Hypoguard USA, Inc., et al., Respondents, vs. St. Paul Fire and Marine Insurance Company, Appellant.

Annotate this Case
Hypoguard USA, Inc., et al., Respondents, vs. St. Paul Fire and Marine Insurance Company, Appellant. A06-2215, Court of Appeals Unpublished Decision, December 4, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).




Hypoguard USA, Inc., et al.,
St. Paul Fire and Marine Insurance Company,

Filed December 4, 2007

Reversed and remanded

Huspeni, Judge*



Hennepin County District Court

File No. 27-CV-06-7295


George R. Serdar, Messerli & Kramer, P.A., 1800 Fifth Street Towers, 150 South 5th Street, Minneapolis, MN 55402; and


Kenneth M. Gorenberg (pro hac vice), 225 West Wacker Drive, Suite 3000, Chicago, IL 60606 (for respondents)


Charles E. Spevacek, William M. Hart, Michael P. McNamee, Damon L. Highly, Meagher & Geer, P.L.L.P., 33 South 6th Street, Suite 4400, Minneapolis, MN 55402 (for appellant)



            Considered and decided by Toussaint, Chief Judge; Lansing, Judge; and Huspeni, Judge.

U N P U B L I S H E D   O P I N I O N


            Appellant St. Paul Fire and Marine Insurance Co. (St. Paul) and its insureds, respondents Hypoguard USA, Inc., and Medisys USA, Inc. (collectively Hypoguard), brought cross-motions for summary judgment to resolve whether St. Paul had a duty to defend Hypoguard in a class action brought against it.  The district court determined that St. Paul was obligated to defend Hypoguard, granted Hypoguard's motion, and denied St. Paul's motion.  Because we conclude that St. Paul has no duty to defend Hypoguard in that action, we reverse the summary judgment granted to Hypoguard and remand for entry of summary judgment for St. Paul.


The Underlying Action


            Hypoguard manufactures glucose monitors.  In January 2005, two purchasers of its glucose monitors brought an action (the Miller action) against Hypoguard in Illinois state court.  The Miller complaint stated that the action was brought "on behalf of plaintiffs and a Class consisting of all persons and entities in the United States who purchased . . . blood glucose monitors . . . manufactured by or on behalf of [respondents]" and that the plaintiffs asserted claims of breach of express warranties, breach of implied warranties, breach of covenant of good faith and fair dealing, unjust enrichment, breach of implied warranty under the Magnuson-Moss Act, consumer fraud and common law fraud.  The Miller complaint asserted that the monitors were defective and that "[t]he financial costs to plaintiffs and class members as a result of this defect have been substantial.  Plaintiffs have had to buy new monitors or will have to buy new ones in the future."  The Miller complaint also stated that the action "seeks compensation for members of the Class for the financial and other costs incurred by them as a result of their purchase of the blood glucose monitors" and added that "plaintiffs and each member of the Class expressly disclaim any individual recovery in excess of [$50,000], and any claims for personal injury." 

            In March 2005, Hypoguard removed the matter to federal district court.  The Miller plaintiffs sought to have it remanded to state court, arguing that the $75,000 threshhold for federal court was not met because their complaint asserted that they sought "less than $50,000 per plaintiff" and "expressly disclaim[ed] any individual recovery in excess of that amount, and any claims for personal injury."  Their motion for a remand was denied.  Miller v. Hypoguard USA, Inc., No. 05-CV-0186-DRH (S.D. Ill. Aug. 25, 2005). 

            In May 2005, the Miller plaintiffs amended their complaint to add a count of breach of contract, asserting that, as a result of Hypoguard's breach of contract, "plaintiffs have been damaged in the amount that they paid for the blood glucose monitor and supplies, in an amount substantially less than $50,000.00 per class member."  When the Miller plaintiffs moved for class certification, they asserted that an aggregate damage formula could be used for all class members: "calculation of damages is based on the cost to replace the defective blood glucose monitors and test strips.  One measure is the price charged by defendants for the meters and test strips."

            In June 2005, Hypoguard moved to dismiss all counts of the Miller amended complaint, arguing that the Miller plaintiffs "disclaim[ed] any claims for personal injury" and sought either repayment of the money spent to purchase the monitors and strips or actual damages.  The district court granted Hypoguard's motion in part by dismissing some claims, including the Magnuson-Moss claim, for plaintiffs' failure to give timely notice because the exception to the notice requirements applied only to situations involving personal injury and the Miller plaintiffs did not allege personal injury.  Miller v. Hypoguard USA, Inc., No. 05-CV-0186-DRH (S.D. Ill. Dec. 20, 2005).[1]

The policy

            When the Miller plaintiffs brought their action, Hypoguard had a policy with St. Paul.  In relevant part, the policy states:

Right and duty to defend a protected person

We'll have the right and duty to defend any protected person against a claim or suit for injury or damage covered by this agreement.  We'll have such right and duty even if all of the allegations of the claim or suit are groundless . . . .


. . . .


Claim means a demand that seeks damages.


Suit means a civil proceeding that seeks damages. . . .


Injury or damage means:

·     bodily injury, personal injury, or advertising injury; or

·     property damage.


Offense means any:

·     personal injury offense; or

·     advertising injury offense.


The policy also states:


            Bodily injury means any physical harm, including sickness or disease, to the physical health of other persons.


                        . . . .


            Personal injury means injury, other than bodily injury or advertising injury, that's caused by a personal injury offense.


            Personal injury offense means any of the following offenses:

·     False arrest, detention, or imprisonment.

·     Malicious prosecution.

·     Wrongful entry into, or wrongful eviction from, a room, dwelling, or premises . . . .

·     Invasion of the right of private occupancy of a room, dwelling, or premises . . . .

·     Libel, or slander, in or with covered material.

·     Making known to any person or organization covered material that disparages the business . . . of others.

·     Making known to any person or organization covered material that violates a person's right of privacy. 


Hypoguard tendered defense of Miller to St. Paul.  St. Paul refused defense on the ground that "the [Miller] Complaint, as framed, does not present any potentially covered claim."  Hypoguard then brought this action and moved for a summary judgment that St. Paul is obliged to defend Hypoguard in Miller.  St. Paul brought a cross-motion for summary judgment.  The district court, after finding the policy ambiguous, interpreted it to extend St. Paul's duty to defend to the underlying action, granted summary judgment to Hypoguard, and denied St. Paul's motion.


            "[T]he interpretation of insurance contract language is a question of law as applied to the facts presented."  Meister v. W. Nat'l Mut. Ins. Co., 479 N.W.2d 372, 376 (Minn. 1992).  

            As a threshold matter, we reach a conclusion contrary to that of the district court on whether the policy language is ambiguous.  Contract language is ambiguous when it is "susceptible of more than one interpretation."  Hilligoss v. Cargill, Inc., 649 N.W.2d 142, 148 (Minn. 2002).  The district court found the policy was ambiguous not because it is "susceptible of more than one interpretation" but rather because it does not insert the definitions of terms into the sentences where the terms are used.  But "[a]mbiguity does not arise merely because a policy must be read with some care."  Steele v. Great W. Cas. Co., 540 N.W.2d 886, 889-90 (Minn. App. 1995), review denied (Minn. Feb. 9, 1996).  Thus, a document is not ambiguous because a reader must refer to another page for a definition, and a term does not acquire another meaning by being defined on one page and used on another.  For these reasons, we conclude that the policy's statement of the duty to defend is not ambiguous.   

            We recognize that a decision may be affirmed for reasons other than those given for the decision.  See, e.g., State v. Farnsworth, 738 N.W.2d 364, 366 (Minn. 2007) (affirming this court's decision for different reasons); State v. Lemmer, 736 N.W.2d 650, 653 (Minn. 2007) (same); Brown-Wilbert, Inc. v. Copeland Buhl & Co., 732 N.W.2d 209, 212 (Minn. 2007) (same). 

In considering a possible alternative basis for affirmance, we recognize that the Miller complaint waived any claim for the varying damages that would result from individual bodily injury claims in an effort to obtain class-action certification.[2] See Minn. R. Civ. P. 23.02(c) (requiring that, in a class action, "questions of law or fact common to the members of the class predominate over any questions affecting only individual members"); see also Lewy 1990 Trust v. Inv. Advisors, Inc., 650 N.W.2d 445, 456 (Minn. App. 2002) (holding that a need for different damages calculations for each plaintiff when "damages do not lend themselves to mechanical calculation" would "weigh against certification"), review denied (Minn. Nov. 19, 2002).  While that effort may have been proper, we now address whether the damages the Miller plaintiffs did seek (i.e., the cost of the glucose monitors and strips) are arguably covered by St. Paul's duty to "defend any protected person against a claim or suit for injury or damage covered by this agreement."  We conclude that they are not covered.

            "In determining whether a policy arguably provides coverage, an appellate court must compare the allegations in the complaint in the underlying action with the relevant language in the insurance policy."  Reinsurance Ass'n of Minn. v. Timmer, 641 N.W.2d 302, 311 (Minn. App. 2002) (quotation omitted), review denied (Minn. May 14, 2002).  While a court may "go beyond the face of the complaint when determining the true nature of the claims," a court may not "determine coverage on the basis of claims that could have been made (for example, are suggested by the fact pattern) but were not."  Id. (quotation omitted).  "For purposes of determining arguable coverage, [an appellate court] will limit [itself] to the causes of action alleged in the complaint."  Id.  

            We examine Miller's second amended complaint to determine the type of injury asserted by its three claims.  The first, a claim for breach of contract, asserts that "plaintiffs have been damaged in the amount that they paid for the blood glucose monitor and supplies."  The second, a claim under the Illinois Consumer Fraud and Deceptive Practices Act and the Minnesota Deceptive Trade Practices Act, asserts that Hypoguard made statements that it knew to be false and omitted making necessary true statements "with the intent that plaintiffs and the Class members would rely on [the statements and omissions] and to induce plaintiffs and the Class members to purchase Hypoguard . . . monitors and strips," and that "Plaintiffs and the other members of the Class, unaware of [Hypoguard's] concealment or suppression, purchased at least one Hypoguard blood glucose monitors [sic] or strips."  The third, a claim for common-law fraud, asserts that if plaintiffs and other class members had "known of the concealed facts, they would not have purchased the Hypoguard blood glucose monitors or paid as much for the product as they did."  The injury alleged in the Miller complaint is the purchase price of Hypoguard's products and is neither a bodily injury nor a personal injury within the meaning of the policy.  See Timmer, 641 N.W.2d at 311 (to determine whether a policy provides coverage in an underlying action, a court compares the complaint with the relevant policy language).

            The words "bodily injury" never appear in the Miller complaint and the words "personal injury" appear only in the context that "plaintiffs and each member of the Class expressly disclaim . . . any claims for personal injury."  Moreover, the policy defines "bodily injury" as "any physical harm, including sickness or disease, to the physical health of other persons," and defines "personal injury" as injury resulting from torts such as false arrest, detention, or imprisonment; malicious prosecution; wrongful entry of eviction; violation of the right of privacy; or libel and slander.  The Miller plaintiffs were presumably not familiar with the language of Hypoguard's insurance policy defining bodily injury and personal injury, but, like the language in their complaint, their conduct during litigation demonstrates that they were not seeking to recover for physical injury under any name.  They refused to produce lists of their medications, stating that they were "not relevant in this case which alleges no personal injury but that a defective blood glucose monitor was sold to the plaintiffs."  They also refused to produce medical records, stating that they "have not put their health condition at issue in that they have stipulated they are not making a claim for personal injuries."  These refusals, like the language of the complaint, demonstrate that the Miller plaintiffs were not seeking recovery for bodily injury or personal injury. 

Hypoguard relies on two cases involving Dahlberg, Inc., a manufacturer of hearing aids, to support its argument that St. Paul had a duty to defend:  Martin v. Dahlberg, Inc., 156 F.R.D. 207, 218 (N. D. Cal. 1994) (denying class certification for plaintiffs who brought an action against Dahlberg), and St. Paul Mercury Ins. Co. v. Dahlberg, Inc., 596 N.W.2d 674, 678 (Minn. App. 1999) (concluding that Dahlberg's insurer had no duty to defend Dahlberg in action bought by plaintiffs), review denied (Minn. Sept. 28, 1999).  Hypoguard's reliance is misplaced. 

The policy in Dahlberg provided that the insurer would pay "amounts any protected person is legally required to pay as damages for covered bodily injury, property damage or fire damage. . . ."  Id. at 675.  The policy "included ‘mental anguish' as a covered bodily injury."  Id. at 677.  The complaint in the California action alleged emotional distress as an injury, and, before class certification was denied, the insurer had agreed to defend Dahlberg.  Id. at 675.  Hypoguard argues that St. Paul must defend because "[l]ike the California plaintiffs in Dahlberg, the Miller plaintiffs repeatedly alleged emotional distress."  The argument fails for two reasons.  First, contrary to Hypoguard's argument, the Miller complaint does not include the phrase "emotional distress" anywhere, and does not make a claim of intentional or negligent infliction of emotional distress.  Second, Dahlberg's policy defined bodily injury to include mental anguish, id. at 677, and the emotional distress alleged by the plaintiffs in the California action was arguably related to, or a form of, mental anguish.  The policy here does not include mental anguish, emotional distress, or any similar condition in the definitions of either bodily injury or personal injury.  Therefore, even if the Miller plaintiffs had claimed emotional distress, the claim would be outside St. Paul's duty to defend. 

In the Minnesota Dahlberg action, the insurer declined defense because the claimed injures were not covered by the policy.  Id. at 676.  This court agreed:

Dahlberg first failed to meet the initial threshold of establishing a covered claim by presenting complaints that excluded allegations of bodily injury or mental anguish.  Not only did the . . . Minnesota complaint . . . fail to allege such injuries, [it] also omitted claims typically resulting in mental anguish or general bodily injury.  Instead, . . . [it] emphasized the classes' monetary damages rather than physical injuries.  The Minnesota complaint specifically stated "[p]laintiffs, seek compensation for economic damage" and the class is seeking "monetary damages."


Id. at 677-78 (citations omitted).  Like the complaint in Dahlberg, the complaint here specifically disclaims personal injury and emphasizes monetary damages rather than physical injuries. 

            But Dahlberg also provides that "if a complaint fails to establish coverage, an insurer still must accept tender of defense if it has independent knowledge of facts that may establish coverage."  Id. at 677.  Dahlberg argued that the allegation of emotional distress in the California complaint gave the insurer independent knowledge of facts that might establish coverage.  Id. That argument was rejected. 

[Dahlberg] failed to establish a covered claim simply by relying on allegations contained in the earlier California complaint.  Although the California class action arose from the same set of factual circumstances, the California complaint differed from the . . . Minnesota complaint . . . by including specific allegations of emotional distress and involving claims that usually involve bodily injury. Because the . . . Minnesota complaint . . . did not allege such injuries or even incorporate such allegations from the California complaint by reference, [the insurer] was under no obligation to investigate into the possibility of coverage based on this earlier, separate, and dissimilar action. To hold otherwise would require insurers to speculate about possible coverage when the complaint against their insureds and extrinsic evidence clearly fail to establish a covered claim.


Id. at 678 (citation omitted).  Like the insurer in Dahlberg, St. Paul was not required to speculate about its possible obligation to defend when the underlying complaint alleged only claims for breach of contract, common-law fraud, and violation of the Illinois Consumer Fraud and Deceptive Practices Act and the Minnesota Deceptive Trade Practices Act, and sought only the purchase price of a glucose monitor and test strips as damages.  Dahlberg, like Timmer, requires reversal of the summary judgment granted on the basis of St. Paul's duty to defend.[3]

            We conclude that St. Paul has no duty to defend Hypoguard, reverse the summary judgment granted to Hypoguard, and remand for the entry of summary judgment for St. Paul.

Reversed and remanded.


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

[1] See also Miller v. Hypoguard USA, Inc., No. 05-CV-0186-DRH (S.D. Ill. May 8, 2006) (concluding that, without the Magnuson-Moss claim, federal district court lacked subject-matter jurisdiction and, sua sponte, remanding to state court).  Hypoguard has appealed the remand to the seventh circuit; that decision is pending.


[2] The Miller complaint identifies the Class as "comprised of thousands of individuals who purchased Hypoguard blood glucose monitors with a common design defect" and explains that "[s]ince the damages suffered by individual class members may be relatively small, the expenses and burden of individual litigation make it impossible for members of the Class to individually seek redress for the wrongful conduct alleged." 

[3] Hypoguard also relies on three cases from other jurisdictions.  Two are distinguishable, and the third is contrary to Minnesota law.  In Voicestream Wireless Corp. v. Fed. Ins. Co., the plaintiffs alleged bodily injury in the form of "radio frequency radiation that [the defendants] knew to cause biological changes in the human body," and sought "maximum legal and equitable relief for the alleged bodily injury, as well as punitive damages."  112 Fed. Appx. 553, 555-56 (9th Cir. 2004) (quotation omitted).  The Miller plaintiffs neither alleged nor sought relief for bodily injury and explicitly disclaimed relief for personal injury.  In N. Ins. Co. of N.Y. v. Baltimore Bus. Commc'n, Inc., the insurer "fail[ed] to conclusively establish that the . . . plaintiffs have foresworn any claim for damages because of bodily injury."  68 Fed. Appx. 414, 421 (4th Cir. 2003) (quotation omitted).  The Miller plaintiffs explicitly foreswore any claim for such damages in their complaint.  Finally, in Motorola, Inc. v. Associated Indem. Corp., the court found a duty to defend based on language withdrawn from the amended complaint.  878 So. 2d 824 (La. App 2004).  "Despite the . . . plaintiffs' voluntary elimination of claims for certain elements of alleged [covered] damages, the factual grounds of their cause of action remain the same."  Id at 834.  Thus, the duty to defend was based on a claim that could have been made, but was not.  But see Timmer, 641 N.W.2d at 311 (a court may not "determine coverage on the basis of claims that could have been made (for example, are suggested by the fact pattern) but were not."