RLI Ins. Co. v. Heling

• Decision Date: 24 August 1994
• Docket Number: No. 940065,940065
• Citation: 520 N.W.2d 849
• Parties: RLI INSURANCE COMPANY, Plaintiff and Appellant, v. Jennifer Chester HELING, individually and as Personal Representative of the Estate of Michael L. Heling, Deceased, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 849

520 N.W.2d 849

RLI INSURANCE COMPANY, Plaintiff and Appellant, v. Jennifer Chester HELING, individually and as Personal Representative of the Estate of Michael L. Heling Deceased, Defendant and Appellee.

Civ. No. 940065.

Supreme Court of North Dakota.

Aug. 24, 1994.

William P. Harrie (argued), of Nilles, Hansen & Davies, Ltd., Fargo, for plaintiff and appellant.

Charles T. Hvass, Jr. (argued), of Hvass, Weisman & King, Minneapolis, MN, and Alvin O. Boucher (appearance), of Robert Vogel Law Office, PC, Grand Forks, for defendant and appellee.

LEVINE, Justice.

Under N.D.R.App.P. 47, the United States District Court for the District of North Dakota, Southeastern Division, has certified to this court the following question of law:

"Is a spousal exclusion clause in an aircraft liability insurance policy valid and enforceable under the statutes and public policy of the State of North Dakota?"

We answer the question in the affirmative.

Michael L. Heling and his spouse, Jennifer Chester Heling, were the registered owners of a 1964 Piper PA30 aircraft insured by RLI Insurance Company (RLI). On March 28, 1991, Michael was piloting the aircraft when it crashed near Butte, Montana. Michael died from injuries he received during the accident, and Jennifer, a passenger in the aircraft, was seriously injured.

Jennifer sued Michael's estate in state court seeking compensation for her injuries. RLI later commenced an action in federal court requesting a declaratory judgment that: (1) the RLI aviation insurance policy does not provide liability coverage under the circumstances; and (2) RLI is not obligated to provide a defense for Jennifer's state court action against Michael's estate.

RLI moved for summary judgment, arguing that its aviation insurance policy issued to Michael unambiguously excluded liability coverage for bodily injury to Jennifer. Section 1 of the policy, titled "LIABILITY PROTECTION," provides:

"D. Single Limit--This is a combination coverage which protects you or any permissive user for your or their legal responsibility for both bodily injury and property damage. It will also include protection for your or their legal responsibility for bodily injury to passengers in the insured aircraft if you have chosen to buy that additional coverage." [Emphasis in original].

The policy further provides, under the heading, "WHAT IS NOT INSURED IN THIS SECTION--," that: "4. The policy does not insure for any bodily injury to you." [Emphasis in original]. The policy definition of "you" is contained in section 5 of the document:

"You, Your and Yours means the persons or organizations who are named in Item 1 on your Insurance Coverage Schedule. These words also include the spouse of any person named in Item 1 if that spouse resides in the same household as the person...." [Emphasis in original].

RLI contended that because Michael is the person named in Item 1 of the insurance policy, Jennifer, as Michael's spouse, is included in the definition of "you" in section 5. Thus, RLI asserted that Jennifer's bodily injuries are not covered because subsection 4 states that the "policy does not insure for any bodily injury to you." [Emphasis in original]. Jennifer responded that the policy's exclusion prohibiting the insured's spouse from recovering for her personal injuries is contrary to the public policy of this State. The federal court found that North Dakota law governed the action and certified the question of law to this court.

Jennifer presents a two-pronged argument to attack the insurance policy's spousal exclusion. She asserts that the exclusion contravenes public policy because it discriminates against married women in violation of N.D.C.C. Sec. 14-07-05, and it illegally excludes coverage for the spouse in an accident involving a "motor vehicle," as defined by N.D.C.C. Title 39. We reject both contentions.

I

Section 14-07-05, N.D.C.C., provides:

"Rights and liabilities of married person. Any person after marriage has with respect to property, contracts, and torts the same capacity and rights and is subject to the same liabilities as before marriage, including liability to suit by his or her spouse. In all actions by or against a married person, the married person shall sue and be sued in one's own name."

In Fitzmaurice v. Fitzmaurice, 62 N.D. 191, 242 N.W. 526, 529 (1932), this court construed the predecessor statute to Sec. 14-07-05 ¹ as authorizing a wife to sue her husband for a personal tort, thus abrogating the common law doctrine of interspousal immunity. See Mager v. Mager, 197 N.W.2d 626, 627 (N.D.1972); Nuelle v. Wells, 154 N.W.2d 364, 366 (N.D.1967). Jennifer claims that Sec. 14-07-05, and the broad interpretation given its predecessor by the Fitzmaurice court, evidences a strong public policy banning "any attempt at distinguishing the rights and capacities of a woman based on marital status." According to Jennifer, in order to give the statute and its underlying policy their "intended effect," we should declare the RLI spousal exclusion invalid. We disagree.

The insurance policy, like the statute, is gender neutral. Section 14-07-05 ensures that married persons retain all of the rights they enjoyed before marriage, including the right to contract. Jennifer has not been denied any contractual right to be insured on the basis of her marriage. Michael entered into the insurance contract which excludes coverage otherwise available to an insured for a suit brought against that insured by a spouse. ² The question is whether RLI must provide coverage to the insured being sued, Michael's estate, for a tort action brought by a spouse.

Jennifer's argument appears to be that the spousal exclusion undercuts the public policy underlying the abrogation of interspousal immunity. Generally, however, absent legislative or constitutional mandates evidencing a contrary public policy, see Continental Cas. Co. v. Kinsey, 499 N.W.2d 574, 580 (N.D.1993), private parties are free to decide what insurance coverage they want and will pay for, and insurance companies are free to decide what risks to undertake and what risks to reject. See, e.g., State Farm Fire & Cas. Co. v. Clendening, 150 Cal.App.3d 40, 197 Cal.Rptr. 377, 378 (1983); American Family Mut. Ins. Co. v. Ryan, 330 N.W.2d 113, 115 (Minn.1983); Neil v. Allstate Ins. Co., 379 Pa.Super. 299, 549 A.2d 1304, 1307 (1988); Faraj v. Allstate Ins. Co., 486 A.2d 582, 585 (R.I.1984). Neither this court's decision in Fitzmaurice, nor Sec. 14-07-05, purports to determine the scope of a contract between an insured and an insurer; rather, they authorize a spouse to sue the other spouse in tort. The right of one spouse to sue the other does not require insurers to provide protection so that there may actually be a source of funds to respond to tort claims no longer shielded by immunity. See, e.g., Allstate Ins. Co. v. Boles, 481 N.E.2d 1096, 1099 (Ind.1985); Allstate Ins. Co. v. Elwell, 513 A.2d 269, 273 (Me.1986); Hahn v. Berkshire Mut. Ins. Co., 28 Mass.App.Ct. 181, 547 N.E.2d 1144, 1145 (1989). In Porter v. Farmers Ins. Co. of Idaho, 102 Idaho 132, 627 P.2d 311, 315 (1981), the Idaho Supreme Court addressed the fallacy of the argument:

"[T]he right to sue a spouse for injuries caused by that spouse is an entirely separate matter from the contractual obligation of an insurance company to pay for those injuries. The fact that there is or is not an insurance policy in force covering an accident does not affect the right of one spouse to sue and obtain a judgment against the other spouse."

We agree with the rationale of Porter and with those courts that hold that the exclusion of a spouse or other family member from insurance coverage does not frustrate the public policy against immunity for interspousal or intrafamily torts. See, e.g., RLI Ins. Co. v. Kary, 779 F.Supp. 1300, 1303 (D.Ct.Kan.1991); Clendening, supra; Boles, supra; Elwell, supra; Hahn, supra; Ryan, supra; Foley v. Foley, 173 N.J.Super. 256, 414 A.2d 34, 35 (1980); Suba v. State Farm Fire and Cas. Co., 114 A.D.2d 280, 498 N.Y.S.2d 656, 658 (1986); Neil, supra; Faraj, supra. The spousal exclusion does not deprive Jennifer of her right to bring a lawsuit because she may still sue Michael's estate and recover from available assets.

We conclude that the spousal exclusion does not violate the public policy expressed in Fitzmaurice and Sec. 14-07-05.

II

Relying on Hughes v. State Farm Mut. Auto. Ins. Co., 236 N.W.2d 870 (N.D.1975), Jennifer asserts that the spousal exclusion is contrary to public policy because it excludes coverage we have already required to be provided for a spouse in an accident involving a "motor vehicle," as defined in N.D.C.C. Title 39. We disagree.

In Hughes, supra, 236 N.W.2d at 885, this court held that a " 'household, or family, exclusion clause' contained in a policy of motor vehicle liability insurance issued and delivered in this State is void as violative of public policy and the statutes of this State." Hughes involved a recreational vehicle policy covering a snowmobile. The wife, a passenger on a snowmobile driven by her husband, sued her husband and the driver of another snowmobile for injuries she suffered from a collision. The family exclusion clause in the policy excluded coverage for the wife's injuries. This court concluded that: a snowmobile is a "motor vehicle" under N.D.C.C. Title 39; the policy was a "motor vehicle liability policy" subject to the financial responsibility laws which were enacted to protect innocent victims of motor vehicle accidents from financial disaster; and:

"A 'motor vehicle liability policy' must provide coverage which insures all permissive operators against loss from liability, within certain minimum monetary limits, for damages imposed by law. Such mandatory 'Omnibus Clause' coverage is a clear legislative expression of public policy."

Hughes, supra, 236 N.W.2d at 873, Syllabus 11. Thus, we found the family exclusion...