Hegseth v. Am. Family Mut. Ins. Grp., A14–1189.

• Decision Date: 23 March 2016
• Docket Number: No. A14–1189.,A14–1189.
• Parties: Jamy HEGSETH f/k/a Jamy Jager, Appellant, v. AMERICAN FAMILY MUTUAL INSURANCE GROUP, Respondent.
• Court: Minnesota Supreme Court

877 N.W.2d 191

Jamy HEGSETH f/k/a Jamy Jager, Appellant,

v.AMERICAN FAMILY MUTUAL INSURANCE GROUP, Respondent.

No. A14–1189.

Supreme Court of Minnesota.

March 23, 2016.

Michael A. Bryant, Kevin S. Carpenter, Bradshaw & Bryant, PLLC, Waite Park, MN, for appellant.

Mark K. Hellie, Rylee J. Retzer–Busselmann, Eden Prairie, MN, for respondent.

Wilbur W. Fluegel, Fluegel Law Office, Minneapolis, MN, for amicus curiae Minnesota Association for Justice.

Beth A. Jenson Prouty, Bassford Remele, P.A., Minneapolis, MN, for amicus curiae Property Casualty Insurance Association of America.

OPINION

DIETZEN

, Justice.

This case requires us to determine the accrual date of a claim for excess uninsured motorist ("UM") benefits under the Minnesota No–Fault Act, Minn.Stat. §§ 65B.41

–.71 (2014). Appellant Jamy Hegseth brought a lawsuit against her insurer, respondent American Family Mutual Insurance Group ("American Family"), seeking excess UM benefits for injuries arising out of a 2007 motor vehicle collision. After settling her primary UM claim, Hegseth brought suit against American Family for excess UM benefits. The district court granted American Family's motion for summary judgment, concluding that the excess UM claim accrued on the date of the accident, and therefore was barred by the 6–year statute of limitations for contract actions. The court of appeals affirmed, and we granted review. For the reasons that follow, we affirm.

The material facts are undisputed. On March 30, 2007, Hegseth was a passenger in a vehicle driven by another person when that vehicle and a semi-truck were involved in an accident that injured Hegseth. The semi-truck left the scene of the accident before the identity of the driver could be determined.

Hegseth sought UM benefits¹ from two insurance policies—a policy issued by West Bend Insurance that covered the vehicle she was riding in, and an American Family policy that covered her own vehicle. The West Bend policy had $50,000 of UM coverage, and the American Family policy had $100,000 of UM coverage. The parties agree that, under Minn.Stat. § 65B.49, subd. 3a(5)

, the American Family policy is considered excess UM protection.

On June 14, 2012, Hegseth settled her claim for primary UM benefits with West Bend for the UM policy limit of $50,000. On August 17, 2012, Hegseth demanded that American Family pay her excess UM benefits. On September 13, 2012, American Family denied the claim, contending that Hegseth had been fully compensated for her injuries.

On July 9, 2013, Hegseth commenced a lawsuit seeking excess UM benefits from American Family. American Family moved for summary judgment on the ground that the excess UM claim was barred by the 6–year statute of limitations for contract actions in Minn.Stat. § 541.05, subd. 1(1) (2014)

. The district court granted the motion, concluding that Hegseth's claim had accrued over 6 years earlier, on the date of the accident. The court of appeals affirmed the judgment of the district court. Hegseth v. Am. Family Mut. Ins. Grp., No. A14–1189, 2015 WL 1013967 (Minn.App. Mar. 9, 2015). We granted review to resolve the issue of the proper accrual date for excess UM benefits.

I.

Hegseth argues that the court of appeals erred in concluding that a cause of action to recover excess UM benefits accrues on the date of the accident. According to Hegseth, the resolution of the primary UM claim is a condition precedent to the assertion of an excess UM claim, and it is fundamentally unfair for the excess claim to accrue before the occurrence of the condition. She urges us to hold that excess UM claims accrue on the date the insurer denies the claim for excess UM benefits.

When reviewing a decision to grant summary judgment, we examine whether there are genuine issues of material fact and whether a party is entitled to judgment as a matter of law. Oganov v. Am. Family Ins. Grp., 767 N.W.2d 21, 24 (Minn.2009)

. The date a claim accrues is a question of law that we review de novo. Id. To answer the question presented we will examine the relevant provisions of the No–Fault Act and our case law, and then apply the law to the dispute before us.

A.

The Minnesota No–Fault Act requires insurers to include uninsured motorist coverage in their automobile policies. Minn.Stat. § 65B.49, subd. 3a

. Insureds may recover UM benefits when they are legally entitled to recover damages for bodily injury from the owner or operator of an uninsured motor vehicle or hit-and-run vehicle. Minn.Stat. § 65B.43, subd. 18. An "uninsured motor vehicle" is a vehicle "for which a plan of reparation security meeting the requirements of [the No–Fault Act] is not in effect." Minn.Stat. § 65B.43, subd. 16.

Minnesota Statutes § 65B.49, subd. 3a(5)

, sets forth a priority scheme to identify UM and underinsured motorist ("UIM") coverages available to a person injured in a motor vehicle accident. The first two sentences provide:

If at the time of the accident the injured person is occupying a motor vehicle, the limit of liability for uninsured and underinsured motorist coverages available to the injured person is the limit specified for that motor vehicle. However, if the injured person is occupying a motor vehicle of which the injured person is not an insured, the injured person may be entitled to excess insurance protection afforded by a policy in which the injured party is otherwise insured.

Minn.Stat. § 65B.49, subd. 3a(5)

. Thus, if the injured passenger is not insured under the policy covering the vehicle involved in the accident, the passenger may look to policies under which she is insured to determine if she is entitled to any excess UM coverage. It is undisputed that, because Hegseth was not an insured of the vehicle involved in the accident and she had UM coverage under her American Family policy, American Family provided Hegseth excess UM coverage to the extent she satisfied the other provisions of the statute.

The third sentence of Minn.Stat. § 65B.49, subd. 3a(5)

sets forth limitations on excess UM coverage:

The excess insurance protection is limited to the extent of covered damages sustained, and further is available only to the extent by which the limit of liability for like coverage applicable to any one motor vehicle listed on the automobile insurance policy of which the injured person is an insured exceeds the limit of liability of the coverage available to the injured person from the occupied motor vehicle.

Id. The practical effect of this sentence is to limit the availability of excess insurance protection to: (1) the amount of covered damages sustained, and (2) the extent the liability limits of the excess UM policy exceed the coverage available to the injured party from the primary UM policy. See Sleiter v. Am. Family Mut. Ins. Co., 868 N.W.2d 21, 28 (Minn.2015)

(holding that, when the full limits of the primary UM policy could not be recovered by an injured party because multiple parties made claims against the policy, "coverage available" means the benefits actually paid to the injured party by the primary policy). Because the full $50,000 UM limit of the primary policy was available to Hegseth and her American Family policy had a $100,000 UM limit, $50,000 of excess UM coverage was potentially available to her.

It is well settled that UM claims are subject to the 6–year statute of limitations governing contracts, and that the limitations period begins to run when the claim accrues. Oganov v. Am. Family Ins. Grp., 767 N.W.2d 21, 24 (Minn.2009)

. We have previously determined the accrual date for UM and UIM claims in three relevant cases: Weeks v. Am. Family Mut. Ins. Co., 580 N.W.2d 24 (Minn.1998) ; Oanes v. Allstate Ins. Co., 617 N.W.2d 401 (Minn.2000) ; and Oganov, 767 N.W.2d 21.

In Weeks, we considered whether a cause of action for UM benefits accrues on the date of the accident or on the date the insurer from which benefits are sought rejects the claim. 580 N.W.2d at 26

. We held that a claim for UM benefits accrues on the date of the accident. Id. at 27. Our holding rested on the premise that a cause of action for UM benefits is governed by contract principles, but also "presents tort aspects because liability under the coverage is determined by tort law." Id. at 26.² Because "liability [of the uninsured motorist] rather than the existence of coverage is the underlying substantive issue" of a UM claim, we concluded that a cause of action for UM benefits accrues when the accident occurs. Id. at 27. We rejected the argument that the claim accrues when the insurance company allegedly breaches the insurance contract by denying the claim, reasoning that under such a rule claimants would be able to indefinitely postpone the running of the statute of limitations. See id. at 26–27

.

In Oanes, we considered whether a UIM claim accrues on the date of the accident or at a later time. 617 N.W.2d at 401

. We held that a UIM claim accrues on the date of settlement with or judgment against the tortfeasor. Id. at 406. In doing so, we overruled the date-of-accident accrual rule previously applied to UIM claims. Id.; see also O'Neill v. Ill. Farmers Ins. Co., 381 N.W.2d 439, 441 (Minn.1986) (establishing a date-of-accident accrual rule for UIM claims). This decision resolved a paradox in our case law. On the one hand, O'Neill required a claimant to bring a UIM claim within 6 years of the accident. See 381 N.W.2d at 441. On the other hand, a separate line of cases established that resolution of the claim against the tortfeasor is a condition precedent to assertion of a UIM claim. See Emps. Mut. Cos. v. Nordstrom, 495 N.W.2d 855, 857 (Minn.1993). We observed that the disharmony between the O'Neill date-of-accident accrual rule and the Nordstrom condition-precedent rule made it possible for the statute of limitations to expire on a UIM claim before it is known whether the tortfeasor is actually underinsured, and therefore whether a UIM claim could be brought. Oanes, 617 N.W.2d at 404–05.

In deciding Oanes, we again rejected (as we...