DeCoteau v. Nodak Mut. Ins. Co., 990100.

• Decision Date: 10 January 2000
• Docket Number: No. 990100.,990100.
• Citation: 2000 ND 3,603 N.W.2d 906
• Parties: James Joseph DeCOTEAU, Plaintiff and Appellant, v. NODAK MUTUAL INSURANCE COMPANY, Defendant and Appellee
• Court: North Dakota Supreme Court

603 N.W.2d 906

2000 ND 3

James Joseph DeCOTEAU, Plaintiff and Appellant, v. NODAK MUTUAL INSURANCE COMPANY, Defendant and Appellee

No. 990100.

Supreme Court of North Dakota.

January 10, 2000.

H. Patrick Weir, Jr., Lee Hagen Law Office, Ltd., Fargo, N.D., Jeffrey J. Lowe, Gray & Ritter, P.C., St. Louis, MO, and Joseph P. Danis and John J. Carey, Carey & Danis, LLC, St. Louis, MO, for plaintiff and appellant. Submitted on brief.

Richard N. Jeffries and Ronald J. Knoll, Jeffries, Olson, Flom & Bullis, P.A., Moorhead, MN, for defendant and appellee. Submitted on brief.

SANDSTROM, Justice.

[¶ 1] James Joseph DeCoteau appealed from a summary judgment dismissing his action against Nodak Mutual Insurance Company for underinsured motorist coverage. We hold there is a material issue of fact about whether Nodak's 1992 or 1994 version of its insurance policy was in effect when DeCoteau was involved in an automobile accident. Because there is a material issue of fact about which policy was in effect when the accident occurred and DeCoteau may be entitled to underinsured benefits under the 1992 policy, we reverse and remand for further proceedings.

I

[¶ 2] DeCoteau was a named insured under an "Automaster auto policy" with Nodak, which provided him with underinsured motorist coverage in the minimum statutory required amount of "$25,000 each person / $50,000 each occur." for a semiannual premium "included" with his $6 premium for uninsured motorist coverage. On October 6, 1994, DeCoteau was injured in an automobile accident with a tortfeasor who carried automobile insurance with a liability limit of $25,000 per person, and DeCoteau received $25,000 under the tortfeasor's policy. DeCoteau claimed he sustained damages in the accident in excess of $25,000 and sought underinsured coverage under his policy with Nodak. Nodak denied DeCoteau's claim.

[¶ 3] DeCoteau sued Nodak for breach of contract in allegedly providing him illusory underinsured coverage, breach of a duty of good faith and fair dealing, misrepresentation and omission, unjust enrichment, and promissory estoppel. Although not certified as a class action, DeCoteau's complaint alleged he was suing on behalf of himself and as class representative for all individuals who had purchased the minimum statutory required amount of underinsured coverage from Nodak since 1992 and had been denied proceeds under their coverage. [¶ 4] Nodak denied liability and moved for summary judgment. DeCoteau opposed Nodak's motion and moved under N.D.R.Civ.P. 56(f) for a stay pending further discovery. He sought additional time to obtain a copy of his policy with Nodak as well as information regarding whether Nodak had ever paid an underinsured claim under a policy providing the minimum statutory required amount of underinsured coverage.

[¶ 5] The trial court granted Nodak summary judgment and dismissed DeCoteau's breach of contract claim, ruling a 1994 version of Nodak's policy was not illusory because it provided coverage under narrow circumstances and a 1992 version of Nodak's policy did not raise issues about illusory coverage because the 1992 version provided broader coverage than the 1994 version. The court rejected DeCoteau's argument the doctrine of reasonable expectations applied to the case because he had made no argument the insurance policy was ambiguous. The court dismissed DeCoteau's other claims, concluding they were dependent upon his contract claim. The court also denied DeCoteau's motion for a stay, ruling the question whether Nodak's underinsured coverage was illusory was a question of law that could be decided without further discovery. DeCoteau appealed.

[¶ 6] The trial court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. DeCoteau's appeal is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. § 28-27-01.

II

[¶ 7] We review DeCoteau's appeal in the posture of summary judgment, which is a procedure for promptly and expeditiously disposing of an action without a trial if either party is entitled to judgment as a matter of law, if no dispute exists as to either the material facts or the inferences to be drawn from undisputed facts, or if resolving factual disputes would not alter the result. Close v. Ebertz, 1998 ND 167, ¶ 8, 583 N.W.2d 794.

III

[¶ 8] The issues raised in this appeal require a brief description of underinsured motorist coverage in North Dakota. The main types of underinsured coverage are gap or difference-in-limits coverage and excess coverage. See Score v. American Family Mut. Ins. Co., 538 N.W.2d 206, 208 (N.D.1995)

. In North River Ins. Co. v. Tabor, 934 F.2d 461, 464 (3rd Cir. 1991) (citations omitted and emphasis in original), the Third Circuit Court of Appeals aptly explained the difference between those types of coverage:

[Gap or difference-in-limits] coverage places the insured party in the same position that he would have been in had the tortfeasor carried liability insurance in the amount of the insured's underinsured motorist policy limit. Under this "gap" theory of underinsured motorist coverage—so-called because the coverage merely fills the "gap" between the tortfeasor's liability coverage and the injured party's underinsured motorist coverage, a driver is considered "underinsured" when his liability coverage does not at least equal the uninsured/underinsured coverage carried by the injured insured.

Under [excess coverage], underinsured motorist coverage supplies a fund for full compensation to the injured insured and thus the insured is entitled to compensation from his insurer regardless of any recovery obtained from other sources. The insured may therefore recover underinsured motorist benefits until his policy limits are reached or he is fully compensated for his damages, whichever comes first. Under this "excess" theory of underinsured motorist coverage—i.e., the injured insured's coverage being reckoned as "excess" over and above the liability policy of the tortfeasor, a tortfeasor is "underinsured" when his liability coverage does not at least equal the damages suffered by the injured insured.

[¶ 9] In 1987, the North Dakota legislature enacted mandatory difference-in-limits underinsured coverage that required motor vehicle insurers to provide their insureds with underinsured coverage of either $50,000 per person and $100,000 per accident, or the insured's bodily injury liability limit, whichever was greater. See 1987 N.D. Sess. Laws ch. 369, § 2. The legislature defined an "underinsured motor vehicle" as a motor vehicle covered by insurance with a liability limit that was less than an insured's underinsured coverage, or had been reduced by payments to other persons injured in an accident to an amount less than the limits of the insured's underinsured coverage. 1987 N.D. Sess. Laws ch. 369, § 1. Under 1987 N.D. Sess. Laws ch. 369, § 2, an insurer's underinsured liability could not exceed the limits of the underinsured coverage stated in the insured's policy, and the insurer's maximum liability was the lesser of:

a. The difference between the amount paid in compensatory damages to the insured by and for any person or organization who may be legally liable for the bodily injury, sickness, disease, or death resulting therefrom, and the limit of underinsured motorist coverage; or

b. The amount of compensatory damages, established but not recovered by any agreement, settlement, or judgment with or for the person or organization legally liable for the bodily injury, sickness, disease, or death resulting therefrom.

[¶ 10] In 1989 N.D. Sess. Laws ch. 375, the legislature amended the mandatory minimum requirements for underinsured coverage, in part, to alleviate a cost problem for "long-haul trucks" that were required to maintain a million dollars in liability insurance and, under the 1987 law, were required to have the same amount of underinsured coverage. See Hearing on H.B. 1155 Before the House Committee on Industry, Business, and Labor, 51st N.D. Legis. Sess. (Jan. 30, 1989) (prepared testimony of Thomas O. Smith, p. 1). The statutory provisions relevant to this appeal have not been amended since 1989, see N.D.C.C. §§ 26.1-40-15.1(2), 26.1-40-15.3(2), and 26.1-40-15.4(1), and require motor vehicle insurers to provide their insureds with underinsured coverage of at least $25,000 for bodily injury or death to one person in any one accident and $50,000 for bodily injury or death to two or more persons in any one accident. See N.D.C.C. §§ 26.1-40-15.3(1); 26.1-40-15.2(1); 39-16.1-11(2).

[¶ 11] As originally introduced in 1989, H.B. 1155 mandated a modified difference-in-limits approach for underinsured coverage. See Hearing on H.B. 1155 Before the House Committee on Industry, Business, and Labor, 51st N.D. Legis. Sess. (Jan. 30, 1989) (prepared testimony of Thomas O. Smith, pp. 10-11). Amendments during the 1989 legislative process, however, altered the minimum statutory requirements for underinsured coverage.

[¶ 12] The 1989 legislature retained essentially the same definition of an underinsured motor vehicle used in the 1987 law—a motor vehicle covered by insurance with a liability limit that was less than an insured's underinsured coverage, or had been reduced by payments to other persons injured in an accident to an amount less than the limits of the insured's underinsured coverage. 1989 N.D. Sess. Laws ch. 375, § 1. See N.D.C.C. § 26.1-40-15.1(2). The 1989 legislature enacted language changing an insurer's maximum liability for underinsured coverage to the lowest of (1) the compensatory damages established but not recovered from the tortfeasor, or (2) the insured's liability limit for underinsured coverage.¹ 1989 N.D Sess. Laws ch. 375, § 3. See N.D.C.C. § 26.1-40-15.3(2). The legislative history reflects the legislature deleted difference-in-limits language from the introduced version of what became N.D.C.C. § 26.1-40-15.3...