940 N.W.2d 865
S.D.2020Background
- On Oct. 24, 2013 a borrowed 15‑passenger van driven by Altayeb Arbab‑Azzein rolled over; passenger Alaaldeen Mussa was seriously injured and sued Arbab‑Azzein.
- Arbab‑Azzein owned a 15‑passenger van and routinely drove 10–15 co‑workers roundtrip (~125 miles) to a Worthington, MN plant; passengers paid a flat fee ($40–$45/week each).
- Western Agricultural Insurance issued Arbab‑Azzein’s policy, which contained exclusions: no coverage for vehicles used to carry people for a fee, but liability exclusion carved out an exception for a “shared‑expenses car pool.”
- Western Ag denied coverage and refused defense; Arbab‑Azzein and Mussa entered a stipulated (Miller‑Shugart style) $1.5M judgment with assignment of policy rights to Mussa.
- The circuit court held the fee‑for‑transport exclusion applied (no medical payments, no liability coverage because the arrangement was not a shared‑expenses car pool); Mussa appealed.
Issues
| Issue | Plaintiff's Argument (Western Ag) | Defendant's Argument (Mussa) | Held |
|---|---|---|---|
| Whether the policy’s “vehicle used to carry people for a fee” exclusion applies | The van was used to carry people for a fee (flat weekly payments); exclusion therefore bars coverage | Payments were informal cost‑sharing for commuting, not a for‑hire operation | Exclusion applies — evidence shows flat fees were charged, so exclusion established |
| Whether the liability exclusion’s exception for a “shared‑expenses car pool” is ambiguous | Phrase has plain, ordinary meaning and is not ambiguous | Phrase ambiguous and should be construed for the insured to include this arrangement | Term is not ambiguous; reads broadly to include various cost‑sharing arrangements, not limited to turn‑taking drivers |
| Whether the arrangement here falls within the “shared‑expenses car pool” exception | Arrangement was profit‑making (flat per‑passenger receipts exceeded expenses); not a shared‑expenses car pool | Even if expenses not strictly proven, informality of carpools means lack of exact expense proof is not dispositive | Exception did not apply — factual findings show receipts exceeded expenses and evidence supported finding of a profit motive |
| Whether the court erred in considering IRS mileage rates and other inferences about expenses | IRS mileage evidence and other testimony properly show fees exceeded expenses | Reliance on IRS rates was improper absent direct expense evidence | No error — Mussa did not object at trial or present alternative expense proof; court permissibly relied on available evidence |
Key Cases Cited
- Auto‑Owners Ins. Co. v. Hansen Hous., Inc., 604 N.W.2d 504 (S.D. 2000) (insurance contract interpretation reviewed de novo)
- Demaray v. De Smet Farm Mut. Ins. Co., 801 N.W.2d 284 (S.D. 2011) (insured bears burden to prove coverage exceptions)
- Meridian Mut. Ins. Co. v. Auto‑Owners Ins. Co., 698 N.E.2d 770 (Ind. 1998) (definition and factors for shared‑expense car pool)
- Ass Kickin Ranch, LLC v. N. Star Mut. Ins., 822 N.W.2d 724 (S.D. 2012) (policy language construed by plain and ordinary meaning)
- W. Nat’l Mut. Ins. Co. v. TSP, Inc., 904 N.W.2d 52 (S.D. 2017) (validity of Miller‑Shugart settlements and insurer’s non‑bound status unless claim covered and settlement reasonable)
- Avemco Ins. Co. v. Auburn Flying Serv., Inc., 242 F.3d 819 (8th Cir. 2001) (similar exclusions construed as unambiguous in context)