American Fire and Casualty Co. v. Mary Hegel
2017 U.S. App. LEXIS 2152
| 8th Cir. | 2017Background
- Adam Fetzer, a Papa John’s delivery driver, died in a North Dakota car accident while driving his own vehicle during work; the at-fault driver’s liability policy paid $25,000.
- Papa John’s (Kentucky) purchased a nationwide business auto Policy from American Fire (incorporated in Ohio, principal place in Massachusetts); Policy was negotiated and delivered in Kentucky and premiums paid in Ohio.
- The Policy insured Papa John’s employees’ vehicles across multiple states and included state-specific endorsements; Fetzer’s vehicle was garaged and the accident occurred in North Dakota.
- Fetzer’s estate (represented by Hegel) sought underinsured motorist (UIM) benefits from American Fire; American Fire denied the claim and sued for declaratory judgment.
- The district court applied North Dakota law, held American Fire required to provide UIM coverage, and awarded $100,000; American Fire appealed.
- The Eighth Circuit reversed, holding Kentucky law governs the Policy and therefore American Fire had no obligation to provide UIM benefits under Kentucky law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law: which state’s law governs the Policy | Hegel: North Dakota law applies because loss, parties, and accident occurred in ND | American Fire: Kentucky law governs because contract was negotiated, delivered, and purchased in KY for a KY insured | Court: Kentucky law governs (ND choice-of-law test favors KY) |
| Is UIM coverage required under the Policy | Hegel: ND statutory law requires UIM coverage and applies | American Fire: KY law controls and does not require UIM coverage | Court: KY law applies; no required UIM under KY law |
| If ND law applied, is American Fire liable for $100,000 in UIM benefits | Hegel: district court awarded $100,000 | American Fire: award unsupported; ND law mandates minimum only | Court: even if ND law applied, statutory minimum (at least $25,000) applies; $100,000 award was unsupported |
| Is the tortfeasor “underinsured” under ND law after receiving $25,000 | Hegel: sought UIM top-up after tortfeasor’s payment | American Fire: $25,000 satisfies tortfeasor’s liability; thus not underinsured | Court: under ND law the tortfeasor is not underinsured (no UIM recovery) |
Key Cases Cited
- Plante v. Columbia Paints, 494 N.W.2d 140 (N.D. 1992) (multistate insurance policy contacts reduce significance of forum where loss occurred)
- R.D. Offutt Co. v. Lexington Ins. Co., 342 F. Supp. 2d 838 (D.N.D. 2004) (applying forum choice-of-law factors when policy covers multiple states)
- Daley v. American States Preferred Ins. Co., 587 N.W.2d 159 (N.D. 1998) (North Dakota’s two-prong choice-of-law test adopting Leflar factors)
- Nodak Mut. Ins. Co. v. Wamsley, 687 N.W.2d 226 (N.D. 2004) (describing application of Leflar’s considerations)
- Apollo Sprinkler Co. v. Fire Sprinkler Suppliers & Design, Inc., 382 N.W.2d 386 (N.D. 1986) (setting out the five choice-influencing factors)
- Whirlpool Corp. v. Ritter, 929 F.2d 1318 (8th Cir. 1991) (forum’s choice-of-law analysis applies in diversity cases)
- Barkley, Inc. v. Gabriel Brothers, Inc., 829 F.3d 1030 (8th Cir. 2016) (standard for reviewing summary judgment)