Murphy v. Milbank Mut. Ins. Co.
| Decision Date | 04 June 1985 |
| Docket Number | Nos. C1-85-88,C7-85-158,s. C1-85-88 |
| Citation | 368 N.W.2d 753 |
| Parties | Mary E. MURPHY, individually, and as trustee for the heirs of Gary K. Murphy, decedent, Appellant, v. MILBANK MUTUAL INSURANCE COMPANY, Kemper Insurance Companies, Respondents. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. When an insurer fails to offer optional coverage required by Minn.Stat. § 65B.49, subd. 6(f), coverage equal to the liability limits will be implied as a matter of law.
2. When uninsured motorist coverage applies because the tortfeasor's liability limits are not legally sufficient under Minnesota law, underinsured motorist coverage is not applicable.
3. Uninsured motorist coverages should not be stacked on a commercial policy unless the record is clear that the premiums are computed on an individual vehicle basis.
4. The amount of uninsured motorist coverage should not be reduced by the amount of worker's compensation benefits received.
David C. Sandberg, Forest Lake, for appellant.
Sally A. Holmgren, Golden Valley, for Milbank Mut. Ins. Co.
Mark L. Pfister, Minneapolis, for Kemper Ins. Companies.
Heard, considered and decided by POPOVICH, C.J., and SEDGWICK and RANDALL, JJ.
As the result of a wrongful death action, judgment was entered against defendant Milbank Mutual Insurance Company in the amount of $100,000 plus $3,925 prejudgment interest. A $15,000 judgment was entered against defendant Kemper Insurance Companies. Appellant Mary Murphy, decedent's spouse, and appellant Milbank Mutual Insurance Company appeal this judgment. Affirmed in part, reversed in part and remanded.
Gary Murphy died as a result of injuries sustained in a car/truck collision on October 29, 1977 in Iowa. Appellant Mary E. Murphy is decedent's surviving spouse, parent and guardian of his daughter and duly appointed trustee for his heirs and next-of-kin.
Gary Murphy, a Minnesota resident, was driving a semi-tractor trailer owned by United States Industries, Inc., his employer. The tractor was registered in Minnesota and insured by defendant American Motorists Insurance Company (Kemper Insurance Companies). The policy issued April 1, 1977, had bodily injury limits of $500,000 and no underinsured motorist coverage. The uninsured motorist coverage had "statutory" limits. Kemper asserts this means limits of $25,000. Appellant argues that the limits of uninsured motorist coverage are equal to the residual liability limits of $500,000.
Gary and Mary Murphy owned two family cars registered in Minnesota and insured by defendant Milbank Mutual under policies issued in Minnesota. The amount of uninsured coverage with Milbank was $50,000 per vehicle.
The other motorist was an Iowa resident. His car was registered in Iowa and had $10,000 in bodily injury liability coverage, $20,000 per occurrence. These limits were in accord with Iowa law. The $10,000 limits of this policy have been paid to Kemper in settlement of its subrogation claim.
Mary Murphy brought an action against Kemper insurance company to determine whether she was entitled to uninsured motorist benefits. By partial summary judgment the trial court determined Mary was entitled to uninsured motorist benefits. The supreme court affirmed. Murphy v. Milbank Mutual Insurance, 320 N.W.2d 423 (Minn.1982).
Mary then filed a Demand for Arbitration claiming uninsured motorists benefits against Milbank Mutual and Kemper. No claim for underinsured coverage was made.
The arbitrators found that plaintiff's damages were $800,000.00 with plaintiff 30% at fault and the Iowa motorist 70% at fault. Application of comparative negligence resulted in damages of $560,000. The arbitrators reduced the award by $10,000 previously paid in no-fault survivors benefits. The arbitrators denied an offset for the $10,000 of liability coverage available to the Iowa driver.
The trial court confirmed the arbitration award, but after various rulings entered judgment against Milbank Mutual Insurance Company in the amount of $100,000, plus $3,925 in prejudgment interest, and against Kemper in the amount of $15,000, plus $588.75 in prejudgment interest.
1. Was Kemper required by Minn.Stat. § 65B.49, subd. 6(f), to offer additional uninsured motorist coverage equal to its liability limits to $500,000?
2. Is underinsured motorist coverage applicable when there has been a determination that uninsured motorist coverage applies because the tortfeasor's liability limits of $10,000 are not legally sufficient under Minnesota law?
3. Should the uninsured motorist coverages of all trucks garaged in Minnesota be stacked where the record is unclear as to how the premiums on a commercial policy are computed?
4. Should the amount of uninsured motorist coverage be reduced by the amount of liability coverage on the other car?
5. Should the amount of uninsured motorist coverage be reduced by worker's compensation benefits received?
1. Minn.Stat. § 65B.49, subd. 6(f) (1977) (repealed 1980), effective on the date of the accident, required that an insurer "shall offer" uninsured motorist coverage equivalent to the residual liability limits, in this case $500,000. Kemper claims it was not required to offer matching uninsured motorist coverage until its renewal, April 1, 1978, even though the statute became effective May 27, 1977.
The trial court agreed. It held this statute did not apply to the policy between Kemper and decedent's employer because Minn.Stat. § 65B.49, subd. 6(f), was not effective until May 27, 1977, two months after the Kemper policy was entered into. Therefore, the trial court found Kemper had no statutory duty to offer supplemental coverage until April 1, 1978, the next renewal date.
This conclusion appears supported by Owens v. Federated Mutual Implement and Hardware Insurance Co., 328 N.W.2d 162 (Minn.1983), where the court refused to apply a recently enacted statute to a policy which was in existence before the effective date of the statute. However, Owens does not deal with the situation where the policy is amended after the effective date of an applicable statute and before the policy's next renewal.
Ritchie v. U.S. Auto Ass'n., 363 N.W.2d 851 (Minn.Ct.App.1985), pet. for rev. denied , deals with this circumstance. It held that an insurer must offer uninsured motorist coverage without waiting until the next renewal date if the policy is amended before its renewal date and a statute requiring such an offering has come into effect since the original issuance or last renewal of the policy.
Between the policy's renewal in April 1977 and the accident in October 1977 the policy was amended at least two times. Before the accident, Kemper had frequent contact with its insured, decedent's employer. This conduct contradicts Kemper's claim that it would have been commercially too burdensome to make an offer of additional optional coverages between April 1977 and October 1977, the date of the accident.
Kemper argues that requiring it to offer additional coverage before the next renewal date would involve enormous expense and that the legislature did not intend such an unreasonable construction. Requiring insurance companies to offer these optional coverages, does not mean insurance companies will have to pay under both the uninsured and underinsured provisions. These provisions are mutually exclusive.
Respondents' concern regarding commercial unreasonableness and expense to insurance companies is misplaced. This decision affects only those contracts amended between their renewal dates and only those subject to Minn.Stat. § 65B.49, subd. 6, which was repealed in 1980.
The trial court's findings that requiring insurance companies to offer the optional coverage when amending a policy would be commercially unreasonable and involve enormous expense are not based on evidence and are beyond the scope of a motion for summary judgment. Because Kemper amended the policy several times before the accident, it was required under Ritchie to offer additional uninsured and underinsured motorist coverage pursuant to Minn.Stat. § 65B.49, subd. 6. Therefore, the additional $500,000 uninsured coverage must be implied as a matter of law.
2. Appellants claim the trial court erred in denying a motion to amend the complaint to include a claim for underinsured coverage. Uninsured coverage and underinsured coverage are mutually exclusive Berg v. Western National Mutual Insurance Co., 359 N.W.2d 726, 729 (Minn.Ct.App.1984), pet. for rev. denied (Minn. Mar. 29, 1985).
Uninsured coverage is applicable where a car...
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