General Cas. Co. v. Outdoor Concepts

• Decision Date: 12 August 2003
• Docket Number: No. C7-03-256.,C7-03-256.
• Citation: 667 N.W.2d 441
• Parties: GENERAL CASUALTY COMPANY OF WISCONSIN, Appellant, v. OUTDOOR CONCEPTS, et al., Respondents.
• Court: Minnesota Court of Appeals

667 N.W.2d 441

GENERAL CASUALTY COMPANY OF WISCONSIN, Appellant, v. OUTDOOR CONCEPTS, et al., Respondents.

No. C7-03-256.

Court of Appeals of Minnesota.

August 12, 2003.

Michael W. McNee, Andrea E. Reisbord, Cousineau, McGuire & Anderson, Minneapolis, MN, for appellant.

Joel W. Brodd, Brodd Law Firm, LLC, Hudson, WI, for respondents.

Considered and decided by SCHUMACHER, Presiding Judge, RANDALL, Judge, and KALITOWSKI, Judge.

OPINION

KALITOWSKI, Judge.

On appeal from summary judgment, appellant contends that (1) respondent Joe Ebertz was not an "insured" under a commercial automobile policy issued to "Outdoor Concepts Joe Ebertz DBA"; and (2) Ebertz made an election within the meaning of Minn.Stat. § 65B.49, subd. 3a(5) (2002), and is precluded from recovering Personal Injury Protection or Underinsured Motorist benefits under his commercial policy or from otherwise stacking coverage.

FACTS

On August 25, 2001, respondent Joe Ebertz was riding his bicycle on a country road north of his home in Hudson, Wisconsin, when he was struck head-on by a pickup truck driven by an underinsured motorist. Following the accident, Ebertz settled his claims against the underinsured motorist for $50,000, the liability limit under the motorist's policy.

At the time of the accident, respondent and his wife were insured under a personal automobile insurance policy issued by Allstate Insurance Company pursuant to the laws of Wisconsin. In June 2002, respondent settled with Allstate for $50,000 in Underinsured Motorist benefits (UIM) for damages incurred in the accident.

Ebertz also insured the vehicles used in his landscaping business, Outdoor Concepts, under a commercial automobile policy obtained through his insurance agent in Minnesota. The agent completed an application with appellant, listing the applicant as "Outdoor Concepts Joe Ebertz DBA," and applied for no-fault coverage and $250,000 in UIM coverage. Appellant prepared a declarations page for the commercial automobile policy, listing the named insured as "Outdoor Concepts Joe Ebertz DBA."

The commercial automobile policy contained an endorsement entitled "Minnesota Uninsured and Underinsured Motorists Coverage," which stated that appellant will pay all sums the "insured" is legally entitled to recover as compensatory damages from the owner or driver of an underinsured motor vehicle. The endorsement defined "insured" as follows:

B. WHO IS AN INSURED

1. You.

2. If you are an individual, any "family member."

3. Anyone else "occupying" a covered "auto" or a temporary substitute for a covered "auto."

4. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured."

The commercial policy contained another endorsement entitled the "Minnesota Personal Injury Protection" (PIP). The PIP endorsement provides that appellant will pay PIP benefits incurred for "bodily injury" sustained by an "insured" caused in an "accident." The policy defines "insured" as the "named insured."

Ebertz made a demand on appellant for no-fault benefits and payment of the $250,000 in UIM benefits. Appellant denied the claim, contending Ebertz was not an "insured" under the policy.

Appellant commenced a declaratory-judgment action to determine its obligations under the commercial automobile policy issued to Outdoor Concepts Joe Ebertz DBA. Cross-motions for summary judgment were presented to the district court. The parties agreed there were no genuine issues of material fact and requested that the court determine whether Ebertz was an "insured" under the policy and whether he waived his right to recover pursuant to the anti-stacking provision of Minn.Stat. § 65B.49, subd. 3a(5) (2002).

The district court ruled in favor of Ebertz, concluding that (1) Ebertz was a named insured under appellant's policy; and (2) because the Allstate policy was not a "plan of reparation security" as defined by statute, adding the UIM limits of the Wisconsin Allstate policy to the UIM limits of appellant's policy did not constitute stacking. Appellant challenges the district court's grant of summary judgment to Ebertz.

ISSUES

1. Did the district court err in determining that Ebertz was an "insured" under the commercial automobile policy issued by appellant?

2. Did the district court err in determining that Ebertz did not waive his claims against appellant by accepting the available UIM limits under the Allstate policy?

ANALYSIS

I.

On appeal from summary judgment, this court asks two questions: (1) whether there are any genuine issues of material fact; and (2) whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990)

.

Construction of an insurance policy involves a question of law. Iowa Kemper Ins. Co. v. Stone, 269 N.W.2d 885, 886-87 (Minn.1978). When, as here, there is no dispute of material fact, this court independently reviews the district court's interpretation of the insurance contract. Zimmerman v. Safeco Ins. Co. of Am., 605 N.W.2d 727, 729 (Minn.2000).

Appellant argues that the commercial automobile policy covers only the named insured and that the named insured is Outdoor Concepts, Ebertz's business, not Ebertz as an individual. Appellant relies primarily on Jensen v. United Fire & Cas. Co., 524 N.W.2d 536 (Minn.App. 1994), review denied (Minn. Feb. 3, 1995). In Jensen, a father claimed UIM benefits for his daughter under an insurance policy that listed the father's sole proprietorship as the named insured. Id. at 539-40. Specifically, the insurance policy listed the named insured as "EAGLE EXCAVATING JENSEN ROGER DBA." Id. This court affirmed the district court's grant of summary judgment in favor of the insurer, finding that the named insured was a business, not an individual, and noting the "commercial" nature of the policy. Id.

But the language in Jensen addressing who is insured when a commercial automobile policy insures a sole proprietorship is contrary to the Minnesota Supreme Court's decision in Gabrelcik v. Nat'l Indem. Co., 269 Minn. 445, 131 N.W.2d 534 (1964). Gabrelcik involved a woman who was involved in an accident while driving a car she borrowed from the used-car dealership owned by her husband as a sole proprietor. Id. at 445-47, 131 N.W.2d at 535. The woman asserted she was entitled to liability benefits under the substituted vehicle clause of her policy. Id. But because the substituted vehicle clause did not provide coverage where the named insured or the named insured's spouse owned the substituted vehicle, the insurer argued that the woman's husband owned the borrowed car as the sole proprietor of the business, and therefore, the woman was not entitled to coverage. Id. The woman argued that her husband did not own the car because it was owned by a separate legal entity—the used-car dealership. Id. The Minnesota Supreme Court ruled in favor of the insurer, holding the husband and the used-car dealership were one and the same. Id. at 449, 131 N.W.2d at 537.

Whether the vehicle is registered in the husband's name or in the name of the business which he owns and operates as a sole proprietorship, the result is the same; namely, that this vehicle was owned by the insured's spouse who resides in the same household.

Id. at 536.

Here, the district court concluded that because it was a decision of the Minnesota Supreme Court, the holding in Gabrelcik is controlling, and Ebertz qualifies as a named insured under the commercial automobile policy. We agree.

A significant majority of authorities support the view that when an insurance policy lists a sole proprietorship's trade name as the "named insured," the policy extends coverage to the sole proprietor as well as the business. For example, in O'Hanlon v. Hartford Accident & Indem. Co., 639 F.2d 1019, 1026 (3d Cir.1981), the Third Circuit held that an insurance policy issued in the insured's trade name, and agreeing to cover the named insured's resident relatives, provided uninsured motorist coverage to the named insured's son. In that case, O'Hanlon sought uninsured motorist coverage under the policy after his son suffered serious injuries. The policy agreed to cover "the Named Insured * * * and, while residents of the same household, the * * * relatives of [the named insured]." Id. at 1026. The policy designated the named insured as "Coe Management Company," the trade name under which O'Hanlon operated his business. Id. at 1021. In conducting its analysis, the Third Circuit stated that "an insured's trade name and given name should be equated" and that "where an insured purchases a policy in a trade name, the policy will be viewed as if issued in his given name." Id. at 1025.

Similarly, in Purcell v. Allstate Ins. Co., 168 Ga.App. 863, 310 S.E.2d 530, 533 (1983), the Court of Appeals in Georgia held that Purcell was the named insured under a commercial automobile policy listing the named insured as "Purcell Radiator Serv." and that Purcell's wife could recover as a relative of the named insured. The court based its decision primarily on the inability of Purcell Radiator Service, a sole proprietorship with no separate legal identity, to own the vehicle listed in the policy. Id. at 532. The court concluded that

Purcell, as the owner of the vehicle, was the `entity' to whom the uninsured motorist coverage was extended by Allstate's policy and was the true `named insured' in that regard.

Id.

Numerous other jurisdictions have agreed that policies that list a trade name as the "named insured" extend coverage to the individuals operating those businesses. See, e.g., Simmons v. Ins. Co. of N. Am., 17 P.3d 56, 62 (Alaska 2001)

(when a business owner acquires insurance in his trade name, coverage extends to the owner as well as the business); Bushey v. N. Assurance Co. of Am., 362 Md. 626, 766 A.2d 598, 603 (2001) (policy identifying insured as "William Bushey t/a Bushey's Automotive Repair" covers the individual); Chmielewski v....