Court Opinion

ID: 3040805
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:04:01.925436+00
Date Added: 2024-06-11T11:51:28.671411
License: Public Domain

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.

      1
        The Honorable Ann D. Montgomery, United States District Judge for the
District of Minnesota.
      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

      2
        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).

                                         -2-
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:

                                          -3-
      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

                                           -4-
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. 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"

                                           -5-
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. 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

                                          -6-
      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
                      ______________________________

      3
       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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