Meister v. Western Nat. Mut. Ins. Co.

• Decision Date: 17 January 1992
• Docket Number: No. C1-90-1997,C1-90-1997
• Parties: Michael David MEISTER, et al., Respondents, v. WESTERN NATIONAL MUTUAL INSURANCE COMPANY, petitioner, Appellant, Mutual Service Casualty Insurance Company, et al., Respondents.
• Court: Minnesota Supreme Court

Page 372

479 N.W.2d 372

Michael David MEISTER, et al., Respondents, v. WESTERN NATIONAL MUTUAL INSURANCE COMPANY, petitioner,

Appellant,

Mutual Service Casualty Insurance Company, et al.,

Respondents.

No. C1-90-1997.

Supreme Court of Minnesota.

Jan. 17, 1992.

Rehearing Denied Feb. 26, 1992.

Syllabus by the Court

Individual injured while riding in business vehicle was properly awarded basic economic loss benefits under employer's policy. Insured may also collect additional economic loss benefits, to the extent they can be shown, under personal policy where a premium was paid to allow those benefits in addition to basic benefits due under another policy.

Gregory J. Johnson, Theodore J. Smetak, Arthur, Chapman & McDonough, Minneapolis, for appellant.

Harry L. Newby, Jr., Newby, Lingren, Newby & Carlson, Ltd., Cloquet, for Michael David Meister, et al.

Richard J. Kruger, St. Paul, for Mut. Service Cas. Ins. Co., et al.

Jan M. Gunderson, Louise A. Dovre, Rider, Bennett, Egan & Arundel, Minneapolis, for amicus, Ins. Federation of Minnesota.

Heard, considered and decided by the court en banc.

YETKA, Justice.

This case comes before us on stipulated facts and involves whether the 1985 anti-stacking amendment to the Minnesota No-Fault Automobile Insurance Act ¹ forecloses the requirement that Western National Mutual Insurance Company (hereinafter Western National), as insurer of plaintiff Meister, pay benefits in addition to the basic economic loss benefits paid by Mutual Service Casualty Insurance Company (hereinafter MSI), the insurer of Michael Meister's employer. The District Court of Carlton County ruled in favor of Western National, the court of appeals reversed, and Western National appealed here. We affirm the court of appeals.

On August 9, 1988, Michael Meister suffered severe head injuries when he was thrown from the back of the pickup truck in which he was riding. Meister's employer, Gunflint Lodge, Inc., owned and furnished the truck from which Meister fell; however, Meister was not working at the time of the accident. The accident occurred after another lodge employee who was transporting the lodge's inflatable river rafts agreed to drive Meister and another employee to a place where they could go rafting. The rafts were loaded in the back of the pickup with Meister sitting on top of them. En route to the drop-off point, one of the rafts blew out of the truck, throwing Meister to the pavement. Since the accident, Meister has incurred medical bills in excess of $60,000.

MSI insured the truck under a business automobile policy that provided $20,000 in medical expenses and $20,000 in non-medical expense limits of basic economic loss benefits. Meister was also an insured under the personal automobile policy of his father, David J. Meister. In that policy, issued by Western National, David J. Meister elected to increase by $20,000 his

$20,000/$20,000 basic economic loss coverage applicable to each of his two insured vehicles, resulting in $40,000 each of medical and non-medical coverage for each insured.

The Western National policy also provided an exclusion with respect to personal injury protection benefits coverage in its Minnesota endorsement:

Exclusions. This coverage does not apply:

* * * * * *

c. to "bodily injury" sustained by any person arising out of the maintenance or use of a "motor vehicle"

(1) being used in the business of transporting persons or property, or

(2) furnished by the employer of the "named insured" or "relative."

If with respect to such vehicle the security required by the Minnesota No-Fault Automobile Insurance Act is in effect.

On October 26, 1988, Meister submitted an application to MSI for basic economic loss benefits. On November 8, 1988, MSI tendered $20,000 in medical expense benefits to Meister for medical expenses incurred as a result of the accident. On November 21, 1988, Meister rejected the $20,000 draft tendered by MSI because he determined that he was entitled to basic economic loss benefits from Western National. Meister had filed his claim for benefits with Western National on November 10, 1988. At the time of the summary judgment motion, MSI had not withdrawn its November 8, 1988 tender of basic economic loss benefits.

On January 18, 1989, Meister commenced suit against Western National, MSI, and Gunflint Lodge, Inc. He contended that, as a matter of law, he was entitled to receive economic loss benefits from Western National in the amount of $40,000 for medical expense benefits and $40,000 for income loss benefits pursuant to Minn.Stat. Sec. 65B.44, subds. 1(a), (b). In the alternative, Meister claimed that he was entitled to add the benefits of the Western National policy to those of the MSI policy.

The trial court granted summary judgment in favor of Western National, holding that MSI, as the insurer of the employer's vehicle, provided the sole source of basic economic loss coverage for Meister's medical expenses. The trial court predicated its conclusion on the applicability of the business vehicle priority section of Minn.Stat. Sec. 65B.47, subd. 1 (1988), which determines the payment source of basic economic loss benefits. That provision reads in pertinent part:

In case of injury to the driver or other occupant of a motor vehicle * * * if the accident causing the injury occurs while the vehicle is being used in the business of transporting persons or property, the security for payment of basic economic loss benefits is the security covering the vehicle or, if none, the security under which the injured person is an insured.

Minn.Stat. Sec. 65B.47, subd. 1 (1988).

The trial court stated that subdivision 1 applied in this case even though Meister "was, for his own nonwork-related purposes, riding in a truck which was being used to transport property belonging to the Gunflint Lodge." Home Mut. Ins. Co. v. Snyder, 356 N.W.2d 780 (Minn.App.1984). The trial court additionally denied Meister's alternative claim as violative of the prohibition against cross-priority stacking, which is "interdicted by the higher courts in Minnesota."

The court of appeals reversed and held that Meister should prevail on an alternative basis. Meister v. Western Nat'l Mut. Ins. Co., 465 N.W.2d 428 (Minn.App.1991). The appeals court affirmed the trial court's determination that MSI was responsible for basic economic loss benefits under the priority subdivisions of Minn.Stat. Sec. 65B.47. Although the court stated that it was "almost certain" that subdivision 1 applied to the instant case, it held that the coverage under subdivision 2 was "clearly applicable." 465 N.W.2d at 430. Subdivision 2 reads in pertinent part:

In case of injury to an employee * * * if the accident causing the injury occurs while the injured person is driving or occupying a motor vehicle * * * furnished by the employer, the security for payment of basic economic loss benefits is the security covering the vehicle or, if none, the security under which the injured person is an insured.

Minn.Stat. Sec. 65B.47, subd. 2 (1988). According to the court of appeals, because Meister was an employee in his employer's vehicle, the business vehicle priority of subdivision 2 applied without regard to whether Meister was injured in the course and scope of his employment. 465 N.W.2d at 430.

However, the court of appeals also held that some of the Western National policy coverage was available to Meister as "additional first-party coverage." Id. at 431. According to the court, this result was mandated by the 1985 anti-stacking amendment to the Act (Minn.Stat. Sec. 65B.47, subd. 7). That amendment

created an entirely new situation. We no longer have traditional stackings. Now, when insureds elect the "added together" coverage * * * they are not choosing to stack "basic economic loss benefits," as contemplated by pre-1985 stacking cases. Before 1985 stacking occurred by operation of law; now an insurance purchaser chooses to have double coverage; to buy voluntarily another $40,000 of insurance over and above basic economic loss benefits.

465 N.W.2d at 430-31 (footnote omitted).

The appeals court pointed out that the priority system of Minnesota's no-fault act applied only to basic economic loss benefits, which the Act clearly defines.

Basic economic loss benefits shall provide reimbursement for all loss suffered through injury arising out of the maintenance or use of a motor vehicle, subject to any applicable deductibles, exclusions, disqualifications, and other conditions, and shall provide a maximum of $40,000 for loss arising out of the injury of any one person, consisting of:

(a) $20,000 for medical expense loss arising out of injury to any one person; and

(b) a total of $20,000 for income loss, replacement services loss, funeral expense loss, survivor's economic loss, and survivor's replacement services loss arising out of the injury to any one person.

Minn.Stat. Sec. 65B.44, subd. 1 (1988) (emphasis added).

The court of appeals held that economic loss benefits exceeding the $40,000 maximum are not basic economic loss benefits. Instead, they are " 'additional benefits' as provided for in section 65B.49, subdivision 7 (1988), and 'optional economic loss benefits' as referred to in sections 65B.53, 65B.58, and 65B.60." Meister, 465 N.W.2d at 431 (footnote omitted). The court concluded that the priority section is limited to basic economic loss benefits and, by its terms, does not apply to "additional" or "optional economic loss" benefits.

Accordingly,

[u]nder the circumstances of this case, we are not talking about "stacking." We are not stacking the same coverage, rather we are determining first, which policy covers the basic economic loss benefits and, second, giving effect to additional protection that has been purchased by [Meister's] father, and requiring the insurer to pay the added benefits that it contracted to pay to covered members of the Meister family if seriously injured in an...