Schleuter v. Northern Plains Ins. Co., Inc.

Decision Date23 September 2009
Docket NumberNo. 20090060.,20090060.
Citation772 N.W.2d 879,2009 ND 171
PartiesRandall SCHLEUTER, Plaintiff and Appellant v. NORTHERN PLAINS INSURANCE COMPANY, INC., Defendant and Appellee and Charlotte Schleuter, Defendant.
CourtNorth Dakota Supreme Court

Anthony Joseph Weiler (argued), and David S. Maring (on brief), Bismarck, N.D., for plaintiff and appellant.

Clark Jay Bormann, Bismarck, N.D., for defendants and appellees.

CROTHERS, Justice.

[¶ 1] Randall Schleuter appeals from a summary judgment dismissing his action against Northern Plains Insurance Company ("Northern Plains") for coverage for injuries arising out of an automobile accident. Because we conclude the applicable insurance policy's "out-of-state coverage" provision precludes application of the policy's "household exclusion" in order to conform to North Dakota law, we reverse.


[¶ 2] The parties stipulated that in November 2006, Randall Schleuter was a passenger in a motor vehicle driven by his wife, Charlotte Schleuter, and owned by Randall Schleuter. Charlotte Schleuter lost control of the motor vehicle near Casselton, North Dakota, the vehicle rolled, and Randall Schleuter was injured. It is undisputed that at the time of the accident, Northern Plains, a South Dakota company, insured Schleuter's vehicle under an automobile liability policy issued in South Dakota, and the Schleuters purchased the policy while residents of South Dakota. The parties do not dispute that North Dakota's involvement with this proceeding is limited to the site of the accident and the location of Randall Schleuter's initial medical treatment. Since his release from a Fargo hospital, Randall Schleuter has received medical treatment at South Dakota facilities.

[¶ 3] In October 2007, Randall Schleuter sued Northern Plains and Charlotte Schleuter, alleging that Charlotte Schleuter was negligent and responsible for Randall Schleuter's injuries and declaring that Northern Plains was required under the policy to pay him no-fault benefits and was required to defend and indemnify Charlotte Schleuter for his claims. Randall Schleuter and Northern Plains filed cross-motions for summary judgment, agreeing that resolution of the insurance coverage issues would resolve the litigation.

[¶ 4] The liability coverage provision of Northern Plains' policy contains the following "household" or "family" exclusion:

"When Liability Coverage Does not Apply

In addition to the limitations of coverage in `Who Is an Insured'


. . . .


. . . .


The liability coverage provision also includes an "out-of-state coverage" or "conformity" clause in a subsection entitled "Motor Vehicle Compulsory Insurance Law or Financial Responsibility Law." That provision states:

"1. Out-of-State coverage

If an insured under the liability coverage is in another state or Canada and, as a non-resident, becomes subject to its motor vehicle compulsory insurance, financial responsibility or similar law:

a. the policy will be interpreted to give the coverage required by the law; and

b. the coverage so given replaces any coverage in this policy to the extent required by the law for the insured's operation, maintenance or use of a car insured under this policy.

Any coverage so extended shall be reduced to the extent other coverage applies to the accident. In no event shall a person collect more than once.

"2. Financial Responsibility Law

When certified under any law as proof of future financial responsibility, and while required during the policy period, this policy shall comply with such law to the extent required."

(Emphasis added.)

[¶ 5] The district court granted Northern Plains' summary judgment motion, ruling South Dakota has more significant contacts and therefore South Dakota law should apply, permitting application of the policy's "household exclusion" to coverage for a responsible family member.


[¶ 6] Under N.D.R.Civ.P. 56, summary judgment is "`a procedural device for promptly resolving a controversy on the merits without a trial if either party is entitled to judgment as a matter of law, and if no dispute exists as to either the material facts or the inferences to be drawn from the undisputed facts, or if resolving disputed facts would not alter the results.'" Farmers Union Mut. Ins. Co. v. Associated Elec. & Gas Ins. Servs. Ltd., 2007 ND 135, ¶ 7, 737 N.W.2d 253 (quoting ACUITY v. Burd & Smith Const., Inc., 2006 ND 187, ¶ 6, 721 N.W.2d 33).

"The party moving for summary judgment has the burden of establishing that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. In deciding whether the district court appropriately granted summary judgment, this Court views the evidence in the light most favorable to the party opposing the motion, and the opposing party will be given the benefit of all favorable inferences that can reasonably be drawn from the record. On appeal, we decide `whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law.'"

Farmers Union, at ¶ 7 (citations omitted). Whether summary judgment was properly granted is question of law that this Court reviews de novo on the entire record. Id.; Ernst v. Acuity, 2005 ND 179, ¶ 7, 704 N.W.2d 869.


[¶ 7] This case involves the interpretation of Northern Plains' policy to determine whether the policy's "conformity" or "out-of-state coverage" clause provides the "coverage" required under North Dakota law, or whether the policy's "family or household exclusion" excludes coverage. Randall Schleuter argues the district court erred in granting Northern Plains summary judgment because the policy's conformity clause provides the coverage required under North Dakota law, which holds a family or household exclusion in a liability policy is void. See Hughes v. State Farm Mut. Auto. Ins. Co., 236 N.W.2d 870, 885 (N.D.1975). Northern Plains responds that the district court did not err as a matter of law in determining South Dakota law governed this case and in applying the household exclusion to preclude coverage.

[¶ 8] Under North Dakota law, the interpretation of an insurance contract is a question of law, fully reviewable on appeal. Burd & Smith Constr., 2006 ND 187, ¶ 7, 721 N.W.2d 33. "This Court independently examines and construes an insurance policy to determine if the district court erred in its construction." Grinnell Mut. Reinsurance Co. v. Lynne, 2004 ND 166, ¶ 20, 686 N.W.2d 118. We summarized the standards for construing an insurance contract in Ziegelmann v. TMG Life Ins. Co., 2000 ND 55, ¶ 6, 607 N.W.2d 898 (citations omitted):

"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."

"Exclusions from coverage ... must be clear and explicit and are strictly construed against the insurer." Nationwide Mut. Ins. Cos. v. Lagodinski, 2004 ND 147, ¶ 9, 683 N.W.2d 903 (quoting Grinnell Mut. Reinsurance Co. v. Center Mut. Ins. Co., 2003 ND 50, ¶ 10, 658 N.W.2d 363). Although exclusionary provisions are strictly construed, we "will not rewrite a contract to impose liability on an insurer if the policy unambiguously precludes coverage." Lagodinski, at ¶ 9.

[¶ 9] Likewise, under South Dakota law, the interpretation of an insurance contract presents a legal question, reviewed de novo on appeal. MGA Ins. Co., Inc. v. Goodsell, 2005 SD 118, ¶ 9, 707 N.W.2d 483. Ambiguous language in an insurance contract is construed liberally in favor of the insured. Northland Ins. Co. v. Zurich Am. Ins. Co., 2007 SD 126, ¶ 13, 743 N.W.2d 145. "The existence of the rights and obligations of parties to an insurance contract are determined by the language of the contract, which must be construed according to the plain meaning of its terms. Thus, in deciphering the language of the insurance contract, the court must employ a plain meaning approach." State Farm Fire & Cas. Co. v. Harbert, 2007 SD 107, ¶ 17, 741 N.W.2d 228 (citation and quotation omitted).

[¶ 10] "In determining coverage under the contract, [the Court] must look to the contractual intent and objectives of the parties as expressed in the contract." Northland Ins. Co., 2007 SD 126, ¶ 13, 743 N.W.2d 145. "`Limits to coverage, whether in exclusions, limitations, riders, or endorsements, should be set forth clearly and explicitly.'" Fall River County v. South Dakota Pub. Assur. Alliance, 2001 SD 40, ¶ 8, 623 N.W.2d 735 (quoting Mid-Century Ins. Co. v. Lyon, 1997 SD 50, ¶ 9 n. 4, 562 N.W.2d 888).

[¶ 11] Northern Plains argues this case presents a "choice of law" issue under this Court's decision in Nodak Mut. Ins. Co. v. Wamsley, 2004 ND 174, ¶¶ 14-23, 687 N.W.2d 226, which held North Dakota and not Montana law governed the right to stack underinsured motorist coverages, where the policies were issued to North Dakota residents by a North Dakota insurance company and the accident occurred in...

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