Nationwide Mut. Ins. Companies v. Lagodinski, 20030334.
| Decision Date | 22 July 2004 |
| Docket Number | No. 20030334.,20030334. |
| Citation | 683 N.W.2d 903,2004 ND 147 |
| Parties | NATIONWIDE MUTUAL INSURANCE COMPANIES, Plaintiff and Appellee v. Victor LAGODINSKI, Defendant and Appellant. |
| Court | North Dakota Supreme Court |
Troy A. Wolf, Smith Bakke Oppegard Porsborg & Wolf, Moorhead, MN, for plaintiff and appellee.
Duane A. Lillehaug, Fargo, ND, for defendant and appellant.
[¶ 1] Victor Lagodinski appeals from summary judgment granting declaratory relief to Allied Mutual Insurance Company, now known as Nationwide Mutual Insurance Company ("Nationwide"). We affirm.
[¶ 2] Lagodinski lives and farms in LaMoure County. As a part of the farming operation, Lagodinski employed Grant Kleven as a seasonal employee. On May 22, 2000, Kleven was transporting water and chemicals from Lagodinski's farmstead to a field in a 1970 Kenworth semi-tractor/trailer owned by Lagodinski. The Kenworth was being used to transport water and chemicals between the farmstead and fields on a public highway. The Kenworth was not registered as a motor vehicle nor was it insured. As Kleven turned onto Highway 13, he struck a motorcycle traveling eastbound driven by Lucas Klettke. Klettke sustained bodily injury including a concussion and broken leg. Klettke filed suit against Lagodinski alleging negligence under respondeat superior.
[¶ 3] Lagodinski asserts the incident should be covered under a farm policy issued to him by Nationwide. Lagodinski argues the farm policy should cover the incident because the policy provides coverage for occurrences arising out of the farm operation. The policy does not provide liability coverage for bodily injuries arising out of the use of a motor vehicle, unless the vehicle is not subject to motor vehicle registration because it is used exclusively for farm purposes. Lagodinski argues the Kenworth was adapted to be used solely for farm purposes; thus, the terms of the policy should be construed to provide coverage.
[¶ 4] Lagodinski argues the semi was not required to be registered as a motor vehicle because it was not driven outside of the farmstead until the day of the accident. At the time of the accident, nineteen of Lagodinski's motor vehicles were insured under a policy issued by Farmers' Insurance Group; however, the Kenworth involved in the accident was not listed on the motor vehicle policy.
[¶ 5] Nationwide argues the terms of the policy do not provide coverage for Klettke's claims against Lagodinski; Nationwide asserts the plain language of the policy does not provide coverage for the Kenworth because it was subject to motor vehicle registration under North Dakota statute.
[¶ 6] This Court stated its review of summary judgment in Ritter, Laber & Assocs. v. Koch Oil, Inc., 2004 ND 117, ¶ 7, 680 N.W.2d 634.
We review this appeal under our standards for summary judgment, which is a procedure for promptly resolving an action on the merits without a trial if there are no disputed issues of material fact or inferences to be drawn from undisputed facts and if a party is entitled to judgment as a matter of law. Bender v. Aviko, 2002 ND 13, ¶ 4, 638 N.W.2d 545. Whether a trial court properly grants summary judgment is a question of law, which we review de novo on the entire record. Fetch v. Quam, 2001 ND 48, ¶ 8, 623 N.W.2d 357. A party seeking summary judgment bears the initial burden of showing there are no genuine disputes regarding the existence of material facts. Id. at ¶ 9. On appeal, we view the evidence in the light most favorable to the party opposing the motion. Id. at ¶ 8.
[¶ 7] This Court reviews declaratory judgment actions under the same standards as other cases. N.D.C.C. § 32-23-07; see also Hanneman v. Continental Western Ins. Co., 1998 ND 46, ¶ 19, 575 N.W.2d 445
(citing American Hardware Mut. Ins. Co. v. Dairyland Ins. Co., 304 N.W.2d 687, 689 (N.D.1981)). "Interpretation of an insurance contract is a question of law, fully reviewable on appeal." Hanneman, at ¶ 20 (citing Nodak Mut. Ins. Co. v. Heim, 1997 ND 36, ¶ 12, 559 N.W.2d 846). This case "involves the legal effect of a contract term, on appeal we fully review the issues by independently examining the insurance policy to determine if there is coverage." Hanneman, at ¶ 19 (citing Martin v. Allianz Life Ins. Co. of North America, 1998 ND 8, ¶ 9, 573 N.W.2d 823 (1998)).
[¶ 8] In Ziegelmann v. TMG Life Ins. Co., 2000 ND 55, ¶ 6, 607 N.W.2d 898 (citations omitted), this Court summarized our standards for construing an insurance policy:
Our goal when interpreting insurance policies, as when construing other contracts, is to give effect to the mutual intention of the parties as it existed at the time of contracting. We look first to the language of the insurance contract, and if the policy language is clear on its face, there is no room for construction. "If coverage hinges on an undefined term, we apply the plain, ordinary meaning of the term in interpreting the contract." While we regard insurance policies as adhesion contracts and resolve ambiguities in favor of the insured, we will not rewrite a contract to impose liability on an insurer if the policy unambiguously precludes coverage. We will not strain the definition of an undefined term to provide coverage for the insured. We construe insurance contracts as a whole to give meaning and effect to each clause, if possible. The whole of a contract is to be taken together to give effect to every part, and each clause is to help interpret the others.
[¶ 9] "Exclusions from coverage in an insurance policy must be clear and explicit and are strictly construed against the insurer." Grinnell Mut. Reinsurance Co. v. Center Mut. Ins. Co., 2003 ND 50, ¶ 10, 658 N.W.2d 363 (citing Western Nat'l Mut. Ins. Co. v. Univ. of North Dakota, 2002 ND 63, ¶ 7, 643 N.W.2d 4). Although this Court construes exclusionary provisions strictly, we do not automatically construe every insurance exclusion provision against an insurer and in favor of coverage for the insured. This Court will not rewrite a contract to impose liability on an insurer if the policy unambiguously precludes coverage. Northwest G.F. Mut. Ins. Co. v. Norgard, 518 N.W.2d 179, 181 (N.D.1994). The insured still must prove he falls within an exception to the exclusion in order to benefit from coverage.
[¶ 10] The first issue presented by Lagodinski is whether the Kenworth should have been covered under the farm policy because, although motor vehicles are excluded from coverage, there is an applicable exception to this exclusion.
[¶ 11] The applicable exclusion Nationwide argues operates to preclude coverage for Klettke's claim against Lagodinski provides:
[¶ 12] The policy defines "motor vehicle" as Lagodinski argues the Kenworth is not subject to motor vehicle registration requirements because it was adapted solely for farm purposes and thus the motor vehicle registration statute does not require registration. We disagree.
[¶ 13] The Kenworth was designed for travel on public roads; thus, the vehicle was a motor vehicle as defined by the plain language of the policy. Even if this Court was not persuaded the plain language of the policy excluded coverage, the Kenworth was subject to motor vehicle registration under North Dakota's motor vehicle registration statute. If the Kenworth owned by Lagodinski fits under either of these definitions, it is excluded from coverage under the terms of the policy. The vehicle was being used off the farm premises, was not adapted exclusively for farm purposes, and was subject to motor vehicle registration under North Dakota statute.
[¶ 14] Lagodinski argues the exclusion does not operate to exclude policy coverage in this case because the Kenworth was modified to be used exclusively for farm purposes and was only taken off the farm premises to be used for transporting chemicals and water from the farmstead to fields. Lagodinski asserts modification of the Kenworth into a vehicle used exclusively for farm purposes operates to remove the vehicle from the motor vehicle definition of the policy. Lagodinski further asserts the vehicle was not subject to registration requirements, due to its change in use and location of the accident.
[¶ 15] "In construing insurance policies, we have interpreted policies in light of relevant statutory provisions." Western Nat'l Mut. Ins. Co. v. Univ. of North Dakota, 2002 ND 63, ¶ 20, 643 N.W.2d 4. The code provides every motor vehicle is to be registered annually with a number of exceptions. Section 39-04-18(1), N.D.C.C., provides:
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