Oanes v. Allstate Ins. Co.

• Decision Date: 14 September 2000
• Docket Number: No. C5-99-704.,C5-99-704.
• Citation: 617 N.W.2d 401
• Parties: Patricia Frances OANES, et al., Appellants, v. ALLSTATE INSURANCE COMPANY, Respondent.
• Court: Minnesota Supreme Court

617 N.W.2d 401

Patricia Frances OANES, et al., Appellants, v. ALLSTATE INSURANCE COMPANY, Respondent.

No. C5-99-704.

Supreme Court of Minnesota.

September 14, 2000.

Robert J. Milavetz, Paul T. Kizilos, David O.N. Johnson, Milavetz Gallop & Milavetz, P.A., Edina, for appellants.

Jeanne H. Unger, John R. Neve, Rider, Bennett, Egan & Arundel, Minneapolis, for respondent.

Considered and decided by the court en banc without oral argument.

OPINION

PAGE, Justice.

The court of appeals affirmed dismissal of a suit for underinsured motorist ("UIM") benefits because it was commenced more than six years after the accident in which the injury occurred. We are asked to determine whether the statute of limitations begins to run on a UIM claim on the date of the accident or at a later time. In the past, we have indicated that the claim accrues and the limitations period commences at the time of the accident that causes the injury. See Weeks v. American Family Mut. Ins. Co., 580 N.W.2d 24, 27 (Minn.1998)

; O'Neill v. Illinois Farmers Ins. Co., 381 N.W.2d 439, 439 (Minn.1986). Yet we have also held that a UIM claim is not ripe until is has been determined that the tortfeasor is in fact underinsured by settlement or adjudication of the claim against the tortfeasor. See Employers Mut. Cos. v. Nordstrom, 495 N.W.2d 855, 857 (Minn.1993). Because the confluence of these decisions creates the possibility that the statute of limitations could run on a UIM claim before it becomes ripe, we conclude that the better rule is that UIM claims accrue and the statute of limitations begins to run when the UIM claim becomes ripe by settlement or adjudication of the claim against the tortfeasor. We therefore reverse and remand.

On October 7, 1998, appellants, Patricia and Gerald Oanes (collectively "the Oanes"), brought suit in Hennepin County District Court against respondent, Allstate Insurance Company ("Allstate"), seeking to recover UIM benefits under their Allstate policy for a March 18, 1992, automobile accident. Allstate moved for summary judgment, claiming that the Oanes' claims were time barred. Agreeing with Allstate, the district court granted the motion and dismissed the action. The court of appeals affirmed.

The relevant facts from the record are as follows. Patricia Oanes was injured in a multi-vehicle, chain reaction collision on March 18, 1992, as a result of being rear-ended by a car driven by Jeffrey Giefer. Oanes suffered injuries to her head, neck and back. Oanes, along with her husband, Gerald, first brought a claim against Giefer. That claim was settled on August 12, 1995. In July 1995, before the settlement, the Oanes notified Allstate of their intent to seek underinsured motorist benefits under their Allstate policy. Under the policy, UIM benefits were not recoverable until all tortfeasors' "limits of liability" had been exhausted by settlement or judgment. Allstate informed the Oanes that their claim was not ripe because they had not pursued a claim to settlement or judgment against Howard Theis, the driver of the car that rear-ended Giefer. As a result, on April 2, 1997, the Oanes commenced an action against Theis' estate. That action was settled on August 26, 1998.

In a complaint filed on October 7, 1998, the Oanes commenced an action against Allstate seeking to recover UIM benefits. Allstate moved for summary judgment arguing that O'Neill and Weeks establish that the six-year statute of limitations for UIM claims begins to run on the date of the accident causing the injury for which recovery is sought and the Oanes' action was therefore time-barred because it was commenced more than six years after the date of Patricia Oanes' injuries. The Oanes responded that the O'Neill-Weeks rule of accrual for UIM claims did not apply because under the language of their Allstate policy, the statute of limitations did not begin to run until the limits of all tortfeasors' liability had been exhausted by settlement, which did not occur until August 26, 1998, less than six years before they commenced their UIM action. They relied on Sargent v. State Farm Mutual Automobile Insurance Co., 486 N.W.2d 14 (Minn.App.1992),rev. denied (Minn. Aug. 4, 1992), for this policy-language argument.¹ The district court rejected the argument because the language of the Oanes' policy was different than the policy language in Sargent and dismissed the action. The Oanes made the same policy-language argument in the court of appeals, and as in the district court, the argument was rejected. See Oanes v. Allstate Ins. Co., No. C5-99-704, 1999 WL 886662, at *2 (Minn.App. Oct.19, 1999).

In their petition for review to this court, in addition to the policy-language argument presented to the district court and the court of appeals, the Oanes raised a new issue. For the first time, the Oanes asked the court to address the general issue of when a UIM claim accrues, independent of the specific language in their policy. Specifically, they presented the question of whether this court should reject the O'Neill-Weeks rule that the statute of limitations on a UIM claim begins to run on the date of the accident causing the injuries and instead hold that the statute of limitations for a UIM claim begins to run on the date the insurance contract is breached—that is, when a claim for UIM coverage is denied by the insurer.

I.

The first issue we must address is whether we should consider the claim accrual issue in light of the fact that it was raised for the first time in the petition for review. Generally, issues not raised below will not be considered on appeal. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988)

. This is not, however, an ironclad rule. We have recognized an exception to this rule when the issue "is plainly decisive of the entire controversy on its merits, and where, as in a case involving undisputed facts, there is no possible advantage or disadvantage to either party in not having had a prior ruling by the trial court on the question." Watson v. United Servs. Auto. Ass'n, 566 N.W.2d 683, 687 (Minn. 1997) (quoting Holen v. Minneapolis-St. Paul Metro. Airports Comm'n, 250 Minn. 130, 135, 84 N.W.2d 282, 286 (1957)). Here, there are no disputes of fact that affect the purely legal question presented and there is no possible advantage or disadvantage to either party by not having a prior lower court ruling. Although the issue is not decisive of the entire case on the merits, the procedural posture of this case is such that we will entertain the issue. See Minn.R.Civ.App.P. 103.04 (appellate court may "review any other matter as the interest of justice may require").

The issue the Oanes first raised in their petition for review—when a UIM claim accrues—was pending before this court in another case when the Oanes filed their petition. See Johnson v. State Farm Mut. Auto. Ins. Co., 594 N.W.2d 243 (Minn.App. 1999),

rev. granted (Minn. Aug. 18, 1999), and rev. vacated and appeal dismissed as moot (Minn.Jan.25, 2000). The Johnsons brought their UIM claim more than six years after the accident causing their injuries but before their claims against the tortfeasor were resolved. In early November 1999, the Johnsons' claim against the tortfeasor was tried. Based on the jury's November 9, 1999 verdict, the district court entered an order for judgment for the Johnsons in an amount less than the policy limits of the tortfeasor's liability insurance coverage. Because the judgment did not exceed his insurance limits, the tortfeasor was not underinsured. On that basis, the insurer in Johnson moved to dismiss the Johnsons' appeal to this court as moot just two days before oral argument. The oral argument took place, but after the appeal period for the underlying tort judgment had passed and the judgment became final, the Johnson appeal was dismissed as moot.

The petition for review in this case came before the court after the Johnson oral argument, but before the final determination that Johnson was moot. In order to preserve the claim accrual issue, we granted review in this case and stayed further proceedings pending final disposition in Johnson. Having dismissed the appeal in Johnson as moot, we now address the claim accrual issue here.

II.

The substantive question that we must resolve is when an insured's action against its insurer for UIM benefits accrues and starts the statute of limitations running. Although we have not previously ruled on this issue in this precise context, we have addressed related aspects of the issue. We held that, an action to imply UIM coverage in a policy and then to recover benefits under that implied-in-law coverage accrues on the date of the accident. See O'Neill v. Illinois Farmers Ins. Co., 381 N.W.2d 439, 439 (Minn.1986)

. Next, we held that because of its tort character, a UIM claim does not survive the death of the injured claimant and in doing so explained O'Neill as holding that the statute of limitations for a UIM claim begins to run when the accident that caused the injury occurs. See Beaudry v. State Farm Mut. Auto. Ins. Co., 518 N.W.2d 11, 11, 13 (Minn.1994). We then held that a UIM insurer's subrogation action against the tortfeasor also begins to run on the date of the accident causing the injury. See Hermeling v. Minnesota Fire & Cas. Co., 548 N.W.2d 270, 275 (Minn.1996). Most recently, we held that the statute of limitations for an uninsured motorist ("UM") claim runs from the date of the accident that causes the injury. See Weeks v. American Family Mut. Ins. Co., 580 N.W.2d 24, 27 (Minn.1998). In reaching that conclusion, we stated that the rule of claim accrual announced in O'Neill was not limited to implied-at-law UIM claims and that our subsequent cases established that "the statute of limitations on a UIM claim begins to run when the accident occurs." Weeks, 580 N.W.2d at 26 (citation omitted). While we acknowledged in Weeks that in a majority of jurisdictions the statute of limitations for a UIM...