827 N.W.2d 366
S.D.2013Background
- Arizona couple injured in South Dakota on a motorcycle by an unidentified rider who left the scene.
- Policy issued in Arizona with uninsured motorist (UM) limits of $15,000 per person and $30,000 per accident.
- Progressive tendered $15,000 per person to each claimant; plaintiffs sought $25,000 per person as SD minimums would have provided if the other rider were insured.
- Plaintiffs filed suit in SD seeking declaratory relief that SD minimum UM limits apply; alleged bad faith in withholding higher UM benefits.
- Circuit court granted summary judgment for Progressive, holding SD law did not govern UM coverage because policy issued in Arizona and vehicle was domiciled there.
- On appeal, SD Supreme Court affirmed, holding the contract and Arizona law govern UM coverage; SD minimums do not apply to an out-of-state policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does SD minimum UM coverage apply to an out-of-state policy? | Milinkoviches: SD policy minimums should apply regardless of policy origin. | Progressive: contract governed by Arizona law; SD minimums do not bind non-SD policies. | No; SD minimums do not apply to out-of-state policy. |
| What law governs UM coverage in this contract dispute? | Milinkoviches: SD public policy supports equal protection of victims. | Progressive: contract and coverage governed by Arizona law under choice-of-law provision. | Arizona law governs UM coverage. |
| Do SD statutes on financial responsibility/UM apply to a policy issued for delivery outside SD? | Milinkoviches rely on SD public policy linking UM to liability coverage in SD. | SD statutes apply only to SD-registered or SD-delivered policies within SD. | No; SD statutes do not force SD UM limits on an Arizona-issued policy. |
| Is there any policy-based reason to override the explicit contract language? | Milinkoviches argue public policy requires SD-level UM to protect all drivers in SD. | Policy language and choice-of-law clause control; no overriding public policy. | Policy language and contract controls; no override. |
| Does choice-of-law analysis apply to coverages sounding in contract? | Milinkoviches emphasize interrelationship between UM and liability coverage across states. | Coverage disputes are contractual; apply the contract's governing law. | Contract governs; choice-of-law favors Arizona. |
Key Cases Cited
- Transp. Ins. Co. v. Martinez, 899 P.2d 194 (Ariz. Ct. App. 1995) (purpose of UM coverage explained; equal protection concept discussed)
- Cornelius v. Nat’l Cas. Co., 2012 S.D. 29, 813 N.W.2d 167 (S.D. 2012) (SD equalization of UM concepts cited)
- Great Western Cas. Co. v. Hovaldt, 603 N.W.2d 198 (S.D. 1999) (choice-of-law in SD insurance coverage context)
- Wilds v. Mid-Century Ins. Co., 642 P.2d 567 (Kan. 1982) (interpretation of out-of-state policy delivery statutes)
- Martin v. Lumberman’s Mut. Cas. Co., 559 A.2d 1028 (R.I. 1989) (similar interpretation of UM vs. liability coverage)
- Vaughn v. Nationwide Mut. Ins. Co., 702 A.2d 198 (D.C. 1997) (policyChoice-of-law considerations in UM context)
- Am. Family Mut. Ins. Co. v. Merrill, 454 N.W.2d 555 (S.D. 1990) (SD interpretation of UM coverage within statute framework)