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Pogge v. American Family Mutual Insurance Co.11/9/2004
of negligence which proximately caused any damage to the Pogges. In such instance, Mandell's policy would be "inapplicable" to the Pogges' damages and would not have to be exhausted before the American Family underinsured motorist coverage was available to the Pogges. Accordingly, the trial court erred in dismissing the action, because it did not consider whether there was a set of facts which could be proved which would make Mandell's policy inapplicable and, therefore, a policy which did not have to be exhausted. In this regard, we hold that Mandell's policy is not an applicable policy merely because State Farm paid part of its coverage into the settlement; rather, if the policy is applicable or available and must be exhausted, it is because Mandell was guilty of negligence which proximately caused injury to Rosemary. However, from the facts of the accident as pleaded, there is a readily imaginable set of facts-Mandell's absence of negligence proximately causing injury-which would make Mandell's policy inapplicable.
We are bound by the conclusions reached in Ploen v. Union Ins. Co., 253 Neb. 867, 573 N.W.2d 436 (1998). The practical effect of the Ploen court's approval of exhaustion clauses, both from a public policy standpoint and as being in accord with Nebraska statutory law on underinsured motorist coverage, is that the Pogges are forced into the usually undesirable position of having to proceed to trial against Mandell to either secure 100 percent of the coverage provided by Mandell's policy, thereby satisfying the exhaustion clause, or secure an adjudication that Mandell was not guilty of any negligence which proximately in-jured Rosemary. The former result would satisfy the exhaustion clause. The latter result would make Mandell's policy "inapplicable," and as a result, no exhaustion of Mandell's policy's limits would be required. Thus, in an accident where there may be more than one tort-feasor, as in this case, the exhaustion clause seems to force a trial against an "iffy" tort-feasor to get an adjudication, which is binding on the underinsured motorist carrier, either that the coverage is inapplicable and therefore need not be exhausted or that it is applicable and is exhausted by the judgment exceeding the policy limits.
The problems associated with upholding exhaustion clauses and applying them in a way which forces parties to trial in cases which could be resolved in another manner were highlighted in the dissent in Ploen, supra, a 4 to 3 decision. The majority in Ploen also acknowledges that public policy questions are inherent in these issues but suggests that they are best addressed by the Legislature. We respectfully suggest that the instant case reveals a more complicated situation than Ploen, which complexities make reexamination of these policy questions more compelling than as outlined by the Ploen dissent. Nonetheless, Ploen remains binding precedent, and it resolves the public policy questions raised in this appeal against the Pogges.
However, under the standard for reviewing a motion to dismiss filed pursuant to rule 12(b)(6), the trial court erred when it dismissed the case, because there is a set of facts, which if proved, would make Mandell's State Farm policy inapplicable and therefore not subject to exhaustion. As a result, we reverse the decision of the trial court and remand the cause with direction to overrule the motion to dismiss.
Reversed and remanded with direction.
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