Opinion ID: 2185697
Heading Depth: 1
Heading Rank: 2

Heading: Difference of Limits Method

Text: State Farm UIM policy limits $ 50,000 Settlement with Jenkins $ 25,000 ______ State Farm's obligation $ 25,000 ====== Add-On Method Zurn's damages $125,000 Settlement with Jenkins $ 25,000 _______ Remaining damages $100,000 State Farm's obligation $ 50,000 ======= Under either method State Farm's underinsurance obligation cannot exceed the $50,000 policy limits. The two methods present a revolving target because the Minnesota legislature has vacillated between the two. [1] The question is whether Zurn's claim is controlled by the difference of limits method in effect in Minnesota at the time of the accident, or whether it is controlled by the add-on method which went into effect later. State Farm relies on the clear legislative mandate that the change to the present law was made effective for all contracts issued or renewed on or after August 1, 1989. 1989 Minn. Laws ch. 213, § 3. In arguing for application of the add-on method, Zurn cites our opinion in Berghammer v. Smith, 185 N.W.2d 226 (Iowa 1971), in which we applied Minnesota law. Berghammer involved an automobile accident in which a Minnesota resident was injured when his truck collided with a truck owned by an employee of the defendant, an Illinois resident. Id. at 230, 231. At the time of the accident Minnesota did not recognize a wife's cause of action for loss of consortium, but did so at the time Berghammer was decided. Id. at 230. We applied the new Minnesota law, stating: Even though Minnesota has made the new rule prospective, we are not bound to do likewise. We should decide, rather, whether that action would further some valid interest of that state under the particular circumstances of this case. Id. at 232. We concluded that: [B]y enforcing the now discarded Minnesota rule, we would ignore our own state policy without advancing Minnesota's. Id. We are disinclined to follow Berghammer in the present case, however, because the prospective aspect of the change involved here was mandated, not at common law, but by the Minnesota legislature. We are not free in the present case to sort through and decide the policy considerations. The Minnesota legislature had clear authority to set the effective date for change of its statutory rule. The trial court was correct in determining that we are bound to abide by it. II. The question on State Farm's appeal is whether, in addition to Zurn's $25,000 recovery from Jenkins, his $50,000 dramshop recovery should also be deducted from the policy limits. Although this question is also one of Minnesota law, we must decide it on the basis of our own. Unless the law of a sister state is pled and proven at trial, we presume it to be the same as our own. [2] Iowa Kemper Ins. Co. v. Cunningham, 305 N.W.2d 467, 469 (Iowa 1981); In re Estate of Allen, 239 N.W.2d 163, 169 (Iowa 1976). This case is an obvious choice for application of the rule because Minnesota, as most states, seems never to have ruled on the question. There is a dearth of authority on whether dramshop recoveries, in common with recoveries against underinsured motorist, should be deducted from underinsurance policy limits. Bauter v. Hanover Ins. Co., 247 N.J.Super. 94, 101, 588 A.2d 870, 874-75 (N.J.Super.App.Div.1991), cert. denied, 126 N.J. 335, 598 A.2d 893 (1991), cites a case for each view, and opts for also deducting the dramshop recovery. The question is said to turn on the basic approach taken in the jurisdiction toward underinsurance provisions. We have said our basic approach to underinsurance provisions is broader than our approach to uninsurance provisions. McClure v. Northland Ins. Cos., 424 N.W.2d 448, 449-50 (Iowa 1988). In McClure we described our perceived difference in the roles of uninsurance and underinsurance: uninsurance is designed to establish a minimum amount which a victim may recover when injured by a party with less liability insurance than required by Iowa Code section 321A.1(10). Underinsurance coverage, on the other hand, is designed to make the victim whole. Id. We think Zurn's $50,000 dramshop recovery should be treated similarly. It should be deducted from his $125,000 in damages, leaving $75,000 in damages, which does not affect the $50,000 limit. The trial court was correct in deducting the $25,000 recovery against Jenkins and in declining to deduct the $50,000 dramshop award from Zurn's underinsurance claim. AFFIRMED.