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Nelson v. American Family Insurance Group8/29/2002
Appellant Sharon Nelson commenced this action in Murray County District Court to recover no-fault benefits from respondent American Family Insurance Group. Both parties brought motions for summary judgment. The court granted American Family's motion and dismissed Nelson's claim on the grounds that any recovery would be a double recovery and would frustrate the purpose of the No-Fault Act. The Minnesota Court of Appeals affirmed. We reverse.
Sharon Nelson was involved in an automobile accident in Minnesota on March 2, 1990. At the time of the accident, she was insured by American Family Insurance Group. Following this accident, Nelson received $20,000 in no-fault income loss benefits, the maximum payable under the limits of her American Family policy. Approximately 14 months later, on May 16, 1991, Nelson was involved in a second automobile accident, which occurred in South Dakota. American Family was still Nelson's insurer at the time of the second accident, but this time it denied her no-fault claims in part on the ground that she had not yet returned to work after the first accident.
After being denied no-fault benefits for the second accident, Nelson commenced a personal injury action in South Dakota against the tortfeasor to recover damages for this accident. Coincidentally, Nelson's no-fault insurer, American Family, was also the insurer for the South Dakota tortfeasor. Six years after the accident and three years after bringing her South Dakota action, Nelson prevailed in a jury trial. Nelson v. Erickson, No. 94-1604 (Second Judicial Circuit Court, Minnehaha County, S. D. Mar. 12, 1997) (jury verdict). Along with other damages, the jury awarded Nelson $37,000 for past income loss and American Family paid this amount in full in its capacity as the tortfeasor's insurer. Nelson's recovery for past income loss was subject to a one-third contingency fee arrangement with her attorney, resulting in Nelson receiving a net amount of $24,666.67.
Nelson then commenced this action in Minnesota against American Family to recover future medical expenses and past income loss caused by the second accident. American Family asserted the defenses of claim preclusion, issue preclusion, accord and satisfaction, and payment. The parties settled Nelson's no-fault claims for future medical expenses, but were unable to resolve her claim for past income loss. The parties subsequently brought cross motions for summary judgment on stipulated facts. The district court granted American Family's motion and dismissed Nelson's complaint. The court explained its reasoning in a memorandum, stating that (1) Nelson had a no-fault policy limit of $20,000 for loss of income; (2) Nelson had been awarded $37,000 for past income loss; and (3) any further award or recovery for loss of income would frustrate the purpose of the No-Fault Act by allowing a double recovery.
Nelson appealed, characterizing her action as a simple breach of contract case and asserting that the No-Fault Act does not prevent a double recovery in every case. Nelson specifically argued that even if no-fault benefits had been paid prior to the verdict, there would be no comparable set-off in South Dakota because South Dakota does not have offset and subrogation provisions comparable to those found in Minnesota's No-Fault Act. Nelson first asserted that she was entitled to receive the entire $20,000 no-fault benefit for past income loss because she had $37,000 of income loss at the time of the South Dakota trial. In the alternative, Nelson argued that she was partially uncompensated for her total $37,000 judgment for past income loss because after subtracting attorney fees, she was left with only $24,666.67 as a net recovery.
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