Wangler v. Lerol11/13/2003
ements such as that entered into by the parties here, we agree with the magistrate that Iowa public policy does not require a different result in this case.
Freeman, 755 F.2d at 137-139 (footnotes omitted). A minority of jurisdictions have followed the rule the Eighth Circuit predicted the Iowa Supreme Court would adopt. See, e.g., Lida Mfg. Co., Inc. v. United States Fire Ins. Co., 448 S.E.2d 854, 857 (N.C. App. 1994); State Farm Fire and Cas. Co. v. Gandy, 925 S.W.2d 696, 719 (Tex. 1996).
[ ] In 1995, the Iowa Supreme Court had the opportunity itself to consider the question. In Red Giant Oil Co. v. Lawlor, 528 N.W.2d 524, 532-33 (Iowa 1995), the court rejected the Freeman court's conclusion and held a covenant not to execute is merely an agreement rather than a release, the underlying tort liability remains, a breach of contract action is available if the injured party seeks to collect the confessed judgment, and the stipulated judgment does not eliminate the fact of damages. Consequently, the court ruled, because there remained outstanding liability against the insured who had confessed judgment in favor of the injured party, there was "potential damage" caused by an insurance agent's failure to procure the correct coverage, and the action against the agent was viable if there was no insurance coverage. Id. at 533. The Iowa court thus aligned itself with the vast majority of courts to have considered the question since Freeman was decided. See, e.g., Gray v. Grain Dealers Mut. Ins. Co., 871 F.2d 1128, 1133 (D.C. Cir. 1989) (involving assigned action against insurance company); McLellan v. Atchison Ins. Agency Inc., 912 P.2d 559, 564-565 (Haw. Ct. App. 1996) (involving assigned action against insurance agent); Guillen ex rel. Guillen v. Potomac Ins. Co., 785 N.E.2d 1, 13 (Ill. 2003) (involving assigned action against insurance company); Campione v. Wilson, 661 N.E.2d 658, 663 (Mass. 1996) (involving assigned action against insurance agent); Lancaster v. Royal Ins. Co. of America, 726 P.2d 371, 375 (Or. 1986) (involving assigned action against insurance company); Kobbeman v. Oleson, 574 N.W.2d 633, 637 (S.D. 1998) (involving assigned action against insurance agent); Tip's Package Store, Inc. v. Commercial Ins. Managers, Inc., 86 S.W.3d 543, 555 (Tenn. Ct. App. 2001) (involving assigned action against insurance agent); Gainsco Ins. Co. v. Amoco Prod. Co., 53 P.3d 1051, 1060-61 (Wyo. 2002) (involving assigned action against insurance company). See also J. Harris, Note Judicial Approaches to Stipulated Judgments, Assignments of Rights, and Covenants Not to Execute in Insurance Litigation, 47 Drake L. Rev. 853, 858 (1999). However, if the insured does execute a full release of liability, the insured has no right to recover against the insurance company that can be assigned to an injured party. See, e.g., Clock v. Larson, 564 N.W.2d 436, 438 (Iowa 1997); Tip's Package Store, 86 S.W.3d at 555.
[ ] The validity of Miller-Shugart agreements has been recognized in North Dakota for more than a decade. See McPhee v. Tufty, 2001 ND 51, 623 N.W.2d 390; Rebel v. Nodak Mut. Ins. Co., 1998 ND 194, 585 N.W.2d 811; Ohio Cas. Ins. Co. v. Horner, 1998 ND 168, 583 N.W.2d 804; Fisher v. American Family Mut. Ins. Co., 1998 ND 109, 579 N.W.2d 599; Hanneman v. Continental W. Ins. Co., 1998 ND 46, 575 N.W.2d 445; D.E.M. v. Allickson, 555 N.W.2d 596 (N.D. 1996); Medd v. Fonder, 543 N.W.2d 483 (N.D. 1996); Dundee Mut. Ins. Co. v. Balvitsch, 540 N.W.2d 609 (N.D. 1995); Sellie v. North Dakota Ins. Guar. Ass'n, 494 N.W.2d 151 (N.D. 1992). In Miller v. Shugart, 316 N.W.2d 729, 732 (Minn. 1982), the Minnesota Supreme Court approved the settlement mainly on policy grounds without specifically addressing whether the ag
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