Latterell v. Progressive Northern Ins. Co., A09–1138.

• Decision Date: 31 August 2011
• Docket Number: No. A09–1138.,A09–1138.
• Parties: Gregory LATTERELL, as trustee for the heirs of Jared Travis Boom, decedent, Appellant,v.PROGRESSIVE NORTHERN INSURANCE COMPANY, Respondent,andAIG Insurance Company, Respondent.
• Court: Minnesota Supreme Court

801 N.W.2d 917

Gregory LATTERELL, as trustee for the heirs of Jared Travis Boom, decedent, Appellant,

v.PROGRESSIVE NORTHERN INSURANCE COMPANY, Respondent,andAIG Insurance Company, Respondent.

No. A09–1138.

Supreme Court of Minnesota.

Aug. 31, 2011.

Syllabus by the Court

1. An insurance policy provision excluding underinsured motorist coverage for accidents occurring while using an automobile to carry persons or property “for compensation or a fee” is not ambiguous.

2. An insurance policy provision excluding underinsured motorist coverage for accidents occurring while using an automobile to carry persons or property “for compensation or a fee” is unenforceable under the Minnesota No–Fault Automobile Insurance Act, Minn.Stat. §§ 65B.41–.71 (2010).

Michael A. Bryant, Nicole L. Bettendorf, Bradshaw & Bryant, PLLC, Waite Park, Minnesota, for appellant.Curtis D. Ruwe, Michelle M. Carter, Arthur, Chapman, Kettering, Smetak & Pikala, P.A., Minneapolis, Minnesota, for respondent Progressive Northern Insurance Company.Michael M. Skram, Matthew M. Johnson, Johnson & Condon, P.A., Minneapolis, Minnesota, for respondent AIG Insurance Company.

OPINION

STRAS, Justice.

Appellant Gregory Latterell, on behalf of his stepson Jared Boom's estate, sued respondents Progressive Northern Insurance Company and AIG Insurance Company to recover underinsured motorist (UIM) benefits following Boom's death from a motor vehicle accident. Progressive, the insurer of Boom's vehicle, denied Latterell's claim for UIM benefits because of a business-use exclusion in Boom's insurance policy. The district court granted summary judgment to both insurance companies, and the court of appeals affirmed. Because the business-use exclusion in Progressive's policy is invalid under the Minnesota No–Fault Automobile Insurance Act (“No–Fault Act”), Minn.Stat. §§ 65B.41–.71 (2010), we reverse the district court's grant of summary judgment to Progressive.

I.

The relevant facts in this case are undisputed. Jared Boom worked as a subcontractor delivering and picking up books. For completing his delivery route, Boom's employer paid him $148 per day in addition to a surcharge for gas. During one of Boom's deliveries to a library in Kerkhoven, Minnesota, Boom was killed when another vehicle collided with his 1998 Dodge Grand Caravan.

Gregory Latterell, Boom's stepfather and trustee for Boom's heirs, first made a claim against the other driver's insurer, which settled for the liability policy limit of $100,000. Latterell then sought to recover UIM benefits from the insurance policy with Progressive Northern Insurance Company that covered Boom's vehicle. Progressive denied the claim based on a business-use exclusion contained in Boom's policy. The policy exclusion states, in relevant part:

Coverage under this Part III [UIM coverage] will not apply:

1. to bodily injury sustained by any person while using or occupying:

a. a covered auto while being used to carry persons or property for compensation or a fee, including, but not limited to, pickup or delivery of magazines, newspapers, food, or any other products.

(Emphasis omitted.)

After Progressive denied coverage, Latterell sought UIM benefits from his own insurance policy with AIG Insurance Company. In limited circumstances, the AIG policy provided coverage for family members residing with Latterell, the named insured on the AIG policy. Even though Boom resided with Latterell, AIG denied Latterell's claim for UIM benefits because of a policy exclusion for injuries sustained while occupying a vehicle owned by a resident relative but not insured under the AIG policy.

Latterell subsequently sued Progressive and AIG in Hennepin County District Court. All three parties moved for summary judgment. The district court granted summary judgment to Progressive and AIG, but denied Latterell's motion for summary judgment. The court of appeals affirmed, concluding that the business-use exclusion in the Progressive policy is enforceable under the No–Fault Act and unambiguously excludes UIM coverage under the specific circumstances of this case. Latterell v. Progressive N. Ins. Co., No. A09–1138, 2010 WL 696747, at *2–3 (Minn.App. Mar. 2, 2010). The court further concluded that because Boom was the named insured on the Progressive policy covering the motor vehicle he occupied at the time of accident, Latterell could not recover UIM benefits under the AIG policy. Id. at *4 (citing Minn.Stat. § 65B.49, subd. 3a(5)). We granted Latterell's petition for review.

II.

This case requires us to address two questions in order to resolve whether Latterell is entitled to UIM benefits under the Progressive policy. First, we must determine whether the district court and the court of appeals correctly interpreted the business-use exclusion in the Progressive policy. Second, we must decide whether the business-use exclusion, as properly interpreted, is enforceable under the No–Fault Act. We address each of these questions in turn.

A.

The first question is whether the business-use exclusion unambiguously encompasses Boom's conduct in delivering and picking up library books as a subcontractor at the time of the accident. Interpretation of an insurance contract, including whether provisions in a policy are ambiguous, is a legal question subject to de novo review. Dohney v. Allstate Ins. Co., 632 N.W.2d 598, 600 (Minn.2001); Am. Commerce Ins. Brokers, Inc. v. Minn. Mut. Fire & Cas. Co., 551 N.W.2d 224, 227 (Minn.1996).

Progressive's business-use exclusion states in relevant part that UIM coverage is not available for bodily injury sustained “while using or occupying ... a covered auto while being used to carry persons or property for compensation or a fee, including, but not limited to, pickup or delivery of magazines, newspapers, food, or any other products.” (Emphasis omitted.) Latterell contends that the phrase “for compensation or a fee” is ambiguous because it may refer to a per-trip charge, a daily charge for use of the car, or a fixed hourly wage.

Insurance policy provisions are ambiguous only when they are “reasonably subject to more than one interpretation.” Am. Commerce Ins. Brokers, 551 N.W.2d at 227. We interpret unambiguous policy language “in accordance with its plain and ordinary meaning.” Ill. Farmers Ins. Co. v. Glass Serv. Co., 683 N.W.2d 792, 799 (Minn.2004). Here, the broadly worded business-use exclusion in the Progressive policy is unambiguous because it excluded UIM coverage for Boom's delivery and retrieval of books under any of the remuneration arrangements identified by Latterell, including the daily wage that Boom received for his services. The definition of the term “fee” is “compensation often in the form of a fixed charge for professional service or for special and requested exercise of talent or of skill.” Websters Third New International Dictionary 833 (2002); see also Blacks Law Dictionary 690 (9th ed.2009) (defining “fee” as “[a] charge for labor or services”); The American Heritage Dictionary of the English Language 647 (4th ed. 2009) (“A charge for professional services”). The term “compensation,” by contrast, means “payment for value received or service rendered: remuneration.” Webster's Third New International Dictionary 463 (2002); see also Black's Law Dictionary 322 (9th ed.2009) (defining “compensation” as “[r]emuneration and other benefits received in return for services rendered; esp., salary or wages”); The American Heritage Dictionary of the English Language 376 (4th ed. 2009) (“Something, such as money, given or received as payment or reparation, as for a service or loss.”).

Boom's daily wage of $148, plus a gas surcharge, unambiguously constitutes “compensation” because it is “remuneration” or “payment for ... service[s] rendered” for the delivery and retrieval of library books. Moreover, Progressive's business-use exclusion uses the disjunctive “or” between the terms “compensation” and “fee,” which means that using or occupying “a covered auto while being used to carry persons or property for” either compensation or a fee is excluded from UIM coverage under the Progressive policy. Therefore, even assuming the term “fee” is ambiguous or must be interpreted as including only a fixed charge for each delivery, see Progressive Cas. Ins. Co. v. Metcalf, 501 N.W.2d 690, 692 (Minn.App.1993), the phrase “compensation or a fee” is sufficiently broad to include Boom's daily wage, plus the surcharge he received for gas.

Latterell nonetheless argues that the phrase “for compensation or a fee” is ambiguous because the phrase is so broad that it could include nearly any remuneration arrangement between two parties, including the payment of money or “some [other] type of tangible or intangible benefit.” Latterell's argument, however, mistakenly equates breadth with ambiguity; just because contractual language is broad does not mean it is ambiguous. To the contrary, we have recognized that broad meanings in insurance policies do not “necessarily create ambiguity.” Am. Commerce Ins. Brokers, 551 N.W.2d at 228; see also Associated Indep. Dealers, Inc. v. Mut. Serv. Ins. Cos., 304 Minn. 179, 183, 229 N.W.2d 516, 519 (1975) (concluding that a “broad” provision in an insurance contract was unambiguous). And we “must fastidiously guard against the invitation to create ambiguities where none exist.” Columbia Heights Motors, Inc. v. Allstate Ins. Co., 275 N.W.2d 32, 36 (Minn.1979) (citation omitted) (internal quotation marks omitted).

Here, Progressive's business-use exclusion unambiguously excluded UIM coverage because Boom was transporting books for compensation in the form of a fixed daily wage.

B.

Now that we have interpreted Progressive's business-use exclusion, the next question is whether the exclusion is enforceable under the No–Fault Act. The district court and the court of appeals upheld Progressive's policy exclusion, concluding that the No–Fault Act does not specifically prohibit excluding UIM...