Mary Jo BURGRAFF, Respondent, v. AETNA LIFE & CASUALTY COMPANY, Appellant.
No. C5-82-1102
Supreme Court of Minnesota
March 30, 1984
346 N.W.2d 627
TODD, Justice (concurring specially).
I join in the special concurrence of Justice Simonett.
John H. Hinderaker, Gerard M. Nolting, Minneapolis, for appellant.
John C. Goetz and James R. Schwebel, Minneapolis, for respondent.
Jon K. Hammarberg, Bloomington, for American Family Mut. Ins. Co. amicus curiae.
The issuе here is whether the provision in an auto liability policy defining who is a “relative” of the named insured for underinsured motorist coverage is, as the trial court decided, contrary to the provisions of the No-Fault Act and, therefore, invalid. We conclude that the statutory definition of “relative” in the No-Fault Act applies to underinsured motorist coverage and that the insurance policy‘s definition of “relative” is inconsistent with the statutory definition and is, therefore, invalid. We affirm.
On October 1, 1977, while a passenger in her boyfriend‘s automobile, plaintiff-respondent Mary Jo Burgraff was involved in an accident with another car and was seriously injured. Both cars involved in the accident were insured. At the time of her accident, Mary Jo also owned an automobile on which she had insurance. In addition, she was living at home with her parents and her father had two automobiles insured with defendant-appellant Aеtna Life and Casualty Company. Mary Jo collected the $25,000 limits from her boyfriend‘s insurer, the $25,000 limits from the insurer of the other car involved in the accident, and $40,000 from the insurer of her own automobile in settlement of her claim that she had not been offered underinsured motorist coverage as mandated under then existing statutes. In addition, Mary Jo has also received $30,000 in no-fault benefits under her own policy. These payments still leave her inadequately comрensated for her injuries.
Plaintiff Mary Jo Burgraff, therefore, brings this declaratory judgment action against defendant Aetna, claiming she is entitled to underinsured motorist coverage under her father‘s policy. This coverage is extended under Aetna‘s policy to any relative of the named insured residing in the insured‘s household, which indisputably includes Mary Jo. Aetna‘s definition of “relative,” however, goes on to exclude any such relative who owns a private passenger automobile. Since Mary Jo owns an automobile, Aetna denied Mary Jo underinsured motorist coverage under her father‘s policies. Both parties agree that if this exclusion is valid, then Mary Jo cannot recover under her father‘s policies.
The trial court, in its summary judgment order, held that the policy definition of “relative” was contrary to the Minnesota No-Fault Act,
I.
The first issue we asked the parties to brief was whether the definition of “insured” contained in
Since 1980, when the legislature repealed the mandatory offer for underinsured motorist coverage, there has been no reference in the No-Fault Act to underinsured motorist coverage. Aetna argues here that the No-Fault Act‘s definition of “insured,” which is applied to determine coverage of no-fault benefits, should also be used to determine coverage of uninsured motorist benefits and thеrefore also underinsured motorist benefits. We agree.
1. First of all, we conclude that the definition of “insured” in
We do not think our case law is inconsistent with this statutory interpretation. In Kaysen v. Federal Insurance Co., 268 N.W.2d 920 (Minn.1978), where a corporate officer sought uninsured motorist coverage under a policy issued to his corporate employer, we held that the policy definition of insured was contrary to the No-Fault Act,
Respondent Burgraff, on the other hand, quotes our dictum in Gudvangen v. Austin Mutual Insurance Co., 284 N.W.2d 813, 817 (Minn.1979), appeal dismissed, 444 U.S. 1062, 100 S.Ct. 1002, 62 L.Ed.2d 745 (1980), where, on rehearing, we said:
[I]n adopting the concept of no-fault insurance into the Minnesota statutes, the legislature intended no change in the law insofar as uninsured motorist insurance protection is concerned. The statutes dealing [with] uninsured motorist insurance were intended to be incorporated intact. Since decisions of this court prior to no fault, cited in the main opinion, make it clear that the protection of the uninsured motorist statutes applied to persons and not vehicles, appellant would be covered.
See also American Motorist Insurance Co. v. Sarvela, 327 N.W.2d 77, 78 (Minn.1982) (the provisions for underinsured motorist coverage, existing before the No-Fault Act, “were incorporated into the No-Fault Act unchanged“). From this respondent Burgraff argues that the definitional section of the No-Fault Act should not be read into uninsured motorist coverage. It must be remembered, however, that the quotations from Gudvangen and Sarvela are statements of what this court deemed to be the legislature‘s intent with respect to the issues presented in those two cases. These statements were not meant tо preclude further inquiry into legislative intent with respect to different issues. Particularly is this so where, as Professor Steenson has noted, coordinating uninsured motorist coverage with the Act creates problems of “definitional consistency.” M. Steenson, Minnesota No-Fault Automobile Insurance 125 (1982).
Curiously enough, prior to the No-Fault Act, uninsured motorist coverage had no statutory definition for “insured” except as the term was mentioned indirectly.2 Even this oblique reference was repealed when
Although this court has never before examined whether the definition of “insured” in the No-Fault Act applies to uninsured motorist coverage,3 respondent Burgraff argues that since our prior decisions clearly favor stacking of coverages, to permit application of the statutory definition here would violate that favored policy since stacking would thereby be denied in this case. But to state that stacking is to be favored is only the beginning, not the end, of our inquiry. Moreover, the issue here is not, strictly speaking, a stacking issue. The question of who is an “insured” goes to whether there is coverage, not to whether coverages found to exist should be stackеd. Thus, in Bock v. Mutual Service Casualty Insurance Co., the case consolidated with and reported in Wasche v. Milbank Mutual Ins. Co., 268 N.W.2d 913 (Minn.1978), we denied no-fault PIP benefits because of the policy definition of insured. There we held that the
We hold, therefore, that the
2. This leads, then, tо the next question: Should the same statutory definition of insured govern underinsured motorist coverage? We think so.
While it may not necessarily follow that the statutory definition of “insured” for uninsured motorist coverage should also apply to underinsured coverage, the proposition does have merit from the standpoint of “definitional consistency.” The No-Fault Act is now silent about underinsured motorist coverage. But in two recent cases we implicitly held thаt the fact that an offer of underinsured motorist coverage is not mandatory or that the coverage itself is not required to be provided, as it is for uninsured coverage, does not mean that uninsured and underinsured coverages must be treated differently. See American Motorist Insurance Co. v. Sarvela, 327 N.W.2d 77 (Minn.1982); Holman v. All Nation Insurance Co., 288 N.W.2d 244 (Minn.1980).
More importantly, we discern from a review of the statutory history a legislative intent that the No-Fault definition of “insured” in
Considering this clear indication of legislative intent, and having in mind the need for “definitional consistency” for uninsured and underinsured coverages, we hold that the underinsured motorist coverage, as supplemental coverаge to a plan of reparation security under the No-Fault Act, is governed by the No-Fault definition of “insured” in
II.
The next issue is whether the definition of “relative” as written in Aetna‘s policy is invalid because it restricts underinsured motorist coverage to less coverage than is afforded under the statutory definition of insured in the No-Fault Act. The trial court ruled that the policy definition was unduly restrictive, resulting in an exclusion broader than the No-Fault Act permits, and thus held the policy exclusion invalid. We agree.
Aetna‘s policy excludes from coverage a relative of the named insured who resides in the same household as the named insured if that relative “owns a private passenger automobile.” On the other hand, the No-Fault Act,
In this casе, the policy exclusion and the statutory exclusion are coextensive, as applied, since Mary Jo Burgraff both owns a car and is the named insured in a policy issued on the car. Nevertheless, the trial court found that the policy exclusion, as written, was broader than the statutory exclusion and that, as a matter of public policy, Aetna‘s exclusion based on car ownership instead of insurance policy ownership was invalid. Since, at least ordinarily, a relative who owns a car is required to have a plan of reparation security on that car, see
Anderson involved a 1974 сar accident, where the plaintiff, a resident of her stepfather‘s household, sought uninsured motorist benefits under her stepfather‘s policy. The policy said a relative was an additional insured “provided neither such relative nor his spouse owns an automobile.” At the time of the accident, however,
In 1981 we decided Rosenberger, which involved a 1977 car accident covered by the new No-Fault Act provision,
Anderson, of course, is not in point since it was decided under a different statutory definition of “relative.” But Rosenberger, we think, must be deemed controlling. Under Rosenberger—under the same policy exclusion and the same statute as here—a relative who owns a car and fails to insure it is entitled to coverage. To now say that a relative who owns a car but does insure it is to be denied coverage would be incongruous and unfair. As written, the policy exclusion is overbroad and misleading. For whatever reason, the insurer elected to use language in its policy exclusion which does not track the statute. It seems to us, as a matter of public policy, that it is preferable in this instance to refuse to rewrite the policy exclusion, since judicial rewriting of the policy to save the exclusion would only condone insurers’ drafting overbroad policy exclusions.
Consequently, we hold that Aetna‘s policy definition of “relative,” which excludes a relative who owns a private passenger automobile, conflicts with the definition of “relative” in
Affirmed.
KELLEY, Justice (dissenting).
I respectfully dissent. While I concur in the majority‘s conclusion in Section I of the opinion that the definitiоn of “insured” contained in
Clearly, the legislature can mandate coverage provisions that must appear in insurance policies. Indeed, it has done so with respect to automоbile insurance.
I find nothing in the history of the legislative action with respect to underinsured motorist coverage to demonstrate that it intended that the definition of “insured” for optional underinsured coverage should be co-extensive with the statutory definition of “insured” for the mandatory coverages contained in that chapter.
Mary Jo Burgraff, a relative of the named insured, resided in the same household as the named insured, owned a private passenger automobile, and was identified by name in another contract for a plan of reparation security complying with
In doing so, the majority relies upon Rosenberger v. American Family Mutual Insurance Co., 309 N.W.2d 305 (Minn.1981), as being dispositive. I disagree. The two cases are dissimilar. The main issue in Rosenberger related to whether Jean Rosenberger was a resident in the named insured‘s home for the purpose of collecting uninsured motorist benefits. A bare majority of the court affirmed a trial court determination that she was. Although she owned her own automobile, she did not come within the statutory exclusion because she was not identified by name in any other contract for a plan of reparation. Therefore, to have applied the рolicy exclusion attempting to exclude a resident who owns an automobile would have defeated the policy of the No-Fault Act.2 In the
AMDAHL, Chief Justice. I join in the dissent of Justice Kelley.
PETERSON, Justice. I join in the dissent of Justice Kelley.
COYNE, Justice. I join in the dissent of Justice Kelley.