficient to support a determination that he intended to obstruct justice by giving a false name to a peace officer.

ISSUES

1. Did the district court’s procedure in allowing jurors to question witnesses deprive Costello of a fair trial by an impartial jury?

Was the evidence sufficient to support Costello’s conviction of giving a false name to a peace officer?

ANALYSIS

1. Juror questions

Costello does not argue that the specific questions asked in this case were prejudicial. He argues that the process itself caused him to have a trial that was considerably different in quality from the trials of most other defendants in Minnesota and deprived him of a fair trial by an impartial jury. Costello argues that a district court cannot implement a “local practice,” relying on Minn.R.Crim.P. 1.03, which provides:

Any court may recommend rules governing its practice not in conflict with these rules or with the General Rules of Practice for the District Courts and those rules shall become effective as ordered by the Supreme Court.

No rule specifically allows or prohibits juror questions to witnesses. In State v. Crawford, 96 Minn. 95, 104 N.W. 822 (1905), the Minnesota Supreme Court affirmed a first-degree murder conviction, finding no abuse of discretion when the district court allowed a petit juror to question a witness directly. The supreme court noted the defense counsel’s failure to object to the juror’s questioning, the fact that the juror’s questions had already been essentially covered in earlier questioning, and the overwhelming amount of evidence supporting the verdict. Id., at 100, 104 N.W. at 824. The Crawford court commented, however, that there is ordinarily no occasion for a jury member to interrogate a witness. Id.

The majority of jurisdictions that have addressed the issue have held that permitting jurors to question witnesses lies within the sound discretion of the district court. Some of these jurisdictions expressly approve of jurors asking questions, while others discourage the practice. “All, however, agree that it is a matter within the trial court’s discretion and that generally a verdict will not be reversed absent a showing of prejudice.” State v. Hays, 256 Kan. 48, 883 P.2d 1093, 1098 (1994) (citing 30 cases).

Nebraska and Texas are apparently the only jurisdictions that prohibit any juror questioning of witnesses. See State v. Zima, 237 Neb. 952, 468 N.W.2d 377, 380 (1991); Morrison v. Texas, 845 S.W.2d 882, 889 (Tex.Crim.App.1992) (en banc). In Morrison, the Texas Court of Criminal Appeals prohibited the practice of juror questioning of witness, agreeing with the defendant that juror questions amount to a form of communication between jurors and the parties, which calls into question the integrity of the adversary system. 845 S.W.2d at 884. The Texas Court of Criminal Appeals stated:

To allow our adversary system to travel, without prior authorization, unregulated by statute or rule, in the direction encouraged by the trial court’s practice is inconsistent with the principles underlying the system. Further, the dangers inherent in such a practice cannot be adequately circumvented by the imposition of procedural safeguards.

Id.

In Zima, the Supreme Court of Nebraska prohibited juror questioning of witnesses. 468 N.W.2d at 380. The Nebraska Supreme Court was primarily concerned about what effect juror questioning may have, or appear to have, on juror impartiality and concluded that a change in the traditional system “does not on its face suggest a fairer or more reliable truth-seeking procedure.” Id. at 380.

The procedure used by the district court in the instant case eliminated: (1) any risk that an attorney would be forced to make an objection to a question in front of the inquiring juror, thereby offending the juror; (2) the problem of a juror asking a question prohibited by the rules of evidence; and (3) any tension or antagonism that could result from direct questioning. Remaining risks that have been identified by other jurisdictions are (1) that other jurors may become aware of what the questioning juror is thinking, which may begin the deliberation process before the evidence is concluded and (2) disruption to courtroom decorum. Hays, 883 P.2d at 1099. There is no indication in the present case that jurors discussed the case before it was submitted or that courtroom decorum was affected.

“[Jjurisdictions that permit jurors to question witnesses reason that the purpose of a trial is a quest for truth and that juror questions may help get to the truth. The practice may alert counsel who are familiar with the case to problems that would bother a juror hearing the case for the first time.” Id. The reasoning here is that the jury, as the finder of fact, should be permitted to ask questions that may assist in reaching its ultimate decision in the case. Id. Jurisdictions that permit juror questioning as within the discretion of the district court review the district court’s exercise of discretion under the totality of the circumstances in each case. United States v. Sutton, 970 F.2d 1001, 1005 (1st Cir.1992).

Costello, citing much of the reasoning set out in Momson, asks this court to invoke the state and federal constitutional guarantees of a fair trial by an impartial jury to prohibit jury questioning of witnesses and to vacate his convictions. Costello notes that it is impossible to determine exactly what effect the practice of juror questioning had on this jury but argues that prejudice should be presumed. The state argues that if the process has any potential for prejudice, the potential for prejudice to the state is the same as it is to defendant, depriving neither of a fair trial. While recognizing that a procedure inviting juror questions raises policy issues that might be best addressed by the appropriate rules committee, this court declines to hold that the process violates per se a defendant’s right to a fair trial by an impartial jury. We agree with jurisdictions that find the process is within the sound discretion of the district court exercising its trial-management authority, and we will review the exercise of this discretion on a case-by-case basis.

Given the absence of any rule prohibiting juror questions, the procedural safeguards used by the district court in the instant case, the nature of the questions asked, the absence of objections to the questions asked, and Costello’s admission that the specific questions asked did not prejudice him, we hold that the process of jury questioning in the instant case did not violate Costello’s federal or state constitutional right to a fair trial by an impartial jury and does not warrant vacation of his convictions.

2. Sufficiency of evidence

Costello admitted at trial that he initially gave the police officer his brother’s name: “I was hoping my brother had a license, so I was thinking my brother’s name. I don’t know.” Costello’s testimony constitutes sufficient evidence from which the jury could conclude beyond a reasonable doubt that Costello intended the officer to rely on the false name in violation of Minn.Stat. § 609.506, subd. 1 (1998): “Whoever with intent to obstruct justice gives a fictitious name * * * to a peace officer ⅜ * * when that officer makes inquiries incident to a lawful investigatory stop * * ⅜ is guilty of a misdemeanor.”

DECISION

With appropriate instructions to the jury, allowing individual jurors to submit written questions for witnesses, subject to objections by counsel made out of the hearing of jurors, is within the sound discretion of the district court and did not deprive Costello of a fair trial by an impartial jury in violation of the state or federal constitutions. There was sufficient evidence to sustain Costello’s conviction of giving a false name to a peace officer.

Affirmed.

      . Costello alleged that the Schneider brothers had assaulted him in the boarding house where they all rented rooms, necessitating his use of his automobile.


author: Alan C. Page Associate Justice

text:
    In re Petition for DISCIPLINARY ACTION AGAINST Thomas G. ROWE, an Attorney at Law of the State of Minnesota.
    No. C1-98-964.
    Supreme Court of Minnesota.
    Jan. 8, 2001.
   ORDER

On September 21, 1998, this court publicly reprimanded respondent Thomas G. Rowe and placed him on probation for two years. See In re Rowe, 583 N.W.2d 923 (1998). During probation, additional allegations of unprofessional conduct were brought to the attention of the Office of Lawyers Professional Responsibility.

The Director of the Office of Lawyers Professional Responsibility has investigated these allegations and filed a petition for revocation of probation seeking further disciplinary action against respondent.

Respondent has entered into a stipulation with the Director in which he admits the professional misconduct warranting further public discipline, namely, assisting a suspended’ lawyer in the unauthorized practice of law, and neglecting and failing to communicate with two clients in violation of Rules 1.3, 1.4, 5.5(b), and 8.4(d), Minnesota Rules of Professional Conduct.

Respondent has waived his rights pursuant to Rule 14, Rules on Lawyers Professional Responsibility (RLPR), and has, with the Director, jointly recommend that the appropriate discipline is a public reprimand and two years of supervised probation subject to the following conditions:

(1) Respondent shall abide by the Minnesota Rules of Professional Conduct.
(2) Respondent shall initiate or continue current treatment by a licensed consulting psychologist or other mental health professional acceptable to the Director, and shall complete all therapy programs recommended by the therapist.
(3) Respondent shall cooperate fully with the Director’s Office in its efforts to monitor compliance with this probation and promptly respond to the Director’s correspondence by the due date. Respondent shall cooperate with the Director’s investigation of any allegations of unprofessional conduct which may come to the Director’s attention. Upon the Director’s request, respondent shall provide authorization for release of information and documentation to verify compliance with the terms of this probation.
(4) Respondent shall be supervised by a licensed Minnesota attorney, appointed by the Director to monitor compliance with the terms of this probation. Respondent shall provide to the Director the names of four attorneys who have agreed to be nominated as respondent’s supervisor within two weeks from the date this stipulation is executed. If, after diligent effort, respondent is unable to locate a supervisor acceptable to the Director, the Director will seek to appoint a supervisor.
(5) Respondent shall initiate and maintain office procedures which ensure that there are prompt responses to correspondence, telephone calls, and other important communications from clients, courts and other persons interested in matters which respondent is handling, and which will ensure that respondent regularly reviews each and every file and completes legal matters on a timely basis.
(6) During probation, respondent shall limit his practice to the following areas:
(a) Criminal law matters; and
(b) Tax court matters.

This court has independently reviewed the file and approves the jointly recommended disposition.

IT IS HEREBY ORDERED that respondent Thomas G. Rowe is publicly reprimanded and placed on two years of supervised probation subject to the agreed-upon conditions set forth above.

BY THE COURT

Alan C. Page Associate Justice