Jon P. Hanbury, individually and as father and natural guardian of Andrew and Nick Hanbury v. American Family Mutual Insurance Company

STATE OF MINNESOTA
IN COURT OF APPEALS
A14-1746
Jon P. Hanbury, individually and as father
and natural guardian of Andrew and Nick Hanbury,
Appellant,
vs.
American Family Mutual Insurance Company,
Respondent.
Filed June 15, 2015
Affirmed
Hudson, Judge
Hennepin County District Court
File No. 27-CV-14-1837
Timothy P. McCarthy, Gary K. Luloff, Chestnut Cambronne PA, Minneapolis,
Minnesota (for appellant)
Louise A. Behrendt, Stich, Angell, Kreidler, Dodge & Unke, P.A., Minneapolis,
Minnesota (for respondent)
Considered and decided by Reyes, Presiding Judge; Hudson, Judge; and
Bjorkman, Judge.
SYLLABUS
An insurance policy that provides underinsured motorist coverage only to insured
persons who sustain bodily injury in a motor-vehicle accident complies with the
Minnesota No-Fault Automobile Insurance Act.
OPINION
HUDSON, Judge
In this appeal taken from the district court’s entry of judgment in favor of
respondent American Family Mutual Insurance Company (American Family), we
consider whether an insurance policy that limits underinsured motorist (UIM) coverage to
bodily injury sustained by an insured person complies with the Minnesota No-Fault
Automobile Insurance Act (no-fault act). Because we conclude that the no-fault act
requires UIM coverage be provided only for bodily injury sustained by an insured person,
we affirm.
FACTS
On August 30, 2010, Mary Ellen Hanbury was killed in an automobile accident
caused by her husband’s negligence. Mary Ellen’s son, appellant Jon P. Hanbury, was
not in the car when the accident occurred. Following Mary Ellen’s death, appellant was
appointed trustee for her next of kin. He filed a wrongful-death action against Mary
Ellen’s husband and settled that claim for $100,000, the maximum liability limit of her
husband’s insurance policy.
At the time of Mary Ellen’s death, appellant and his children were insured under
an automobile policy issued by American Family. The policy included UIM coverage in
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the amount of $100,000 for “bodily injury to an insured person who is legally entitled to
recover from the owner or operator of an underinsured motor vehicle.” It is not disputed
that, if Mary Ellen had survived, she would have been ineligible to recover UIM benefits
from appellant’s insurance policy because she is not an insured under the terms of the
policy.
After appellant settled the wrongful-death action for the limits of Mary Ellen’s
husband’s policy, he submitted a claim to American Family, his own insurer, for payment
of UIM benefits, contending that his recovery from the wrongful-death settlement did not
adequately compensate him for the losses that he sustained from Mary Ellen’s death.
American Family informed appellant that he was not eligible for UIM benefits because
he had not suffered bodily injury in the automobile accident. Appellant subsequently
filed suit against American Family, seeking a declaration that his UIM claim is covered
by his insurance policy. Both parties moved for summary judgment and the district court
entered judgment in favor of American Family. This appeal follows.
ISSUE
Does an insurance policy omit coverage required by the no-fault act if it provides
UIM coverage only to persons who sustain a bodily injury as the result of a motor vehicle
accident?
ANALYSIS
Appellant argues that the district court erroneously concluded that his insurance
policy, which limits UIM coverage to bodily injuries sustained by an insured person, does
not omit coverage required by the no-fault act. In reviewing a grant of summary
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judgment, we consider whether: (1) genuine issues of material fact exist, and (2) the
district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4
(Minn. 1990). We view the evidence in the light most favorable to the nonmoving party
and draw all reasonable inferences in his or her favor. STAR Centers, Inc. v. Faegre &
Benson, L.L.P., 644 N.W.2d 72, 76–77 (Minn. 2002). When “the district court grants
summary judgment based on the application of a statute to undisputed facts, the result is a
legal conclusion that we review de novo.” Weston v. McWilliams & Assocs., Inc., 716
N.W.2d 634, 638 (Minn. 2006).
Generally, the extent of an insurer’s liability is determined by its insurance
contract with its insured. Lynch ex rel. Lynch v. Am. Family Mut. Ins. Co., 626 N.W.2d
182, 185 (Minn. 2001). But insurance policies may not omit coverage required by law or
contradict other applicable statutes. Id. Thus, if the terms of an insurance policy conflict
with the no-fault act or omit coverage required by that act, we must declare those terms
invalid. Kwong v. Depositors Ins. Co., 627 N.W.2d 52, 55 (Minn. 2001). Because the
parties agree that appellant’s insurance policy only provides UIM benefits for “bodily
injury to an insured person,” we consider only whether that exclusion omits coverage
required by the no-fault act.
The no-fault act requires that every insurance policy issued in Minnesota provide
certain first- and third-party coverage. Minn. Stat. §§ 65B.42, 49, subd. 3a (2014). UIM
coverage is a form of first-party coverage required by the no-fault act and is provided for
“the protection of persons insured under that coverage who are legally entitled to recover
damages for bodily injury from owners or operators of underinsured motor vehicles.”
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Minn. Stat. § 65B.43, subd. 19 (2014). Insured persons include the named policyholder
and that person’s spouse, relatives, and custodial minors who reside with the policyholder
and are not covered by any other insurance policy. Id., subd. 5 (2014). An insured
person is “legally entitled to recover damages” if that person has established “fault and
damages” against the underinsured driver. Miklas v. Parrott, 684 N.W.2d 458, 461–62
(Minn. 2004).
Appellant claims that he is eligible for UIM benefits because the recovery he
received in the wrongful-death action did not adequately compensate him for Mary
Ellen’s death. American Family contends that the no-fault act does not require UIM
benefits to be paid to insured persons who have not suffered bodily injury in an
automobile accident. Our resolution of this dispute requires us to consider whether an
insured person is eligible to recover UIM benefits for pecuniary loss resulting from an
uninsured person’s death in an automobile accident in which the insured person was not
involved.
A
We begin by considering whether appellant is eligible to recover UIM benefits
from his individual policy based on his status as the trustee in Mary Ellen’s wrongful-
death action. We note first that, although appellant made his UIM claim under his
American Family policy on his own behalf, he has at various points also contended that
he has “standing” to recover UIM benefits because he “is the trustee” under the wrongful-
death statute. Thus, we address both contingencies, beginning with his status as trustee
under the wrongful-death statute.
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The wrongful-death statute states that:
When death is caused by the wrongful act or omission of any
person or corporation, the trustee appointed as provided in
subdivision 3 may maintain an action therefor if the decedent
might have maintained an action, had the decedent lived, for
an injury caused by the wrongful act or omission.
Minn. Stat. § 573.02, subd. 1 (2014). Recovery on wrongful-death claims is limited to
“the amount . . . deem[ed] fair and just in reference to the pecuniary loss resulting from
the death, and shall be for the exclusive benefit of the surviving spouse and next of kin,
proportionate to the pecuniary loss severally suffered by the death.” Id. But the
wrongful-death statute neither transforms the decedent’s claim into the next-of-kin’s
claim nor permits the decedent’s next-of-kin to file suit against the tortfeasor in his
individual capacity. Rather, the wrongful-death statute, by its express terms, permits the
trustee—here, appellant—to pursue the decedent’s claim against the tortfeasor. See
Minn. Stat. § 573.02, subds. 1, 3 (2014). And the trustee is permitted to maintain those
actions that “the decedent might have maintained . . . had the decedent lived.” Id.,
subd. 1. It is undisputed that, had Mary Ellen survived, she would have been ineligible to
recover UIM benefits from appellant’s policy because she was not an insured under that
policy. Accordingly, appellant is also precluded from recovering those same benefits as
trustee in a wrongful-death action.
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B
We next consider whether appellant is eligible to recover UIM benefits in his
individual capacity because, as Mary Ellen’s next-of-kin, he was legally entitled to
recover damages in the wrongful-death action and because those damages did not
adequately compensate him for her death. This appears to be an issue of first impression
in Minnesota. Appellant argues that the no-fault act requires UIM benefits be paid to any
insured person legally entitled to recover damages for bodily injury, even if the insured
person was not the party who suffered the bodily injury. We disagree.
We “interpret statutes, such as the No–Fault Act, de novo.” Pepper v. State Farm
Mut. Auto. Ins. Co., 813 N.W.2d 921, 925 (Minn. 2012). “The goal of all statutory
interpretation is to ‘ascertain and effectuate the intention of the legislature.’” Caldas v.
Affordable Granite & Stone, Inc., 820 N.W.2d 826, 836 (Minn. 2012) (quoting Minn.
Stat. § 645.16 (2010)). The first step in statutory interpretation is to “determine whether
the statute’s language, on its face, is ambiguous.” Larson v. State, 790 N.W.2d 700, 703
(Minn. 2010) (quotation omitted). A statute is ambiguous only if its plain language is
subject to more than one reasonable interpretation. Tuma v. Comm’r of Econ. Sec., 386
N.W.2d 702, 706 (Minn. 1986). Here, the relevant statutory definition of UIM coverage,
which mandates coverage for the “protection of persons insured under that coverage who
are legally entitled to recover damages for bodily injury,” is ambiguous because it can be
interpreted in two different ways. Minn. Stat. § 65B.43, subd. 19. First, it can be read, as
appellant contends, to require coverage for any person’s bodily injury, so long as the
insured person is entitled to recover damages for that injury. Second, it can be read, as
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American Family argues, to require coverage only for bodily injury sustained by the
insured person. Because the statutory language is ambiguous, we look beyond the
specific language of the statute to determine the legislature’s intent. Rohmiller v. Hart,
811 N.W.2d 585, 589 (Minn. 2012). For several reasons, we conclude that the legislature
intended for UIM benefits to be reserved for those who sustained bodily injury from a
motor vehicle accident.
First, the legislature has expressly stated that the purpose of the no-fault act is to
address “[t]he detrimental impact of automobile accidents on uncompensated injured
persons.” Minn. Stat. § 65B.42 (emphasis added); see also Kelly v. State Farm Mut. Ins.
Co., 666 N.W.2d 328, 330 (Minn. 2003) (quotation omitted) (explaining that UIM
benefits protect “the named insured and other additional insureds from suffering an
inadequately compensated injury”). The no-fault act is also intended to “relieve the
severe economic distress of uncompensated victims of automobile accidents within this
state.” Minn. Stat. § 65B.42(1). A “victim” is commonly defined as a person “who is
harmed or killed by another.” American Heritage Dictionary of the English Language
1990 (3d ed. 1996). Those statutory provisions expressly limit the purpose of the no-fault
act to ensuring that adequate compensation is paid for bodily injury. They do not suggest
that the legislature intended for UIM coverage to extend to claims where, as here, the
insured person has not suffered bodily injury and was not involved in the automobile
accident, and the insured person is otherwise ineligible for UIM benefits.
Second, we are persuaded by the fact that the legislature made significant
amendments to the no-fault act in 1985, which limited UIM coverage and “reflect[ed] a
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broad policy decision to tie uninsured motorist and other coverage to the particular
vehicle involved in an accident.” West Bend Mut. Ins. Co. v. Allstate Ins. Co., 776
N.W.2d 693, 699 (Minn. 2009) (quotation omitted); see also Meyer v. Ill. Farmers Ins.
Grp., 371 N.W.2d 535, 537 (Minn. 1985) (explaining that UIM coverage is different
from most forms of first-party coverage because it follows the vehicle and “is intended to
protect against . . . the risk that a negligent driver of another vehicle will have failed to
purchase adequate liability insurance”). Prior to the 1985 amendments, insureds could
stack UIM coverages under any insurance policy in which they were identified as an
insured because public policy favored full compensation for injuries. Michael K.
Steenson, Minnesota No-Fault Automobile Insurance § 15.01, at 5 (3rd ed. 2002). The
1985 amendments, which prohibited the stacking of UIM coverage and “otherwise
limited the occupant’s ability to collect additional like coverage” were passed to “stem
rising insurance costs” that resulted from “prior law requiring expansive interpretation of
vehicle insurance coverage.” West Bend, 776 N.W.2d at 699 (quotations omitted); see
Minn. Stat. § 65B.49, subd. 3a (codifying a portion of 1985 amendments). The 1985
amendments demonstrate that the legislature did not intend to provide the expansive UIM
coverage that is sought here and further establish, by tying UIM coverage to the vehicle,
that the legislature’s priority was to ensure protection for those actually injured in an
automobile accident.
Our conclusion is also informed by the plain language of other related provisions
that govern the application and scope of UIM coverage. See Milner v. Farmers Ins.
Exch., 748 N.W.2d 608, 617 (Minn. 2008) (stating that this court may consider other
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related statutes in assessing legislative intent). We note that those provisions make
multiple references to the term “injured person.” For example, Minn. Stat. § 65B.49,
subd. 3a(5), which establishes a priority scheme to determine which UIM policies
provide coverage, explains that, when the “injured person” is occupying a motor vehicle
at the time of the accident, the “injured person’s” coverage is the limit specified for that
vehicle. Minn. Stat. 65B.49, subd. 3a(5). The same subdivision also states that, if the
“injured person” is not an insured under the policy covering the vehicle that he or she was
occupying when the accident occurred, the “injured person” may collect “excess
insurance protection” from a policy under which the “injured person” is an insured. Id.
Subdivision 4a of the same section provides that a person “injured” by two or more
vehicles may recover UIM benefits whenever any one of those vehicles meets the
definition of an underinsured motor vehicle. Id., subd. 4a (2014). These references
further demonstrate that the legislature contemplated that UIM coverage would extend
only to those persons who sustained bodily injury in a motor vehicle accident.
Finally, if recovery were permitted here, insurance companies would be obligated
to provide UIM coverage to insured persons for the automobile-related deaths of all
people for whom the insured person was the next-of-kin. That result would impose
considerable additional risk on insurance companies, essentially requiring coverage for
the deaths of uninsured or underinsured persons who did not pay premiums for that
coverage and who, if they had survived, would be ineligible to recover UIM benefits
themselves. We do not believe that the legislature intended that result when it enacted
the no-fault act. Cf. McIntosh v. State Farm Mut. Auto. Ins. Co., 488 N.W.2d 476, 479
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(Minn. 1992) (stating that those who pay premiums into a pool for insured motorist
coverage do not “expect those funds to be available to pay compensation for injuries for
which, if the uninsured motorist were insured, his insurance company would not have to
pay”). For all of the above reasons, we conclude that the no-fault act requires UIM
coverage be provided only for insured persons who sustain bodily injuries as the result of
a motor-vehicle accident.1
C
Finally, we consider whether the pecuniary loss that appellant suffered as a result
of Mary Ellen’s death constitutes a bodily injury separate from Mary Ellen’s bodily
injury claim that would entitle appellant to receive UIM benefits from his own insurance
policy. Appellant contends that pecuniary damages are akin to loss-of-consortium
damages and argues that he may recover those damages under his policy because we have
previously permitted uninjured parties to recover UIM benefits for loss-of-consortium
damages resulting from an automobile accident. We are not persuaded.
As appellant notes, we have previously concluded that an insurance policy that
provides coverage for bodily injury also provides coverage for loss-of-consortium
damages unless the policy contains specific language excluding that coverage. Carlson v.
Mut. Serv. Cas. Ins. Co., 527 N.W.2d 580, 583–84 (Minn. App. 1995), review denied
(Minn. Apr. 27, 1995). We based our conclusion on the fact that loss-of-consortium
1
We also note that our conclusion is consistent with a majority of jurisdictions that have
addressed similar issues. See Strum v. Swanson, 653 S.E.2d 667, 673-78 (W. Va. 2005)
(summarizing reasoning of decisions permitting and prohibiting recovery of UIM benefits
where the insured person has not suffered bodily injury).
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damages are “derivative from” bodily injury and that we had previously recognized that a
bodily injury claim encompassed both actual injury and loss-of-consortium damages. Id.;
Beukhof v. Minn. Mut. Fire & Cas. Co., 502 N.W.2d 223, 224 (Minn. App. 1993), review
denied (Minn. Aug. 6, 1993). We therefore permitted an uninjured spouse to recover
UIM benefits for loss of consortium from the injured spouse’s insurance policy. Id.; see
also Allstate Ins. Co. v. Henderson, 895 F. Supp. 237, 238–40 (D. Minn. 1995)
(permitting decedent’s next-of-kin to recover UIM benefits for “pecuniary loss/loss of
consortium” damages from the decedent’s insurance policy).
Like a loss-of-consortium claim, a wrongful-death claim is “derivative in nature”
because the damages recovered in that claim arise out of and are dependent on injuries to
the decedent. W. Page Keeton et al., Prosser & Keeton on the Law of Torts, § 127 (5th
ed. 1984). As a result, an insurance policy that provides UIM coverage for an insured
person’s bodily injury also provides coverage for pecuniary loss suffered by that person’s
relatives. Cf. Beukhof, 502 N.W.2d at 224 (stating that a loss-of-consortium claim is not
a separate compensable injury, but is included in the personal injury claim). Here,
however, appellant seeks UIM coverage for pecuniary loss from his own policy. Because
pecuniary loss is derived from another party’s personal injury, appellant is eligible to
receive UIM benefits only from an insurance policy from which Mary Ellen is eligible to
recover for her own personal injury. Because appellant’s insurance policy does not
provide UIM benefits for Mary Ellen’s personal injury, appellant is also ineligible to
recover UIM benefits for pecuniary loss from that policy.
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DECISION
Because we conclude that an insurance policy that limits payment of UIM benefits
to claims where the insured person has suffered bodily injury is valid under the no-fault
act, we affirm the district court’s entry of judgment in favor of American Family.
Affirmed.
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