Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-03099/USCOURTS-ca8-05-03099-0/pdf.json

Parties Involved:
Allianz Insurance Company of Canada
Appellee
Carolyn Sanftleben
Appellant
Richard Sanftleben
Appellant

Document Text:

1

The Honorable Ann D. Montgomery, United States District Judge for the

District of Minnesota.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-3099

___________

Allianz Insurance Company of *

Canada, *

*

Appellee, *

*

v. * Appeal from the United States

* District Court for the

Richard Sanftleben, also known as * District of Minnesota.

Ric Sanftleben; Carolyn Sanftleben, *

as purported assignee of Richard *

Sanftleben, *

*

Appellants. *

___________

Submitted: March 15, 2006

Filed: July 21, 2006

___________

Before MURPHY, BOWMAN, and BENTON, Circuit Judges.

___________

BOWMAN, Circuit Judge.

In this diversity action, the District Court1

 granted summary judgment in favor

of Allianz Insurance Company of Canada on Richard and Carolyn Sanftleben's claim

for benefits under an automobile insurance policy issued by Allianz to Richard. The

Sanftlebens appeal, and we affirm.

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In a Miller-Shugart settlement, the insurer denies all coverage, and the

abandoned insured agrees with the claimant that judgment may be entered against him

in return for the claimant's agreement to release the insured from personal liability.

Miller v. Shugart, 316 N.W.2d 729 (Minn. 1982); see Peterson v. Wilson Twp., 672

N.W.2d 556, 557 n.1 (Minn. 2003). 

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On August 28, 1999, Richard was driving his wife Carolyn's 1994 Ford

Explorer from Hopkins, Minnesota to Alberta, Canada. Carolyn was a passenger in

the vehicle. While driving in Minnesota, Richard lost control of the Explorer, the

vehicle rolled, and Carolyn was seriously injured. Carolyn had insured the Explorer

with Farmers Insurance Group under a policy providing a liability limit of $50,000 per

person, as well as uninsured and underinsured motorist (UIM) coverage (the Farmers

policy). Farmers determined that Richard was an additional insured under the terms

of Carolyn's policy and, because Farmers provided the primary liability coverage for

the accident, paid Carolyn $50,000 pursuant to the Farmers policy.

At the time of the accident, Richard, then a Canadian citizen, owned a 1986

GMC truck on which he carried a policy of insurance from Allianz (the Allianz

policy) with a limit of $1,000,000 in both liability and "SEF 44 benefits," essentially

the Canadian equivalent of UIM coverage. On June 22, 2001, Carolyn filed a personal

injury action against Richard in Hennepin County District Court. Allianz defended

Richard subject to a complete reservation of rights. On May 6, 2003, the Sanftlebens

settled the personal injury action by entering into a Miller-Shugart2

 settlement

agreement in the amount of $650,000. On May 5, 2004, Allianz sought a declaratory

judgment in federal district court that Carolyn was not entitled to liability or UIM

benefits under the Allianz policy. Carolyn conceded that she was precluded from

recovering liability benefits under the Allianz policy, but contended that she was

entitled to UIM benefits under the Allianz policy. 

The District Court granted summary judgment in favor of Allianz, concluding

that the Allianz policy must be interpreted under the laws of Canada rather than

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Minnesota and that, so interpreted, the plain language of the Allianz policy barred

Carolyn from recovering UIM benefits. This appeal followed.

Our standard of review is a familiar one: We review a district court's grant of

summary judgment de novo, viewing the evidence in the light most favorable to the

nonmoving party. See LeGrand v. Area Res. for Cmty. & Human Servs., 394 F.3d

1098, 1101 (8th Cir.), cert. denied, 126 S. Ct. 335 (2005). Summary judgment is

proper if there are no genuine issues as to any material fact and the moving party is

entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). We review de novo a

district court's interpretation of the contractual provisions of an insurance policy. See

Noran Neurological Clinic, P.A. v. Travelers Indem. Co., 229 F.3d 707, 709 (8th Cir.

2000) (applying Minnesota law). 

The Sanftlebens first argue that the District Court erred in its choice-of-law

analysis. According to the Sanftlebens, the law of Minnesota rather than the law of

Canada should govern their claim for UIM benefits under the Allianz policy. In a

diversity case, a district court sitting in Minnesota applies Minnesota's choice-of-law

rules. See DCS Sanitation Mgmt., Inc. v. Castillo, 435 F.3d 892, 895 (8th Cir. 2006)

(noting that in diversity cases federal courts apply the forum state's choice-of-law

rules). Under Minnesota law, parties to an insurance contract may agree on the law

that will govern the contract. See Milliken & Co. v. Eagle Packaging Co., 295

N.W.2d 377, 380 n.1 (Minn. 1980) (noting that Minnesota law enforces contract

choice-of-law provisions). The construction and effect of a contract presents a

question of law, unless an ambiguity exists. Brookfield Trade Ctrs., Inc. v. County

of Ramsey, 584 N.W.2d 390, 394 (Minn. 1998). A contract is ambiguous only if its

language is reasonably susceptible to more than one interpretation, and we give

contractual language its plain and ordinary meaning. Id.

The Allianz policy includes a choice-of-law section which provides, in relevant

part:

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In determining the amount an eligible claimant is legally entitled to

recover from the inadequately insured motorist, issues of quantum shall

be decided in accordance with the law of the province governing the

policy and issues of liability shall be decided in accordance with the law

of the place where the accident occurred. 

Appendix of Appellant at 30 (SEF 44 5.b.). Here, the accident occurred in Minnesota,

but the Allianz policy was written and issued in Canada. As the District Court noted,

there is no question that Richard was liable for the single-vehicle accident in which

Carolyn was injured, so there are no "issues of liability" to be determined under

Minnesota law—the place where the accident occurred. Rather, the only issue to be

resolved is the amount, if any, of UIM benefits Carolyn is entitled to recover under

the Allianz policy. This is a question of quantum which, pursuant to the terms of the

Allianz policy, is governed by Canadian law. See, e.g., Myers Estate v. Zurich Ins.

Co., [1992] 118 N.S.R.2d 379, 388 (N.S. S.Ct. T.D.) (finding that where Florida

underinsured motorist was found by Florida jury to be 80% liable for injury to

Canadian insured, Canadian insurer was "bound by the Florida decision only in so far

as it decided that the driver of the car was 80% liable and [the insured] was 20%

liable"; issues of quantum were determined under Canadian law). Because Minnesota

law respects choice-of-law provisions in insurance contracts and because a provision

of the Allianz policy specifically and unambiguously identifies Canadian law as

controlling on the issue of quantum, the District Court did not err in concluding that

the plain language of the Allianz policy directs that Canadian law be applied to the

determination of whether Carolyn is entitled to UIM benefits under the Allianz policy.

We turn next to the question of whether the District Court properly concluded

that the plain language of the Allianz policy bars Carolyn's recovery of UIM benefits.

The Allianz policy's SEF 44 benefits provision permits an eligible claimant to recover

UIM benefits for injuries caused by an "inadequately insured motorist," which the

policy defines as "the identified owner or identified driver of an automobile with

respect to which the total motor vehicle liability insurance . . . of the owner and driver

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is less than the [SEF 44 benefits limit]." Appendix of Appellant at 29 (SEF 44 1.e.(i)

(emphasis added)). In other words, under the Allianz policy, an inadequately insured

motorist exists—and UIM benefits are available—only if the total liability limit of the

driver of the vehicle involved in the accident and that vehicle's owner is less than the

SEF 44—or UIM—benefits limit provided under the Allianz policy. Here, Carolyn

(the owner of the vehicle) carried a $50,000 liability limit under the Farmers policy

covering her Explorer, and Richard (the driver of the vehicle) carried a $1,000,000

liability limit under the Allianz policy covering his GMC truck. The total liability

limit under the policies for the owner and driver, therefore, was $1,050,000, while the

SEF 44 benefits limit under the Allianz policy was $1,000,000. Because the SEF 44

benefits limit under the Allianz policy is less than the total liability limit of the owner

and the driver of the vehicle involved in the accident, there was no "inadequately

insured motorist" as that term is defined under the Allianz policy. Accordingly,

Carolyn is not entitled to recover UIM benefits under the plain language of the Allianz

policy's SEF 44 benefits provision. The District Court did not err in reaching this

conclusion.

This result does not contravene applicable Canadian law. In Gully v. Coseco

Ins. Co., [1994] 155 A.R. 75 (Alta. C.A.), the Alberta Court of Appeal interpreted an

identical SEF 44 benefits provision in circumstances similar to those involved in this

case. In Gully, the plaintiff was injured in a single-vehicle accident when an

automobile owned and insured by his mother was negligently driven by a friend. The

plaintiff was excluded from liability coverage under his mother's policy, and there was

no other liability coverage available. The plaintiff sought UIM benefits under his

mother's policy pursuant to that policy's SEF 44 benefits clause. The insurer denied

the claim. The court upheld the denial, noting that the plain language of the SEF 44

benefits clause required a comparison of the total liability limit of the vehicle's driver

and its owner ($1,000,000 under the mother's policy because the driver had no liability

insurance) with the limit under the SEF 44 benefits provision ($1,000,000 under the

mother's policy) to determine whether there was an "inadequately insured motorist"

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as defined in the policy. Because the limits of the liability and SEF 44 benefits

provisions were identical, the court held that there was no inadequately insured

motorist as defined in the policy and thus no UIM coverage. Gully, 155 A.R. at 77

("Nothing in the [SEF 44 benefits clause] supports the view that an adequately insured

motorist becomes inadequately insured simply because a particular claimant is

excluded from any recovery under the policy."); see also Despotopoulos v. Jackson,

No. C8414, 67 A.C.W.S. (3d) (O.C.A. Nov. 29, 1996), available at 1996 A.C.W.S.J.

Lexis 142445 (Ont. C.A.) (holding that because the plaintiff had the same limit in

UIM coverage as the defendant tortfeasor had in liability coverage, the defendant was

not inadequately insured and the plaintiff was not entitled to UIM benefits). The court

in Gully found it irrelevant that the liability limits were not actually available to the

plaintiff because of a provision excluding the plaintiff from liability coverage under

his mother's policy. Here, Richard was not an inadequately insured motorist because

the total liability limit ($1,050,000) of Richard's and Carolyn's policies exceeded the

SEF 44 benefits limit of the Allianz policy ($1,000,000), even though Richard's

$1,000,000 in liability coverage was not available to Carolyn due to an exclusion. The

District Court did not err in concluding that the plain language of the Allianz policy

barred Carolyn's claim for UIM benefits and that this result was consistent with

Canadian law. 

Although not necessary for the disposition of this appeal, we note that the

District Court did not err in concluding that even if Minnesota law applied as argued

by the Sanftlebens, Carolyn's claim for UIM benefits under the Allianz policy would

fail. Minnesota statutes provide:

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

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Because we agree with the District Court that the plain language of the Allianz

policy precludes Carolyn's recovery of UIM benefits, we decline to address the other

arguments raised in Allianz's brief. 

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may be entitled to excess insurance protection afforded by a policy in

which the injured party is otherwise insured.

Minn. Stat. § 65B.49, subd. 3a(5) (2002) (emphasis added). An "insured" for

purposes of this statute includes, inter alia, the individual named in the policy insuring

the vehicle. Id. § 65B.43, subd. 5; see also Becker v. State Farm Mut. Auto. Ins. Co.,

611 N.W.2d 7, 13 (Minn. 2000) ("[T]he correct interpretation of 'insured' . . . is limited

to those persons specifically listed in [§ 65B.43, subd. 5]; that is, the named insured,

or spouse, minor, or resident relative of the named insured, in the policy of the

occupied vehicle."). Carolyn was the named insured on the Farmers policy that she

purchased for the Explorer. Consequently, under Minnesota law, Carolyn is an

"insured" as defined by section 65B.43, subdivision 5. As such, she is limited to

recovering under the Farmers policy insuring the Explorer, and she is prohibited by

statute from recovering under the Allianz policy. This result is consistent with the

Minnesota Supreme Court's pronouncement that the goal of the Minnesota UIM

regime is to give "motor vehicle owners the ability to select and purchase the amount

of [UIM] coverage they desire in excess of the mandatory minimums, and then access

that coverage in the event they are injured while occupying a vehicle owned by

someone who has purchased only the minimum [UIM] coverage." Becker, 611

N.W.2d at 13. Carolyn selected the level of coverage available under her Farmers

policy should she or another driver of the Explorer negligently operate the vehicle and

cause her injury. Had she desired additional protection from those risks, she could

have elected to purchase additional coverage through higher liability limits. 

For the foregoing reasons, we affirm the District Court's grant of summary

judgment in favor of Allianz.3

 

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