This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).






U.S. Specialty Insurance Company,





James Courtney Law Office, P.A.,

et al.,



Dale Swapinski, as trustee for the

heirs and next of kin of

Jill N. Townsend-Swapinski,




Filed May 28, 2002

Klaphake, Judge

Harten, Judge, dissenting


St. Louis County District Court

File No. C600601605


Michael C. Lindberg, Susan E. Gustad, Johnson & Lindberg, P.A., 7900 International Drive, Suite 960, Minneapolis, MN  55425-1582 (for appellant)


Randy G. Gullickson, Anthony Ostlund & Baer, P.A., 3600 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN  55402 (for respondents Courtney Law Office, et al.)


Charles T. Hvass, Jr., Hvass, Weisman & King, Chartered, 100 South Fifth Street, Suite 450, Minneapolis, MN  55402; and


Phillip Gainsley, 701 Fourth Avenue South, Suite 527, Minneapolis, MN  55415-1810 (for respondent Swapinski)


            Considered and decided by Harten, Presiding Judge, Klaphake, Judge, and Anderson, Judge.

U N P U B L I S H E D   O P I N I O N


            Appellant U.S. Specialty Insurance Company challenges the district court’s determination that its aircraft liability policy exclusions were void as to respondent Jill N. Townsend-Swapinski.  Appellant also challenges the court’s award of attorney fees to respondent Townsend-Swapinski.  Because we conclude that the exclusions violate Minn. Stat. § 60A.081 (2000), and that the policy provides for payment of attorney fees, we affirm.


            Appellant challenges the district court’s determinations that exclusions in its aircraft liability policy violate Minn. Stat. § 60A.081 (2000), and that the policy requires appellant to pay its insured’s attorney fees.  Both determinations are reviewed de novo.  See Am. Family Ins. Group v. Schroedl, 616 N.W. 2d 273, 277 (Minn. 2000) (statutory construction is question of law subject to de novo review); Iowa Kemper Ins. Co. v. Stone, 269 N.W. 2d 885, 886-87 (Minn. 1978) (construction of insurance policy is question of law subject to de novo review).

            Appellant issued an aircraft liability policy to James Courtney and respondent James Courtney III Law Office, P.A. (the law office).  Courtney and his employee, respondent Townsend-Swapinski, were killed when the insured aircraft crashed en route to a professional engagement.  Other respondents, the heirs and next of kin of respondent Townsend-Swapinski, brought a wrongful death action against respondent Marcia Courtney, the personal representative of Courtney’s estate.  All respondents entered into a Miller-Shugart agreement whereby respondent Townsend-Swapinski’s heirs and next of kin agreed to recover from only appellant.

            Appellant then sought a declaratory judgment that it had no duty to defend or indemnify because of the following two exclusions in its policy.

3.         Who is Not Protected

            Your bodily injury and property damage coverage does not protect:

            a.         Employees

                        Any employee for injuries to any person who is in the course and scope of employment by the same employer[.]


            * * * *


4.         What is Not Covered

            We do not cover any

            * * * *

            b.         Employees

                        Bodily injury to any person in the course and scope of employment either by you or by anyone we protect for any claim against you, against anyone we protect or against a fellow employee[.]


(Emphasis in original.)  The district court found the exclusions void because they violated the following provision of Minn. Stat. § 60A.081, subd. 2:

[N]o policy of insurance issued or delivered in this state covering an aircraft equipped with passenger seats and covering liability hazards shall be issued excluding coverage for injury to or death of passengers or nonpassengers * * * .


            “When interpreting a statute, we must determine whether its language is clear or ambiguous.”  Scheibel v. Ill. Farmers Ins. Co., 615 N.W.2d 34, 38 (Minn. 2000) (citation omitted).  We see no ambiguity in this statute as it applies to respondent Townsend-Swapinski.  “A statute is only ambiguous when the language therein is subject to more than one reasonable interpretation.”  Schroedl, 616 N.W.2d at 277 (citations and quotations omitted).  There can be only one reasonable interpretation of the phrase “no policy * * * shall be issued excluding coverage for injury to or death of passengers or nonpassengers * * * .”  Therefore, appellant’s exclusions of coverage for injury to or death of respondent Townsend-Swapinski, who was a passenger in the covered aircraft, are void.

            Appellant relies on RLI Ins. Co. v. Pike, 556 N.W.2d 1, 3 (Minn. App. 1996) (holding that named insureds were not passengers within context of Minn. Stat. § 60A.08), review denied (Minn. Jan. 29, 1997).  Appellant would extend the holding in Pike to argue that employees also are not “passengers.”  The policy in Pike, like the policy here, was

liability insurance, providing protection to named insureds against claims by third parties--passengers and nonpassengers--harmed as a result of the operation of the aircraft. [The claimant] was not a third party; he was a named insured on the liability policy * * * .


Id.  Here, the claimant is a third party, not a named insured.  Thus, appellant’s reliance on Pike is misplaced.

            Appellant also argues that the exclusivity provision of the Workers’ Compensation Act (the act) permits it to exclude coverage for employees injured in the course and scope of their employment.  See Minn. Stat. § 176.031 (2000) (employer’s liability under act is exclusive and takes place of any other liability to employees or those entitled to recover for their injury or death).  But respondent Townsend-Swapinski’s suit included a claim of gross negligence on the part of co-employee James Courtney.  See Minn. Stat. § 176.061, subd. 5(c) (2000) (employee liable for co-employee’s injury resulting from employee’s gross negligence).  Because this is a Miller-Shugart settlement, liability issues are not litigated except as they relate to the reasonableness of the settlement.  Alton M. Johnson Co. v. M.A.I., 463 N.W.2d 277, 279 (Minn. 1990).  Because a claim based on gross negligence is not precluded by the act and appellant’s policy covers gross negligence claims, appellant may not claim that the act allows it to always exclude coverage for injuries occurring in the course and scope of employment. 

            We therefore affirm the district court and hold that aircraft liability policy exclusions of coverage for injuries to or deaths of employees are void.

            Appellant next argues that the district court erroneously ordered it to pay respondent $42,587.28 in attorney fees.  The policy provides that:  “We will * * * [r]eimburse you and anyone we protect for all reasonable expenses incurred at our request * * * .”  This coverage was included in the policy because of the following mandate set forth in Sec. Mut. Cas. Co. v. Luthi, 303 Minn. 161, 171, 226 N.W. 2d 878, 885 (1975):[1]

            To deny an insured the legal fees incurred in establishing coverage would work a substantial hardship in many instances.  The insured would be compelled to bear litigation costs in situations where he contracted in order to avoid just such an expense.  We hold * * * that [the insured] may recover its attorneys fees incurred in defending the declaratory judgment action as “expenses incurred at the Company’s request.”


The attorney fees here were reasonable expenses incurred by appellant’s insured at appellant’s request, and appellant is liable for them. 

            Because Minn. Stat. § 60A.081 clearly prohibits aircraft liability insurance policies from excluding coverage for injuries to or death of passengers or nonpassengers, the exclusions at issue here are void.  Because appellant’s policy provides for reimbursement of reasonable expenses incurred by the insured at the insurer’s request, the insurer must reimburse respondents’ reasonable attorney fees incurred to establish coverage.


HARTEN, Judge (dissenting)

The majority affirms on the grounds that the exclusions violate Minn. Stat. § 60A.081, subd. 2 (2000).  I would reverse on the ground that the exclusions comport with the Workers’ Compensation Act, (WCA), specifically with Minn. Stat. § 176.031 (2000):

The liability of an employer prescribed by this chapter is exclusive and in the place of any other liability to such employee, personal representative, surviving spouse, parent, any child, dependent, next of kin or other person entitled to recover damages on account of such injury or death.


Moreover, Minn. Stat. § 176.041 (2000) lists 21 classes of persons to whom Minn. Stat. § 176.031 does not apply, and employees traveling in aircraft as part of their employment are not among those listed.  The majority in effect adds employees who are airline passengers to the list set out in Minn. Stat. § 176.041.

RLI Ins. Co. v. Pike, 556 N.W.2d 1 (Minn. App. 1996), review denied (Minn. Jan. 29, 1997) construed Minn. Stat. § 60A.081, subd. 2 (1994) and 360.92 (1994) and rejected the view that use of “passengers” was all-inclusive.  

The statute[] require[s] coverage for injury to or the death of passengers and nonpassengers.  But they do not mandate coverage for “all” passengers or define “passengers” to include named insureds.  We will not read those terms into sections 60A.081 and 360.92, because this court cannot supply that which the legislature has omitted or overlooked.


Id. at 3 (citation omitted).  Analogously, the statutes do not define “passengers” to include “employees injured within the course of their employment.”  RLI supports upholding the exclusions.  Other caselaw supports upholding exclusions that comport with the WCA.  See, e.g., Peterson v. Kludt, 317 N.W.2d 43, 48-49 (Minn. 1982) (holding that “cross-employee” exclusion in policy on delivery truck in which employee was injured was valid and that workers’ compensation coverage precluded employee injured in the course of employment from recovering under his own uninsured motorist coverage.)

            The majority claims that respondents’ workers’ compensation coverage would not have precluded their recovery under appellant’s policy if James Courtney had been found grossly negligent.  While this is true, such a finding was never made, and respondents themselves foreclosed the possibility of such a finding by utilizing a Miller-Shugart settlement.  Respondents have not admitted even negligence, much less gross negligence.  Their stipulated facts state only that the aircraft was piloted by James Courtney when it departed, that it was destroyed by impact with the ground and by fire, and that Courtney and Townsend-Swapinski were both fatally injured.  Respondents, having settled their case, cannot recover from appellant on the ground that a trial would have resulted favorably for them.[1]

Because appellant’s policy could not provide coverage for passenger-employees injured in the course of their employment without violating the WCA, exclusions of that coverage are not void. 

[1] Appellant contends that Luthi was implicitly overruled by Am. Standard Ins. Co. v. Le, 551 N.W. 2d 923 (Minn. 1996).  We disagree because Le did not involve a policy provision providing payment for fees incurred at the insurer’s request.


[The following footnote is from dissenting opinion.]

[1] Analogously, appellant cannot invoke its “intentional acts” exclusion on the ground that a trial might have shown that James Courtney or Townsend-Swapinski acted intentionally.  See Pike, 556 N.W.2d at 4 (Minn. Stat. § 60A.081, subd. 1, list of permitted exclusions omits “obviously acceptable exclusions, such as an exclusion for intentional acts).