Nodak Mutual Insurance Co. v. Bahr-Renner
2014 ND 39
N.D.2014Background
- Nodak issued a policy to Peggy Gwyther with $100k/$300k bodily injury limits and a step-down to $25k/$50k/$25k when an insured not in the household drives, plus a general property damage limit; policy defines ‘family member’ as a resident of the named insured’s household.
- Mary Gwyther was co-owner of Peggy Gwyther’s Bismarck home but had not lived there since 1972 and lived in Switzerland, despite voting absentee from the Bismarck address.
- Mary’s relationship to the household was disputed; Nodak interpleader sought a declaration that only the step-down limits applied because she was not a resident.
- Mary’s residency status involved evaluating whether she dwells with named insureds in a manner that makes her a ‘family member’ under the policy, a fact-intensive question.
- The district court found Mary was not a resident of Peggy’s household on the accident date and that the step-down endorsement did not violate North Dakota law; Nodak was required to pay the lower step-down limits.
- The court considered whether the step-down endorsement complied with N.D.C.C. § 26.1-40-16 and whether notice of the endorsement was sufficient.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Mary Gwyther was a resident of Peggy Gwyther’s household. | Claimants contend Mary resided in the household. | Nodak argues Mary was not a household resident. | Not resident; district court findings affirmed. |
| Whether the step-down endorsement violates N.D.C.C. § 26.1-40-16. | Nodak’s step-down requires insured consent or a written agreement. | Statute permits restrictive endorsements without a written agreement for step-down. | Statute does not require a written agreement for step-down endorsements. |
| Whether the step-down notice was sufficiently conspicuous and properly placed. | Endorsement buried in a long document; insufficient notice. | Endorsement titled prominently and placed on a two-page endorsement. | Notice sufficient; endorsement valid. |
Key Cases Cited
- State Farm Mut. Auto. Ins. Co. v. LaRoque, 486 N.W.2d 235 (N.D. 1992) (interprets 'resident of your household' in auto policy)
- Schleuter v. Northern Plains Ins. Co., Inc., 772 N.W.2d 879 (N.D. 2009) (recognizes ambiguity and household residency analysis)
- Center Mut. Ins. Co. v. Thompson, 618 N.W.2d 505 (N.D. 2000) (discusses residency in household context)
- Close v. Ebertz, 583 N.W.2d 794 (N.D. 1998) (residency/household interpretation considerations)
- Dietz v. City of Medora, 333 N.W.2d 702 (N.D. 1983) (residency determination as a factual question)