Court Opinion

ID: 9700529
Source: CourtListenerOpinion
Date Created: 2023-08-25 21:33:49.210406+00
Date Added: 2024-06-11T18:21:10.410281
License: Public Domain

HENDERSON, Justice
(dissenting).
A legal obligation exists unto Heitmann. It is not being enforced in this Court. Therefore, I respectfully dissent.
Given the strong public policy in South Dakota supporting the rights of parties to contract, as well as the rights of innocent accident victims to be compensated, the terms and conditions of the Farmland policy, issued to the Heitmanns, providing broader UIM coverage should apply — rather than minimum coverage required by SDCL 58-11-9.5.
Here, the insurer claims it issued a policy to Heitmann providing less coverage than the minimum UIM coverage required by SDCL 58-11-9.5. Farmland seeks to take advantage of its own wrong, namely that it issued, in essence, a defective policy which provided no UIM coverage whatsoever and, therefore, SDCL 58-11-9.5 should be incorporated into the contract as a matter of law. During oral argument of this case at Black Hills State University, where this Court convened, Mr. Lon Kouri, Attorney, of Sioux Falls, South Dakota, representing Farmland, under the questioning of this writer, admitted it was the insurance company’s fault that a rider was not put on the policy. This insurance company should not be able to profit by its own wrong. As expressed by the renowned jurist, Benjamin Cardozo, “No man should profit from his own inequity or take advantage of his *628own wrong.” The Nature of The Judicial Process, p. 41 (1921). See also Conway v. Conway, 487 N.W.2d 21, 24 (S.D.1992); Johnson v. Kolman, 412 N.W.2d 109, 116 (S.D.1987) (Henderson, J., dissenting).
It should be pointed out that both parties, during open court, expressed that there were no disputed facts. Both parties moved for summary judgment. Summary judgment should be affirmed if there are no genuine issues of material facts and the trial court has correctly decided the legal issues. We have, in my opinion, this single legal issue decided incorrectly, namely that a state statute, SDCL 58-11-9.5 supersedes the more favorable terms and conditions in the Farmland policy or that the said statute operates to defeat the entitlement of Laura Heitmann’s family to UIM benefits.
Contracts of insurance are to be “construed liberally in favor of the insured and strictly against the insurer.” Prokop v. North Star Mutual Ins. Co., 457 N.W.2d 862 (S.D.1990). Heitmann is entitled to rely upon the plain language of the declaration and policy provisions. If Farmland had its theoretical stance prevail, this Court would be imposing policy terms totally contrary to the express language of the policy terms and provisions that Heitmann bargained for; that does not make good sense and it is not fair to this citizen. The declarations page of the policy, in effect on the date of the accident, explicitly provides for UIM benefits in the amount of $100,000 per person, $300,000 per accident. Additionally, it requires Heitmann to pay an additional amount in his insurance premium for UIM coverage. The terms of the UIM coverage are specified within the policy itself, which states that UIM coverage is provided up to the “full amount the insured is legally entitled to recover as damages.” Both parties agree that the policy issued to Heitmann did not contain an endorsement requiring UIM benefits to be offset from available liability insurance benefits. Without the limiting offset endorsement, the insurance policy issued to Heitmann provides UIM coverage to the full extent of the insured’s uncompensated damages, subject only to the $100,000/$300,000 policy limits. Therefore, the terms and conditions of the policy, without any limiting offset language, provide for UIM coverage that is broader than the minimum UIM coverage required by SDCL 58-11-9.5.
I cannot understand why this Court would impose a contract by law — when the parties have a contract in existence between them. My authorities follow. If the reader reviews SDCL 58-11-9.5, it becomes obvious that our state statute expressly supports the rights of parties to contract for UIM coverage in excess of that amount required by statute. If, in fact, a valid express contract exists, which establishes the rights of the contracting parties, no implied contract will be or need be inferred. Weller v. Spring Creek Resort, Inc., 477 N.W.2d 839 (S.D.1991). Weller was written by Justice Amundson and concurred in by Chief Justice Miller and Justice Sabers. This Court has recognized such a rule of law going back three decades. See Thurston v. Cedric Sanders Company, 80 S.D. 426, 125 N.W.2d 496 (1963). The law will not imply a contract where a contract is already in existence between the parties. There is a presumption that the parties to a contract know and understand its contents, and that the contract embodies and expresses the true intention of the parties. Ryken v. Blumer, 307 N.W.2d 865, 868 (S.D.1981).
Another paramount provision of SDCL 58-11-9.5 which the majority fails to give importance to is that UIM coverage is “subject to the terms and conditions [of such underinsured motorist coverage]." People have the right, in other words, to freely contract. It is true that said statute provides that UIM coverage is to be offset against the amount of the liability coverage paid, but nonetheless, it has the very important introductory phrase, which I believe is a clear message by our State Legislature, to adopt a policy of the freedom to contract by our citizens. In interpreting legislation, the Supreme Court should not presume that the Legislature intended an absurd result. Helmbolt v. LeMars Mut. Ins. Co., Inc., 404 N.W.2d 55, 59 (S.D.1987). Obviously, an insurance policy must be *629subject to a reasonable interpretation and not one which amounts to an absurdity. Id. at 60.
Heitmann had a right to rely upon the policy (not upon a state statute which the insurance company now uses as a shield to defeat its contract). Heitmann is a lay person; insurance company is a professional with professional staff and lawyers to support it and to draft its policy. As depicted in Utah Property & Cas. v. United Serv. Auto., 230 Cal.App.3d 1010, 1021, 281 Cal.Rptr. 917, 923 (3rd Dist.1991):
Laypersons cannot be expected to know of statutory limitations or exclusions or coverage not contained in their insurance policies. Trusting the language of their policies, laypersons will not seek coverage they think they have. Thus, should statutes be allowed to narrow or limit coverage otherwise provided by a policy, the net result would be unanticipated gaps in coverage or, ultimately, a failure of financial responsibility.... Moreover, this conclusion is not unfair to insurance companies because, unlike laypersons, insurance companies are fully capable of knowing about statutory restrictions on coverage and of. incorporating the restrictions in the language of their policies. (Emphasis supplied mine).
I subscribe to the reasoning and holding in Capelli v. Twin City Fire Ins. Co., 209 N.J.Super. 552, 508 A.2d 269 (1986) and would apply that holding to the case at bar. There, the Capelli court refused to apply a statutory amendment to limit recovery of personal injury protection benefits. It rationalized:
“An insurer is bound by the terms of its contract despite the fact that the coverage thereby provided was more extensive than required by statute....” Here the carrier sold to the deceased a policy of insurance which provided and spelled out benefits more liberal than that which is now contained or was then contained in the amended statute. It very well may be that the carrier had neglected to amend its policy to conform to the statute or to attach to it a rider indicating that the language is superseded by the language of the statute, and it charged a premium for the option that it sold. The carrier should not now be heard to complain of its liberality or its neglect which resulted in liberality on the basis that it would be contrary to public policy and the intent of the legislature to limit the exposure of the carriers under the no fault law.
508 A.2d at 271 (citations omitted). (Emphasis supplied mine).
Did this insurance company ever clearly communicate to the insured that a policy exclusion existed? No. The terms and conditions of this policy of insurance are more favorable to the insured than a statutory provision.* If by a fault or wrong of the insurance company (as here), an uncertainty or ambiguity is created, it should be construed most strongly against the insurer and in favor of the insured. See McGriffv. United States Fire Ins. Co., 436 N.W.2d 859, 862 (S.D.1989). Heitmann had a right to rely on the terms and conditions of the policy. When construing a contract, this Court must ascertain and give effect to the intention of the parties. American State Bank v. Adkins, 458 N.W.2d 807, 809 (S.D.1990). We should honor the contract. SDCL 58-11-9.5 (1990) begins with this language: “Subject to the terms and conditions of such underinsured motorist coverage, ...” Because of a computer error, occasioned by the insured, a UIM schedule was not included in the policy and delivered to Heitmann. .Yet, various portions of the policy referred to UIM coverage. So — the computer error by Farmland is their escape hatch to get out from under the contract. Such advocacy should not pass muster under the authorities cited above.
Ham and eggs. That great old American fare makes me think of a conceptual differ*630ence: Committed and involved. It is apropos in this factual scenario. There is a difference: The hog is committed (his obligation of commitment is beyond question) and the hen is involved. Here, the insurance company only wants to be involved (take the premium) but not committed (will not pay). It took the premium and issued the policy. It is committed, just like the hog. Unfortunately, the Heitmann estate is involved with this insurance company. It is the unfortunate hen.
State Legislature is committed. Committed to supporting the rights of innocent accident victims to be compensated. Therefore, the involved hen is entitled to its just due.

 Insurer relied upon an unsigned affidavit of Wessel, one of its employees. It was attached to its motion documents. It is a nullity. Wessel referred to policy provisions requiring exhaustion and offset of the limits of applicable liability policies. Later, insurer conceded that the policy did not contain either an offset requirement or exhaustion clause.