Court Opinion

ID: 9884974
Source: CourtListenerOpinion
Date Created: 2023-10-06 03:26:36.389413+00
Date Added: 2024-06-11T07:48:43.008041
License: Public Domain

DISSENT
MEYER, Justice
(dissenting).
We are faced with the novel question of whether an insurer’s exclusion- of vehicles regularly used by family members from its definition, of “underinsured motor vehicle” contravenes the purpose behind the No-Fault Act as articulated in Minn.Stat. § 65B.42 (2002). I conclude that it does and would hold the exclusion invalid under the facts of this case.
Minnesota Statutes § 65B.42 states that the No-Fault Act was promulgated, in part, “to reheve the severe economic distress of uncompensated victims of automobile accidents within this state * * * without regard to whose fault caused the accident.” In order to achieve that purpose, the legislature mandated that automobile owners insure themselves against situations in which the at-fault party does not have sufficient liability coverage to make whole a victim’s injury. See Minn. Stat. § 65B.49, subd. 3a (2002). In general; policy exclusions that contravene the purpose of the No-Fault Act will not be enforced. See Am. Motorist Ins. Co. v. Sarvela, 327 N.W.2d 77, 79 (Minn.1982); DeVille v. State Farm Mut. Auto. Ins. Co., 367 N.W.2d 574, 576 (Minn.App.1985). We have carved one exception to that general rule, holding that policy exclusions that prevent insureds from converting first-party coverage into third-party liability coverage will be enforced. See, e.g., Lynch v. Am. Family Mut. Ins. Co., 626 N.W.2d 182, 189 (Minn.2001); Petrich v. Hartford Fire Ins. Co., 427 N.W.2d 244, 246 (Minn.1988); Myers v. State Farm Mut. Auto. Ins. Co., 336 N.W.2d 288, 291-92 (Minn.1983). Therefore, we must decide first whether invalidating State Farm’s exclusion of family vehicles from the definition of “underinsured motor vehicle” constitutes improper coverage conversion in this case, and if it does not, whether the exclusion undermines the legislative purpose to protect insureds from *333the economic losses stemming from injuries caused by underinsured motorists.
In the cases in which we have identified coverage conversion, the insured party has either been attempting to seek UIM benefits under another person’s insurance policy, or attempting to seek UIM benefits under the same policy that provided the liability coverage. See Myers, 336 N.W.2d at 290 (concluding heirs of deceased passenger could not collect UIM benefits under policy of owner of vehicle); Petrich, 427 N.W.2d at 245 (concluding individual injured in one car could not collect UIM benefits from his stepfather’s policy on another car); Meyer, 371 N.W.2d at 536 (concluding insured could not collect UIM from same automobile insurance policy that provided liability coverage); Lynch, 626 N.W.2d at 189 (concluding that to recover UIM under the same policy that had paid liability benefits constituted conversion). Unlike those cases, Kelly is properly attempting to recover UIM under her own insurance policy on the Grand Am, and that policy is not the one that paid the liability coverage. She is not converting her first-party insurance into third-party insurance, but attempting to reap the benefit of the bargain she struck when she and her husband separately insured the Grand Am. See also Kelly v. State Farm Mut. Auto. Ins. Co., No. C0-02-217, 2002 WL 1837992, at *4-5 (Minn.App. Aug. 13, 2002) (Hanson, J., concurring) (explaining why Kelly was not attempting an illicit conversion).
The majority relies almost exclusively on Lynch in reaching its conclusion that Kelly is attempting conversion, despite Lynch’s very different facts. In Lynch we held that the son improperly converted his father’s automobile policy because he had already collected liability insurance under the same policy. Lynch, 626 N.W.2d at 188-89 (“In these cireum-.stances, paying UIM benefits from the same policy results in paying additional benefits for the injuries caused by the negligence of the insured * * * [t]hat is the essence of liability coverage.”). But we went on to conclude that because such conversion was not prohibited by the terms of the insurance policy, it did not contradict the No-Fault Act, and the policy would be enforced, despite the conversion. Id. at 190.
As applied to the facts of this case, Lynch is inapposite because Kelly is not attempting to collect UIM from the same policy that paid her bodily injury liability. State Farm’s definition of “underinsured motor vehicle” is not preventing conversion of first-party insurance to third-party insurance, but preventing an insured from collecting her UIM coverage at all. Under the majority’s result, Kelly receives nothing from her underinsured motorist coverage, despite having paid for such mandatory coverage.
Having concluded that Kelly is not attempting any sort of prohibited policy conversion by claiming UIM benefits, I next examine whether State Farm’s policy definition of an “underinsured motor vehicle” comports with the public policy behind the No-Fault Act. The clear terms of the statute show that the legislature’s intent was “to relieve the severe economic distress of uncompensated victims of automobile accidents within this state * * * without regard to whose fault caused the accident.” Minn.Stat. § 65B.42. In contrast, the policy exclusion in this case leaves Kelly under-compensated for her injuries solely because her husband caused the accident while driving a car he owned. I do not believe the legislature intended marriage to serve as a barrier to an individual’s relief from the “severe economic distress” caused by the negligence of an underin-sured tortfeasor. I certainly do not believe the legislature intended the hyper-*334technical distinctions between who does and does not receive UIM that the majority introduces — focusing on who has title to the car and who is a named insured on the insurance policy.1 Therefore, I would conclude that State Farm’s definition is invalid under the facts of this case, and Kelly can recover UIM benefits under her insurance policy on the Grand Am.
We have never before decided whether an insurer can define an “underinsured motor vehicle” in order to prevent one spouse from recovering under his or her UIM coverage when the injury was caused by the other spouse and liability has been paid from a policy on a different vehicle. Faced with this novel question of law, I would hold that State Farm’s definition cannot be enforced to prevent Kelly from receiving UIM under her automobile insurance policy because to do so would contravene the purpose of Minnesota’s No-Fault Act.

. As is probably true for most married couples, Kelly and her husband were both named insureds on each of their automobile insurance policies. It appears that if Kelly’s husband were not named as an insured on the Grand Am, the majority would not find Kelly was attempting improper coverage conversion, and hold the exclusion inapplicable. This distinction seems a feeble basis to deny adequate compensation and is contrary to the statutory requirement of mandatory underin-surance coverage.