Nelson v. FARMERS MUTUAL INSURANCE COMPANY OF NEBRASKA

• Decision Date: 30 June 2004
• Docket Number: No. 23074-a-DG,23074-a-DG
• Citation: Nelson v. FARMERS MUTUAL INSURANCE COMPANY OF NEBRASKA, 2004 SD 86, 684 NW 2d 74 (S.D. 2004)
• Court: South Dakota Supreme Court
• Parties: KAREN NELSON, Plaintiff and Appellee, v. FARMERS MUTUAL INSURANCE COMPANY OF NEBRASKA, Defendant and Appellant.

2004 SD 86

684 NW 2d 74

KAREN NELSON, Plaintiff and Appellee, v. FARMERS MUTUAL INSURANCE COMPANY OF NEBRASKA, Defendant and Appellant.

No. 23074-a-DG

Supreme Court of South Dakota.

Considered on Briefs June 1, 2004

Opinion Filed June 30, 2004

NANCY J. TURBAK, Turbak Law Office, P.C., Watertown, South Dakota, Attorney for plaintiff and appellee.

RICHARD L. TRAVIS, DAVID A. PFEIFLE of May & Johnson Sioux Falls, South Dakota, Attorneys for defendant and appellant.

GILBERTSON, Chief Justice.

[¶ 1.] Farmers Mutual Insurance Company of Nebraska (Farmers Mutual) appeals a declaratory judgment allowing Karen Nelson (Nelson) to submit two separate claims for damages subject to the maximum underinsured motorist coverage limit. Nelson's claims arose as a result of an automobile-pedestrian collision which claimed the lives of her mother and father. We affirm the judgment of the trial court.

FACTS AND PROCEDURE

[¶ 2.] The facts underlying this appeal are not in dispute. On September 1, 2001, a van driven by Donald Huber struck and killed Verna Mae Gloe and Larry Gloe in Watertown, South Dakota. Nelson, the daughter of Larry Gloe and Verna Mae Gloe and at all times relevant to this action a policy holder with Farmers Mutual, was not involved in the accident. Considering the circumstances surrounding the accident, Nelson was entitled to collect damages from Huber for the deaths of her parents. Huber, however, was underinsured. Insurers providing the applicable liability insurance coverage paid Nelson $41,583 in damages for the death of her father and Nelson received $40,611 in damages for the death of her mother from the relevant insurance policies.

[¶ 3.] Based upon her automobile insurance policy in effect at the time of the accident, Nelson submitted two claims to Farmers Mutual for underinsured motorist coverage arising as a result of the deaths of her mother and father. Although Farmers Mutual admitted its policy's underinsured motorist coverage entitled Nelson to seek damages as a result of her parents' deaths, the parties disagreed as to the limits of the coverage. Nelson contented that each of her claims for underinsured motorist benefits was subject to a separate $100,000 limit outlined in the policy. Farmers Mutual argued Nelson was entitled to submit only one claim as a result of her parents' deaths, subject to the $100,000 limit for underinsured motorist coverage.

[¶ 4.] Nelson subsequently commenced a suit for declaratory judgment in a South Dakota circuit court. A trial before the court was held on August 25, 2003. After considering a set of stipulated facts along with written and oral argument by Nelson and Farmers Mutual, the trial court entered findings of fact and conclusions of law granting a declaratory judgment to Nelson. Consistent with its judgment, the trial court ruled Nelson was entitled to $58,417 ($100,000 minus the previously awarded $41,583) for the death of her father and $59,389 ($100,000 minus the previously awarded $40,611) for the death of her mother. Farmers Mutual now appeals and raises the following issue for our review:

Whether the underinsured motorist coverage contained in the Farmers Mutual insurance policy entitled Nelson to submit two separate claims for damages arising out of her parents' deaths.

Affirmed.

STANDARD OF REVIEW

[¶ 5.] We review declaratory judgments as we would any other judgment or order. SDCL 21-24-13; Parks v. Cooper, 2004 SD 27, ¶20, 676 NW2d 823, 828-29. Questions of law such as the construction of an insurance contract are reviewed de novo without deference to the trial court. Roden v. General Casualty, 2003 SD 130, ¶6, 671 NW2d 622, 625. We review the circuit court's findings of fact under the clearly erroneous standard. City of Deadwood v. Summit, Inc., 2000 SD 29, ¶9, 607 NW2d 22, 25.

ANALYSIS AND DECISION

[¶ 6.] Whether the underinsured motorist coverage contained in the Farmers Mutual insurance policy entitled Nelson to submit two separate claims for damages arising out of her parents' deaths.

[¶ 7.] In the controversy presently before this Court, Farmers Mutual acknowledged Nelson was entitled to recover underinsured motorist benefits under the terms of its policy. Our task is to determine whether Nelson's claims arising out of the deaths of her mother and father are individually or collectively subject to the liability limit provided in the policy between Nelson and Farmers Mutual. This is the sole issue presented on appeal. We acknowledge courts in other jurisdictions are split on the propriety of allowing an insured, pursuant to statutorily required underinsured motorist policy provision, to recover damages arising from bodily injury or death of a third person. Compare Wetherbee v. Economy Fire & Casualty Co., 508 NW2d 657 (Iowa 1993) (insured allowed to collect for damages sustained by third party); Sexton v. State Farm, 433 NE2d 555 (Ohio 1982), superseded by statute, (insured does not have to be the person who sustained bodily injury); State Farm v. Selders, 190 NW2d 789 (Neb 1971); with Farmers Insurance Exchange v. Chacon, 939 P2d 517 (ColoCtApp 1997) (denying recovery where policy limited coverage to only "bodily injury sustained by the insured person"); Livingston v. Omaha Property and Casualty Insurance Company, 927 SW2d 444 (MoCtApp 1996) (public policy not offended by insurance contract's limitation of coverage to "injuries sustained by the insured"); Bartning v. State Farm Fire & Casualty, 164 Ariz 370, 793 P2d 127. Given the particular facts and posture of this case, however, today's opinion does not address the wisdom or public policy of allowing such suits.

[¶ 8.] In South Dakota, automobile insurance providers must provide underinsured motorist coverage in their policies. SDCL 58-11-9.4.¹ Nelson's policy with Farmers Mutual provided:

We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an underinsured motor vehicle.

(emphasis added). The policy defined "bodily injury" as "physical harm to the body, sickness, or disease and resulting death." There is no dispute that Nelson is "an insured" under the policy. According to the policy's language, liability under the underinsured motorist coverage was limited to:

The bodily injury liability limit for "each person" is the maximum we will pay as damages for bodily injury to one person in any one occurrence.

(emphasis added). The policy's sets the maximum limit for recovery at $100,000.

[¶ 9.] Farmers Mutual admitted Nelson was entitled to collect damages as a result of the deaths of her mother and father. The real issue in this case revolves around who sustained the "bodily injury" as a result of the accident that claimed Nelson's parents' lives. The trial court specifically found Nelson did not sustain any bodily injury as a result of the accident, but it followed the theory that she was entitled to collect for the bodily injury — death — her parents sustained in the accident. Thus, because the policy allowed for maximum recovery for "each person" who sustained bodily injury, it found that Nelson was entitled to two claims for damages, each claim subject to the $100,000 limit.

[¶ 10.] On appeal, Farmers Mutual argues that Nelson only had one claim for damages because she sustained "bodily injury" as result of the accident that killed her parents. It insists, therefore, that this one claim was subject...