Jung v. Gen. Cas. Co. of Wis., 10–3350.

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Writing for the Court: Before LOKEN, BEAM, and GRUENDER, Circuit Judges.
• Citation: 651 F.3d 796
• Parties: John JUNG; Janice Jung, Appellants,v.GENERAL CASUALTY COMPANY OF WISCONSIN, Appellee.
• Docket Number: No. 10–3350.,10–3350.
• Decision Date: 09 August 2011

651 F.3d 796

John JUNG; Janice Jung, Appellants,
v.
GENERAL CASUALTY COMPANY OF WISCONSIN, Appellee.

No. 10–3350.

United States Court of Appeals, Eighth Circuit.

Submitted: June 15, 2011.Filed: Aug. 9, 2011.

[651 F.3d 797]

Alexander F. Reichert, argued, Troy R. Morley, on the brief, Grand Forks, ND, for appellants.Michael J. Morley, argued, Kraig A. Wilson, on the brief, Grand Forks, ND, for appellee.Before LOKEN, BEAM, and GRUENDER, Circuit Judges.BEAM, Circuit Judge.

John and Janice Jung (the Jungs) challenge the denial of their claim for benefits arising from an underinsured motorists (UIM) policy issued by appellee, General Casualty of Wisconsin. The district court ¹ granted summary judgment in favor of General Casualty. The Jungs appeal. We affirm.

I. BACKGROUND

On November 30, 2006, John Jung (Jung) was seriously injured in a motor-

[651 F.3d 798]

vehicle accident caused by a negligent driver, Richard Martin. At the time of the accident, Jung was driving a 2006 Dodge Ram 2500 pickup owned by his employer, Tooz Construction. The vehicle was covered by an insurance policy Tooz had purchased from General Casualty. The policy included a $1,000,000 UIM endorsement. Martin was driving a 2001 Dodge pickup he owned and insured under a motor-vehicle-liability policy issued by Nodak Mutual Insurance Company. That policy had a liability limit of $250,000 per person and $500,000 per accident. Martin also had an excess-liability policy issued by Nodak Mutual, which had a $1,000,000 limit. The excess-liability policy specifically listed operation of Martin's truck as an insured risk.

On July 30, 2008, the Jungs, Nodak Mutual, and Martin reached a settlement agreement under which the Jungs received $1,250,000. The settlement was paid via two separate checks: one check for $250,000—the full amount of Martin's motor-vehicle-liability policy—and one for $1,000,000—the full value of Martin's excess-liability policy. The Jungs then filed a claim with General Casualty for coverage pursuant to the UIM endorsement. General Casualty denied the Jungs' claim after concluding that Martin's vehicle was not underinsured.

On November 24, 2008, the Jungs filed suit against General Casualty in federal district court. General Casualty moved for summary judgment, arguing that, as a matter of law, Martin's truck was not underinsured. The motion was referred to the magistrate judge ² who issued a report, recommending that summary judgment be granted. The Jungs filed objections with the district court. After a hearing, the district court adopted the magistrate judge's recommendations and granted General Casualty's motion for summary judgment. The Jungs then filed a Request to Certify a Question of Law to the North Dakota Supreme Court. On October 15, 2010, the district court entered an order denying this request. The Jungs appeal the adverse grant of summary judgment and the denial of their request for certification.

II. DISCUSSION

We review the district court's grant of a motion for summary judgment de novo. Genosky v. Minnesota, 244 F.3d 989, 992 (8th Cir.2001). Summary judgment is appropriate where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Here, there is a potentially dispositive legal issue; General Casualty is entitled to summary judgment if Martin's vehicle was, as a matter of law, not underinsured. See DeCoteau v. Nodak Mut. Ins. Co., 603 N.W.2d 906, 912 (N.D.2000). Because we are sitting in diversity, this issue is governed by North Dakota state law. Walker v. Armco Steel Corp., 446 U.S. 740, 747, 100 S.Ct. 1978, 64 L.Ed.2d 659 (1980).

The North Dakota Century Code establishes the minimum standard for UIM coverage in the state, requiring a UIM insurer to compensate an insured for “bodily injury” damages that the insured is legally entitled to collect from the operator of an underinsured motor vehicle, so long as those damages arise “out of the ownership, maintenance, or use” of that vehicle.

[651 F.3d 799]

N.D. Cent. Code Ann. § 26.1–40–15.3(1). The Code goes on to define an underinsured motor vehicle as “a motor vehicle for which there is a bodily injury liability insurance policy, or bond providing equivalent liability protection, in effect at the time of the accident, but the applicable limit of bodily injury liability of such policy or bond [i]s less than the applicable limit for underinsured motorist coverage under the insured's policy.” N.D. Cent. Code Ann. § 26.1–40–15.1(2)(a).

Under this “gap” approach to defining underinsured status, a vehicle is only underinsured if the policy limits applicable to that vehicle are less than the UIM coverage in the policy under which the insured seeks benefits. Score v. Am. Family Mut. Ins. Co., 538 N.W.2d 206, 208 (N.D.1995). Thus, here, the relevant question is whether Martin's truck insured by Nodak Mutual was a “motor vehicle for which there is a bodily injury liability policy” with an applicable limit of less than the applicable limit of Jung's $1,000,000 UIM endorsement in the General Casualty policy. It is undisputed that Martin's car was covered by a $250,000 automobile-liability policy issued by Nodak Mutual. If this were the only applicable policy, there would be a gap of $750,000, Martin's vehicle would be underinsured, and summary judgment would be inappropriate. However, General Casualty argues that Martin's personal excess-liability policy is a “bodily injury policy” that applies to the at-fault vehicle and that, therefore, there is $1,250,000 worth of coverage on...