Miller-Shugart Agreement

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 agreement extinguished any damages the insured could suffer, even though the court observed the stipulated "judgment effectively liquidates defendants' personal liability." See J. Harris, Note, 47 Drake L. Rev. at 858 (noting "most recent decisions concerning the use of this procedure do not even address the question of whether the provider is 'legally obligated to pay' under the terms of its policy"). The Minnesota Court of Appeals has indicated it is an open question whether a stipulated tort judgment eliminates damages and defeats assigned claims. See Peterson v. Brown, 457 N.W.2d 745, 748, 750 (Minn. Ct. App. 1990). In McPhee v. Tufty, 2001 ND 51,10 n.1, 623 N.W.2d 390, the Court explained a Miller-Shugart agreement: Under Miller v. Shugart, 316 N.W.2d 729 (Minn. 1982), an insured defendant may settle a plaintiff's claims and stipulate judgment may be collected only from the proceeds of an insurance policy. See Medd v. Fonder, 543 N.W.2d 483, 485 (N.D. 1996). The stipulated judgment is not conclusive on the insurer, and the plaintiff judgment creditor has the burden of showing the settlement was reasonable and prudent. See Rebel v. Nodak Mut. Ins. Co., 1998 ND 194,5 n.1, 585 N.W.2d 811.