Schulte v. Progressive Northern Ins. Co., No. 23365.

• Court: Supreme Court of South Dakota
• Writing for the Court: KONENKAMP, Justice.
• Citation: 699 N.W.2d 437,2005 SD 75
• Parties: Matthew L. SCHULTE, Plaintiff and Appellant, v. PROGRESSIVE NORTHERN INSURANCE COMPANY and Thomas Hoftiezer, Defendants and Appellees.
• Docket Number: No. 23365.
• Decision Date: 15 June 2005

699 N.W.2d 437
2005 SD 75

Matthew L. SCHULTE, Plaintiff and Appellant,
v.
PROGRESSIVE NORTHERN INSURANCE COMPANY and Thomas Hoftiezer, Defendants and Appellees

No. 23365.

Supreme Court of South Dakota.

Considered on Briefs March 21, 2005.

Decided June 15, 2005.

Stephen C. Landon, Shawn M. Nichols of Cadwell, Sanford, Deibert & Garry, Sioux Falls, South Dakota, Attorneys for plaintiff and appellant.

Patricia A. Meyers of Costello, Porter, Hill, Heisterkamp, Bushnell & Carpenter, Rapid City, South Dakota, Attorneys for defendants and appellees.

KONENKAMP, Justice.

[¶ 1.] In this declaratory action dealing with insurance coverage, the plaintiff seeks to recover the policy limits of $100,000 from both the offending driver, for negligent operation of the insured vehicle, and the driver's father, for negligent entrustment. We conclude that under our automobile

699 N.W.2d 438

insurance statutes the policy limits apply to the insured vehicle and do not require separate policy limits for each insured who may be liable in a single accident. We affirm the circuit court

Background

[¶ 2.] Plaintiff Matthew L. Schulte was seriously injured in an automobile accident in Clay County, South Dakota, on March 24, 2003. The accident occurred when Joshua Hoftiezer drove a truck through the on-coming lane of traffic without yielding the right-of-way and collided with Schulte, who was traveling in the opposite direction. The truck Joshua was operating was owned, licensed, and insured by his father, Thomas Hoftiezer. As the named insured, Thomas Hoftiezer held an "owners policy" issued by Progressive Northern Insurance Company. See SDCL 32-35-68 (1960). Under this policy, Hoftiezer's son, Joshua, was an additional insured. The policy had liability limits of $100,000 per person and $300,000 per accident.

[¶ 3.] At the time of the accident, Joshua was driving with a suspended license, had previously been cited for driving under the influence and failing to stop, and was reputed to be a poor driver.¹ Despite his alleged knowledge of Joshua's poor driving record, Thomas Hoftiezer provided the insured vehicle for his son's use.

[¶ 4.] Progressive offered Schulte $100,000 in exchange for a full and final release of any claims against Progressive, Hoftiezer, and Joshua. Although Schulte's damages exceed $100,000, the company maintained that $100,000 was the limit in total liability coverage available to Schulte under Hoftiezer's policy. Schulte brought a declaratory action against Progressive, seeking a determination that Hoftiezer's policy provided separate policy limits for both insureds, Thomas and Joshua Hoftiezer. Each side moved for summary judgment. In granting Progressive's motion, the circuit court concluded that Progressive was under no obligation to pay its policy's liability limits for Hoftiezer's negligent entrustment of the automobile and also pay its policy limits for Joshua's negligent driving. On appeal, Schulte contends that Progressive is required to provide separate policy limits of $100,000 for the independent acts of negligence of each of its insureds.

Standard of Review

[¶ 5.] Under our familiar standard of review in summary judgment cases, we decide only whether genuine issues of material fact exist and whether the law was correctly applied. If any legal basis exists to support the trial court's ruling, we will affirm. Kobbeman v. Oleson, 1998 SD 20, ¶ 4, 574 N.W.2d 633, 635 (citing SDCL 15-6-56(c) (1966)); see De Smet Ins. Co. of South Dakota v. Gibson, 1996 SD 102, ¶ 5, 552 N.W.2d 98, 99. "With the material facts undisputed, our review is limited to determining whether the trial court correctly applied the law." Kobbeman, 1998 SD 20, ¶ 4, 574 N.W.2d at 635. Statutory construction and insurance contract interpretation are questions of law reviewable de novo. Auto-Owners Ins. Co. v. Hansen Housing, Inc., 2000 SD 13, ¶ 10, 604 N.W.2d 504, 509 (citations omitted).

Analysis and Decision

[¶ 6.] Schulte argues that Joshua's negligent driving and his father's negligent entrustment are two active and distinct acts of negligence; therefore, Progressive should be obliged to provide the policy limits of $100,000 for each negligent

699 N.W.2d 439

act. Progressive does not dispute that Schulte's injuries exceed $100,000, but contends that $100,000 is the limit payable for Schulte's damages. Schulte maintains that the circuit court erred in ruling that the limits of automobile liability coverage did not apply separately to Joshua, as an insured permissive user, and to Hoftiezer, as the named insured under the policy

[¶ 7.] South Dakota's financial responsibility law requires that automobile insurance policies provide vehicle owners with certain liability coverage for acts arising out of the ownership of insured vehicles. SDCL 32-35-70 (1992); Colonial Ins. Co. of Cal. v. Lundquist, 539 N.W.2d 871, 875 (S.D.1995). Because coverage is mandatory, our state's omnibus clause must be read into every "automobile insurance policy whether or not coverage is explicitly included by the policy language." 8 LEE R. RUSS & THOMAS F. SEGALLA, COUCH ON INSURANCE § 11:23 (3d ed. 2004). Schulte does not contend that Progressives policy provides coverage greater than that required under South Dakota law.² His argument is that our financial responsibility laws require that the coverage he contends exists must be read into the...