Hiltner v. Owners Ins. Co.
| Decision Date | 24 February 2016 |
| Docket Number | No. 20140308.,20140308. |
| Citation | 876 N.W.2d 460 |
| Parties | Amy HILTNER, Plaintiff v. OWNERS INSURANCE COMPANY, Defendant. |
| Court | North Dakota Supreme Court |
Keith L. Miller, Moorhead, Minn., for plaintiff.
Michael J. Morley, Grand Forks, N.D., for defendant.
Tyler J. Siewert, Bismarck, N.D., for amicus curiae North Dakota Association for Justice.
[¶ 1] The United States District Court for the District of North Dakota certified the following question of law to this Court regarding the proper calculation of an offset provision to underinsured motorist coverage under North Dakota law:
Whether the court should deduct no-fault benefits from the award of past economic damages before reduction for the percentage of fault attributable to plaintiff and other parties for whose conduct the defendant is not responsible.
We answer the certified question, "No."
[¶ 2] In 2010, Amy Hiltner was seriously injured when she fell off the trunk of a moving vehicle driven by Samantha Denault. Denault's insurer paid Hiltner its liability limit under a policy covering the vehicle. Owners Insurance Company provided underinsured coverage to Hiltner in an automobile policy issued to her father. In 2012, Hiltner sued Owners in state court for underinsured motorist coverage benefits under North Dakota law, alleging she was injured as a result of driver Denault's negligent operation of the motor vehicle. Owners removed the action from state court to the United States District Court in North Dakota.
[¶ 3] Under N.D.R.App.P. 47
, the United States District Court provided this Court with the following statement of facts for the certified question:
[¶ 4] The certified question involves interpretation of the statutory scheme for underinsured motorist coverage. Statutory interpretation presents a question of law, which is fully reviewable on appeal. Jund v. Johnnie B's Bar & Grill, Inc., 2011 ND 230, ¶ 9, 814 N.W.2d 776
. Words in a statute are given their plain, ordinary, and commonly understood meaning, unless defined by statute or a contrary intention plainly appears. N.D.C.C. § 1–02–02. Statutes are construed as a whole and, if possible, are harmonized to give meaning to related provisions. N.D.C.C. § 1–02–07. If the language of a statute is clear and unambiguous, "the letter of [the statute] is not to be disregarded under the pretext of pursuing its spirit." N.D.C.C. § 1–02–05. The language of a statute must be interpreted in context and according to the rules of grammar. N.D.C.C. § 1–02–03. It is presumed that the "entire statute is intended to be effective." N.D.C.C. § 1–02–38(2). This Court presumes the legislature did not intend an unreasonable result or unjust consequences. See N.D.C.C. § 1–02–38(3) ; Jund, at ¶ 9. "A statute is ambiguous if it is susceptible to different, rational meanings." Jund, at ¶ 9. When a statute's language is ambiguous, a court may consider the object sought to be obtained, former statutory provisions, and legislative history to determine the intention of the legislation. N.D.C.C. § 1–02–39.
[¶ 5] "Underinsured motorist insurance is a first party coverage arrangement that entitles an insured to compensation for injuries from the insurer." Wisness v. Nodak Mutual Ins. Co., 2011 ND 197, ¶ 9, 806 N.W.2d 146
(quoting 3 Alan I. Widiss & Jeffrey E. Thomas, Uninsured and Underinsured Motorist Insurance § 32.1 n. 1 (3d ed.2005)). In North Dakota, underinsured motorist coverage is governed by statute. See N.D.C.C. §§ 26.1–40–15.1 to 26.1–40–15.7. Although these statutes provide the minimum requirements for underinsured coverage, an insurer's policy may provide an insured with greater coverage. See N.D.C.C. § 26.1–40–15.7(5) ; Jund, 2011 ND 230, ¶ 7, 814 N.W.2d 776 ; Sandberg v. American Family Ins. Co., 2006 ND 198, ¶ 8, 722 N.W.2d 359 ; DeCoteau v. Nodak Mut. Ins. Co., 2000 ND 3, ¶ 17, 603 N.W.2d 906. The parties in this case do not contend Owners' policy provides greater underinsured coverage than required by statute. The resolution of the certified question before us, therefore, is governed by the statutory scheme providing underinsured coverage.
[¶ 6] Under N.D.C.C. § 26.1–40–15.1(2)
, an "underinsured motor vehicle" means "a motor vehicle for which there is a bodily injury liability insurance policy ... in effect at the time of the accident" with a limit that is less than the insured's underinsured motorist coverage limit or that has been reduced by payments to other persons injured in the accident to an amount less than the insured's underinsured limit. In this case, Hiltner and Owners do not dispute the Denault vehicle is an "underinsured motor vehicle."
[¶ 7] Because Hiltner's underinsured coverage with Owners was triggered, N.D.C.C. § 26.1–40–15.3(1)
provides what the underinsured coverage must pay:
The insurer shall also provide underinsured motorist coverage at limits equal to the limits of uninsured motorist coverage. Underinsured motorist coverage must pay compensatory damages which an insured is legally entitled to collect for bodily injury, sickness, disease, including death resulting therefrom, of such insured, from the owner or operator of an underinsured motor vehicle arising out of the ownership, maintenance, or use of such underinsured motor vehicle.
(Emphasis added.) Section 26.1–40–15.3(2), N.D.C.C
., provides the maximum liability of underinsured coverage:
This Court has said that when the threshold definition of underinsured vehicle is satisfied, the insurer's maximum liability under this subsection is "the lowest of (1) the compensatory damages established but not recovered from the tortfeasor, or (2) the insured's liability limits for underinsured coverage." DeCoteau, 2000 ND 3, ¶ 16, 603 N.W.2d 906
.
[¶ 8] This issue in this case involves the proper calculation of the offset required under N.D.C.C. § 26.1–40–15.4(1)
, which addresses reductions to the damages payable for underinsured coverage:
(emphasis added). We have explained this subsection "allows insurers to reduce damages paid to the insured for underinsured coverage only for amounts paid or payable under workers compensation law and under the insured's first-party motor vehicle coverage." DeCoteau, 2000 ND 3, ¶ 16, 603 N.W.2d 906
.
[¶ 9] Hiltner argues N.D.C.C. § 26.1–40–15.4(1)
should be construed to require deducting no-fault benefits paid from the past economic damages award before reducing for the percentage of fault attributable to Hiltner and other parties for whose conduct Owners is not responsible. In arguing the no-fault benefits paid to Hiltner must be deducted from the past economic damages award before reducing for the percentage of fault, Hiltner agrees the comparative fault provisions of N.D.C.C. § 32–03.2–02 limit her recovery against Owners for underinsured coverage to the 55 percent of fault allocated to Denault—the driver of the motor vehicle—and that a reduction of $30,000 for the no-fault benefits paid to her is appropriate. She contends, however, that N.D.C.C. § 26.1–40–15.4(1)(b) is ambiguous and argues a "reasonable interpretation" of the statute is to invoke the offset at the point of the district court's award of past economic damages, and then to reduce that amount by the comparative fault. She asserts her calculation is more appropriate and reasonable than the calculation put forth by Owners and avoids the "injustice" of Owners' construction. She contends Owners' interpretation of N.D.C.C. § 26.1–40–15.4(1)(b)
would deprive Hiltner of a full recovery and result in Owners receiving an approximate $13,000 windfall.
[¶ 10] Although the parties and the amicus curiae have cited cases from other jurisdictions and argued about broad implications of the certified question, we answer the question in the context of the underinsured statutory offset provided in N.D.C.C. § 26.1–40–15.4(1)(b)
and the statutes governing underinsured coverage in North Dakota and our prior case law construing those statutes.
[¶ 11] This Court has extensively discussed the legislative...
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