Murphy v. Milbank Mut. Ins. Co., s. C1-85-88

• Decision Date: 06 June 1986
• Docket Number: Nos. C1-85-88,C7-85-158,s. C1-85-88
• Citation: 388 N.W.2d 732
• Parties: Mary E. MURPHY, individually, and as trustee for the heirs of Gary K. Murphy, decedent, Petitioner, Appellant (C1-85-88), Respondent (C7-85-158), v. MILBANK MUTUAL INSURANCE COMPANY, Petitioner, Respondent (C1-85-88), Appellant (C7-85-158), Kemper Insurance Companies, Petitioner, Appellant, Respondent (C1-85-88, C7-85- 158).
• Court: Minnesota Supreme Court

Page 732

388 N.W.2d 732

Mary E. MURPHY, individually, and as trustee for the heirs of Gary K. Murphy, decedent, Petitioner, Appellant (C1-85-88), Respondent (C7-85-158), v. MILBANK MUTUAL INSURANCE COMPANY, Petitioner, Respondent

(C1-85-88), Appellant (C7-85-158),

Kemper Insurance Companies, Petitioner, Appellant,

Respondent (C1-85-88, C7-85- 158).

Nos. C1-85-88, C7-85-158.

Supreme Court of Minnesota.

June 6, 1986.

Syllabus by the Court

1. A 1977 statute requiring an insurer to offer optional uninsured coverage, which became effective during a policy period, did not require the insurer to make the mandatory offer until the policy was reissued or renewed, and endorsements added to the policy did not activate the offer requirement.

2. In the instance where a Minnesota vehicle had an accident in 1977 in Iowa with an Iowa vehicle having minimum liability limits less than Minnesota's, uninsured and underinsured coverage under the No-Fault Act then in effect provided for duplicative coverages but not duplicative recoveries.

3. Uninsured motorist coverages in a commercial fleet policy could not be stacked because, by the terms of the policy, the claimant truck driver was an insured only for the coverage of the truck he was occupying.

4. A denial of a petition for discretionary review of a court of appeals decision does not give that decision any more or any less precedential effect than a court of appeals decision where no petition for review was sought.

David Sandberg, Forest Lake, for Murphy.

David Oskie, Golden Valley, for Milbank Mut.

Mark L. Pfister, Minneapolis, for Kemper Ins.

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

SIMONETT, Justice.

This case presents issues of whether uninsured motorist coverage should be implied for an insurer's failure to offer, whether uninsured and underinsured coverages are mutually exclusive, and whether stacking applies to a commercial fleet policy. We affirm in part and reverse in part.

On October 29, 1977, Gary Murphy, a Minnesota resident, while driving his employer's truck in Iowa, was fatally injured in a collision with a car. The car, owned and operated by an Iowa resident, carried the minimum bodily injury limits required by Iowa law of $10,000/20,000. Murphy's employer, U.S. Industries, kept Murphy's truck garaged and registered in Minnesota and insured with Kemper Insurance Company. Kemper's policy covered a commercial fleet of over 2,000 vehicles operated nationwide by U.S. Industries. The policy provided for uninsured motorist coverage conforming to the state where a particular vehicle was registered; consequently, Murphy's truck had $25,000/50,000 uninsured coverage as then required by Minnesota law. The policy had single limit liability coverage of $500,000. As written, the policy had no underinsured motorist coverage.

Decedent Murphy owned two family vehicles insured by Milbank Mutual Insurance Company. The Milbank policies contained uninsured motorist coverage of $50,000/100,000 on each vehicle. Milbank concedes this coverage may be stacked, thus affording $100,000 of uninsured motorist coverage for the Murphy death claim, subject to any Kemper coverage that might be primary. After collecting the $10,000 liability limits on the Iowa car, plus survivor's no-fault benefits and workers' compensation, the Murphy heirs considered establishing additional coverage under the employer's policy with Kemper.

Consequently, plaintiff Mary E. Murphy, trustee for the heirs of her deceased husband, brought this suit against defendants Kemper and Milbank. The original complaint alleged that the Murphy heirs were entitled to uninsured motorist coverage under both policies. On plaintiff's motion for summary judgment, the trial court held that the Iowa car, even though carrying $10,000/20,000 liability coverage, was an "uninsured motor vehicle" under Minnesota's No-Fault Act. On appeal, we affirmed. Murphy v. Milbank Mutual Insurance Co., 320 N.W.2d 423 (Minn.1982). On return of the case to the trial court, plaintiff expanded her theory of recovery. First, she claimed that Kemper having failed to offer optional additional uninsured motorist coverage, $500,000 of uninsured coverage should be read into the policy by operation of law, and she moved for partial summary judgment on this claim. Second, she claimed that underinsured coverage should also be read into Kemper's policy, and she moved to amend her complaint to claim underinsured as well as uninsured coverage. The trial court rejected both claims, ruling that there was no additional uninsured coverage because, at the times involved, Kemper was not required to offer it, and, further, that underinsured and uninsured coverages were mutually exclusive.

The case then went to arbitration, with the trial court's rulings on the legal issues reserved for later judicial review. The arbitrators assessed the trustee's damages at $800,000, and put 70% fault on the Iowa driver and 30% on decedent Murphy. Plaintiff was thus awarded $560,000, reduced by $10,000 no-fault survivor's benefits already paid. The district court confirmed the award of $550,000 but ruled Kemper need pay only $15,000 of the award with Milbank paying $100,000, plus prejudgment interest on each award.

Both trustee Murphy and defendant Milbank appealed to the court of appeals. The court of appeals held: (1) reversing the trial court, that $500,000 of uninsured motorist coverage would be implied by law; (2) affirming the trial court, that underinsured coverage was not available to plaintiff; and (3) affirming the trial court, that any uninsured coverages in the Kemper policy could not be stacked. (On two other issues not appealed to this court, the court of appeals held that Kemper could not set off either the $10,000 paid by the tortfeasor's insurer or the workers' compensation benefits received by Mary Murphy.) Murphy v. Milbank Mutual Insurance Co., 368 N.W.2d 753 (Minn.Ct.App.1985). We granted the petitions of all three parties for further review.

I.

We first consider whether additional uninsured coverage must be read into Kemper's policy. The policy covered the period April 1, 1977, to April 1, 1978, and contained the mandatory $25,000/50,000 uninsured motorist coverage. Almost two months after the policy was issued, on May 27, 1977, a Minnesota law went into effect requiring insurers to offer optional additional uninsured motorist coverage in an amount equal to the residual bodily injury limits of the policy. Minn.Stat. Sec. 65B.49, subd. 6(f) (Supp. 1977). ¹ Thus our first issue is: Since Kemper did not make an offer of optional coverage under subdivision 6(f), which went into effect during the policy period, should this coverage be added to the policy by operation of law? We say no.

Minn.Stat. Sec. 65B.49, subd. 4 (1976) (repealed 1985), provided that no insurance policy may be "renewed, delivered or issued for delivery, or executed" without the statutory minimum uninsured coverage. Subdivision 6(f) of the same section then required the insurer to offer additional uninsured coverage. We believe the section must be "construed as a whole to harmonize all its parts," Owens v. Federated Mutual Implement & Hardware Insurance Co., 328 N.W.2d 162, 164 (Minn.1983); and we hold, therefore, that subdivision 6(f) is to be read as requiring offers of optional coverage to be made when a policy is issued or renewed after the effective date of the subdivision. ²

In this case, Kemper's policy was not renewed after the effective date of the subdivision (May 27) and before the date of Murphy's accident (October 29). The court of appeals, however, felt that several endorsements added to the policy after its issuance so "amended" the policy as to activate the mandatory offer statute. We disagree. The case closest on point is Folstad v. Farmers Insurance Exchange, 297 Minn. 496, 210 N.W.2d 238 (1973). ³ There we held that adding an additional driver to the named insured's auto policy, with the insurer issuing a new declarations sheet containing a rate class change and a premium increase, was a "significant transaction" involving more than a policy renewal, thus activating a statute mandating that a rejection of uninsured coverage must be in writing unless the transaction involved was only a policy renewal.

Here four endorsements were added to Kemper's policy, mostly deleting some subsidiaries from coverage, although one endorsement may have added a few subsidiaries or clarified the identity of some subsidiaries already covered. Two of these endorsements were declared to have effective dates prior to May 27. The fact these two were not countersigned by the insurer until after May 27 is not particularly significant. The other two endorsements, Nos. 36 and 38, had effective dates after May 27 but each merely deleted a subsidiary. Here we have a commercial fleet policy covering over 2,000 vehicles operating nationwide, negotiated in New York, and involving a premium of almost $200,000. In this context, considering the nature and effective dates of the endorsements, we conclude the endorsements made during the policy period do not constitute a renewal or the kind of "significant transaction" contemplated by Folstad that triggers Kemper's duty under subdivision 6(f) to offer the optional uninsured coverage for the vehicles garaged and registered in Minnesota.

We reverse the court of appeals on this issue and hold, as a matter of law, that optional additional uninsured motorist coverage is not to be read into the Kemper policy.

II.

Assuming Kemper's policy has underinsured coverage, ⁴ the next issue is whether plaintiff is entitled to recover underinsured motorist benefits as well as the $25,000 of uninsured benefits admittedly provided by the policy. The court of appeals held that underinsured and uninsured benefits are "mutually exclusive" and that, because there was uninsured coverage, there could not be underinsured coverage. We do not agree.

We need...