Court Opinion

ID: 9656935
Source: CourtListenerOpinion
Date Created: 2023-08-23 20:08:33.12066+00
Date Added: 2024-06-11T13:15:07.806808
License: Public Domain

ROBERT H. SCHUMACHER, Judge
(dissenting).
I respectfully dissent. I believe the exhaustion clause is not enforceable. First, Minn.Stat. § 65B.50 (2002), and opinions interpreting this statute are clear: Minnesota law will not impose greater underwriting risks on underinsured motorist (UIM) coverage than the insurer of a nonresident has contracted to take. See, e.g., Aguilar v. Texas Farmers Ins. Co., 504 N.W.2d 791, 793 (Minn.App.1993) (stating section 65B.50 does not require that policy written in another state be “written up” to provide, the minimum UIM coverage required by Minnesota law). But these cases áre not applicable here. In this case, Ziegelmann paid premiums for the benefit of carrying the UIM coverage he now seeks to recover. The issue is not whether coverage should be added, but whether the exhaustion clause included in' Ziegelmann’s policy is enforceable. ■
Second, Schmckert, Inc. v. Winnebago Seniors, Ltd., 680 N.W.2d 79 (Minn.2004), has no application here. The facts in that case involved damage to a building, not personal injury resulting from an automobile accident. Id. at 81. Moreover, in Schmckert, the supreme court was asked to determine whether the procedure set forth in Schmidt v. Clothier, 338 N.W.2d 256 (Minn.1983), could be used to resolve an insurer’s subrogation rights in a first-party property insurance dispute. See Schwickert, 680 N.W.2d at 83. (“Owner asks us to extend [the Schmidt ] procedure for resolving an insurer’s subrogation rights to first-property insurance disputes.”). The supreme court determined the procedure did not apply. Id. at 84. But the supreme court did not determine the issue presented here — whether the exhaustion clause included in a nonresident’s UIM policy is enforceable.
In Minnesota, exhaustion clauses are not enforceable. Schmidt, 338 N.W.2d at 261; see also Minn.Stat. § 65B.49, subd. 4a (2002) (specifying that insured may recover “difference between the limit of under-insured motorist coverage and the amount paid -to the insured by [torfeasor].”). North Dakota law, however, requires the liability insurance of the tortfeasor be exhausted before UIM coverage may be sought. N.D. Cent. § 26.1-40-15.6 (2003). Thus, to determine whether the exhaustion clause is enforceable, we must determine which state’s law applies. The district court was correct in applying a conflict-of-law analysis.
To determine the outcome of a conflict of law, we consider five choice-influencing factors: (1) predictability of result, (2) maintenance of interstate and international order, (3) simplification of the judicial task, (4) advancement of thS forum’s governmental interest, and (5) application of the better rule of law. Jepson v. Gen. Cas. Co. of Wise,, 513 N.W.2d 467, 470 (Minn.1994). The first three factors are not significant in tort cases. Bigelow v. Halloran, 313 N.W.2d 10, 12 (Minn.1981); see also Nodak Mut. Ins. Co. v. Am. Family Mut. Ins. Co., 604 N.W.2d 91, 96-97 (Minn.2000) (concluding that all factors except fourth factor were neutral in tort case arising from automobile accident).
The key consideration is the fourth factor, advancement of the forum’s governmental interest. Minnesota places great value in compensating tort victims. Jepson, 513 N.W.2d at 472. In fact, we have *569refused to apply our law when the law of another state would better serve to compensate a tort victim. See, e.g., Bigelow, 313 N.W.2d at 12-13; Boatwright v. Budak, 625 N.W.2d 483, 490 (Minn.App.2001), review denied (Minn. July 24, 2001). Moreover, because the automobile accident occurred in Minnesota, this state has the stronger governmental interest. See No-dak, 604 N.W.2d at 96 (holding that when all other relevant choice-of-law factors favor neither state’s law, state where accident occurred has strongest governmental interest and that state’s law should be applied).
The fifth factor, better rule of law, requires that Minnesota courts “prefer rules of law which make good socio-economic sense for the time when the court speaks, whether they be its own or another state’s rules.” Bigelow, 313 N.W.2d at 13 (quotation omitted). The supreme court has in some cases not placed significant emphasis on this factor. See Nodak, 604 N.W.2d at 96. Nevertheless, I note that Minnesota law makes good socio-economic sense in this case. By not enforcing exhaustion clauses, Minnesota law ensures that tort victims are compensated and limits the amount of useless litigation occurring in this state. Not only does Minnesota law make good socio-economic sense for tort victims and for the cost imposed on the judicial system, but the procedure outlined in Schmidt protects the economic interests of the insurer. See Schmidt, 338 N.W.2d at 260-63.
For these reasons, I would affirm the district court’s denial of National Farmers’ motion for summary judgment. Minnesota’s law should be applied, under which the exhaustion clause is not enforceable.