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Minnesota Deli Provisions, Inc. v. Boar's Head Provisions Co., Inc.: US District Court : CONTRACT | TORT - no breach of contract, good faith, promissory estoppel, or interference in terminating grocery supply relationship

17
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
MINNESOTA DELI PROVISIONS, INC.,
Plaintiff,
v.
BOARS HEAD PROVISIONS CO., INC.,
and FRANK BRUNCKHORST CO., LLC,
Defendants.
Civil No. 06-1275 (JRT/FLN)
MEMORANDUM OPINION AND
ORDER GRANTING DEFENDANTS
MOTION FOR SUMMARY
JUDGMENT
David R. Crosby, LEONARD STREET AND DEINARD, PA, 150 South
Fifth Street, Suite 2300, Minneapolis, MN 55402, for plaintiff.
John Edward Connelly and Jesseca R.F. Cockson, FAEGRE & BENSON
LLP, 90 South Seventh Street, Suite 2200, Minneapolis, MN 55402-3901;
Jacqueline G. Veit and Martin S. Hyman, GOLENBOCK EISEMAN
ASSOR BELL & PESKOE LLP, 437 Madison Avenue, New York, NY
10022-7302, for defendants.
This case arises out of the termination of a business relationship between Boars
Head Provisions Co., Inc.,1 a Delaware company that produces meats and cheeses, and
Minnesota Deli Provisions, Inc., a Minnesota company that distributed those products
primarily in Minnesota for approximately six years. Following this termination,
Minnesota Deli filed this action against Boars Head alleging breach of contract, breach
of the implied covenant of good faith and fair dealing, promissory estoppel, and tortious
1 The second defendant in this case, Frank Brunkhorst Co., LLC (Brunkhorst) works in
close coordination with Boars Head. Boars Head produces the meat and cheese products and
Brunkhorst, a New York company headquartered in Sarasota, Florida, handles the distribution of
those products. Neither party suggests any distinction between these parties in terms of their
liability or the availability of any defenses. Consequently, the Court refers to the defendants
collectively as Boars Head throughout this order.
-2 -
interference with prospective economic relations. Boars Head now moves for summary
judgment. For the reasons given below, the Court grants Boars Heads motion, and
dismisses Minnesota Delis action in its entirety.
BACKGROUND2
Boars Head Provisions Co., Inc. (Boars Head) is a Delaware company
headquartered in Sarasota, Florida. Boars Head produces meats and cheeses that are
sold throughout the United States. Boars Head typically distributes its products by
selling them to independent distributors. The distributors then sell the products to
retailers, such as supermarkets or delicatessens, who then sell directly to consumers.
In 1999, Boars Head began exploring the possibility of distributing its products in
Minnesota. This expansion was likely to create an opportunity for an independent
distributor to work with Minnesota retailers. John Marso learned of this opportunity, and
decided to pursue it. Marso met with Boars Head representatives in Sarasota, and a
short time later Boars Head gave its preliminary approval to Marso serving as a
Minnesota distributor. Beginning in February 2000, Marso attended a six-week training
program that Boars Head required for its new distributors. Following this training,
Marso spent an additional seven weeks observing Boars Head distributors in South
Carolina and Texas. Boars Head ultimately approved Marso as a Minnesota distributor
through his new company Minnesota Deli Provisions, Inc. (Minnesota Deli) in
August 2000.
2 For the purposes of this summary judgment motion, the Court considers the facts and
evidence in the light most favorable to Minnesota Deli, the non-moving party.
-3 -
Marso discussed this approval with Boars Head executive Rick Bellucci in an
August 29, 2000, phone call, and Marso testified that it was in that conversation that he
and Boars Head reached an oral agreement concerning his distributorship. (Grassley
Aff., Ex. F. at 175.) Marso alleges that during this call, Bellucci indicated that Marso
would continue to be the distributor for the state of Minnesota so long as he grew his
business. (Grassley Aff., Ex. F at 169-72.)
The parties did not commit their agreement to writing. However, on March 17,
2000, months before Boars Head agreed to make Minnesota Deli a distributor, Marso
signed a form acknowledging that he had read Boars Heads Sales Policy for Out-of-
Town Distributors (Sales Policy). That writing includes the following four passages:
As a Boars Head distributor, you are responsible for ensuring that all
Boars Head products are properly handled and rotated by your employees
and your retailers. You must provide proper and continuous training
regarding the handling, rotation and display of all products at both the
distribution and retail levels. . . . It is the policy of the Company not to do
business with any distributor that fails to satisfy our standards for
cleanliness[,] freshness and presentation of product.
* * *
The Company reserves the right to make all judgments, in its sole
discretion, as to where and by whom its products will be sold.
* * *
The Company does not grant exclusive territories to any distributor. No
distributor may represent itself as an exclusive distributor of Boars Head
products, and it is the policy of the Company not to do business with any
distributor that misrepresents its status . . . in this manner.
* * *
The Company reserves the right, in all circumstances, to ensure that all
-4 -
areas are being properly developed and to make whatever adjustments to its
distribution system it deems necessary to achieve that objective, including
the appointment of additional distributors in any geographic area or the
implementation of direct sales.
(Hilleman Aff., Ex. E at 5, 9-10, 15.) The Sales Policy does not give a specific
duration for Boars Heads relationships with its distributors, and does not expressly state
that distributors will receive compensation if their accounts are reassigned or terminated.
Also during this time period, Boars Head sent all of its existing distributors a
letter raising concerns about out-of-code product that is, product for sale beyond the
date stamped on the package appearing in retail stores. (Pizzuro Aff., Ex. B.) The
letter indicated that Boars Head was adopting a zero tolerance policy and that if any
more out-of-code product was discovered, Boars Head would terminate its relationship
with the responsible distributor.
Minnesota Deli contends Marso was given a variety of verbal assurances that
developed his understanding of the parties agreement. Marso alleges that the term
established in his call with Bellucci making him the Minnesota distributor so long as he
performed adequately was reinforced by later comments from Boars Head
employees, describing Minnesota as his market and expressing optimism about his
future working with Boars Head. (Id. at 173-75, 185-95, 200-01.) Marso also testified,
however, (1) that he did not have any conversations with Boars Head employees about
how long he could be an authorized distributor of Boars Head products; (2) that he did
not have any conversations with Boars Head employees about any limitations on
Minnesota Delis ability to terminate the agreement; and (3) that he did not have any
-5 -
conversations with Boars Head about a distributors right to sell accounts with
retailers until August 2005. (Id. at 205, 209, 218.)
Minnesota Deli was successful, with sales reaching .3 million in 2001 and .3
million in 2004. Marso alleges that during the course of this successful period, numerous
Boars Head employees continued to describe Minnesota as his market, and that Boars
Heads regional sales manager Brent Lindorfer told him that Boars would never do
anything to [him]. (Bartusch Aff., Ex. G at 193.) Marso alleges that Lindorfer further
indicated that Boars Head had no plans to appoint additional distributors in his territory.
Finally, Marso alleges that early in Minnesota Delis existence Boars Head executive
Sherry Robert told him that he would have the right to sell any accounts that he
developed, (Bartusch Aff., Ex. G at 213-14.), and that this was consistent with Boars
Heads dealings with other distributors. In the time period when these comments
occurred, Minnesota Deli made additional investments by purchasing a warehouse and
several additional delivery trucks.
In August 2005, Scott Williams, another of Boars Heads employees, visited
several Minnesota supermarkets purchasing its products from Minnesota Deli. Williams
sent a report back to Joe Pizzuro, defendants national sales manager, indicating that he
had discovered some out-of-code product in several stores. Minnesota Deli alleges that
this is a common problem that had been discovered with dozens of Boars Heads
distributors, and that Boars Heads practice was to ignore the problem, require additional
training, or allow the distributor to sell its accounts. Minnesota Deli further alleges that
Marso was never told of any policy whereby a distributors accounts with particular
-6 -
retailers would be reassigned if Boars Head learned that its grocers were selling out-ofdate
product.
On August 19, 2005, Marso was summoned to New York to meet with Pizzuro
and Lindorfer. Marso was informed of Boars Heads discovery, and told that Boars
Head would be reassigning five of his accounts to another distributor without
compensation. Marso was offered a chance to attend a six-week product integrity
training, to improve his performance and retain his remaining accounts. Marso declined.
Nonetheless, Marso alleges he was told that Boars Head would help him resolve the
product issue, and that he would be permitted to proceed with his remaining accounts
with a clean slate.
Two weeks after this meeting, Boars Head sent additional employees to
Minnesota Delis retailers to look for further out-of-code product. Lindorfer reported to
Pizzuro that the employees discovered out-of-code product in five additional stores.
Shortly thereafter, Marso was informed that Boars Head would be stripping Minnesota
Deli of these five additional accounts. Marso alleges that the true reason for this step was
that five accounts the number that had been stripped from him earlier was not enough
to support another Minnesota distributor, so Boars Head needed to take five more.
Marso responded to this news by saying that he now wanted to sell his entire
distributorship. He alleges that he was given 90 days to sell his remaining accounts, but
was told that he did not have permission to sell the ten disputed accounts.
Marso alleges that Boars Head later placed an ad in the Star Tribune newspaper
seeking distributors, and was uncooperative when he found a qualified buyer on his own.
-7 -
Boars Head ultimately reassigned Minnesota Delis ten stripped accounts in the spring of
2006, without compensating Marso.
On March 10, 2006, Minnesota Deli filed this action against Boars Head
challenging the reassignment of the ten disputed accounts. Minnesota Deli contends that
it was a given the exclusive right3 to distribute Boars Head products within its territory,
and that this agreement was one of infinite duration so long as it performed adequately.
Minnesota Deli argues that Boars Head failed to honor these terms by reassigning its
accounts without compensation even though Minnesota Deli was performing adequately.
Based on this conduct, Minnesota Deli brings claims for breach of contract, breach of the
implied covenant of good faith and fair dealing, and promissory estoppel. Minnesota
Deli also brings a claim for tortious interference with prospective economic relations,
based on Boars Heads alleged interference with Minnesota Delis relations with
Minnesota retailers.
Shortly after this lawsuit was filed, Boars Head sent employees to look for further
out-of-code product in Minnesota Delis market. After again finding out-of-code
product, Pizzuro ordered that Minnesota Delis entire distributorship be terminated, and
in April 2006, Minnesota Deli was given a termination notice effective in 90 days. All of
Minnesota Delis accounts were ultimately reassigned to another distributor without
compensation to Marso. On September 14, 2006, Minnesota Deli filed an amended
complaint adding these allegations and claiming additional damages.
3 Minnesota Deli has since clarified that it is not claiming the exclusive right to distribute
Boars Heads products in Minnesota. Rather, Minnesota Deli contends that it had the exclusive
right to sell Boars Heads products to the retailers it had already developed relationships with.
(Plaintiffs Memo at 36 n.11.)
-8 -
ANALYSIS
I. STANDARD OF REVIEW
Summary judgment is appropriate where there are no genuine issues of material
fact and the moving party can demonstrate that it is entitled to judgment as a matter of
law. Fed. R. Civ. P. 56(c). A fact is material if it might affect the outcome of the suit,
and a dispute is genuine if the evidence is such that it could lead a reasonable jury to
return a verdict for either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247
(1986). A court considering a motion for summary judgment must view the facts in the
light most favorable to the non-moving party and give that party the benefit of all
reasonable inferences that can be drawn from those facts. Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986).
II. BREACH OF CONTRACT
In Minnesota, [t]he general rule is that a contract having no definite duration,
expressed or which may be implied, is terminable at will upon reasonable notice to the
other. Benson Co-op Creamery Assn v. First Dist. Assn, 151 N.W.2d 422, 426 (Minn.
1967); see also Minn. Stat. 336.2-309(2)-(3) (incorporating the same standard into
Minnesota law for cases governed by the U.C.C.). Boars Head argues that this rule
applies here because the parties did not agree on a duration for Minnesota Delis
distributorship.
Minnesota Deli disagrees, arguing that the parties agreed that Boars Head would
only terminate the agreement if Minnesota Deli failed to perform adequately. Minnesota
-9 -
Deli argues that the parties also agreed that it would not be stripped of any of its accounts
without compensation. As evidence that these conditions were part of the agreement,
Minnesota Deli relies on oral assurances by Boars Head employees and Boars Head
documents. After a careful review of these documents and the remainder of the record,
however, the Court does not find this evidence sufficient to support Minnesota Delis
view of the agreement.
As noted above, Marso testified that the performance condition was agreed to in
an August 2000 telephone conversation with Bellucci, and reinforced by later
conversations with other Boars Head employees. (See Grassley Aff., Ex. F at 175.)
However, when asked to indicate what Bellucci said in the 2000 conversation, Marso
merely recalled statements that he would be the distributor in the state of Minnesota,
and that Minnesota was [his] to grow. (Id. at 171-72.) These vague statements of
encouragement do not touch directly on the topic of termination, and were insufficient as
a matter of law to create an enforceable limit on Boars Heads right to terminate. As to
the later conversations, Minnesota Deli points to similar statements of encouragement,
including the frequent description of Minnesota as [Marsos] market. The Court has
carefully reviewed each of these statements in the record, and finds nothing that rises
beyond the vague encouragement expressed by Bellucci, and nothing sufficient to create
a binding obligation. Cf. Benson, 151 N.W.2d at 426-27 (finding a genuine issue of
material fact where several agents of the allegedly breaching party testified that they also
believed the relevant contract included a just cause provision).
-10 -
While Minnesota Deli argues that the performance condition is further supported
by Boars Head documents, each of those documents generally confirms Boars Heads
position that the agreement was terminable at will. Minnesota Deli first points to an
email from Lindorfer to Pizzurro, making suggestions for how Boars Head should
explain its position to Marso. Minnesota Deli emphasizes the following passage: as you
are well aware, [Boars Head] does not regularly stop selling products to its customers
except in circumstances that put the integrity of the brand at risk. (Hilleman Aff., Ex.
O.) Immediately before this passage, however, the email states: Let me remind you one
last time that there are no Boars Head franchises and our business relationship is an at
will relationship, meaning that you may choose to stop purchasing BH products at
anytime for any reason and that [Boars Head] may stop selling BH product to you at any
time for any reason. (Hilleman Aff., Ex. O.) Minnesota Deli also relies on statements
from a Boars Head document discussing the transfer of sales routes and Boars Heads
Sales Policy. However, both documents expressly include express statements affirming
Boars Heads sole discretion to make decisions about who sells its products. Cf. Best
Vendors Co. v. Air Express, Inc., No. 00-2224, 2002 WL 31163039, at *3 (D. Minn.
Sept. 23, 2002) (finding a genuine issue of material fact where the allegedly breaching
party had sent a letter indicating that their agreement would continue for 36 months, and
would only be adjusted should the current level of performance change to what would be
deemed substandard by our client). In sum, these documents fail to support Minnesota
Delis view of the contract.
-11 -
As to the right to sell its accounts, Minnesota Deli does not allege that this right
was discussed in Marsos August 29, 2000, phone call with Bellucci establishing their
agreement. Rather, Minnesota Deli alleges that Marso was later told of this right by
Robert. In his deposition, however, Marso was unable to recall exactly where or when
this comment was made, and did not indicate that he and Robert specifically discussed
the sale of accounts in the context of a termination.4 Moreover, Marso later indicated that
he had absolutely not had any discussions with Boars Head about account sales in the
context of termination before August 2005, approximately five years after the parties
reached their agreement. (See Bartusch Aff., Ex. G at 213, Grassley Aff., Ex. F at 218-
19.) Finally, when squarely asked whether there was an agreement between Minnesota
Deli and . . . Boars Head that Minnesota Deli would not be terminated unless being
allowed to sell, Marso responded [n]o. (Grassley Aff., Ex. F at 217.)5 In those
circumstances, Roberts comment was insufficient to support an enforceable addition to
the parties contract.
4 Marso initially indicated that Robert told him he could sell his accounts in all
circumstances. (Bartusch Aff., Ex. G at 214.) However, when pressed as to whether she said
under all circumstances, or she didnt put any limitation on it, Marso responded I dont know
that theres a limitation. (Id.) (emphasis added). In other words, Marso did not indicate that he
received specific assurance that he would be free to sell his accounts in the context of a
termination.
5 Minnesota Deli sought to correct this admission with an errata sheet, indicating that
Marso meant there was no written agreement, and that his understanding of that agreement
was based on our course of dealing with Boars Heads treatment of other distributors.
(Grassley Aff., Ex. F.) Conspicuously absent from this explanation is any specific mention of
communications between Minnesota Deli and Boars Head. In any event, as explained in the
text of this order, the Court finds the support cited in this errata sheet insufficient to demonstrate
the agreement alleged by Minnesota Deli.
-12 -
Minnesota Deli also relies on Boars Heads dealings with other parties, its
distribution of documents intended to help with account transfers, and a Boars Head
newspaper ad stating that The Best Route to Success is the One You Own. However,
as Boars Head points out, none of this circumstantial evidence goes to the specific
agreement reached between Boars Head and Minnesota Deli, particularly where Marso
admitted that this topic was not discussed until five years after the creation of the
agreement. Boars Head was free to negotiate different arrangements with different
distributors, and the generic reference to ownership in the ad could plausibly refer to
Marsos undisputed ownership of Minnesota Deli, rather than ownership over a right to
sell Boars Head products. Accordingly, the Court finds insufficient evidence for a
reasonable juror to conclude that Boars Head agreed to allow Minnesota Deli to sell its
accounts upon the termination of its distributorship.6
In summary, establishing a contract requires evidence of a meeting of the minds.
While Marso may well have believed that his distributorship would continue indefinitely,
or that he would be paid for the relationships that he established with Minnesota grocers,
[t]he existence of a contract . . . depends upon the parties observable conduct, not on
6 The Court adds that neither party has explained how the right to sell accounts is
consistent with the at-will status of Boars Head distributorships. In short, it is unclear what,
precisely, a party seeking to sell its distributorship has to sell, particularly in a situation where
Boars Head had declared its intention to sever ties. The purchasing distributor would seem to
be buying into a situation where it could also be terminated at will, possibly even a short time
after it purchased the prior distributors accounts. Moreover, if an aspiring distributor wanted
to be in that position, it is unclear why it could not simply approach Boars Head directly. If
Boars Head really wanted the new party to serve as a distributor, it could then at least as a
matter of law terminate any existing distributors and begin a relationship with the new
distributor. In sum, an aspiring distributor who buys accounts would seem to be buying an
uncertain future that it could acquire directly from Boars Head without paying any money. In
any event, the Court finds insufficient evidence that this right to sell upon termination was
agreed upon by the parties.
-13 -
their subjective expectations. Corum v. Farm Credit Servs., 628 F. Supp. 707, 714 (D.
Minn. 1986). Marsos understanding was not memorialized in any writing, and there is
insufficient evidence for a reasonable juror to conclude that it was the subject of an oral
agreement. Thus, the Court concludes that the parties entered into an at-will business
relationship, terminable upon reasonable notice. As Minnesota Delis argument that it
did not receive adequate notice focuses exclusively on its unsuccessful claim that it
should have been given an opportunity to sell its accounts, the Court finds insufficient
evidence that Boars Head breached the parties agreement.7 Accordingly, Minnesota
Delis breach of contract claim is dismissed.
III. IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING
Under Minnesota law, every contract includes an implied covenant of good faith
and fair dealing requiring that one party not unjustifiably hinder the other partys
performance of the contract. In re Hennepin County 1986 Recycling Bond Litig., 540
N.W.2d 494, 502 (Minn. 1995). Minnesota Deli argues that Boars Head breached this
implied covenant by handling its discretion under the contract unfairly. However,
[u]nder Minnesota law, a cause of action for breach of the implied duty of good faith
and fair dealing does not exist independently of a breach of contract claim. Semanko v.
Minn. Mut. Life Ins. Co., 168 F. Supp. 2d 997, 1002 (D. Minn. 2000). Because the Court
7 Reasonable notice is that period of time necessary to close out accounts and minimize
losses. Viking Supply v. Natl Cart Co., Inc., 310 F.3d 1092, 1098 (8th Cir. 2002). The Court
notes that following Boars Heads 90-day notice, Minnesota Deli was able to sell its warehouse
for approximately 0,000 more than it paid two years prior. (Grassley Aff., Ex. F at 14, Ex.
G.)
-14 -
has concluded that Minnesota Delis breach of contract claim must be dismissed for the
reasons discussed above, the Court must dismiss this claim as well. See id.
IV. PROMISSORY ESTOPPEL
Minnesota Deli argues that even if the Court does not find an enforceable contract
for the reasons articulated above, it justifiably relied on Boars Heads promises in
investing in its distributorship. Under Minnesota law, promissory estoppel requires (1) a
clear and definite promise; (2) intent to induce reliance; (3) actual reliance; (4) a need to
enforce the promise in order to prevent injustice. Ruud v. Great Plains Supply, Inc., 526
N.W.2d 369, 372 (Minn. 1995). The Court finds that the shortcomings in Minnesota
Delis evidence addressed above also prevent it from demonstrating a clear and definite
promise. Accordingly, Minnesota Delis promissory estoppel claim is dismissed as well.
V. TORTIOUS INTERFERENCE WITH BUSINESS RELATIONS
To establish a claim for tortious interference with business relations under
Minnesota law, Minnesota Deli must prove that Boars Head intentionally committed a
wrongful act that improperly interfered with [plaintiffs] prospective business. Sip-Top,
Inc. v. Ekco Group, Inc., 86 F.3d 827, 832 (8th Cir. 1996). [I]mproper means are those
that are independently wrongful such as threats, violence, trespass, defamation,
misrepresentation of fact, restraint of trade, or any other wrongful act recognized by
statute or the common law. Id. The policy underlying this tort is to protect the
expectations of contracting parties against the frustration by outsiders who have no
legitimate social or economic interest in the contractual relationship. Harman v.
-15 -
Heartland Food Co., 614 N.W.2d 236, 241 (Minn. Ct. App. 2000) (quotation omitted).
Minnesota Deli contends that Boars Head tortiously interfered with its relations with the
end-sellers of Boars Heads products. However, as noted above, Boars Heads sales
policy expressly reserves its right to make all judgments, in its sole discretion, as to
where and by whom its products will be sold. (Hilleman Aff., Ex. E at 9.) Put another
way, the relationships that Boars Head allegedly interfered with were built in large part
on sales of Boars Heads products. In those circumstances, Boars Heads exercise of
rights expressly reserved in its Sales Policy in managing the sales of its own products did
not constitute interference as a matter of law. Cf. Frank Brunkhorst Co., L.L.C. v.
Coastal Atl., Inc., 542 F. Supp. 2d 452, 464 (E.D. Va. 2008) (finding a tortious
interference claim insufficient under Virginia law in nearly identical circumstances).
Accordingly, Minnesota Delis tortious interference claim must be dismissed as well.
ORDER
Based on the foregoing, all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that defendants Motion for Summary Judgment [Docket No. 67]
is GRANTED. Plaintiffs Complaint is DISMISSED with prejudice.
LET JUDGMENT BE ENTERED ACCORDINGLY.
DATED: September 30, 2008 ____s/ ____
at Minneapolis, Minnesota. JOHN R. TUNHEIM
United States District Judge
 

 
 
 

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