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Ziegelmann v. National Farmers Union Property and Casualty Companies9/21/2004
A North Dakota resident injured in a motor-vehicle accident in Minnesota settled the underlying tort case for 90% of the tortfeasor's liability-coverage limits. The North Dakota resident then sought to recover underinsured motorist (UIM) benefits from his own insurer. The UIM insurer denied benefits on the ground that the policy terms required exhaustion of a tortfeasor's liability limits and moved for summary judgment. The district court denied the motion for summary judgment but, upon insurer's request, certified to this court the question of whether the principles set forth in Schmidt v. Clothier, 338 N.W.2d 256 (Minn. 1983), apply to nonresident UIM coverage. We answer the district court's question in the negative.
FACTS
Respondent Mark O. Ziegelmann is a North Dakota resident who was injured in January 1998 in a motor-vehicle accident that occurred in Minnesota. At the time, Ziegelmann was a passenger in his truck, which was driven by his brother, Terry Ziegelmann. The truck collided with a vehicle driven by David Pearce.
Pearce was insured under a policy with Allstate with liability-coverage limits of $50,000. Ziegelmann's coverage on his North Dakota vehicles was with appellant National Farmers Union Property and Casualty Companies (National Farmers).
The policy included underinsured-motorist (UIM) coverage and an exhaustion-of-liability clause:
With regard to . . . an underinsured motor vehicle, we will make payment provided . . . he limits of all bodily injury liability policies and bonds that apply have been exhausted by payment of settlements or judgments, or such limits where the remaining part of them have been offered to the insured person in writing.
This clause is consistent with North Dakota law, which states that UIM coverage does not apply " ntil the limits of all bodily injury liability policies and bonds that apply have been exhausted." N.D. Cent. Code § 26.1-40-15.6 (2003).
In November 2002, Ziegelmann's counsel wrote National Farmers, explaining that Ziegelmann had been offered a settlement in the amount of $45,000 from the $50,000 limit for bodily injury under Pearce's insurance policy with Allstate. The letter states, "I am writing to you pursuant to the procedure outlined in Schmidt v. Clothier in order to preserve any underinsured motorist benefits that might be available to Mark Ziegelmann in the future." 338 N.W.2d 256 (Minn. 1983). National Farmers responded by letter dated December 3, 2002, writing:
At this time, it is not our intention to substitute the draft on this claim. We will allow Mr. Ziegelmann to sign any releases deemed necessary to acquire the settlement money.
However, it is our opinion that North Dakota Underinsured Motorist Law would apply on this claim. Mr. Ziegelmann is a resident of North Dakota. His vehicle is primarily garaged in North Dakota and the contract for Underinsured Motorist Coverage was entered with National Farmers Union in the state of North Dakota. North Dakota law prescribes that the entire amount of the underlying insurance must be acquired in order for the insured to qualify for an underinsured motorist claim.
After this exchange, Ziegelmann settled with Allstate for $45,000 and commenced this litigation in Minnesota to recover UIM benefits from National Farmers. For the purposes of this appeal, the parties assume that Ziegelmann's damages exceed $50,000.
National Farmers moved for summary judgment, arguing that under Minn. Stat. § 65B.50, subds. 1, 2 (2002), National Farmers is not required to provide UIM coverage to a nonresident who is injured in an accident in Minnesota. The relevant s
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