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Minnesota Lawyers Mut. Ins. Co. v. Gordon

The insurer, having taken a firm position as to its rights, was not entitled to a declaratory judgment for the purpose of seeking confirmation of its actions in denying coverage, withdrawing its defense and voiding the insurance policies.

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Minnesota Lawyers Mutual Insurance Company MLM appeals from the trial court’s order granting summary judgment to Pamela Y. Gordon, Courtney Harris, individually and d/b/a Windy Peach Properties, LLC Harris, and others in MLM’s declaratory judgment action. MLM contends that although it denied coverage to its insured, Gordon, because it had asserted a proper claim for rescission of the underlying insurance policies, it was entitled to a trial on that claim. We disagree and affirm. The facts are not in dispute. MLM issued liability insurance policies to Gordon, an attorney. Gordon acted as the closing agent in a November 2005 sale of property owned by Harris. Gordon called on MLM to provide a defense and liability coverage for claims asserted against her by Harris and others arising out of the closing. MLM initially provided a defense to Gordon, but reserved its rights under the policies.

On March 9, 2007, MLM filed a complaint for declaratory judgment against the Defendants. MLM contended that the liability policy it issued to Gordon, effective June 6, 2005 to June 6, 2006 the “first policy” excluded coverage for Gordon’s fraudulent and criminal acts. MLM sought a declaration that it had no liability to the Defendants with respect to the claims arising out of the closing or for Gordon’s alleged failure to pay off certain debt encumbering Harris’s property, and that it had no obligation to defend Gordon.

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