Court Opinion

ID: 4400465
Source: CourtListenerOpinion
Date Created: 2019-05-24 16:00:23.63803+00
Date Added: 2024-06-11T14:24:14.112903
License: Public Domain

United States Court of Appeals
                              For the Eighth Circuit
                         ___________________________

                                 No. 17-3448
                         ___________________________

                      Berkley Regional Insurance Company

                         lllllllllllllllllllllPlaintiff - Appellee

                                            v.

        Debbie Bernick-Odom, personally and as Personal Representative
                        for the Estate of Jeffrey Odom

                       lllllllllllllllllllllDefendant - Appellant
                                       ____________

                     Appeal from United States District Court
                    for the District of North Dakota - Bismarck
                                    ____________

                           Submitted: February 14, 2019
                              Filed: May 24, 2019
                                 ____________

Before LOKEN, COLLOTON, and KELLY, Circuit Judges.
                          ____________

LOKEN, Circuit Judge.

       Jeffrey Odom died in a motor vehicle accident driving a pick-up truck owned
by his employer and insured by a Berkley Regional Insurance Company commercial
auto policy. The other driver’s tractor-trailer was owned by his employer and insured
by a Zurich America commercial auto policy. Odom’s widow, Debbie Bernick-
Odom, filed a claim with Berkley for underinsured motorist (UIM) benefits. Berkley
filed this diversity action seeking a declaratory judgment of no UIM coverage;
Bernick-Odom counterclaimed for UIM coverage and other relief. The district court1
granted Berkley’s motion for summary judgment, concluding that the other driver’s
vehicle was not an “underinsured motor vehicle” as defined in Berkley’s policy and
in the auto insurance provisions of the North Dakota Century Code. Bernick-Odom
appeals. Reviewing the grant of summary judgment de novo, we affirm.

                                           I.

      The issue on appeal is whether the tractor-trailer insured by Zurich was an
“underinsured motor vehicle.” The North Dakota statute defines underinsured motor
vehicle as a vehicle:

      for which there is a bodily injury liability insurance policy . . . in effect
      at the time of the accident, but the applicable limit of bodily injury
      liability of such policy . . . :

      a.     Is less than the applicable limit for underinsured motorist
             coverage under the insured’s policy; or

      b.     Has been reduced by payments to other persons injured in the
             accident to an amount less than the limit for underinsured
             motorist coverage under the insured’s policy.

N.D.C.C. § 26.1-40-15.1(2). Berkley’s commercial auto policy promised to pay any
sum its insured “is legally entitled to recover . . . from the . . . driver of an
‘underinsured motor vehicle.’” The policy incorporated the statutory definition of
“underinsured motor vehicle” almost word for word.

      1
       The Honorable Daniel L. Hovland, Chief Judge of the United States District
Court for the District of North Dakota.

                                          -2-
       The Berkley policy limited UIM coverage to $1,000,000. The Zurich
commercial auto policy provided its insureds a combined limit of $1,000,000 for
covered bodily injury and property damage. After Odom’s death, Zurich agreed to
pay Berkley $40,000 to reimburse Berkley for payment to Odom’s employer for the
loss of its pick-up truck. Zurich and Bernick-Odom then agreed to settle her
wrongful death claim against Zurich’s insureds for $960,000, the remainder of
Zurich’s $1 million combined policy limit. Bernick-Odom’s attorney gave Berkley
notice of this settlement and advised that Bernick-Odom’s wrongful death claim
exceeded the Zurich policy limits and she would seek to recover UIM benefits from
Berkley. Berkley paid Bernick-Odom $960,000 as a “substitute payment” to preserve
its right of subrogation against an underinsured motorist. See N.D.C.C. § 26.1-40-
15.5(2). Counsel for Berkley advised counsel for Bernick-Odom that this payment
“does not waive Berkley’s rights . . . to deny that the [tractor-trailer insured by
Zurich] is an underinsured motor vehicle.” This lawsuit followed.

                                          II.

       Like the district court, we conclude that the tractor-trailer insured by Zurich
was not an “underinsured motor vehicle.” The North Dakota statute and Berkley’s
policy provide that the vehicle was underinsured if (a) the applicable limit of Zurich’s
bodily injury policy “in effect at the time of the accident” was less than the
$1,000,000 UIM limit in Berkley’s policy, or (b) the applicable limit of Zurich’s
bodily injury liability “[h]as been reduced by payments to other persons injured in the
accident.” Bernick-Odom argues the vehicle was underinsured because Zurich’s
payment of $40,000 for the property damage to the employer’s pick-up reduced the
applicable limit of Zurich’s bodily injury policy to $960,000, less than Berkley’s
$1,000,000 UIM limit. At oral argument, Bernick-Odom conceded the obvious -- that
she is not entitled to UIM coverage under subpart (b) of N.D.C.C. § 26.1-40-15.1(2)
because Zurich’s $40,000 property damage payment was not a payment “to other
persons injured in the accident.” Thus, the coverage issue turns on subpart (a).

                                          -3-
       Bernick-Odom argues that Zurich’s “applicable limit of bodily injury liability”
was less than $1,000,000 because subpart (a) compares Zurich’s bodily injury limit
with Berkley’s UIM limit, and Zurich’s payment of $40,000 for property damage
reduced the bodily injury limit to $960,000, thus making the tractor-trailer
underinsured. However, as the district court recognized, subpart (a) directs us to
compare Zurich’s applicable limit of bodily injury liability “in effect at the time of the
accident” with the UIM limit in Berkley’s policy. At the time of the accident,
Zurich’s applicable bodily injury limit was $1,000,000, the same as Berkley’s UIM
limit. Therefore, applying the unambiguous language of both the statute and the UIM
coverage provision in Berkley’s policy, the tractor-trailer insured by Zurich was not
an “underinsured motor vehicle” under subpart (a).2

       Bernick-Odom argues the district court erred in failing to liberally construe the
North Dakota statute to make her whole, citing Jund v. Johnnie B’s Bar & Grill, Inc.,
814 N.W.2d 776 (N.D. 2011). We disagree. In Jund, the parties stipulated that the
tortfeasor’s vehicle was an “underinsured motor vehicle” within the meaning of
§ 26.1-40-15.1(2). Id. at 777. The Supreme Court of North Dakota recognized that
the 1989 amendments to North Dakota’s UIM statutes at issue in Jund “retained the
definition for an underinsured motorist, which governs the threshold issue of whether
an underinsured motor vehicle is involved.” Id. at 782 (emphasis added). And in
DeCoteau v. Nodak Mut. Ins. Co., 603 N.W.2d 906, 912 (N.D. 2000), after carefully
reviewing the legislative history of various amendments to the State’s UIM statutes,

      2
        Bernick-Odom argues for the first time on appeal that the bodily injury
liability limit in Zurich’s combined policy was less than $1,000,000 because North
Dakota law requires that auto liability policies cover at least $25,000 in property
damage. See N.D.C.C. § 39-16.1-11(2)(b). We rarely consider arguments raised for
the first time on appeal. Moreover, this provision from another title of the Century
Code does not negate the plain meaning of § 26.1-40-15.1(2). That Zurich’s
combined limit policy provided at least $25,000 property damage coverage does not
alter the fact that its bodily injury limit at the time of the accident was $1,000,000.

                                           -4-
the Court emphasized that “a tortfeasor’s motor vehicle must meet the statutory
definition of underinsured motor vehicle in N.D.C.C. § 26.1-40-15.1(2)” to trigger
UIM coverage. In our view, these decisions confirm that the Supreme Court of North
Dakota would apply the unambiguous terms of the statute and Berkley’s policy and
would therefore compare Berkley’s UIM coverage limit with Zurich’s bodily injury
liability limit “at the time of the accident.” See also N.D.C.C. § 1-02-05 (when the
wording of a statute is clear and unambiguous, “it is not to be disregarded under the
pretext of pursuing its spirit”); Rask v. Nodak Mut. Ins. Co., 626 N.W.2d 693, 697
(N.D. 2001) (“The definition of underinsured motor vehicle [in § 26.1-40-15.1(2)] is
not ambiguous.”); Davis v. Auto-Owners Ins. Co., 420 N.W.2d 347, 348 (N.D. 1988)
(a policy’s unambiguous UIM coverage provision “should not be strained to impose
liability on the insurer”).

       Bernick-Odom further argues that Berkley waived its right to contest UIM
coverage when it made a substitute payment of $960,000 in order to preserve its right
to subrogation under § 26.1-40-15.5(2). We disagree. The statute provides that an
“insurer providing underinsured motorist coverage” who makes a substitute payment
“has full rights of subrogation.” Berkley provided Odom underinsured motorist
coverage. It made a substitute payment, expressly reserving the right “to deny that
the [Zurich-insured] vehicle is an underinsured motor vehicle.” Section 26.1-40-
15.5(2) does not state that making a substitute payment waived or relinquished
Berkley’s right to contest UIM coverage, nor would it be in the interest of insureds
to discourage substitute payments by construing the statute as effecting such a waiver.
Berkley timely apprised Bernick-Odom of its legal position on the coverage issue.
There was no waiver.

      For the foregoing reasons, the judgment of the district court is affirmed.
                      ______________________________

                                         -5-