Am. Fire & Cas. Co. v. Hegel

Citation847 F.3d 956
Decision Date07 February 2017
Docket NumberNo. 15-3975,15-3975
Parties AMERICAN FIRE AND CASUALTY COMPANY, Plaintiff–Appellant v. Mary HEGEL, Individually and as Personal Representative for the Estate of Adam Fetzer, Defendant–Appellee
CourtU.S. Court of Appeals — Eighth Circuit

Counsel who presented argument on behalf of the appellant was Christian Andrew Preus, of Minneapolis, MN. The following attorney(s) appeared on the appellant brief; Christian Andrew Preus, of Minneapolis, MN., Elizabeth Ann Jenson–Prouty, of Minneapolis, MN.

Counsel who presented argument on behalf of the appellee was Scott A. Hager, of Bismarck, ND. The following attorney(s) appeared on the appellee brief; Scott A. Hager, of Bismarck, ND.

Before BENTON and SHEPHERD, Circuit Judges, and STRAND,1 District Judge.

STRAND, District Judge.

This case arises out of the untimely death of Adam Fetzer, a delivery driver for the Papa John's restaurant chain who was killed in a car accident on April 28, 2012. Fetzer was driving during the course of his employment in Bismarck, North Dakota, when another driver ran a red light and struck his vehicle.

Defendant Mary Hegel, the personal representative of Fetzer's estate, demanded underinsured motorist (UIM) coverage under a business auto insurance policy (Policy) issued by plaintiff American Fire and Casualty Company (American Fire) to P J Operations, LLC d/b/a Papa John's Pizza (Papa John's). American Fire denied the claim and brought suit for declaratory judgment. On cross motions for summary judgment, the parties disputed whether North Dakota law applies to the Policy and, if so, whether American Fire is obligated to provide UIM benefits in some amount. The district court granted summary judgment against American Fire, holding: (1) North Dakota law applies; (2) American Fire is obligated to provide UIM coverage; and (3) Fetzer's estate is entitled to an award of $100,000 in UIM benefits. American Fire appealed. Having jurisdiction under 28 U.S.C. § 1291, we reverse.


The relevant facts are not in dispute. Fetzer was not at fault. At the time of the accident he was driving his own vehicle, which was covered by both a personal auto insurance policy and the American Fire Policy. The other driver, Robert Harrington, was also covered by a personal auto insurance policy, which provided $25,000 in liability coverage. Following the accident, Hegel, on behalf of Fetzer's estate, was paid the full liability amount, $25,000, from Harrington's insurance policy. Hegel then sought UIM benefits from American Fire.

American Fire is an insurance company incorporated under Ohio law with its principal place of business in Massachusetts. Papa John's is a Kentucky company headquartered in Kentucky. A Kentucky insurance agent sold the Policy to Papa John's in Kentucky. The Policy provided liability coverage and physical damage coverage with a liability limit of $1,000,000. The Policy covered vehicles owned and used by Papa John's employees all over the country. The Policy contained numerous endorsements addressing specific state laws, including some that related to North Dakota law. Papa John's premium payment for the Policy was sent to the insurance agency's office in Middletown, Ohio. Fetzer's vehicle was licensed and garaged in North Dakota.


American Fire argues that Kentucky law controls and that the district court erred in applying North Dakota law to the Policy. American Fire notes that under Kentucky law it was not required to provide UIM coverage. American Fire also argues that even if North Dakota law applies, thus imposing a requirement to provide UIM coverage in some amount, no recovery would be appropriate in this case because Harrington was not underinsured.

A. Standard of Review

"We review de novo a district court's grant of summary judgment, viewing the evidence ‘in the light most favorable to the nonmoving party.’ " Barkley, Inc. v. Gabriel Brothers, Inc. , 829 F.3d 1030, 1038 (8th Cir. 2016) (quoting Beverly Hills Foodland, Inc. v. United Food & Commercial Workers Union, Local 655 , 39 F.3d 191, 194 (8th Cir. 1994) ). "If there is ‘no dispute of material fact and reasonable fact finders could not find in favor of the nonmoving party, summary judgment is appropriate.’ " Shrable v. Eaton Corp. , 695 F.3d 768, 770–71 (8th Cir. 2012) (quoting Fercello v. Cnty. of Ramsey , 612 F.3d 1069, 1077 (8th Cir. 2010) ). We may affirm a grant of summary judgment on any basis supported by the record. Noreen v. PharMerica Corp. , 833 F.3d 988, 992 (8th Cir. 2016) (citing Johnson v. Securitas Sec. Servs. USA, Inc. , 769 F.3d 605, 611 (8th Cir. 2014) (en banc)).

B. The Choice of Law Analysis

The parties agree that declaratory judgment is an appropriate means to resolve their dispute and that if Kentucky law applies to the Policy, then American Fire was not obligated to provide UIM coverage. In determining which state's law applies, we look to the choice of law principles of the forum state—North Dakota. Whirlpool Corp. v. Ritter , 929 F.2d 1318, 1320 (8th Cir. 1991) (when jurisdiction is based on diversity, the forum state's choice of law analysis applies).

North Dakota employs a two-prong test in its choice of law analysis. "With the adoption of the Leflar choice-influencing factors our significant contacts test became something of a hybrid, and effectively became a two-pronged analysis." Daley v. Am. States Preferred Ins. Co. , 587 N.W.2d 159, 162 (N.D. 1998). First, the court must "determine all of the relevant contacts which might logically influence the decision of which law to apply." Id. "Secondly, we apply Leflar's choice-influencing considerations ‘to determine which jurisdiction has the more significant interest with the issues in the case.’ " Nodak Mut. Ins. Co. v. Wamsley , 687 N.W.2d 226, 231 (N.D. 2004). The five factors to be considered under the second prong are predictability of results, maintenance of interstate and international order, simplification of the judicial task, advancement of the forum's governmental interests, and application of the better rule of law. Apollo Sprinkler Co. v. Fire Sprinkler Suppliers & Design, Inc. , 382 N.W.2d 386, 389 (N.D. 1986) (internal citations omitted).

The first prong, relevant contacts, is straight-forward. Papa John's is headquartered in Kentucky and bought the Policy from a Kentucky insurance agent. Papa John's negotiated the terms of the Policy in Kentucky and the Policy was delivered to Papa John's in Kentucky. American Fire is incorporated in Ohio, which is also where Papa John's sent payment for the Policy. American Fire does business nationally and, as is clear from the various endorsements included in the Policy, the Policy was intended to cover Papa John's employees across the country. Meanwhile, all contacts relating to the accident occurred in North Dakota. Fetzer worked for a North Dakota Papa John's, all parties to the accident lived in North Dakota and the accident occurred in North Dakota.

The North Dakota Supreme Court addressed a similar factual situation in Plante v. Columbia Paints , 494 N.W.2d 140 (N.D. 1992). Using a Washington insurance agent, a Connecticut insurer issued a policy to an Idaho corporation to cover activities in numerous states, including North Dakota. Id. at 142. The policy was issued and accepted outside of North Dakota. Id. Two North Dakota residents were injured in an explosion in North Dakota while using the insured's products and filed a declaratory action concerning the extent of the insurance coverage. Id. at 141–42. The parties disputed the applicability of certain coverage provisions. Id. at 141.

On appeal from the trial court's determination that North Dakota law applied to the policy, the North Dakota Supreme Court first identified the relevant contacts as follows:

There are a number of multistate contacts to be considered. Parnell Plante and Mark Sandness are North Dakota residents who were injured in an explosion in North Dakota while using a Columbia paint that had been sold to their employer, a North Dakota painting company, by a Columbia corporate store located in North Dakota. Plante and Sandness filed personal injury actions in North Dakota. Columbia's insurance policy from Hartford was intended to provide coverage for Columbia's retail functions in North Dakota, as well as in other states. Columbia obtained the Hartford insurance policy through Jones & Mitchell (Jones), a Washington insurance broker and agent. Jones delivered the policy to Columbia in Washington. Columbia paid the insurance premiums to Jones in Washington and the policy was intended to cover Columbia's retail and manufacturing functions in Washington, as well as in North Dakota and other states. Columbia maintained corporate headquarters in Washington, as well as in Montana. Columbia is an Idaho corporation. Hartford is a Connecticut corporation. The insurance policy was intended to cover Columbia's retail and manufacturing functions in Idaho, Montana, and South Dakota, as well as in Washington and North Dakota. The paint involved in this case was produced in Columbia's plant in Helena, Montana, and shipped from there to North Dakota.

Plante , 494 N.W.2d at 142. The Court then applied the five factor test. Regarding predictability of results, the Court found:

The rights created by a casualty insurance contract are ordinarily determined "by the local law of the state which the parties understood was to be the principal location of the insured risk." Restatement [ (Second) of Conflict of Laws], supra , § 193. However, the location of an insured risk has less significance when "the policy covers a group of risks that are scattered throughout two or more states." Restatement, supra, § 193, comment b. We conclude Hartford and Columbia are more likely to have thought that the coverage provided would be determined in accordance with the law of Washington, where the contract was negotiated, the policy was delivered, and the

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