North Star Mutual Insurance v. Korzan
2015 SD 97
| S.D. | 2015Background
- On Sept. 19, 2012, Charles and Michael Korzan were hauling round hay bales on two semi‑tractor trailers when a load on Michael’s trailer ignited and the burning trailer spread firebrands, igniting fires along the route and burning thousands of acres and structures.
- Plaintiffs in the underlying tort suit sued Charles and later added Michael for nuisance, negligence, trespass/wrongful entry, and punitive damages arising from the “Okaton Fires.”
- Charles’s insurer, North Star Mutual, filed a declaratory‑judgment action seeking a ruling that it had no duty to defend or indemnify; the Korzans counterclaimed that coverage existed.
- The policy at issue was a farmowners policy with Coverage L (personal liability) and a Personal Injury Endorsement (which lists wrongful entry among covered personal injuries), but Coverage L contains a Motorized Vehicle Exclusion barring coverage for property damage resulting from ownership, use, operation, loading/unloading, etc., of motorized vehicles/trailers.
- The circuit court granted North Star’s motion for summary judgment, concluding the Motorized Vehicle Exclusion applied to bar Coverage L and also applied to the Personal Injury Endorsement; the Korzans appealed.
Issues
| Issue | North Star’s Argument | Korzans’ Argument | Held |
|---|---|---|---|
| Whether the Motorized Vehicle Exclusion bars Coverage L for the Okaton Fires | Exclusion applies because the property damage resulted from operation/use/loading of a motor vehicle (semi), including driving while the load was burning and dropping firebrands | Operation of a vehicle alone does not preclude coverage when an independent, nonvehicle cause or act of negligence caused the loss | Exclusion applies; no genuine issue of fact that losses flowed from use/operation of the truck |
| Whether the divisible/concurrent‑cause doctrine defeats the exclusion | Even if doctrine adopted, no viable independent nonvehicle cause shown that could have caused these damages without the truck | Two independent causes (vehicle use + other negligent acts) alleged so exclusion should not apply to nonvehicle acts | Court declined to adopt doctrine here; even if adopted, Korzans failed to show an independent act that could have caused the loss absent the truck |
| Whether the spread of fire constitutes a "wrongful entry" under the Personal Injury Endorsement | Even if wrongful entry were covered, the Motorized Vehicle Exclusion still bars coverage | The fire/trespass is wrongful entry and thus a covered personal injury under the endorsement | Court assumed (without deciding) that wrongful entry could be covered but held exclusion still precludes coverage |
| Whether the Motorized Vehicle Exclusion applies to the Personal Injury Endorsement | Exclusions in Coverage L apply to endorsements that extend Coverage L; endorsement does not stand alone | Endorsement is separate and not expressly reincorporated, so exclusion should not apply | Exclusion applies to the endorsement; endorsements are part of the policy and are construed with it |
Key Cases Cited
- Ass Kickin Ranch, LLC v. N. Star Mut. Ins. Co., 822 N.W.2d 724 (S.D. 2012) (insurance‑contract interpretation and insurer’s burden to show exclusion applies)
- De Smet Farm Mut. Ins. Co. v. Gulbranson Dev. Co., 779 N.W.2d 148 (S.D. 2010) (duty to defend analysis looks to pleadings and policy language)
- Biegler v. Am. Family Mut. Ins. Co., 621 N.W.2d 592 (S.D. 2001) (insurer must defend if any claim potentially covered)
- Pete Lien & Sons, Inc. v. First Am. Title Ins. Co., 478 N.W.2d 824 (S.D. 1991) (endorsements/riders are part of the policy and construed with it)
- Hawkeye‑Sec. Ins. Co. v. Clifford by Clifford, 366 N.W.2d 489 (S.D. 1985) (duty to defend broader than duty to indemnify)
- Midwest Family Mut. Ins. Co. v. Schmitt, 651 N.W.2d 843 (Minn. Ct. App. 2002) (discussion of divisible concurrent‑cause doctrine and limits where nonvehicle causes are too remote)