Beaudry v. State Farm Mut. Auto. Ins. Co., C9-93-689

• Decision Date: 17 June 1994
• Docket Number: No. C9-93-689,C9-93-689
• Citation: 518 N.W.2d 11
• Parties: William BEAUDRY, et al., Respondents, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner, Appellant.
• Court: Minnesota Supreme Court

Page 11

518 N.W.2d 11

William BEAUDRY, et al., Respondents, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner, Appellant.

No. C9-93-689.

Supreme Court of Minnesota.

June 17, 1994.

Syllabus by the Court

The underinsured motorist claim of the estate of an injured person, who dies of causes unrelated to the auto accident, does not survive the abatement of the underlying personal injury action.

William M. Hart, Joseph W.E. Schmitt, Meagher & Geer, and Albert J. Dickinson, Stringer & Rohleder, St. Paul, for appellant.

James F. Dunn, Dunn & Elliott, St. Paul, for respondents.

Heard, considered, and decided by the court en banc.

OPINION

SIMONETT, Justice.

A cause of action for injury to the person dies with that person (except for special damages). But does the deceased person's claim for underinsured motorist benefits survive the abatement of the underlying tort claim? We answer the question "no" and reverse the contrary ruling of the court of appeals.

On July 29, 1990, Alice Beaudry, age 75, was severely injured when the car in which she was a passenger and which was driven by her husband collided with a car driven by Leonard Defoe. The accident was Defoe's fault.

Alice Beaudry's injuries required extensive medical care, her medical expenses eventually totaling $67,785.83. In October 1990, State Farm paid Alice Beaudry $20,000, the limits of its no-fault medical expense coverage. Initially, it appeared that the other driver, Defoe, was uninsured, and Mr. and Mrs. Beaudry were preparing for an uninsured motorist claim against their own insurer, State Farm.

In May 1991, however, it was learned that Defoe had liability insurance with $30,000/60,000 limits. The Beaudrys negotiated a settlement with Defoe's liability carrier, with the carrier to pay its $30,000 limit on Alice Beaudry's claim (and $22,500 on William Beaudry's claim). State Farm was given notice of the proposed settlement pursuant to Schmidt v. Clothier, 338 N.W.2d 256 (Minn.1983), but it elected not to substitute its own settlement draft. The Beaudrys then proceeded, in mid-November 1991, to conclude their settlement with Defoe on the terms proposed.

At the same time, Beaudrys' counsel also formally advised State Farm it was making a claim for underinsured motorist benefits. The Beaudrys' State Farm policy provided underinsured motorist coverage of $100,000 per person and $300,000 per occurrence. In early January 1992, more medical information having been supplied by the claimants, the Beaudrys twice made demands for the policy limits.

On January 16, 1992, the Beaudrys first informed State Farm that Alice Beaudry was terminally ill with breast cancer and made another demand for the policy limits. On the same day, the Beaudrys commenced this lawsuit against State Farm for breach of contract for failure to pay underinsured motorist limits. Three days later, on January 19, Alice Beaudry died. The cancer which was the cause of her death was unrelated to the injuries received in the auto accident.

The lawsuit alleged William and Alice Beaudry were each entitled to $100,000 in benefits. State Farm moved for summary judgment on the grounds that Alice Beaudry's claim for underinsured motorist benefits abated at her death under Minnesota's survival statute, Minn.Stat. Sec. 573.01 (1992). The trial court granted State Farm's motion. The court of appeals reversed, ruling that the underinsured motorist claim of Alice Beaudry was a contract action not subject to the survival statute. Beaudry v. State Farm Auto. Ins. Co., 506 N.W.2d 673, 675 (Minn.App.1993). We granted State Farm's petition for further review.

The issue before us may be framed as follows: When an underinsured motorist claimant dies of causes unrelated to the auto accident, does her underinsured motorist claim survive the abatement of the underlying tort claim against the tortfeasor? The answer to this question depends on whether the underinsured motorist claim is viewed as a cause of action arising out of an injury to the person, which does not survive the death of the person, or as a contract action, which does survive the person's death.

Our survival statute, Minn.Stat. Sec. 573.01 (1992), reads:

A cause of action arising out of an injury to the person dies with the person of the party in whose favor it exists, except as provided in section 573.02. ¹ All other causes of action by one against another, whether arising in contract or not, survive to the personal representative of the former and against those of the latter.

If Alice Beaudry had died before settling with the tortfeasor, even if she then had a lawsuit pending against the tortfeasor, her claim against the tortfeasor would have abated. With abatement, general damages, such as pain and suffering, die with the person. Indeed, even where the injured person dies from a cause related to the injuries and the personal injury action is converted into a wrongful death action, general pain and suffering damages are not recoverable. See, e.g., Fussner v. Andert, 261 Minn. 347, 351-52, 113 N.W.2d 355, 358 (1961) (damages in a wrongful death action are for pecuniary loss).

In this case Alice Beaudry's estate ² seeks to circumvent the survival statute by characterizing her UIM lawsuit as a contract action for underinsured motorist benefits. As a contract action, her estate would be able to recover underinsured motorist benefits measured by the general damages that would have been recoverable against the tortfeasor. The Beaudrys concede that these general damages, such as pain and suffering, would be recoverable only up to the time of death, in this case for the period of approximately a year and a half that Alice Beaudry lived after the auto accident.

Recently, in McIntosh v. State Farm Mutual Automobile Insurance Co., 488 N.W.2d 476 (Minn.1992), and in Employers Mutual Cos. v. Nordstrom, 495 N.W.2d 855 (Minn.1993), we discussed the nature of uninsured and underinsured motorist coverage. These are first party coverages, i.e., claims based on contract against one's own insurance company, unlike third party liability coverage where the insurer indemnifies the insured against claims of injured third parties. Nevertheless, as we pointed out in these two cases, liability for UM and UIM benefits is determined by tort law, i.e., by what the tortfeasor would have had to pay the claimant if the tortfeasor had not been uninsured or underinsured.

Thus, in McIntosh we cautioned, "In other words, under uninsured motorist coverage, the distinction between coverage and liability under that coverage is radically different than it is under first party coverage." McIntosh, 488 N.W.2d at 479. In Nordstrom, we observed that "[a]n underinsured motorist claim is both alike and unlike a tort cause of action." Nordstrom, 495 N.W.2d at 856. We went on to say, "Underinsured coverage has generally been understood as excess coverage, to be utilized only after the cause of action against the insured tortfeasor has been concluded." Id.

Whether an uninsured or underinsured motorist claim is to be viewed from its contract or tort aspects depends on the question being asked. Thus, for example, in O'Neill v. Illinois Farmers Insurance Co., 381 N.W.2d 439, 440 (Minn.1986), we held that for the purpose of what statute of limitations applied to an underinsured claim, the claim "sounds in contract and is governed by the 6-year statute of limitations for contracts"; at the same time, in deciding when the statute of limitations begins to run, we held it was "when the accident giving rise to the injury happens." Id. An Eighth Circuit case written by Judge Sanborn, Webber v. St. Paul City Ry. Co., 97 F. 140 (8th Cir.1899), which has stood the test of time, is also instructive. There it was held that the estate of a plaintiff injured in a train accident who then died of unrelated causes could not evade the survival statute by alleging a cause of action for breach of contract to transport the plaintiff safely. Id. at...