Court Opinion

ID: 8245796
Source: CourtListenerOpinion
Date Created: 2022-10-16 09:32:54.390363+00
Date Added: 2024-06-11T16:41:51.705447
License: Public Domain

DIETZEN, Justice
(dissenting).
The majority concludes, and I agree, that the Progressive insurance policy’s business-use exclusion unambiguously excludes underinsured motorist (UIM) coverage under the facts of this case. The question we must decide is whether the Minnesota No-Fault Automobile Insurance Act, Minn.Stat. §§ 65B.41-.71 (2010) (No-Fault Act), prohibits a business-use exclusion to UIM coverage in Progressive’s insurance policy. Because the plain language of the No-Fault Act, particularly section 65B.49, subdivision 3a, does not prohibit a business-use exclusion, I conclude that such an exclusion is proper and enforceable. The majority, however, fails to consider or interpret the language of the No-Fault Act. Rather, the majority skips over statutory construction and turns to inapplicable case law to support its conclusion that the business-use exclusion ought to be prohibited. Because the majority opinion does not rest on the plain language of the statute, I respectfully dissent.
I.
The goal of all statutory interpretation is to “ascertain and effectuate the intention of the legislature.” Minn.Stat. § 645.16 (2010); W. Bend Mut. Ins. Co. v. Allstate Ins. Co., 776 N.W.2d 693, 698 (Minn.2009). We construe the words of a statute according to their plain and ordinary meaning. Am. Family Ins. Grp. v. Schroedl, 616 N.W.2d 273, 277 (Minn.2000). Specifically, “[w]hen the words of a law in their application to an existing situation are clear ..., the letter of the law should not be disregarded under the pretext of pursuing the spirit.” MinmStat. § 645.16; accord Tur*927ner v. Mut. Serv. Cas. Ins. Co., 675 N.W.2d 622, 625 (Minn.2004).
An exclusion in an insurance policy “is a limitation of liability or a carving out of certain types of loss to which the coverage or protection of the policy does not apply.” 17 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 49:111 (4th ed.2000). Typical exclusions in automobile insurance policies include family-household exclusions, business-use exclusions, and fellow-employee exclusions. Id. § 49:112. The exclusion at issue here is a business-use exclusion.
The relevant portion of the No-Fault Act set forth in MinmStat. § 65B.49 is quite comprehensive. The statute contains provisions regarding insurance for basic economic loss benefits (subdivision 1), residual benefits insurance (subdivision 3), uninsured motorist (UM) and UIM coverage (subdivision 3a), rental vehicles (subdivision 5a), additional benefits and coverages (subdivision 7), and family or group family day care provider coverage (subdivision 9).
Subdivision 3a is the specific portion of the statute at issue in this case. It sets forth the required UM and UIM coverage for insurance policies in Minnesota. Sub-part 1 provides:
No plan of reparation security may be renewed, delivered or issued for delivery, or executed in this state with respect to any motor vehicle registered or principally garaged in this state unless separate uninsured and underinsured motorist coverages are provided therein. Each coverage, at a minimum, must provide limits of $25,000 because of injury to or the death of one person in any accident and $50,000 because of injury to or the death of two or more persons in any accident.
Minn.Stat. § 65B.49, subd. 3a(l). It is undisputed that the Progressive policy has UM and UIM coverage at the required policy limits mandated by subdivision 3a(l).
Subdivision 3a contains seven other sub-parts that describe who are required to provide UM and UIM coverage, and how benefits are coordinated between different types of coverage. For example, each owner of a vehicle “registered or principally garaged” in Minnesota is required to have UM and UIM coverage. Id., subd. 3a(2). Moreover, no reparation obligor is required to provide UM and UIM coverage in excess of the applicable bodily liability limits. Id., subd. 3a(3). Further, no recovery is permitted’under UM and UIM coverage for basic economic loss benefits. Id., subd. 3a(4). Subdivision 3a(5) provides that UM and UIM coverage follows the vehicle the injured person occupied, subject to certain limitations. Id., subd. 3a(5). Subdivision 3a(6) provides that the limits of liability for UM and UIM for two or more vehicles may not be added together to determine the limit of coverage for any one person for one accident. Id., subd. 3a(6). Further, UM and UIM coverage do not apply to bodily injury of an insured while occupying a motor vehicle owned by the insured except as provided in subpart 7, or while occupying a motorcycle as provided in subpart 8. Id., subd. 3a(7), (8).
Applying section 65B.49, subdivision 3a, I conclude that the business-use exclusion of the Progressive insurance policy is not prohibited, and therefore is proper and enforceable. Specifically, subdivision 3a addresses the mandated policy limits, who is required to provide the UM and UIM coverage, and certain exceptions that relate to the No-Fault Act the Legislature determined should be included in every insurance policy. Subdivision 3a does not address typical insurance policy exclusions such as coverage conversion exclusions, see *928Lynch ex rel. Lynch v. Am. Family Mut Ins. Co., 626 N.W.2d 182, 189-90 (Minn. 2001), family-member exclusions, see Kelly v. State Farm Mut. Auto. Ins. Co., 666 N.W.2d 328, 330-31 (Minn.2003), geographic exclusions, see Smith v. III. Farmers Ins. Co., 455 N.W.2d 499, 501-02 (Minn.App.1990), or exclusions for racing or speed contests or violations of the law, see 8A Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 121:91-:92 (2005). It is reasonable to conclude that the Legislature was guided by the general principles of insurance contracts, that the contract between the parties should govern and parties are free to limit coverage. See Am. Nat’l Prop. & Cas. Co. v. Loren, 597 N.W.2d 291, 292 (Minn.1999). Otherwise, all exclusions not expressly stated in the No-Fault Act would be prohibited. The potential consequence of such an interpretation is to prohibit exclusions that are typically included in insurance policies. Consequently, I would conclude that typical insurance policy exclusions, like a business-use exclusion, are permissible under section 65B.49, subdivision 3a. Thus, the Progressive policy’s business-use exclusion is proper and enforceable.
II.
Having concluded that section 65B.49, subdivision 3a, does not prohibit the business-use exclusion at issue in this case, it is not necessary to stray from the language of the statute. As noted, however, the majority skips over statutory construction, and relies on Meister v. Western National Mutual Insurance Co., 479 N.W.2d 372 (Minn.1992), to support its conclusion. But Meister is easily distinguishable.
In Meister, we considered whether an insurance policy that contained a business-use exclusion was enforceable as a limit on optional additional economic loss benefits. Id. at 374. The plaintiff was injured in a fall from the back of a pickup truck owned by the plaintiffs employer. Id. at 373. In addition to basic economic loss benefits from the employer’s insurer, the plaintiff filed a claim for additional economic loss benefits, including medical expenses and income losses, under an insurance policy purchased by the plaintiffs father. Id. at 374. This policy, however, excluded benefits for bodily injuries that occurred while a motor vehicle was “being used in the business of transporting persons or property.” Id. We concluded that “the legislature mandated the availability of additional benefits without restriction” and therefore the insurer must provide the optional additional economic loss benefits coverage “if the insured chooses to purchase it.” Id. at 378-79 (emphasis omitted).
Meister does not support the majority’s opinion for at least two reasons. First, Meister did not interpret section 65B.49, subdivision 3a, the statute at issue in this case, and did not analyze UIM coverage and benefits under the No-Fault Act. Rather, Meister interpreted optional additional economic loss benefits, the subject of Minn.Stat. § 65B.47, subd. 7, which are not at issue in this case. Subdivision 7 states that “[a]n insurer shall notify policyholders that they may elect to have two or more policies added together.” Id. The Meister court expansively read the language of subdivision 7 to mean that once the optional additional economic loss coverage with the extra premium was offered and accepted, no business-use exclusions were enforceable for those additional benefits. See Meister, 479 N.W.2d at 379. Section 65B.49, subdivision 3a, however, does not contain similar language, and therefore Meister is not applicable.
Second, the optional additional economic loss benefits discussed in Meister are significantly different from UIM benefits. Specifically, economic loss benefits apply *929absent a determination of fault, and additional economic loss benefits supplement this coverage. MinmStat. § 65B.42(1). Optional additional economic loss benefits are part of the overall scheme to “provide prompt payment of specified basic economic loss benefits to victims of automobile accidents without regard to whose fault caused the accident.” Id. UIM benefits under section 65B.49, subdivision 3a, however, are only applicable when fault has been assigned, and the tortfeasor’s liability coverage is not sufficient to cover all damages. Minn.Stat. § 65B.43, subds. 17, 19 (defining “underinsured motor vehicle” and “underinsured motorist coverage”). Thus, UIM benefits serve to supplement insufficient liability coverage and are distinguishable from optional additional economic loss benefits that do not require a determination of fault.1
IV.
The majority’s analysis expands the conclusion in Meister beyond optional additional economic loss benefits to UIM benefits without any analysis of section 65B.49, subdivision 3a. Specifically, the majority offers no interpretation of subdivision 3a to anchor its opinion. Indeed, the majority scrupulously avoids interpreting the statute. The implicit conclusion of the majority, however, is that subdivision 3a does not address exclusions, and therefore exclusions are prohibited. The logical consequence of prohibiting business-use exclusions because they are not mentioned in subdivision 3a is to prohibit all typical insurance policy exclusions. This sweeping conclusion would result in the invalidation of typical exclusions included in insurance policies, such as family-use exclusions, geographic exclusions, coverage conversion exclusions, organized racing or speed contest exclusions, or even exclusions for violations of the law. In my view, the Legislature did not intend to prohibit typical exclusions in insurance policies in subdivision 3a. Rather, the plain language of subdivision 3a does not prohibit these exclusions. Had the Legislature intended to prohibit typical insurance policy exclusions, such as business-use exclusions, it could have easily stated that they were prohibited. It did not. Therefore, I conclude that this business-use exclusion is proper and enforceable.

. The majority relies on the statement that optional additional economic loss benefits and UIM benefits are both "first-party benefits” to conclude that Meister is equally applicable to cases addressing both types of benefits. But UIM coverage is payable to both the insured and third parties who occupy the covered vehicle. Minn.Stat. § 65B.49, subd. 3a(5). Thus, UIM coverage is more properly characterized as a hybrid of both first- and third-party benefits. See McIntosh v. State Farm Mut. Auto. Ins. Co., 488 N.W.2d 476, 478-79 (Minn.1992) (stating that uninsured motorist coverage, which is governed by the same section of the No-Fault Act as underin-sured motorist coverage, is not "true first party coverage” because it functions as substitute liability coverage). This difference between UIM and additional economic loss benefits means that Meister cannot be directly applied to the situation presented here absent additional analysis of the statutory language underlying both types of coverage.
The majority also attempts to apply Meister to this situation because of the "similarly worded” business-use exclusions. But the issue is the language of section 65B.49, subdivision 3a, not the language of the business-use exclusion.