Baker v. Continental Western Ins. Co., No. CIV. 90-5063.

CourtUnited States District Courts. 8th Circuit. United States District Courts. 8th Circuit. District of South Dakota
Writing for the CourtRonald E. Brodowicz, Rapid City, S.D., for plaintiff
Citation748 F. Supp. 716
PartiesGene C. BAKER, Plaintiff, v. CONTINENTAL WESTERN INSURANCE COMPANY, Defendant.
Docket NumberNo. CIV. 90-5063.
Decision Date05 October 1990

748 F. Supp. 716

Gene C. BAKER, Plaintiff,
v.
CONTINENTAL WESTERN INSURANCE COMPANY, Defendant.

No. CIV. 90-5063.

United States District Court, D. South Dakota, W.D.

October 5, 1990.


Ronald E. Brodowicz, Rapid City, S.D., for plaintiff.

G. Verne Goodsell, Gunderson, Palmer, Goodsell & Nelson, Rapid City, S.D., for defendant.

MEMORANDUM OPINION AND ORDER

BATTEY, District Judge.

This case arises from an automobile collision involving the plaintiff, Gene C. Baker (Baker) and an uninsured motorist, Christopher L. Ball (Ball). The plaintiff had stopped for traffic on Mt. Rushmore Road

748 F. Supp. 717
in Rapid City, South Dakota, when he was struck from behind by Ball. Ball stated to the officer at the scene that he was going too fast to stop and the officer issued a citation and summons to Ball for driving at an excessive rate of speed. A plea of guilty was entered on the summons at the Pennington County Courthouse

Baker subsequently filed a claim with his insurer, defendant Continental Western Insurance Company (Continental Western), to recover for personal injuries under the uninsured motorist provision of the plaintiff's policy. Continental Western denied the claim and Baker commenced this action for the coverage claimed under the uninsured motorist provision of his insurance policy and for damages. The defendant has moved to dismiss the action on the grounds that this Court lacks subject matter jurisdiction to hear the plaintiff's direct claim against his insurer unless the plaintiff first obtains a judgment of liability in separate proceedings against the tortfeasor Ball.

For reasons set forth below, this Court does not accept the defendant's arguments, and therefore denies the defendant's motion to dismiss. Accordingly, jurisdiction over this action is properly vested in this Court by reason that the requirements of 28 U.S.C. § 1332 regarding jurisdictional amount and diversity of citizenship are satisfied.

The United States Supreme Court has instructed district courts hearing diversity cases that "except in matters governed by the Federal Constitution or by acts of Congress, the law to be applied in any case is the law of the state." Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938).1 The Erie Court noted that in a diversity context, the "law of the state" includes not only state statutes, but also the corpus of interpretive law as pronounced by the state courts. Erie, 304 U.S. at 78, 58 S.Ct. at 817.

The question presented by the defendant's motion of whether a judgment of liability against a third-party tortfeasor is a precondition to a direct suit for uninsured motorist benefits against an insurance carrier is one of first impression for this jurisdiction. The Supreme Court of South Dakota in Helmbolt v. LeMars Mut. Ins. Co., 404 N.W.2d 55 (S.D.1987), had an opportunity to rule on an issue related to the one presented in this case. Helmbolt involved a bad faith claim against LeMars Mutual Insurance Company for failure to pay under the terms of an underinsured motorist provision of its policy. As discussed below, Helmbolt is distinguishable from the case now before the Court and therefore does not provide this Court with clear controlling precedent on the question presented.

In the absence of a definitive expression of state law on any matter which comes before a district court, it is the duty of the court to conscientiously apply state law as the court believes it would be applied in the state courts in order that the court may "make its own determination of what the Supreme Court of the State would probably rule in a similar case." King v. Order of United Commercial Travelers, 333 U.S. 153, 161, 68 S.Ct. 488, 492, 92 L.Ed. 608 (1948); Wright & Miller, Federal Practice and Procedure § 4507 (1982). Thus, even though the South Dakota Supreme Court's decision in Helmbolt is not an unequivocal statement of state law on the issue raised by the defendant's motion to dismiss, this Court will nonetheless endeavor to follow the guidance provided by that decision in interpreting the South Dakota uninsured motorist statute as this Court conscientiously believes this dispute would be resolved by the South Dakota Supreme Court. King, 333 U.S. at 161, 68 S.Ct. at 492.

The South Dakota statute on uninsured motorist coverage provides in relevant part as follows:

748 F. Supp. 718
Motor Vehicle Insurance—Uninsured Motorist Coverage. No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto in limits for bodily injury or death set forth in § 32-35-70, or if requested by the insured in limits not exceeding the coverage provided by such policy for bodily injury and death, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom.

SDCL 58-11-9 (emphasis added).2

Of historical note, uninsured motorist coverage was first offered in the State of New York during the mid-1950s and other jurisdictions soon followed. The uninsured motorist statute was designed to fill the void left by statutorily mandated liability coverage by providing additional coverage to an insured injured by a tortfeasor who is uninsured, underinsured, or a hit-and-run driver. See Couch, Cyclopedia of Insurance Law, § 45:620 (2d ed. 1981). Thus, the purpose of uninsured motorist protection is to provide compensation to an insured who is the victim of an uninsured motorist's negligence to the same extent as if the uninsured motorist were properly insured. Radlein v. Industrial Fire & Casualty Ins. Co., 117 Wis.2d 605, 345 N.W.2d 874, 884 (1984); State Farm Mut. Auto. Ins. Co. v. Baldwin, 764 F.2d 773, 778 (11th Cir.1985).

The South Dakota uninsured motorist statute is substantially identical in form and intent to the model statute enacted by nearly every legislature across the nation. See Higgins v. Nationwide Mut. Ins. Co., 282 So.2d 301, 303 (Ala.1973); Radlein, 345 N.W.2d at 884; Booth v. Fireman's Fund Ins. Co., 218 So.2d 580, 582, 28 A.L.R.3d 573, 577 (La.1968); Lane v. State Farm Mut. Auto. Ins. Co., 209 Neb. 396, 308 N.W.2d 503, 509 (1981). South Dakota's uninsured motorist statute should thus be viewed in the context of a nationwide public policy of expanding the coverage provided by insurance carriers. To effectuate coverage for victims of financially irresponsible motorists thus left with no remedy under the singular scheme of mandatory liability insurance, the South Dakota legislature elected to provide for a dual system of insurance coverage and "it is for this reason that the legislature made uninsured motorist coverage mandatory in every automobile policy issued in this state." Baldwin, 764 F.2d at 773.3

748 F. Supp. 719

An action by an insured against an insurance carrier pursuant to an uninsured motorist provision is an action on the policy and is therefore ex contractu. Cf. Helmbolt, 404 N.W.2d at 57.4 Uninsured motorist coverage thus constitutes an insurance carrier's direct promise to indemnify an insured for a specific loss and is therefore a first-party benefit, as distinguished from a promise to an insured to pay a third party. Couch at § 45:624. The policy issued by the defendant Continental Western to plaintiff Baker is thus an agreement to indemnify Baker for the injuries caused by the tortfeasor Ball, and Baker's right of recovery is ultimately based upon the policy. Baker's policy provides, in relevant part:

PART C — UNINSURED MOTORISTS COVERAGE INSURING AGREEMENT
A. We will pay damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of "bodily injury:"
1. sustained by an insured; and,
2. caused by an accident.
The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the "uninsured motor vehicle."
Any judgment for damages arising out of a suit brought without our written consent is not binding on us.

(Emphasis added). Neither the South Dakota uninsured motorist statute nor the policy impose on Continental Western an absolute liability to compensate the insured. Couch at § 45:624. The Baker policy provision essentially mirrors the requirements for uninsured motorist coverage as set forth in SDCL 58-11-9 in that to collect compensation an insured must be able to show (1) legal entitlement to recover (2) for bodily injuries (3) sustained through the ownership or operation of a motor vehicle by an uninsured motorist. Because it is uncontested that the plaintiff sustained bodily injuries as a result of the operation of a motor vehicle by an uninsured motorist, it is the meaning of the phrase "legally entitled to recover," appearing in both the statute and the policy, upon which this entire action turns. In the motion to dismiss Continental Western asks this Court to construe the phrase "legally entitled to recover" to require a separate trial on the issue of negligence between Baker and Ball, and a resulting judgment of Ball's liability, before binding the insurer to provide the compensation due under the policy. The merits of this argument are best characterized by Professor Widiss, who stated in A Guide to Uninsured Motorist Coverage § 716 (1969), that:

"although it would seem a matter that should be beyond dispute under both the terms of the endorsement and in light of the historical developments leading up to uninsured motorist coverage, the right of the insured to
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8 practice notes
  • Williams v. State Farm Mut. Auto. Ins. Co., No. 14722
    • United States
    • Supreme Court of Connecticut
    • May 17, 1994
    ...4, and No. 93-297, §§ 1, 29. 7 The plaintiff relies on the following cases for that proposition: Baker v. Continental Western Ins. Co., 748 F.Supp. 716 (W.D.S.D.1990); Allstate Ins. Co. v. Elkins, 63 Ill.App.3d 62, 21 Ill.Dec. 66, 381 N.E.2d 1 (1978), aff'd, 77 Ill.2d 384, 33 Ill.Dec. 139, ......
  • Tokley v. State Farm Ins. Companies, Civ. No. 91-5071.
    • United States
    • United States District Courts. 8th Circuit. United States District Courts. 8th Circuit. District of South Dakota
    • January 28, 1992
    ...1987). Uninsured motorist insurance is thus designed for the benefit of insureds and not insurers. Baker v. Continental W. Ins. Co., 748 F.Supp. 716, 721 (D.S.D. The purpose of uninsured motorist protection is to provide compensation to an insured who is the victim of an uninsured motorist'......
  • Jones v. Regent Ins. Co., CIV. 13-4055-KES
    • United States
    • United States District Courts. 8th Circuit. United States District Courts. 8th Circuit. District of South Dakota
    • June 2, 2014
    ...right to recover damages. Helmbolt v. LeMars Mut. Ins. Co., 404 N.W.2d 55, 59 (S.D. 1987). In Baker v. Continental Western Ins. Co., 748 F. Supp. 716 (D.S.D. 1990), the court found that "the words 'legally entitled to recover' mean simply that an insured must be able to establish fault on t......
  • Great West Cas. Co. v. Hovaldt, No. 20792.
    • United States
    • Supreme Court of South Dakota
    • December 1, 1999
    ...to an uninsured motorist provision is an action on the policy and is therefore ex contractu." Baker v. Continental Western Ins. Co., 748 F.Supp. 716, 719 (D.S.D.1990); see also Nadler v. Liberty Mut. Fire Ins. Co., 188 W.Va. 329, 424 S.E.2d 256, 261 (1992) (citing 1 A. Widiss, Uninsured and......
  • Request a trial to view additional results
8 cases
  • Williams v. State Farm Mut. Auto. Ins. Co., No. 14722
    • United States
    • Supreme Court of Connecticut
    • May 17, 1994
    ...4, and No. 93-297, §§ 1, 29. 7 The plaintiff relies on the following cases for that proposition: Baker v. Continental Western Ins. Co., 748 F.Supp. 716 (W.D.S.D.1990); Allstate Ins. Co. v. Elkins, 63 Ill.App.3d 62, 21 Ill.Dec. 66, 381 N.E.2d 1 (1978), aff'd, 77 Ill.2d 384, 33 Ill.Dec. 139, ......
  • Tokley v. State Farm Ins. Companies, Civ. No. 91-5071.
    • United States
    • United States District Courts. 8th Circuit. United States District Courts. 8th Circuit. District of South Dakota
    • January 28, 1992
    ...1987). Uninsured motorist insurance is thus designed for the benefit of insureds and not insurers. Baker v. Continental W. Ins. Co., 748 F.Supp. 716, 721 (D.S.D. The purpose of uninsured motorist protection is to provide compensation to an insured who is the victim of an uninsured motorist'......
  • Jones v. Regent Ins. Co., CIV. 13-4055-KES
    • United States
    • United States District Courts. 8th Circuit. United States District Courts. 8th Circuit. District of South Dakota
    • June 2, 2014
    ...right to recover damages. Helmbolt v. LeMars Mut. Ins. Co., 404 N.W.2d 55, 59 (S.D. 1987). In Baker v. Continental Western Ins. Co., 748 F. Supp. 716 (D.S.D. 1990), the court found that "the words 'legally entitled to recover' mean simply that an insured must be able to establish fault on t......
  • Great West Cas. Co. v. Hovaldt, No. 20792.
    • United States
    • Supreme Court of South Dakota
    • December 1, 1999
    ...to an uninsured motorist provision is an action on the policy and is therefore ex contractu." Baker v. Continental Western Ins. Co., 748 F.Supp. 716, 719 (D.S.D.1990); see also Nadler v. Liberty Mut. Fire Ins. Co., 188 W.Va. 329, 424 S.E.2d 256, 261 (1992) (citing 1 A. Widiss, Uninsured and......
  • Request a trial to view additional results

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