Court Opinion

ID: 805919
Source: CourtListenerOpinion
Date Created: 2012-08-03 15:24:14+00
Date Added: 2024-06-11T18:00:17.712142
License: Public Domain

United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 11-3330
                                   ___________

Marnita Goddard,                        *
                                        *
            Appellant,                  *
                                        *
      v.                                * Appeal from United States
                                        * District Court for the
South Dakota Public Assurance           * District of South Dakota.
Alliance,                               *
                                        *
            Appellee.                   *
                                   ___________

                             Submitted: June 14, 2012
                                Filed: August 3, 2012
                                 ___________

Before MURPHY, BRIGHT, and COLLOTON, Circuit Judges.
                           ___________

MURPHY, Circuit Judge.

      Marnita Goddard was injured while riding on a trolley operated by the city of
Deadwood, South Dakota. Invoking diversity jurisdiction, Goddard sued the city for
negligence and the South Dakota Public Assurance Alliance (SDPAA) for uninsured
motorist coverage. After Goddard settled with the city, the district court1 granted
summary judgment in favor of SDPAA, concluding that Goddard was not covered

      1
       The Honorable Jeffrey L. Viken, United States District Judge for the District
of South Dakota, adopting the report and recommendation of the Honorable Veronica
L. Duffy, United States Magistrate Judge for the District of South Dakota.
under the uninsured motorist provision in the city's agreement with SDPAA. Goddard
appeals, and we affirm.

       The city of Deadwood operates a daily trolley which makes 37 stops on its route
around the city, from early morning until at least midnight. The trolley is powered by
its own engine and runs without cables. Goddard, a resident of Nevada, paid the $1.00
fee to ride the trolley on an evening in August 2007. Goddard and other passengers
were already seated inside the trolley when the driver came aboard at approximately
11:00 p.m. The record indicates that sometime after starting the route the trolley was
driven off a ledge and onto a football field below. Goddard and other passengers
claimed that they sustained injuries as a result of the accident. A government liability
pool known as SDPAA provides liability coverage for the city's trolley operation
under a Governmental Liability Coverage Agreement.

        Goddard sued the city, alleging that the trolley driver had been negligent in
driving the vehicle on the evening she was injured. During discovery the trolley
driver testified that he had gone over the ledge after seeing a "light in [his]
windshield" and swerving to "avoid a head-on collision." After that testimony
Goddard added SDPAA as a named defendant, alleging a right to recover under the
uninsured and/or underinsured motorist provision in its agreement with the city.
Goddard contended that since a phantom motorist had caused the accident, his vehicle
qualified as an uninsured automobile under the agreement and she could recover under
the uninsured motorist provision.

      The agreement provides in section III(R) that uninsured motorist coverage is
available for amounts

      that a member is legally entitled to recover as damages from the owner
      or operator of an uninsured automobile . . . . The damages must result
      from injury sustained by the member and caused by an occurrence
      resulting from the ownership, maintenance or use of, or when struck by,

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      an uninsured automobile . . . . Use includes operating the vehicle as well
      as getting into or out of, or being in or on the vehicle.

(some emphasis omitted).

       Goddard argued that she was eligible for uninsured motorist coverage under the
agreement between the city and SDPAA because she is a "member" under section II.
That section defines member in four subparts. Section II(A)–(C) designate specific
categories of persons or entities who are members, all of whom have direct ties to the
city. Specific examples given for members are the city of Deadwood, any of its
employees acting within the scope of employment, and any organization which the
city acquires or forms and over which it maintains ownership or majority ownership
interest. Section II(D) is more general. That section states that a member also
includes "anyone else while using, with [the city's] permission, any automobile
owned, hired or borrowed by [the city] . . . ." (emphasis omitted). Trolley passengers
are not mentioned.

         Defendant SDPAA moved for summary judgment, arguing that Goddard was
not entitled to coverage under the uninsured motorist provision because the accident
had been caused solely by the trolley driver's negligence, that she was not a member
within the meaning of its agreement with the city, and that any recovery under the
agreement would be duplicative. Goddard also moved for partial summary judgment,
seeking a determination that there were "no issues regarding the actions of Plaintiff
. . . [and] no genuine issue about whether the Plaintiff was injured." The district court
referred the cross motions to a magistrate judge. While the motions were pending, the
city and Goddard settled her negligence claim and the city was dismissed from the

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case with prejudice. The record does not indicate the basis of the settlement or the
source of any payment to Goddard.2

       After the city was dismissed from the case, the magistrate judge recommended
granting SDPAA's motion for summary judgment and denying Goddard's motion as
moot. The magistrate judge concluded that Goddard was not entitled to coverage
under the uninsured motorist provision because she was not a covered member. The
magistrate judge also noted that "the court has insufficient information to determine
whether any prospective recovery from SDPAA" would be duplicative. The district
court adopted the report and recommendation, concluding that the term member was
"clear and unambiguous" and only referred to those performing a public service or
acting in the same capacity as a city employee. Goddard was not eligible for
uninsured motorist coverage and therefore any potential issue of duplicative recovery
was moot. Goddard appeals, arguing only that she is a member under the agreement.

       We review de novo the district court's grant of summary judgment to SDPAA.
Kroeplin Farms Gen. P'ship v. Heartland Crop Ins., Inc., 430 F.3d 906, 909 (8th Cir.
2005). Summary judgment is appropriate if the evidence, viewed in the light most
favorable to the nonmovant, shows that there is no genuine issue of material fact and
that the movant is entitled to judgment as a matter of law. Id. Our interpretation of
the SDPAA agreement is governed by South Dakota law. See O'Daniel v. NAU
Country Ins. Co., 427 F.3d 1058, 1060 (8th Cir. 2005).

        Goddard argues that the SDPAA agreement is clear and unambiguous and that
she is a member under it. She points to section II(D) which defines member to include
"anyone else while using, with [the city's] permission, any automobile owned, hired

      2
        Section III(J) of the city's agreement with SDPAA requires the latter to pay
"those amounts that a member becomes legally obligated to pay as damages because
of injury arising out of [the city's] covered operations . . . ." (emphasis omitted). It is
undisputed that the trolley's operation is covered and that the driver would have been
a member.

                                           -4-
or borrowed by [the city] . . . ." (emphasis omitted). She points out that she was using
the trolley as a paying passenger on the night she was injured. SDPAA argues that
Goddard cannot be considered a member because her interpretation of section II(D)
would render other provisions meaningless and would contravene the contracting
parties' understanding of the scope of coverage.

       Whether Goddard is a member is a question of contract interpretation. Under
South Dakota law, an insurance policy's unambiguous "terms are to be construed
according to their plain and ordinary meaning." Am. Family Mut. Ins. Co. v. Elliot,
523 N.W.2d 100, 102 (S.D. 1994). Whether a term is ambiguous is determined in
light of "the policy as a whole and the plain meaning and effect of its words." Nat'l
Sun Indus. v. S.D. Farm Bureau Ins. Co., 596 N.W.2d 45, 48 (S.D. 1999) (citation
omitted). Insurance policies should be given a "reasonable interpretation, in the
context of the risks insured, without stretching terminology." Opperman v. Heritage
Mut. Ins. Co., 566 N.W.2d 487, 490 (S.D. 1997). If a term "is fairly susceptible to
two constructions," Am. Family Mut. Ins. Grp. v. Kostaneski, 688 N.W.2d 410, 413
(S.D. 2004) (citation omitted), it is ambiguous and we must adopt "the interpretation
most favorable to the insured." Roden v. Gen. Cas. Co. of Wisc., 671 N.W.2d 622,
625 (S.D. 2003) (citation omitted).

       The term member must be read in the context of the agreement as a whole. See
Nat'l Sun Indus., 596 N.W.2d at 48. The relevant sections of the agreement include
section I which provides definitions for the agreement's terms, section II which
outlines "who receives coverages" under it by defining a "member," and section III
which provides the agreement's "coverages." The coverages in section III of the
agreement generally refer to obligations that SDPAA has toward members under the
agreement, but that section also references payments that might be made to
nonmembers—such as for liability under section III(J) or for medical expenses under
section III(K).

                                          -5-
       Section II defines "member" in four subparts (A)–(D). Section II(A)–(C) define
member to include the city of Deadwood and certain individuals and entities acting
on its behalf, such as an elected or appointed official while acting on the city's behalf
or an organization that the city has acquired or formed and over which it maintains an
ownership or majority ownership interest. Section II(D), the contested section here,
states that "member" includes "anyone else while using, with your permission, any
automobile . . . ." (emphasis omitted). Section II(A)–(C) all define members as either
the city or those acting on its behalf. It is therefore reasonable to conclude that section
II(D)'s language, defining member as "anyone else" using the trolley with the city's
permission, similarly requires a member to be affiliated or associated with the city.
Cf. Nat'l Sun Indus., 596 N.W.2d at 48–49.

        The lack of any reference to trolley passengers in the agreement's definition of
member is also significant. Section II(A)–(D) of the agreement do not designate
passengers or pedestrians as members. If SDPAA and the city had intended trolley
passengers to be included as members, they could have easily been plainly designated
in section II. Instead, section II(A)–(C) define member to include the city or one
affiliated with it. Reading section II(D) to include passengers and others unaffiliated
with the city as members would be an improper judicial enlargement of the
agreement's term "member." See Elliot, 523 N.W.2d at 102.

       Goddard suggests that her interpretation of member to include passengers is not
impermissibly broad because many persons would still be nonmembers under the
agreement. Her examples include a person leaning on the door to speak with the
driver or one jumping on the bus to give a purse to a passenger. Goddard concedes
that such hypothetical individuals would not be members under the agreement but
only for the reason that they would not be using a vehicle "with [the city's]
permission" as is required under section II(D). Her expansive reading would permit
any paying passenger to receive all the benefits of membership under the agreement,
including medical coverage and loss of wages and salary. That interpretation is

                                           -6-
contrary to the plain language of the agreement and would greatly expand the scope
of coverage set out by the city and SDPAA.

       The use of the term "member" in other provisions of the agreement is
instructive. See Nat'l Sun Indus., 596 N.W.2d at 48. For example section III(K)
provides that SDPAA will pay

      reasonable expenses incurred for necessary medical and funeral services
      to: (1) a member who sustains injury caused by an occurrence while in,
      on, getting into or out of an automobile; (2) a member, while a
      pedestrian, when struck by an automobile; or (3) anyone else who
      sustains injury caused by an occurrence arising out of your covered
      operations while in, on, getting into or out of an automobile.

(some emphasis omitted and bolded emphasis supplied).

       Section III(K) is useful in interpreting the meaning of "member" because its
subparts (1) and (2) apply to members while its subpart (3) contemplates coverage for
nonmembers. The most natural reading of "anyone else" in section III(K)(3) is that
the provision could be invoked by trolley passengers seeking coverage for reasonable
expenses for medical and funeral services covered by an automobile injury. If
passengers were members under the agreement, as urged by Goddard, then they could
seek medical coverage under sections III(K)(1) or (2) and section III(K)(3) would be
rendered superfluous. Such a reading would improperly make section III(K)(3)
"strained" and "unusual." Rumpza v. Donalar Enters., 581 N.W.2d 517, 521 (S.D.
1998) (citation omitted).

       Section III(N) would also have an improperly strained meaning if one attempted
to include passengers in the definition of members. See Rumpza, 581 N.W.2d at 521.
This section provides that SDPAA "will pay the reasonable expenses, including actual
loss of wages or salary, incurred by the member, at our request, in assisting us in the
investigation or defense of any claim." (some emphasis omitted). This section

                                         -7-
provides compensation for city employees and affiliated others who aid in an
investigation or defense of a claim. Goddard does not fit within that coverage.

        Interpreting the agreement to include passengers as members would expand the
scope of risk contemplated by SDPAA and the city. See Opperman, 566 N.W.2d at
490. South Dakota established procedures in 1986 to provide a limited waiver of
sovereign immunity so that individuals could bring claims against public entities and
their employees to the extent they participated in a risk sharing pool or purchased
liability insurance. Hansen v. S.D. Dep't of Transp., 584 N.W.2d 881, 883–84 (S.D.
1998). Those procedures were expanded in 1991 to include the state and its
"employees, officers, or agents" in the limited waiver of sovereign immunity.
See Kyllo v. Panzer, 535 N.W.2d 896, 900 (S.D. 1995).

       South Dakota also established a liability pool known as the SDPAA to pay
"valid tort claims against all member public entities of the state and their officers and
employees for all liability they may incur based upon negligence in the operation of
motor vehicles or negligence in performing other acts within an employee's scope of
employment." Hansen, 584 N.W.2d at 883–84 (citation omitted); see also S.D. Pub.
Entity Pool for Liab. v. Winger, 566 N.W.2d 125, 126 (S.D. 1997). While SDPAA
has included underinsured motorist coverage in this agreement with the city, the South
Dakota Supreme Court has stated that it is meant "for employees injured in the scope
of employment and while acting on behalf of or in the interest of their employers."
Winger, 566 N.W.2d at 126.

        This history evidences that in establishing a risk sharing pool, South Dakota
attempted to provide only a limited waiver of sovereign immunity. The agreement
shows that SDPAA and the city contemplated including only those associated or
affiliated with the city as members. South Dakota repeatedly emphasized that waiving
sovereign immunity and entering the risk sharing pool was intended for valid tort
claim against public entities and those affiliated with them. In Winger, 566 N.W.2d
at 126, the South Dakota Supreme Court stated that underinsured motorist coverage

                                          -8-
is meant for those "acting on behalf" of a public employer. Goddard's interpretation
of the term member would expand the risks contemplated by the city and SDPAA by
allowing passengers who are not associated or affiliated with the city to obtain
uninsured motorist coverage. Such an interpretation of the agreement would "hardly
fit[] within the risk the parties contemplated." Opperman, 566 N.W.2d at 491.

       We conclude that the context of the language in the SDPAA agreement as a
whole and the risks insured under it show that the term member is unambiguous and
refers to those performing a public service or acting in the same capacity as a city
employee. The natural reading of the language in the agreement illustrates that
members do not include passengers such as Goddard who pay the $1.00 fare to ride
the trolley. Goddard already settled with the city for the negligence leading to her
accident, and she has not shown that she is entitled to coverage under the uninsured
motorist provision of the SDPAA agreement.

      Accordingly, we affirm the district court.
                     ______________________________

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