Farmers Union Ins. v. Elec. & Gas Ins.

• Decision Date: 22 August 2007
• Docket Number: No. 20060303.,20060303.
• Parties: FARMERS UNION MUTUAL INSURANCE COMPANY, Plaintiff and Appellee, v. ASSOCIATED ELECTRIC AND GAS INSURANCE SERVICES LIMITED, Defendant and Appellant.
• Court: North Dakota Supreme Court

737 N.W.2d 253

2007 ND 135

FARMERS UNION MUTUAL INSURANCE COMPANY, Plaintiff and Appellee, v. ASSOCIATED ELECTRIC AND GAS INSURANCE SERVICES LIMITED, Defendant and Appellant.

No. 20060303.

Supreme Court of North Dakota.

August 22, 2007.

Chris A. Edison, Storslee Law Firm, P.C., Bismarck, N.D., for plaintiff and appellee.

Tiffany L. Johnson (argued) and Patrick W. Durick (on brief), Pearce & Durick, Bismarck, N.D., for defendant and appellant.

CROTHERS, Justice.

[¶ 1] Associated Electric and Gas Insurance Services Limited ("AEGIS") appeals from a summary judgment requiring AEGIS to submit to equitable allocation and intercompany arbitration under N.D.C.C. § 26.1-41-17. Because we conclude AEGIS's issuance of an excess liability policy does not make it a "motor vehicle liability insurer" under N.D.C.C. § 26.1-41-17, we reverse.

I

[¶ 2] In October 2005, Farmers Union Mutual Insurance Company ("Farmers Union") commenced this declaratory judgment action against AEGIS, a "non-admitted surplus lines carrier," seeking a declaration that the equitable allocation and intercompany arbitration provisions of N.D.C.C. § 26.1-41-17 were applicable to AEGIS. AEGIS had insured Plains Marketing, L.P. ("Plains Marketing") under an excess liability policy in an underlying action. In its complaint for declaratory judgment, Farmers Union asserted AEGIS was "transacting business in North Dakota on a surplus lines basis" under the law governing surplus lines insurance. See N.D.C.C. ch. 26.1-44.

[¶ 3] The facts in the underlying action are not in dispute. In March 2001, while driving his car on a North Dakota highway, Caleb Melberg was severely injured in a collision with a crude oil tanker semi-truck. At the time of the collision, Robert Taylor was driving the semi-truck and had entered the highway from a gravel road after leaving a crude oil pipeline station. Taylor was employed by Plains Marketing and was operating the oil tanker truck, owned by Plains Marketing, as a part of his employment.

[¶ 4] Farmers Union insured Melberg under a personal motor vehicle insurance policy, which provided basic no-fault benefits of $30,000. As a result of the severe injuries sustained by Melberg, Farmers Union paid its full $30,000 limit in basic nofault benefits to Melberg. At the time of the collision, Plains Marketing was insured by Zurich-American Insurance ("Zurich") under a primary commercial liability policy and by AEGIS under an excess liability policy.

[¶ 5] Melberg sued Plains Marketing for the injuries and damages he sustained in the accident. Melberg eventually settled his claim against Plains Marketing. Through a combination of a lump-sum payment and structured settlement, Zurich paid its $1,000,000 policy limits to Melberg, and Plains Marketing paid Melberg $407,370.83. AEGIS thereafter indemnified Plains Marketing for the amount of Plains Marketing's settlement with Melberg.

[¶ 6] In July 2005, Farmers Union filed a request for intercompany arbitration against AEGIS under N.D.C.C. § 26.1-41-17, seeking to recover the $30,000 in no-fault benefits it had paid to Melberg. AEGIS refused Farmers Union's requests for equitable allocation and arbitration. In October 2005, Farmers Union brought this declaratory judgment action against AEGIS. AEGIS moved to dismiss Farmers Union's action, and Farmers Union moved for summary judgment. The district court denied AEGIS's motion to dismiss and granted Farmers Union summary judgment, holding AEGIS was a "motor vehicle liability insurer" and the equitable allocation and arbitration provisions of N.D.C.C. § 26.1-41-17 applied to AEGIS.

II

[¶ 7] Summary judgment under N.D.R.Civ.P. 56 is "a procedural device for promptly resolving a controversy on the merits without a trial if either party is entitled to judgment as a matter of law, and if no dispute exists as to either the material facts or the inferences to be drawn from the undisputed facts, or if resolving disputed facts would not alter the result." ACUITY v. Burd & Smith Constr., Inc., 2006 ND 187, ¶ 6, 721 N.W.2d 33. The party moving for summary judgment has the burden of establishing that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Hasper v. Center Mut. Ins. Co., 2006 ND 220, ¶ 5, 723 N.W.2d 409. In deciding whether the district court appropriately granted summary judgment, this Court views the evidence in the light most favorable to the party opposing the motion, and the opposing party will be given the benefit of all favorable inferences that can reasonably be drawn from the record. Id. On appeal, we decide "whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law." Id. Whether the district court properly granted summary judgment is a question of law that we review de novo on the entire record. Ernst v. Acuity, 2005 ND 179, ¶ 7, 704 N.W.2d 869.

III

[¶ 8] AEGIS argues the district court erred in concluding N.D.C.C. § 26.1-41-17 was applicable because AEGIS was an "excess insurer" rather than a "motor vehicle liability insurer." AEGIS also asserts that even if N.D.C.C. § 26.1-41-17 applies, AEGIS still should not be required to participate in binding arbitration because Farmers Union failed to properly commence an arbitration proceeding before the August 1, 2005, effective date of the Legislature's repeal of N.D.C.C. § 26.1-41-17.

[¶ 9] Statutory interpretation is a question of law and fully reviewable on appeal. GO Comm. ex rel. Hale v. City of Minot, 2005 ND 136, ¶ 9, 701 N.W.2d 865.

Words in a statute are given their plain, ordinary, and commonly understood meaning, unless defined by statute or unless a contrary intention plainly appears. N.D.C.C. § 1-02-02. Statutes are construed as a whole and are harmonized to give meaning to related provisions. N.D.C.C. § 1-02-07... . If the language of a statute is ambiguous or doubtful in meaning, a court may consider extrinsic aids, including legislative history, to determine legislative intent. N.D.C.C. § 1-02-39.

Stockman Bank of Montana v. AGSCO, Inc., 2007 ND 26, ¶ 18, 728 N.W.2d 142. However, we do not consider legislative history when statutory language is unambiguous. Rask v. Nodak Mut. Ins. Co., 2001 ND 94, ¶ 18, 626 N.W.2d 693. "A statute is ambiguous if it is susceptible to meanings that are different, but rational." Amerada Hess Corp. v. State ex rel. Tax Comm'r, 2005 ND 155, ¶ 12, 704 N.W.2d 8. If statutory language is clear and unambiguous, the letter of the statute cannot be disregarded under the pretext of pursuing its spirit. N.D.C.C. § 1-02-05. Under N.D.C.C. § 1-01-09, "[w]henever the meaning of a word or phrase is defined in any statute, such definition is applicable to the same word or phrase wherever it occurs in the same or subsequent statutes, except when a contrary intention plainly appears."

[¶ 10] The relevant statute in this case, N.D.C.C. § 26.1-41-17, was repealed by the Legislature effective August 1, 2005, and had authorized a basic no-fault insurer to seek equitable allocation and intercompany arbitration with the motor vehicle liability insurer of a secured person:

A basic no-fault insurer may recover no-fault benefits paid to or for the benefit of an injured person from the motor vehicle liability insurer of a secured person if:

1. The injured person has sustained a serious injury; or

2. The injury results from an accident involving two or more motor vehicles, at least one of which is a motor vehicle weighing more than six thousand five hundred pounds [2948.35 kilograms] unloaded.

The right of recovery and the amount thereof must be determined on the basis of tort law without regard to section 26.1-41-08 by agreement between the insurers involved, or, if they fail to agree, by binding intercompany arbitration under procedures approved by the commissioner. The amount of recovery under this section may not exceed the limits of liability of the secured person's motor vehicle liability insurance policy or other security, reduced by the amount of the liability for tort claims against the secured person covered by the policy or other security.

(Emphasis added.)

[¶ 11] On appeal, AEGIS argues the phrase "motor vehicle liability insurer" in that statute does not include an excess insurer. AEGIS asserts that while its policy provides automobile liability coverage, its coverage is incidental to that of the primary liability policy provided by Zurich. Farmers Union responds by urging this Court to adopt a broad interpretation, arguing the phrase "motor vehicle liability insurer or other security" includes any liability coverage, even if provided by an excess liability policy.

[¶ 12] We conclude Farmers Union's interpretation of "motor vehicle liability insurer" does not account for the modifying phrases "of a secured person" and "the secured person's" as they are used in N.D.C.C. § 26.1-41-17. Under N.D.C.C. § 26.1-41-01(20) (emphasis added), a secured person is defined as "the owner, operator, or occupant of a secured motor vehicle, and any other person legally responsible for the acts or omissions of the owner, operator, or occupant." A secured motor vehicle is defined as "a motor vehicle with respect to which the security required by this chapter was in effect at the time of its involvement in the accident resulting in accidental bodily injury." N.D.C.C. § 26.1-41-01(19) (emphasis added). Based upon these definitions, the "motor vehicle liability insurer" contemplated under N.D.C.C. § 26.1-41-17 must be providing the security for the motor vehicle as required under N.D.C.C. ch. 26.1-41.

[¶ 13] Section 26.1-41-02, N.D.C.C., which defines the security required under N.D.C.C. ch. 26.1-41, states, in part:

1. The owner of a motor vehicle required to be registered in this state, or the owner of a motor vehicle operated in this state by the owner or with the...