Great West Casualty Co. v. Northland Insurance

OPINION

DAVIES, Judge.

Appellant Great West Casualty Company instituted an action against respondent Northland Insurance Company pursuant to Minn. Stat. § 65B.47, subd. 5 (for contribution) or subd. 6 (for subrogation). The trial court held as a matter of law that Great West was not entitled to recover and entered a judgment in favor of Northland. We reverse and remand.

FACTS

In June 1988, Maynard Neuleib (the insured) suffered a dislocated shoulder while unloading a semi-trailer. Three years later, the insured re-injured the shoulder, again while unloading a semi-trailer. At the time of the first accident, the insured was covered by a policy issued by Northland; at the time of the second, the insured was covered by Great West. In November 1991, the insured dislocated the shoulder a third time in an accident not involving a motor vehicle and not covered by policies issued by either party. All three accidents contributed in part to disability of the shoulder, and ultimately to an economic loss of $15,252.20.

The insured submitted claims for the costs of shoulder replacement surgery to both Great West and Northland. After Northland wrongfully denied him benefits, Great West paid the entire claim. Great West then brought this action to recover from North-land the no-fault benefits paid to the extent the injury was traceable to the June 1988 accident.

Following a bench trial, the trial court found that the cause of the insured’s shoulder disability was properly allocated: 50 percent to the first accident (Northland’s accident), 25 percent to the second accident (Great West’s accident), and 25 percent to the third accident (uncovered). The court held, however, that Great West was not entitled to a subrogation recovery. This appeal followed.

ISSUE

Did the trial court err in holding as a matter of law that Great West was not entitled to subrogation?¹

ANALYSIS

Where material facts are not in dispute, a reviewing court need not defer to the trial court’s application of the law. Hubred v. Control Data Corp., 442 N.W.2d 308, 310 (Minn.1989). The construction of a statute is a question of law and thus fully reviewable by an appellate court. Hibbing Educ. Ass’n v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn.1985).

Great West contends that if Northland was obligated under the no-fault law to pay a portion of the economic loss benefits, then Great West should have the right of subrogation. We agree.

The no-fault law includes the right to sub-rogation. Minn.Stat. § 65B.47, subd. 6 (1990), provides:

Where a reparation obligor pays basic economic loss benefits which another reparation obligor is obligated to pay under the priority provided in this section, the reparation obligor that pays is subrogated to all rights of the person to whom benefits are paid.

(Emphasis added.)

The trial court was led astray by the phrase, reading it as applying only to the emphasized “priority” applicable to a single accident. The trial court read the statute as if it read “under the priority provided in this section [and related to this most recent accident].” The statute does not distinguish, however, between an injury caused by a single accident and an injury caused by multiple accidents. The phrase “under priority provided in this section” does not limit subrogation to the circumstances of a priority established between insurers disputing their respective obligations in a single accident. It, thus, applies as well to multiple-accident disability.

When we apply the statute as written, Northland is obligated to pay benefits for the shoulder injury because “under the priority provided” in section 65B.47, subdivision 1, it is the obligated no-fault insurer for the first accident. For that first accident, North-land—as the insurer of the involved vehicle— was the company obligated to pay no-fault benefits. The fact that Northland did not provide coverage at the time of the second accident, when the shoulder was re-injured, does not relieve Northland of its obligation to pay no-fault benefits for the first accident “under the priority” of the statute.²

The purpose of the no-fault act includes “to relieve the severe economic distress” of victims by providing “prompt payment.” Minn.Stat. § 65B.42, subd. 1 (1994); McClain v. Begley, 465 N.W.2d 680, 682 (Minn.1991). The right of subrogation furthers this purpose by encouraging one of the reparation obligors to step forward promptly to pay the full claim of a victim. Because subrogation works to that end regardless of whether an insured suffers injuries in a single accident or in separate accidents, subro-gation should apply here.

We note that Great West was not a volunteer. Great West, obligated in part, simply paid the insured’s claim in full to satisfy a prime goal of the statute. Now Great West is entitled to partial subrogation from North-land, the priority insurer for the initial damage to insured’s shoulder.

DECISION

The trial court erred when it ruled that Great West was not entitled to subrogation. Because Great West and Northland were both reparation obligors, but Great West paid the insured’s entire claim, Great West is entitled to subrogation for whatever share of the economic loss benefits Northland should have paid.³

Reversed and remanded.

1 . On appeal, appellant has abandoned the contribution claim.

2 . The dissent's reliance on Milbrandt v. American Legion Post, 372 N.W.2d 702, 705 (Minn.1985), is misplaced. Subrogation in Milbrandt was based on a dram shop liability, not against another no-fault obligor, as here, and was claimed on the basis of Minn.Stat. § 65B.53, subd. 3.

3 . Great West seeks to recover two-thirds of the benefits it paid to the insured because the trial court found the cause of the shoulder disability allocated to the first accident was twice as great as that allocated to the second accident. We leave to the trial court the determination of the correctness of the amount claimed.