Sleiter v. Am. Family Mut. Ins. Co.

• Decision Date: 05 August 2015
• Docket Number: No. A13–1596.,A13–1596.
• Citation: 868 N.W.2d 21
• Parties: Cody Devereaux SLEITER, et al., Appellants, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Respondent.
• Court: Minnesota Supreme Court

868 N.W.2d 21

Cody Devereaux SLEITER, et al., Appellants

v.AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Respondent.

No. A13–1596.

Supreme Court of Minnesota.

Aug. 5, 2015.

James S. Ballentine, Richard L. Tousignant, Schwebel, Goetz & Sieben, P.A., Minneapolis, MN, for appellants.

Lynn B. Noland, American Family Insurance, Eden Prairie, Minnesota; and Louise A. Behrendt, Stich, Angell, Kreidler, Dodge & Unke P.A., Minneapolis, MN, for respondent.

Wilbur W. Fluegel, Fluegel Law Office, Minneapolis, MN, for amicus curiae Minnesota Association for Justice.

OPINION

PAGE, Justice.

Appellant Cody Sleiter seeks excess underinsured motorist (UIM) coverage benefits from his family's automobile policy with respondent American Family Mutual Insurance Company (American Family) because his damages exceeded the recovery available to him under the coverage of the vehicle in which he was a passenger. Sleiter argues that the district court and court of appeals erred in concluding that he cannot recover UIM benefits from his policy because his $100,000 UIM limit is not greater than the UIM “coverage available” to him from the occupied vehicle. For the following reasons, we reverse.

The facts of this case are undisputed. Sleiter was one of 19 individuals injured when a school bus was struck by an at-fault vehicle on February 19, 2008, in Cottonwood.

Sleiter suffered extensive damage to his right leg, hip, and lower back. The at-fault vehicle had a liability limit of $60,000 per accident; the school bus had $1,000,000 in UIM coverage. Following the accident, the carriers for the at-fault vehicle and the school bus tendered their respective policy limits to the district court. Then, the district court appointed a Special Master to assess the victims' damages and determine the value of each claim. The Special Master found that the damages for the 19 victims totaled $5,302,800. With respect to Sleiter, the Special Master found that his damages totaled $140,000. Due to the substantial gap between the total damages and the tendered insurance limits, the Special Master concluded that the 19 victims would share on a percentage basis in the insurance proceeds. After calculating the percentage basis for each claimant, the Special Master found that Sleiter's pro rata share was $1,600.33 from the at-fault vehicle's policy, and $34,543.70 from the school bus's policy. The district court approved the Special Master's findings and Sleiter received his respective share of the proceeds, which totaled $36,144.03.

Because Sleiter's damages exceeded the insurance coverage available to him under the pro-rata distribution, Sleiter sought $65,456 in excess UIM benefits from American Family, which insured the Sleiter family vehicle for up to $100,000 in UIM coverage. American Family denied coverage, claiming that, pursuant to Minn.Stat. § 65B.49, subd. 3a(5) (2014), of the Minnesota No–Fault Automobile Insurance Act (No–Fault Act), Sleiter's excess UIM coverage ($100,000) did not “exceed” the UIM coverage provided by the school bus's insurance ($1,000,000). American Family, therefore, denied Sleiter's claim for excess UIM benefits.

After American Family denied Sleiter's claim, Sleiter brought this action, seeking the difference between the recovery he received and his UIM policy limits, or $65,456, from American Family. The parties brought cross-motions for summary judgment. The district court agreed with American Family's reasoning, granted its summary judgment motion, and denied Sleiter's motion. The court of appeals affirmed. See Sleiter v. Am. Family Mut. Ins. Co., No. A13–1596, 2014 WL 1272402, at *3 (Minn.App. Mar. 31, 2014). We granted Sleiter's petition for review.

I.

It is undisputed that Sleiter has recovered less than his total damages from the at-fault vehicle and the school bus. The question is whether he is entitled to recover excess UIM benefits from his family's policy to compensate for that under-recovery.

On appeal from a grant of summary judgment, we determine whether any genuine issues of material fact exist and whether the trial court erred in its application of the law, Midwest Family Mut. Ins. Co. v. Wolters, 831 N.W.2d 628, 636 (Minn.2013), construing the facts in the light most favorable to the party against whom summary judgment was granted, J.E.B. v. Danks, 785 N.W.2d 741, 746 (Minn.2010). Here, the facts are undisputed and the only question before us concerns the correct application of the No–Fault Act. Statutory interpretation is a question of law that we review de novo. Emerson v. Sch. Bd. of Indep. Sch. Dist. 199, 809 N.W.2d 679, 682 (Minn.2012).

“The No–Fault Act requires all motor vehicle insurance policies issued in Minnesota to provide certain minimum limits of uninsured (UM) and UIM coverage.”¹ West Bend Mut. Ins. Co. v. Allstate Ins. Co., 776 N.W.2d 693, 697 (Minn.2009) ; see also Minn.Stat. § 65B.49, subd. 3a(1) (2014). Minnesota Statutes § 65B.49, subd. 3a(5), establishes the framework for determining the sources of coverage for UIM claims, West Bend, 776 N.W.2d at 697, and provides:

If at the time of the accident the injured person is occupying a motor vehicle, the limit of liability for uninsured and underinsured motorist coverages available to the injured person is the limit specified for that motor vehicle. However, if the injured person is occupying a motor vehicle of which the injured person is not an insured, the injured person may be entitled to excess insurance protection afforded by a policy in which the injured party is otherwise insured. The excess insurance protection is limited to the extent of covered damages sustained, and further is available only to the extent by which the limit of liability for like coverage applicable to any one motor vehicle listed on the automobile insurance policy of which the injured person is an insured exceeds the limit of liability of the coverage available to the injured person from the occupied motor vehicle.

Minn.Stat. § 65B.49, subd. 3a(5) (emphasis added).

The three sentences in this provision explain the source of primary UM and UIM coverage (the “occup[ied]” vehicle), the source of excess UM and UIM coverage (a vehicle covered by a “policy in which the injured party is otherwise insured”), and the availability of excess coverage. West Bend, 776 N.W.2d at 698, 702 ; Carlson v. Allstate Ins. Co., 749 N.W.2d 41, 46 (Minn.2008) ( “[T]he statute is intended as a list of priorities....”). The final sentence in Minn.Stat. § 65B.49, subd. 3a(5), which explains limits on excess-insurance protection, is the focus of this appeal. Specifically, the parties' dispute requires that we consider the proper interpretation of the phrase “coverage available” in the final sentence.

“The object of all interpretation and construction of laws is to ascertain and effectuate the intention of the legislature.” Minn.Stat. § 645.16 (2014). To interpret a statute, we first assesses “whether the statute's language, on its face, is clear or ambiguous.” Laase v. 2007 Chevrolet Tahoe, 776 N.W.2d 431, 434 (Minn.2009) (citation omitted) (internal quotation marks omitted). When the words of a law are “clear and free from all ambiguity,” the plain meaning controls and will not be “disregarded under the pretext of pursuing the spirit” of the law. Minn.Stat. § 645.16 ; Laase, 776 N.W.2d at 434. When the words of a law are susceptible to more than one reasonable interpretation, the statute is ambiguous. Emerson, 809 N.W.2d at 682. “When the language of a statute is unclear or ambiguous, we will go beyond the specific language of the statute to determine the intent of the legislature.” Id. at 684. With these principles in mind, we turn to interpreting the phrase “coverage available.”

We have previously considered the application of subdivision 3a(5) in the context of a multi-vehicle, single-injured plaintiff accident. In Schons v. State Farm Mut. Auto. Ins. Co., the injured plaintiff (Schons) was a passenger in V.G.'s automobile when an accident occurred with B.K.'s automobile. 621 N.W.2d 743, 744 (Minn.2001). Schons sustained extensive injuries and damages. Id. Both drivers were negligent and underinsured. Id. V.G. carried insurance of $50,000 each in liability and UIM coverage, while B.K. carried insurance of $50,000 in liability coverage. Id. Schons received $50,000 in liability benefits from V.G., and $48,000 in liability benefits from B.K. Id. at 744–45. After this recovery, Schons' damages exceeded the benefits she received. Id. at 745. Accordingly, Schons sought additional benefits from V.G.'s UIM coverage for both drivers' underinsured negligence. Id. V.G.'s insurer paid Schons $50,000 for B.K.'s underinsured negligence, but denied Schons' claim for additional benefits for V.G.'s underinsured negligence because Schons had already received $50,000 in liability benefits under V.G.'s policy. Id. Consequently, Schons sought $50,000 in UIM benefits from her own insurance provider—which had insured Schons up to a $50,000 UIM limit—for V.G.'s underinsured negligence. Id. Schons' insurance company denied the claim, asserting that Minn.Stat. § 65B.49, subd. 3a(5), precluded Schons from recovering additional UIM benefits because the $50,000 UIM limit on her policy did not exceed the host vehicle's policy limit, which was also $50,000. Id.

We recognized that Schons' claim “center[ed] on the third sentence of subdivision 3a(5),” and that the function of this subdivision “is to connect an injured passenger's total UIM benefit recovery to the limit specified for the motor vehicle the passenger occupied” unless “the passenger's preselected level of UIM coverage exceeds the host vehicle's UIM limits.” Id. at 747–48. We held that, because the $50,000 of UIM benefits available to and recovered by Schons through V.G.'s policy was the same as the $50,000 in UIM coverage through her policy, “Schons [was] not entitled to recover additional UIM benefits from her own insurer” because “she could not reasonably expect to recover more than...