Court Opinion

ID: 9704254
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:28:15.953474+00
Date Added: 2024-06-11T15:16:19.786565
License: Public Domain

COYNE, Justice
(dissenting).
I respectfully dissent. In my judgment the conflicting provisions of endorsements CA 21 07 and CA 21 24 are irreconcilable. Nevertheless, because I concur in the conclusion reached by both the trial court and the court of appeals that the only reasonable interpretation of the Commercial policy as a whole is that the limit of the uninsured motorist coverage is $25,000, I would affirm.
Falling back on the “ancient principle” that ambiguous language in an insurance policy is to be construed in favor of the insured, the majority holds that endorsement CA 21 24, which provides that “our limit of liability for any one accident is the sum of the limits applicable to each covered auto,” controls and sets a liability limit for uninsured motorist coverage at $1,675,000. It seems to me, however, that in order for the “sum of the limits applicable to each covered auto” to constitute the limit of liability there must be something in the policy which relates the coverage to the vehicles or to the number of covered vehicles. Here the covered autos are not described in the policy declarations or listed in a schedule contained in the policy. The policy does not even designate the number of vehicles covered; it simply covers “all” owned or hired commercial vehicles. Since R.E.T.E.N.O. owns no vehicles and uses only hired vehicles, the number of covered vehicles undoubtedly fluctuates, perhaps daily. Since the policy does not identify the number of insured vehicles, the premium is based not on a per vehicle charge but on gross receipts. To be sure, the method of premium calculation does not control the construction of the language contained in the policy, but it is apparent that the basis adopted in this policy for calculating the premium does not serve to relate or connect the coverage in any way to the insured vehicles. Finally, the policy declarations refer to endorsement CA 21 07, which clearly sets out policy limits applicable to persons and accidents, not vehicles.
*646In Yaeger v. Auto-Owners Insurance Co., 335 N.W.2d 733 (Minn.1983), we held that no-fault personal injury protection provided under a garage liability policy, the premium for which was a percentage of payroll, was a single limit coverage which could not be multipled by stacking. Just as there was in Yaeger’s single coverage nothing to stack, here there is no series of limits to aggregate. Despite the reference in CA 21 24 to “the sum of the limits applicable to each covered auto,” nowhere in the policy is there set out a limit of liability for uninsured motorist coverage applicable to one covered vehicle which can be added to the limit applicable to some other vehicle to make a larger sum. All dollar limitations of uninsured motorist coverage contained in the policy are applicable only to persons and accidents.
Because of the absence of any per vehicle limitation to which CA 21 24 can refer, the majority is forced to resort to the arbitrary rule that any ambiguity is construed most favorably to the insured, without regard to whether the policy as a whole supports that construction or whether the parties either intended or expected that construction. In short, it seems to me that the majority has abandoned a contract theory adopted only a year ago in Atwater Creamery Co. v. Western National Insurance Co., 366 N.W.2d 271 (Minn.1985). The opinion applied the reasonable-expectations-regardless-of-ambiguity doctrine espoused by Professor Robert E. Keeton and Professor W. David Slawson.1 While the concurring justices would have limited application of the doctrine of reasonable expectations to the resolution of disputes arising out of ambiguities, the conceded presence of an ambiguity in the Commercial policy would seem to mandate application of the doctrine of reasonable expectations under either the expanded or limited version of the doctrine.
The doctrine of reasonable expectations substitutes an objective standard for the often strained justification for reliance on arbitrary rules:
The reasonable-expectations doctrine gives the court a standard by which to construe insurance contracts without having to rely on arbitrary rules which do not reflect real-life situations and without having to bend and stretch those rules to do justice in individual cases. As Professor Keeton points out, ambiguity in the language of the contract is not irrelevant under this standard but becomes a factor in determining the reasonable expectations of the insured, along with such factors as whether the insured was told of important, but obscure, conditions or exclusions and whether the particular provision in the contract at issue is an item known by the public generally.
Atwater, 366 N.W.2d at 278. Although the doctrine of protecting the insured’s reasonable expectations is no doubt an outgrowth of the contract of adhesion doctrine, inherent in the doctrine of reasonable expectations is the rejection of the traditional rule that ambiguities are automatically construed most favorably to the insured:
In our view,, the reasonable-expectations doctrine does not automatically mandate either pro-insurer or pro-insured results. It does place a burden on insurance companies to communicate coverage and exclusions of policies accurately and clearly. It does require that expectations of coverage by the insured be reasonable under the circumstances. Neither of those requirements seem overly burdensome. Properly used, the doctrine will result in coverage in some cases and in no coverage in others.

Id.

Of course, the majority refers to Atwa-ter and the doctrine of reasonable expectations. Having declared that the limits of the uninsured motorist coverage under R.E.T.E.N.O.’s policy is $1,675,000, the majority goes on to find that that limit does *647not exceed the insured s reasonable expectations. The rule adopted in Atwater, .however, does not provide a way to validate a decision already made under the doctrine of adhesion. The doctrine of reasonable expectations provides a method for resolving disagreements over contractual provisions on the basis of the parties’ reasonable expectations about their transaction. To put it another way, the doctrine of reasonable expectations contemplates the application of an objective standard based on what parties such as R.E.T.E.N.O. and Commercial reasonably expected from their agreement when they made it, not on the subjective expectations formed by a truck driver after he has been injured in the course of his employment by one of the contracting parties.
The risk involved under a truckers’ policy is a business risk. As we noted in Yaeger, 335 N.W.2d at 738, where the risk being insured against is a business risk — that is, the risk of injury to an employee in the course of carrying on the business — and where the premium is calculated on the insured’s business activity, measured in this case by the gross receipts generated by the business, it is appropriate to say the coverage is limited to the stated amount even though several vehicles are insured under the policy. In the business context of this transaction it strikes me as highly probable that the trucking company would be surprised to learn that it had purchased for the benefit of its driver employees uninsured motorist coverage with limits calculated on the basis of the number of vehicles the company had in service at any given moment — particularly when that coverage may not be used to offset the employer’s liability for workers compensation. Cooper v. Younkin, 339 N.W.2d 552 (Minn.1983).
Despite the unartful assembly of the Commercial policy, I cannot conclude that the parties to the contract of insurance intended or that the insured could reasonably expect the limits of the uninsured motorist coverage to be fixed by the number of insured vehicles where neither the premium nor the stated dollar limits of coverage are related to or connected with the vehicles insured under the policy and where the number of vehicles insured is not identified in the policy and where, because of fluctuations in the number of vehicles leased by the insured trucker, neither the number of insured vehicles nor the amount of uninsured motorist coverage afforded by the policy could be ascertained in advance of an accident.

. See R. Keeton, Basic Text on Insurance Law, § 6.3(a) (1971); Keeton, Insurance Law Rights at Variance with Policy Requirements, 83 Harv. L.Rev. 961 (1970); and Slawson, Standard Form Contracts and Democratic Control of Lawmaking Power, 84 Harv.L.Rev. 529, 545 (1971).