Joseph L. Koehnen v. Herald Fire Insurance Company, Defendant/garnishee--Appellee, Rachel Sarah Paul

LOKEN, Circuit Judge.

When a liability insurer denies coverage and refuses to defend its insured, Minnesota law allows the plaintiff-claimant and the defendant-insured to enter into a “Miller-Shu-gart” settlement, collectible only from the insurer. The plaintiff then proceeds against the insurer by a garnishment action, seeking to establish coverage and collect the settlement. See Miller v. Shugart, 316 N.W.2d 729 (Minn.1982). In this case, Joseph Koeh-nen is the personal injury plaintiff. He entered into a Miller-Shugart settlement with defendant Rachel Paul, collectible only from the…