Jepson v. General Cas. Co. of Wisconsin

• Decision Date: 25 March 1994
• Docket Number: No. C7-92-1846,C7-92-1846
• Citation: 513 N.W.2d 467
• Parties: Timothy W. JEPSON, Respondent, v. GENERAL CASUALTY COMPANY OF WISCONSIN, Petitioner, Appellant.
• Court: Minnesota Supreme Court

Page 467

513 N.W.2d 467

Timothy W. JEPSON, Respondent, v. GENERAL CASUALTY COMPANY OF WISCONSIN, Petitioner, Appellant.

No. C7-92-1846.

Supreme Court of Minnesota.

March 25, 1994.

Syllabus by the Court

North Dakota law, not Minnesota law, governs the enforcement of anti-stacking provisions in an insurance policy issued to cover vehicles which are licensed and titled in North Dakota, and which rates are based on North Dakota experience, when a named-insured is injured in a third state.

Steven J. Cahill, Cahill & Marquart, PA, Moorhead, for appellant.

Robert Feder, Wold, Feder & Schimmelpfennig, P.C., Fargo, ND and Leslie A. Krisin, Mariscal, Weehe, McClnyrf & Friedlander, P.A., Phoenix, AZ, for respondent.

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

OPINION

PAGE, Justice.

General Casualty of Wisconsin seeks review of a court of appeals decision affirming the trial court's decision in a declaratory judgment action brought by Timothy Jepson. The trial court concluded that Jepson was entitled to Minnesota underinsured motorist benefits as a result of a 1983 auto accident. The court's conclusion was based on its determination that Minnesota, and not North Dakota, law applied to the anti-stacking provisions in the policy. The trial court also concluded, and the court of appeals affirmed, that under Minnesota law Jepson could stack the benefits on each of the seven vehicles insured under the policy. At the time of the accident, North Dakota law would enforce the anti-stacking provisions in the policy while Minnesota law would not. Our choice of law analysis mandates the application of North Dakota law. ¹ We, therefore, vacate the judgment and remand to the trial court.

In March of 1983, Jepson purchased a general liability automobile insurance contract through the Dilworth Agency, Inc., Dilworth, Minnesota, providing coverage from General Casualty. Issued on April 7, 1983, the policy was effective from March 18, 1983, to March 18, 1984. The named insureds were Timothy and Deborah Jepson, National Muffler Shops, Inc., and National Muffler Warehouses, Inc. National Muffler Shops, Inc.'s address, at 72 North Second Street, Fargo, North Dakota 58102, was listed in the policy as the address for the named insureds. National Muffler Shops, Inc. and National Muffler Warehouses, Inc. are North Dakota corporations which do business in North Dakota.

The policy covered seven vehicles. Six of the vehicles were registered in North Dakota, and one was registered in Indiana. None of the vehicles were registered in Minnesota. All but two of the vehicles were registered in the name of either National Muffler Shops, Inc., or National Muffler Warehouses, Inc., the exception being a Corvette registered to Deborah Jepson at the National Muffler Shops' address and a GMC pick-up truck registered to Jepson's nephew at the same address.

The policy premium was calculated at North Dakota rates and paid by one of the corporations. Testimony indicated that it was General Casualty's practice to insure vehicles in the state where they were titled, that Minnesota insurance rates were substantially higher than North Dakota rates, and that, had the policy been written at higher rates, the insurance agent might have lost the sale.

The policy included a North Dakota Amendment of Cancellation Condition Endorsement and a North Dakota Basic Personal Injury Protection Endorsement. Apart from these references, the policy does not indicate that it is a North Dakota policy. Jepson notes that the general policy change coding sheets reference state 22. The number 22 appears to be General Casualty's code for Minnesota.

Jepson testified that he specifically asked for underinsured and uninsured motorist coverage, and the policy purchased provided $100,000 per person/$300,000 per accident for underinsured and uninsured coverage. The policy prohibits stacking of the underinsured and uninsured benefits.

On December 18, 1983, Jepson and his wife were riding as passengers in a real estate agent's car in Phoenix, Arizona, when they were involved in a traffic accident. At the time, they were looking to purchase a home in Phoenix for reasons related to Jepson's health. The person who caused the accident had insurance with a liability limit of $250,000. Jepson settled with that individual for the policy limits. Jepson also received $100,000 from the coverage on the car in which he was riding.

Jepson applied for and received no-fault benefits from General Casualty under the North Dakota no-fault law. A dispute arose between Jepson and General Casualty regarding medical expenses payable under the personal injury protection coverage of the policy. As a result of that dispute, Jepson brought suit against General Casualty in North Dakota, claiming entitlement to North Dakota personal injury protection benefits. A summons and complaint dated September 24, 1985, were served on General Casualty. The lawsuit was settled prior to being filed in the district court. Jepson was represented in that matter by the same counsel representing him in this action.

In June of 1991, Jepson brought a declaratory judgment action in Minnesota, seeking underinsured motorist benefits under the General Casualty policy, and insisting that those benefits be stacked. The declaratory judgment action went forward, and the trial court concluded that Minnesota law should be applied; the trial court further concluded that under Minnesota law Jepson would be allowed to stack benefits on all seven vehicles. General Casualty moved for amended findings, which motion was denied, and then General Casualty appealed to the court of appeals on four issues: adequacy of notice, whether Jepson had met his burden of production, choice of law, and the number of vehicles to be stacked. The court of appeals affirmed the trial court's decision. General Casualty presents two issues ² for our review: (1) whether Minnesota law or North Dakota law governs the resolution of this underinsured motorist coverage dispute; and (2) if Minnesota law applies, how many of the insured vehicles may be stacked for purposes of underinsured motorist coverage. We reverse and remand.

In analyzing the choice of law issue, the first consideration is whether the choice of one state's law over another's creates an actual conflict. Hague v. Allstate Insurance Co., 289 N.W.2d 43, 46-47 (Minn.1979) (citing Myers v. Government Employees Insurance Co., 302 Minn. 359, 225 N.W.2d 238, 241 (1974)), affirmed 449 U.S. 302, 101 S.Ct. 633, 66 L.Ed.2d 521 (1981). Here, North Dakota would enforce the anti-stacking provision in the policy, while under the law in effect at the time of the accident Minnesota would not. St. Paul Mercury Insurance Company v. Andrews, 321 N.W.2d 483, 489 (N.D.1982); Wasche v. Milbank Mutual Insurance Company, 268 N.W.2d 913, 919 (Minn.1978). Thus, an actual conflict exists.

Next, we must consider whether the law of both states can be constitutionally applied. The Supreme Court set out the test for constitutionality in Hague: "[F]or a State's substantive law to be selected in a constitutionally permissible manner, that State must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair." Allstate Insurance Co. v. Hague, 449 U.S. 302, 312-13, 101 S.Ct. 633, 640, 66 L.Ed.2d 521 (1981).

Both Minnesota and North Dakota have sufficient contacts such that the law of either state could be constitutionally applied. Contacts with Minnesota include Jepson residing in Minnesota at the time the insurance contract was made and at the time of the accident, Jepson's purchase of the policy through a Minnesota agency, and the regular use of at least two of the covered vehicles in Minnesota. North Dakota contacts include all of the covered vehicles but one being registered in North Dakota, ³ the named insured's addresses being in North Dakota, and two of the named insureds were North Dakota corporations, located in North Dakota, and not registered or licensed to do business in Minnesota. Finally, one of those corporations paid the premiums on the insurance policy.

Having concluded that there is a conflict between Minnesota and North Dakota law and that either may be constitutionally applied, we next look to the five choice influencing factors set out in Milkovich v. Saari, 295 Minn. 155, 203 N.W.2d 408 (1973). They are: (1) predictability of result; (2) maintenance of interstate and international order; (3) simplification of the judicial task; (4) advancement of the forum's governmental interest; and (5) application of the better rule of law. Milkovich, 203 N.W.2d at 412. These five factors were put forward by Professor Leflar as a way of laying bare the reasons for choosing to apply one state's law over another. See Robert A. Leflar, Choice-Influencing Considerations in Conflicts Law, 41 N.Y.U.L.Rev. 267, 282 (1966); Robert A. Leflar, Conflicts Law: More on Choice-Influencing Considerations, 54 Calif.L.Rev. 1584, 1586-88 (1966). These factors were not intended to spawn the evolution of set mechanical rules but instead to prompt courts to carefully and critically consider each new fact situation and explain in a straight-forward manner their choice of law. See Choice-Influencing Considerations in Conflicts Law at 281-82; Conflicts Law: More on Choice-Influencing Considerations at 1598. The lower courts need to wrestle with each situation anew. While prior opinions may be helpful to a court's deliberations, the court's obligation is to be true to the method rather than to seek superficial factual analogies between cases and import wholesale the choice of law analysis contained therein.

The trial court determined that the first factor, predictability, was not of great importance and the court of appeals agreed. General Casualty, however, contends that predictability is essential to insurance contracts and...