                        This opinion will be unpublished and
                        may not be cited except as provided by
                        Minn. Stat. § 480A.08, subd. 3 (2014).

                             STATE OF MINNESOTA
                             IN COURT OF APPEALS
                                   A14-0528

                                 David Herzog, et al.,
                                     Appellants,

                                          vs.

                     Cottingham & Butler Insurance Services, Inc.,
                                   Respondent.

                               Filed January 12, 2015
                                      Affirmed
                                  Bjorkman, Judge


                           Hennepin County District Court
                              File No. 27-CV-13-1502

John R. Neve, Evan H. Weiner, Neve Webb, PLLC, Minneapolis, Minnesota (for
appellants)

Kelly A. Putney, Janine M. Loetscher, Bassford Remele, P.A., Minneapolis, Minnesota
(for respondent)

      Considered and decided by Connolly, Presiding Judge; Halbrooks, Judge; and

Bjorkman, Judge.

                       UNPUBLISHED OPINION

BJORKMAN, Judge

      Appellants challenge summary judgment, arguing that genuine fact issues preclude

dismissal of their claims of breach of fiduciary duty, negligence, and violation of the

Minnesota Consumer Fraud Act, Minn. Stat. § 325F.69, subd. 1 (2014). We affirm.
                                         FACTS

       Appellant Grounded Air, Inc. is a Minnesota corporation in the business of surface

freight transportation. Appellant David Herzog is the president of Grounded Air; he has

operated the company since 1996 and has been its sole owner since 2000.

       In 2005, Grounded Air transferred all of its insurance business to respondent

Cottingham & Butler Insurance Services, Inc. (Cottingham), an insurance broker. Agent

Christopher Vogel was Grounded Air’s primary contact person at Cottingham.            In

addition to obtaining insurance for Grounded Air, Cottingham prepared certificates of

insurance that Grounded Air provided to its clients.

       Within months of transferring to Cottingham, Grounded Air became concerned

about the price of workers’ compensation insurance. Grounded Air’s vice president,

Nicolas Ehret, discussed alternatives with Vogel. Vogel suggested that Grounded Air use

a professional employer’s organization (PEO), which hires employees and leases them to

the client company while maintaining responsibility for the administrative tasks of

employment, including obtaining workers’ compensation coverage. Vogel indicated that

some of his other clients had worked with the PEO PaySource, Inc., and facilitated

communication between PaySource and Grounded Air.

       PaySource and Grounded Air executed a client service agreement, effective

September 1, 2006, under which PaySource agreed, among other things, to obtain

workers’ compensation insurance coverage for Grounded Air. Effective that same date,

Grounded Air canceled the workers’ compensation insurance policy it previously

obtained through Cottingham. Grounded Air continued to place the rest of its insurance


                                            2
through Cottingham. Cottingham received a “commission” or “referral” payment when

Grounded Air contracted with PaySource.

       Shortly thereafter, Ehret contacted Cottingham about the need to include

information about Grounded Air’s new workers’ compensation policy on its insurance

certificates. Ehret wrote:

                     As you know, as of Sept. 1st we have shifted our
              employees to a PEO (PaySource) in order to lower our costs
              by getting out of the pool. [Vogel] was able to pull this
              together for us . . . . I need to get our new work comp
              information added onto our certificate of liability insurance.

                     I’m not sure if you need me to contact PaySource to
              get the insurance info or if you would like to contact them
              directly.

Ehret provided Cottingham with contact information to obtain the policy details from

PaySource.

       Vogel requested a copy of Grounded Air’s workers’ compensation insurance

policy from PaySource. On September 27, a PaySource representative replied:

                     Per our discussion earlier, I am authorizing
              Cottingham & Butler to issue Certificates of Insurance on
              behalf of PaySource Inc. for Grounded Air Inc. Our policy
              information is as follows:

              MN Workers Compensation Assigned Risk Plan
              Policy # WC-22-04-177879-00

              Policy Limits: Bodily Injury by Accident $100,000 each accident
                             Bodily Injury by Disease $500,000 policy limit
                             Bodily Injury by Disease   $100,000 each employee




                                            3
Vogel did not independently verify the information PaySource provided and listed it on

the insurance certificates.    In fact, the policy PaySource identified did not cover

Grounded Air.

       In April and October 2007, two of Grounded Air’s employees were injured on the

job. Because Grounded Air did not have a workers’ compensation insurance policy in

place at the time of the injuries, the employees received payments from the Minnesota

Special Compensation Fund (SCF). The SCF subsequently sued and obtained judgment

against both Herzog and Grounded Air for the disbursed funds and statutory penalties of

65% for failure to maintain workers’ compensation insurance. See Drier v. Grounded

Air. Inc., 837 N.W.2d 458 (Minn. 2013); Mironenko v. Grounded Air Inc., 837 N.W.2d

458 (Minn. 2013).

       Grounded Air and Herzog (collectively Grounded Air) initiated this action,

alleging breach of fiduciary duty, breach of contract, negligence, fraud/intentional

misrepresentation, and violation of the consumer fraud act.         Cottingham moved for

summary judgment on all claims.         The district court granted Cottingham’s motion,

determining that Cottingham did not owe Grounded Air a heightened duty, did not breach

its limited duty to follow Grounded Air’s instructions, and did not violate the consumer

fraud act. Grounded Air appeals.

                                      DECISION

       Summary judgment is proper “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits . . . show that there is

no genuine issue as to any material fact and that either party is entitled to a judgment as a


                                              4
matter of law.” Minn. R. Civ. P. 56.03. The moving party “is entitled to summary

judgment as a matter of law when the record reflects a complete lack of proof on an

essential element of the plaintiff’s claim.” Lubbers v. Anderson, 539 N.W.2d 398, 401

(Minn. 1995). On appeal from summary judgment, we must determine whether there are

any genuine issues of material fact and whether the district court erred in its application

of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). We review the

evidence de novo, in a light most favorable to the nonmoving party. Valspar Refinish,

Inc. v. Gaylord’s, Inc., 764 N.W.2d 359, 364 (Minn. 2009).

       Grounded Air challenges the district court’s summary dismissal of its breach-of-

fiduciary-duty and negligence claims, arguing that the district court erred in determining

duty, breach, and causation as a matter of law.       Grounded Air also challenges the

dismissal of its consumer-fraud claim.1 We address each of these issues in turn.

I.     Grounded Air’s breach-of-fiduciary-duty claim fails as a matter of law
       because Cottingham did not owe Grounded Air a heightened duty.

       To recover for breach of fiduciary duty, a claimant must establish that a fiduciary

relationship existed and that the fiduciary breached a duty arising from that relationship,

causing damages. Swenson v. Bender, 764 N.W.2d 596, 601 (Minn. App. 2009), review

denied (Minn. July 22, 2009). Whether a person owes a fiduciary duty to another often

turns on the relationship between the two persons. Thomas B. Olson & Assoc. v. Leffert,

Jay & Polglaze, P.A., 756 N.W.2d 2d 907, 914 (Minn. App. 2008), review denied (Minn.

Jan. 20, 2009).    Relationships that give rise to fiduciary duties transcend ordinary

1
  Grounded Air does not challenge the summary judgment dismissing its breach-of-
contract and fraud/intentional misrepresentation claims.

                                            5
business relationships and involve not only reliance on a professional but a certain degree

of trust and a duty of good faith on the part of the fiduciary. Id.

       An insurance agent’s duty generally is limited to acting in good faith and

following the insured’s instructions. Gabrielson v. Warnemunde, 443 N.W.2d 540, 543

(Minn. 1989); see also Louwagie v. State Farm Fire & Cas. Co., 397 N.W.2d 567, 569

(Minn. App. 1986), review denied (Minn. Feb. 13, 1987) (insurance agent has a duty to

carry out the express requests of an insured). But a heightened or fiduciary duty may

exist “if ‘special circumstances’ are present in the agency relationship.” Gabrielson, 443

N.W.2d at 543. Such special circumstances include a “[d]isparity of business experience

and invited confidence,” Murphy v. Country House, Inc., 307 Minn. 344, 352, 240

N.W.2d 507, 512 (1976); a long-standing insurance relationship, Louwagie, 397 N.W.2d

at 571; and when “the insured asks the agent to examine the insured’s exposure and

advise the insured on the potential exposure,” Scottsdale Ins. Co. v. Transport

Leasing/Contract, Inc., 671 N.W.2d 186, 196 (Minn. App. 2003), review denied (Minn.

Sept. 24, 2003).

       Grounded Air argues that Cottingham owed it a fiduciary duty because

Cottingham functioned as its consultant and advisor, with far greater resources and

insurance expertise than Grounded Air, and because Cottingham brokered its contract

with PaySource. We are not persuaded.

       First, this is not a situation involving disparate business experience. As the district

court cogently observed, Grounded Air successfully managed its workers’ compensation

and other insurance needs for more than a decade before contracting with Cottingham.


                                              6
Grounded Air stopped obtaining workers’ compensation insurance through Cottingham

after less than one year. And Grounded Air never sought advice from Cottingham

regarding the adequacy of the workers’ compensation insurance coverage PaySource was

to obtain on Grounded Air’s behalf.2 These facts do not establish a special relationship

based on inexperience or dependence on Grounded Air’s part. Cf. Murphy, 307 Minn. at

352, 240 N.W.2d at 512.

       Second, Cottingham’s referral to PaySource does not create a special relationship.

Grounded Air asked Vogel how to reduce the cost of workers’ compensation insurance,

and Vogel recommended that Grounded Air obtain the insurance through PaySource, a

separate entity.   Grounded Air did just that, making PaySource the sole source of

insurance for its employees’ work-related risks after September 1, 2006. The fact that

Cottingham may have received some form of compensation from PaySource for referring

Grounded Air to PaySource is irrelevant. Grounded Air does not allege that Cottingham

violated any duties to Grounded Air or engaged in fraud in the referral process.

       In sum, the facts relevant to the parties’ relationship are undisputed.     They

demonstrate that Grounded Air only briefly relied on Cottingham to obtain workers’

compensation insurance and terminated Cottingham’s contractual obligation to do so on

September 1, 2006. Because this record does not establish any basis for determining that


2
  Grounded Air notes Herzog’s testimony that he trusted Cottingham to do its “due
diligence to make sure the policy is correct.” We need not decide whether the district
court properly rejected this testimony as self-serving. Whatever Grounded Air’s
expectations were, it is undisputed that Grounded Air never asked Cottingham to confirm
the existence of the workers’ compensation insurance PaySource agreed to obtain.


                                            7
Cottingham owed Grounded Air a heightened duty, Cottingham is entitled to summary

judgment on Grounded Air’s breach-of-fiduciary-duty claim.

II.   Grounded Air’s negligence claim fails as a matter of law because it presented
      no evidence that Cottingham breached its duty to follow Grounded Air’s
      instructions.

      Cottingham agreed to obtain information from PaySource about Grounded Air’s

“new” workers’ compensation insurance and to include the policy information on

Grounded Air’s insurance certificates. This agreement created a specific limited duty to

perform that act in good faith. Grounded Air argues that Cottingham failed in even this

limited duty because it listed the workers’ compensation policy PaySource obtained on its

own behalf on the insurance certificates.       We disagree.   The undisputed evidence

indicates that Grounded Air asked Cottingham to “get our new work comp information

added onto our certificate of liability insurance.”     Consistent with that direction,

Cottingham contacted PaySource, asking for “a copy of the work comp policy” for

various purposes, including preparation of the insurance certificates.        PaySource

responded by “authorizing” Cottingham to issue insurance certificates “on behalf of

PaySource Inc. for Grounded Air” and indicated a policy number and coverage limits.

Cottingham included this information in the insurance certificates as Grounded Air

requested.

      Grounded Air argues that its request created a duty to verify the existence and

terms of the policy. Grounded Air points out that Cottingham had previously expressly

declined to include information in insurance certificates for policies it obtained for

Grounded Air until it had verified them, and that Minnesota law requires Cottingham to


                                            8
get confirmation from the state before listing a Minnesota Assigned Risk Plan workers’

compensation policy on an insurance certificate.       We are not persuaded.      Neither

Cottingham’s past practice regarding insurance policies that it obtained for Grounded Air,

nor Cottingham’s independent obligations to the state, provide a basis for concluding that

Cottingham owed Grounded Air a duty to verify the coverage that PaySource contracted

to obtain for Grounded Air.

       Because Grounded Air failed to establish material facts showing that Cottingham

breached its duty to Grounded Air,3 we conclude that Grounded Air’s negligence claim

fails as a matter of law.4




3
  Grounded Air also challenges the district court’s conclusion that it failed to show
causation. Because the lack of evidence as to breach independently justifies summary
judgment, see Lubbers, 539 N.W.2d at 401, we decline to address this challenge.
4
  Grounded Air argues that the district court erred in granting summary judgment because
it “established a prima facie case of negligent misrepresentation.” As Cottingham
accurately points out, Grounded Air’s amended complaint states claims of negligence and
fraud/intentional misrepresentation, but not negligent misrepresentation. Grounded Air
counters that its complaint “as a whole clearly shows that the negligence claim is based
on [Cottingham]’s misrepresentations” and its memorandum opposing summary
judgment referred to negligent misrepresentation. We disagree. Our careful review of
both documents does not reveal any allegations or arguments consistent with negligent
misrepresentation. See Williams v. Smith, 820 N.W.2d 807, 815 (Minn. 2012) (stating
elements of negligent-misrepresentation claim). Most important, the district court
determined that Grounded Air asserted a claim of negligence, and it is that claim that the
district court addressed. Consequently, Grounded Air’s negligent-misrepresentation
argument is not properly before us. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn.
1988) (holding that appellate review is limited to those issues presented to and ruled on
by the district court).

                                            9
III.   Grounded Air’s consumer-fraud claim fails as a matter of law because
       Grounded Air did not demonstrate an actionable misrepresentation claim or
       that this litigation benefits the public.

       The consumer fraud act penalizes fraud or misrepresentation made “with the intent

that others rely” on the false representation in purchasing “any merchandise.” Minn. Stat.

§ 325F.69, subd. 1; 301 Clifton Place L.L.C. v. 301 Clifton Place Condo. Ass’n, 783

N.W.2d 551, 563 (Minn. App. 2010). The act “applies only to those claimants who

demonstrate that their cause of action benefits the public.” Ly v. Nystrom, 615 N.W.2d

302, 314 (Minn. 2000).

       In its thorough and well-reasoned decision, the district court concluded that

Grounded Air’s consumer-fraud claim fails because there is no evidence that Cottingham

made a misrepresentation in connection with the sale of merchandise or that this action

benefits the public. We agree. First, the only alleged misrepresentation is Cottingham’s

act of listing the workers’ compensation insurance policy information it obtained from

PaySource in Grounded Air’s insurance certificates.      Cottingham did not make this

representation in connection with any sale to Grounded Air. Indeed, Grounded Air chose

not to purchase workers’ compensation insurance through Cottingham.

       Second, the record contains no evidence that Grounded Air’s claims benefit the

public. A claim benefits the public when the defendant “misrepresented its program to

the public at large.” Collins v. Minn. Sch. of Bus., Inc., 655 N.W.2d 320, 330 (Minn.

2003). Conversely, a claim “has no public benefit” when it is redressing “a single one-

on-one transaction” where the defendant made no attempt to reach the general public. Ly,

615 N.W.2d at 314.       There is no evidence and no claim that Cottingham included


                                           10
inaccurate information on insurance certificates it issued for any other clients. And a

damages award would benefit only Grounded Air. Grounded Air argues that an award in

its favor would benefit the public because it will reimburse the SCF with those funds.

We are not persuaded. Grounded Air is obligated to reimburse the SCF regardless of the

disposition of this action; permitting it to recover from Cottingham merely passes the

financial consequences of Grounded Air’s coverage lapse onto Cottingham. Such a result

does not benefit the public.

       On this record, we conclude that Cottingham is entitled to summary judgment

dismissing Grounded Air’s consumer-fraud claim.

       Affirmed.




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