Insurer Seeks Counsel for Insured: Insurer Not the Client

This case centered on the ethical issue of tripartite relationships and possible conflict of interests between Farmland Mutual Insurance Company (the insurer), Pine Island Farmers Coop (the insured), and the defense attorneys sought by the insurer Erstad & Riemer, P.A. Farmland Insurance Company were not clients of Erstad & Riemer. The Minnesota Court of Appeals held that “the insured is the sole client of the defense attorneys hired by the insurer.”

Duane Windhorst initially sought action against Pine Island Farmers Coop when a milk metering system installed on his dairy farm was not properly installed and led to a number of his cows being contaminated with bacteria. The jury found that Pine Island was 90% at fault for negligence since their actions were the direct cause of Windhorst’s damages. Farmland is the insurer of Pine Island Farmers Coop and they allege in this current lawsuit that Erstad & Riemer had represented them both in a court of law and had committed legal practice and breach of contract.

The court focused on the presence of the proposed attorney-client relationship between Farmland and Erstad & Riemer. The court relied on Minnesota law that states attorney-client relationships can be created by contract, either express or implied, or through tort theory. Under tort theory, an attorney-client relationship is created when a person seeks and receives legal advice from an attorney in circumstances in which a reasonable person would rely on the advice. Erstad & Riemer correctly asserted that any action sought by Farmland was for the insured, Pine Island, who is the sole client of the attorneys. Case law in Minnesota further supports this claim.

After applying the facts to the holding, the Minnesota Court of Appeals concluded that Farmland Mutual Insurance Company could not show they were a client of Erstad & Riemer as any legal actions sought by them were for the insured, Pine Island Farmers Coop. Therefore, there was no conflict of interests and no breach of contract between the insurer, insured, and attorneys.