Court Opinion

ID: 9850358
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:56:10.455374+00
Date Added: 2024-06-11T09:20:35.850424
License: Public Domain

NORTON, Judge,
dissenting.
I respectfully dissent. The majority misconstrues Anderson, Budget and the trial court’s ruling in this case to reach its result.
The trial court in this case did not ‘construe the No-fault Act to impose liability on a self-insurer up to its self-insured retention.’ The trial court specifically stated, “This is not a case of the court imposing liability.” It added “Altea has conceded that if it is liable as owner (as opposed to vicariously liable for its driver) we’d have significant coverage available.” In fact, the fundamental source of Altra’s liability in this case is because it was the owner of the vehicle; liability follows the car. *234Crews v. Criterion Insurance Co., 370 N.W.2d 83, 85 (Minn.App.1985).
It is uncontroverted that Altra complied with the self-insurance alternative available under the No-fault Act and completed the forms and complied with the rules promulgated by the Department of Commerce in self-insurance matters. It is also uncontro-verted that Altra attempted to avoid liability in its rental transactions through use of a contract clause in which the lessee waived liability on the part of Altra and assumed liability herself. This contract was found unconscionable, illegal and unenforceable by the trial court and was also declared illegal by the Commissioner of Commerce, as the majority notes.
Both the trial court and the Commissioner, in separate proceedings, relied upon the findings, conclusions and recommendation of Administrative Law Judge Kaibel who presided over hearings on the legality of Altra’s lease contract. The trial court here specifically adopted the AU’s conclusion that Altra, as a lessor, was the legal owner of the vehicles and could not contract away its legal responsibility as an owner to provide liability coverage. The Commissioner found that Altra was not providing a plan of reparation security because the Commissioner found that Altra was forcing its customers to assume Altra’s liability. Nonetheless, the Commissioner also found that Altra was “a qualified sélf-insurer of its own vehicles.” Because Altra has chosen not to appeal any of those decisions, the issues they involved are fully decided. The only matter before this court is whether a self-insured who has represented in its self-insurance application that it is able to pay claims up to $3 million is instead limited by law to paying only $30,000. In order to say that it is, the majority misconstrues prior case law.
In stating that the Commerce Department’s self-insurance application form does not contain liability limits, the majority necessarily decides that the Department has not complied with Minn.Stat. § 65B.49, subd. 3, which requires plans to indicate limits of liability. I would construe that application form to contain express liability limits in accordance with the relevant statute. That application expressly indicates that Altra has decided to self-insure the first $500,000 in damages and has purchased additional coverage of $2,500,000 in excess of that $500,000 self-insured retention. That excess liability policy expressly applied to each and every claim or occurrence. At the time of the accident, Altra routinely sought to avoid owner’s liability by forcing lessees to assume Altra’s obligations. However, coverage is frozen at the time of the accident and the documents available clearly indicate that Altra, if it were to be held liable at all, expected to pay the first $500,000 itself.
Two prior decisions from this court are relevant to the self-insurance situation presented. In relying upon the least similar case and then rejecting the case which should control, the majority misconstrues both to reach its result. In Anderson v. Northwestern Bell Telephone Co., 443 N.W.2d 546 (Minn.App.1989), discovery revealed this unfiled internal corporate document:
DESCRIPTION OF COVERAGE LIMITS Comprehensive General Liability and Property Insurance $1,000,000 Employer’s Liability $ 100,000 Worker’s Compensation statutory Re: As respects all operations during the year 1986.
Id. at 547. This court examined an internal corporate document to determine coverage available to an employee of a self-insured corporation who was injured by a third party tort-feasor. The question presented was whether the document, which expressed other coverages but was silent on uninsured motorist coverage, nonetheless contained UIM benefits. This unofficial document says almost nothing when compared to the official application form filed here, but it was held to evidence a plan of reparation security from which statutorily required UIM coverage was absent. The majority misreads Anderson to hold that ‘in the absence of specific limits of underin-sured motorist (UIM) coverage in a self-insurance plan, the statutory minimum will be imposed by law.’ In Anderson, this court held that UIM coverage not expressed in a self-insured’s plan could be *235implied. Anderson did not affect Budget; it relied upon Budget to extend into self-insurance the Feldman doctrine that where mandated coverages are absent from a-plan of reparation security, they must be implied by law and will be imposed only to the statutory minimum. Anderson, 443 N.W.2d at 548 (citing State Farm Mutual Automobile Insurance Co. v. Feldman, 359 N.W.2d 57 (Minn.App.1984)); see also Beukhof v. State Farm Mutual Automobile Insurance Co., 371 N.W.2d 538, 542 (Minn.1985).
Unlike Anderson, this case involves only the limits of liability of a self-insured whose application to self-insure and excess liability policy, referred to in its application, are filed and available for review. Altra does not challenge the trial court’s decision that Altra provides primary liability coverage. Budget, which recognized that a self-insured car rental agency is liable up to the limits of its self-insurance arrangement, is directly on point. Budget, 359 N.W.2d at 676.
A plan of reparation security must state the limits of liability. Minn.Stat. § 65B.49, subd. 1. Although a self-insured must perform all the obligations imposed by the No-fault Act, the only coverage limits it is required to state are those pertaining to liability. The application Altra filed with the Department of Commerce states a self-imposed limit of $500,000.
That application describes “excess insurance applicable to motor vehicle accidents” and “limits of liability” as “$2,500,000 in excess of $500,000” self-insured retention. (There is some question whether this excess coverage would, in fact, have applied to motor vehicle accidents, but Altra’s application represents it nonetheless.) Like an insurance policy, this limit of liability is selected by the insured and applies to each claim or occurrence. To hold that this application, accepted by the Department of Commerce, contains no stated limit of liability is to hold that it does not comply with the statute. Altra does not argue that the Department erred in accepting its application, nor that the application was inadequate to effect a self-insurance plan of reparation security for tort liability. Moreover, liability coverage is the fundamental aspect of motor vehicle insurance; this coverage need not be implied by law. Thus, application of the Feldman rule to determine the amount of coverage is inappropriate.
The majority compares Altra’s official self-insurance application to the Northwestern Bell internal corporate document examined in Anderson. The majority concludes that Altra’s official application is no more relevant to the question presented than was Bell’s document. The majority states, “Altra’s statement that it had $500,000 of self-insured retention was not responsive to the question asked.” I disagree. That answer is directly responsive to a request to “list all excess insurance policies applicable to motor vehicle accidents,” with “limits of liability.” By stating that it had insurance of $2,500,000 in excess of its $500,000 self-insured retention, Altra was stating two limits of liability: that of its underlying (self-insurance) coverage, and that of its excess insurance. By stating both, Altra accurately depicted the upper and lower limits of the excess coverage.
The majority goes on to state, “It would be ironic if Altra’s gratuitous provision of information not requested anywhere on the form became the basis of its obligation to pay $125,000 more than the legal obligation it carried.” Again, I disagree. That information was not provided gratuitously. It is required by law. Minn.Stat. § 65B.49, subd. 1. Moreover, what would be ironic is if this court were to conclude that a self-insured, unlike any other tort-feasor, might be liable only for damages less than $30,-000 or greater than $500,000 but was not required to pay damages between those two amounts.
The majority also concludes that “the statement that Altra was obligated to provide $500,000 of coverage before invoking its excess insurance plan does not logically imply that Altra intended to provide coverage in each accident for that amount.” Neither Altra’s intentions nor its obligations need be “logically implied”; the excess policy in question expressly states, *236in its declarations, that this coverage applies to each claim or occurrence. There is no question that Altra assumed the risk of paying the first $500,000 of liability.
Finally, the majority’s conclusions that McClain did not rely upon Altra’s self-insurance and that the self-insurance form is not intended to create obligations between the public and the self-insurer are completely' irrelevant to the legal question presented here. Every owner of a motor vehicle is required to accept responsibility for damages resulting from operation of that motor vehicle. That obligation is created by law and cannot be contracted away. Similarly, the majority’s reliance on the later and possibly unrelated revocation by the Commissioner of Commerce of Altra’s right to self-insure is a reliance misplaced. The Commissioner found that Altra had not maintained a plan of reparation security because it found that Altra was requiring lessees to contract away Altra’s liability, something that Altra could not do. Finally, the majority’s concern for punitive measures is inappropriate in a civil case. The question presented involves a matter of pure law and statutory interpretation. To require a party to comply with the civil law and to conform with its representations to the Department of Commerce that it was in compliance with the civil law, is not appropriately characterized as “punitive measures.”
The issue presented by this case begs the question why any self-insured would elect liability limits higher than the statutorily required minimum amount; however, business risk management may involve any number of factors. Each of us who buys a policy of insurance faces similar decisions regarding the amount of coverage needed, the amount of deductible we are willing or can afford to risk, and the affordability of the resulting premium payment, which is heavily influenced by our election of coverage and deductible.
In this case, Altra paid a large premium ($750,000 with a minimum retained premium of $187,500) for an excess liability policy with a threshold, or deductible, of $500,-000. Perhaps a policy with a lower threshold was not available, or cost so much more to purchase that it provided no real additional benefit. An insured tort-feasor pays a fixed premium for protection from a fixed amount of potential damages. That insured tort-feasor remains liable for any damages which exceed the amount of coverage purchased. The statutory minimums in the No-fault Act insure that victims of even insolvent or judgment-proof tort-fea-sors receive some amount of compensation. These statutory limits are minimum amounts; they neither prohibit higher limits nor cap liability.
The self-insured tort-feasor avoids fixed premiums and forgoes protection from that portion of potential loss which a purchased policy would otherwise cover. Like the insured tort-feasor, the self-insured tort-feasor remains liable for damages which exceed coverage. The self-insured tort-fea-sor, however, wears two hats. It may sometimes pay damages as an insurer and as a tort-feasor. Altra, having chosen to purchase only an excess liability policy with a threshold of $500,000, saved itself the premiums it would have otherwise paid as an insured but accepted the concomitant risks as an insurer for liability between $0 and $500,000.
The majority relies on Budget and holds “that in the absence of express limitations on liability coverage contained in a self-insurance plan, the statutory minimum amount of coverage will be imposed.” While I disagree that Budget supports the majority position, I dissent on the basis of something much more fundamental: a self-insurance plan cannot be held to have an absence of express limitations on liability coverage. Because limits of liability are the only limits that any plan of reparation security is required to state, no plan approved by the Department of Commerce would ever be without limits. Therefore, I would hold that Altra chose and stated its limits of liability.
Altra’s application to self-insure represented it had seamless liability coverage it made possible, like Budget, by risking the first amount, in this case $500,000, and purchasing an insurance policy to cover the *237remainder. This case involves only the extent of exposure in liability coverage of a self-insured auto rental agency, like Budget, with an excess liability policy for coverage above its self-insured retention. Like Budget, Altra made a business risk management decision to not purchase insurance coverage for losses of less than a certain amount. Like Budget, Altra would receive a windfall unless it is held to have elected to accept exposure up to its self-insured retention. See Budget, 359 N.W.2d at 676. Although there are differences between this case and Budget, this case is much closer to Budget than it is to Anderson.