Grinnell Mutual Reinsurance v. Kelly Stuart Schmidt
2015 U.S. App. LEXIS 14017
8th Cir.2015Background
- Grinnell Mutual issued a farm policy to the Schmidts with a Select Recreational Vehicle endorsement containing an express-permission exclusion for certain bodily injuries to an insured.
- Alyssa Zamarron, a ten-year-old guest, died after operating the Schmidts’ ATV during a sleepover at the Schmidts’ farm while the Schmidts were present on the property.
- The Schmidts tendered defense of a wrongful-death action to Grinnell; Grinnell reserved its rights and filed a declaratory-judgment action seeking to deny coverage.
- The wrongful-death action settled for $462,500; the resolution raised whether Alyssa had express permission to operate the ATV under the policy’s exclusion.
- The district court held Alyssa did not operate the ATV with the named insureds’ express permission, and therefore the policy provided coverage for the accident.
- Grinnell appealed, arguing the district court erred in finding there was no express permission.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Alyssa operate the ATV with express permission? | Grinnell argues there was express permission by the named insureds. | Schmidts contend there was only tacit/implied permission, not express permission. | No express permission; implied permission is insufficient under the policy. |
| How should undefined terms like 'express permission' be interpreted in the endorsement? | Grinnell argues plain meaning supports express permission requiring direct statement. | Schmidts argue the term should be interpreted liberally to find coverage if warranted by conduct. | Express permission requires direct, affirmative permission; plain meaning applied. |
Key Cases Cited
- Midwest Family Mut. Ins. Co. v. Wolters, 831 N.W.2d 628 (Minn. 2013) (burden to show coverage rests with insured; exclusions construed narrowly)
- Travelers Indem. Co. v. Bloomington Steel & Supply Co., 718 N.W.2d 888 (Minn. 2006) (exclusions construed narrowly and against insurer)
- Gen. Cas. Co. of Wis. v. Wozniak Travel, Inc., 762 N.W.2d 572 (Minn. 2009) (undefined terms interpreted liberally in favor of coverage)
- State Farm Fire & Cas. Co. v. Ricks, 902 S.W.2d 323 (Mo. Ct. App. 1995) (express permission must be affirmative and direct)
- Jones v. Fleischhacker, 325 N.W.2d 633 (Minn. 1982) (distinguishes express vs. implied permission)
- Occidental Fire & Cas. Co. v. Soczynski, 765 F.3d 931 (8th Cir. 2014) (de novo review for insurance-coverage determinations)