• March 26, 2012

Under Minnesota law, there is something called the “implied duty of good faith and fair dealing,” an amorphous concept that, very roughly, means that a party to any legally enforceable agreement (better known as “a contract”) must do more than abide by the express obligations and requirements of the contract under Minnesota law.

If you are a party to a contract there are “implied” responsibilities — implicit obligations — perhaps the most obvious of which is you cannot seek to bind another party to the contract while simultaneously making it difficult or impossible for them to perform it.

(For those who understand better with a concrete example: you cannot contract with a company to pour a concrete foundation, then not let them on the property where you want the foundation poured, and then sue them for breach of contract.  Indeed, not only couldn’t you sue, you could be liable yourself for breach of the covenant of good faith and fair dealing.)

In the context of insurance litigation, it is not uncommon to see claims that not only that the insurer has breached an insurance contract but, also, that it behaved unreasonably in conducting its responsibilities under the insurance contract (by, for example, taking a year to make its coverage determination).  

Ramsey County District Court Judge Dale B. Lindman seems to have agreed with insurers that a breach of contract claim and an overlapping breach of the covenant of good faith and fair dealing claim would have been impermissible “piling on” or “double-dipping” in 3M’s case against a veritable army of insurers.

This week the Minnesota Court of Appeals, however, reversed Judge Lindman’s adverse ruling against 3M on the insurer’s motion to dismiss.

Congratulations to attorneys Douglas L. Skor, Paula Duggan Vraa, Patrick J. Boley of the Larson King firm, counsel to 3M, for this significant reversal of fortune.

Given the stakes for insurers, Minnesota Litigator will be surprised if a petition to the Minnesota Supreme Court review is not the next step for this case.

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