This opinion will
be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
IN COURT OF APPEALS
Daniel Morales, et al.,
Railroad Salvage & Restoration, Inc.,
February 6, 2007
File No. 27CV0510249
Robert E. Kuderer, Stacey A. Nilsen, Johnson & Condon,
P.A., Suite 600, 7401 Metro Boulevard, Minneapolis, MN 55439-3034 (for
Douglas E. Schmidt, Schmidt Law Firm, Suite 200, Fazendin
Building, 1421 Wayzata Boulevard East, Wayzata, MN 55391 (for appellant)
and decided by Stoneburner,
Presiding Judge; Halbrooks,
Judge; and Huspeni,
U N P U B L I S H E D O P I N I O N
In this declaratory-judgment action,
appellant-insured challenges summary judgment granted to respondent-insurer,
arguing that the district court erred in determining that, as a matter of law,
exclusions in a workers’ compensation policy precluded coverage for appellant’s
employee, who was allegedly injured in Minnesota. We affirm.
Appellant Railroad Salvage &
Restoration, Inc. (Railroad Salvage) is a Missouri corporation that builds, maintains,
removes, and salvages railroad track in several states. Railroad Salvage’s only office is located in Missouri.
Daniel Morales was hired by the
foreman at a Railroad Salvage jobsite in Arkansas. Morales became part of a roving crew that
went from jobsite to jobsite. Morales
worked in Arkansas, Illinois,
and Minnesota. Railroad Salvage’s payroll records indicate
that Morales was in Missouri
for no more than four days during the time that he worked for Railroad Salvage. Morales was allegedly injured while working
for Railroad Salvage in Minnesota.
At the time Morales was injured,
Railroad Salvage was insured under a Workers Compensation and Employers
Liability Policy (the policy) issued by respondent Travelers Commercial
Casualty Company (insurer). Railroad
Salvage sought workers’ compensation coverage for Morales, and insurer brought
this action seeking a declaration that it had no duty to defend or indemnify Railroad
Salvage for Morales’s alleged injury under the policy.
The policy contains a “Missouri
Limited Other States Endorsement” providing limited coverage “in situations
when a Missouri employee is entitled to
workers’ compensation benefits of a state other than Missouri.”
“Missouri [e]mployee” is defined in the
policy as “an individual who is an employee of a Missouri
and who also physically works at or out of a physical Missouri location on a regular basis.” The policy, in relevant part, excludes
coverage for “[a]ny employee unless his/her employment was principally
localized in Missouri [exclusion B(1)]; or . . .
[a]ny out of state employees who are hired to perform work in a state other
[exclusion B(3)] . . . .”
The district court granted insurer’s
motion for summary judgment, concluding that, as a matter of law, exclusions
B(1) and B(3) applied to exclude coverage.
This appeal followed.
E C I S I O N
“On an appeal from summary judgment,
we ask two questions: (1) whether there are any genuine issues of material fact
and (2) whether the [district] court erred in [its] application of the
law.” State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).
If there are no material facts in dispute, we review de novo the
district court’s interpretation of the insurance contract and its application
to the facts. Smith v. State Farm Fire and Cas. Co., 656 N.W.2d 432, 435 (Minn. App. 2003). “In an action to determine coverage under an
insurance policy containing an exclusion clause, the insurer bears the burden
of proving the exclusion bars coverage.”
Id.at 436. “We construe insurance
contracts as a whole and give unambiguous language its plain and ordinary
meaning.” State Farm Ins. Cos. v. Seefeld, 481 N.W.2d 62, 64 (Minn. 1992). In reviewing summary judgment, we must view
the evidence in the light most favorable to the party against whom judgment was
granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).
Railroad Salvage first
argues that the district court erred in failing to view the facts in a light
most favorable to Railroad Salvage, as evidenced by its ruling that Morales was
an out-of-state employee. We disagree
and find no merit in Railroad Salvage’s argument that, as a matter of law,
Morales was a “Missouri
employee” as defined in the policy.
Railroad Salvage’s argument rests in
part on its assertion that Morales was hired in Missouri
as demonstrated by evidence that Morales’s employment contract was accepted in Missouri. But we find no merit in the argument that the
location of the contract formation is determinative of whether Morales was a Missouri employee under
the policy. Even if Morales’s employment
contract was formed in Missouri, Morales does
not meet the policy definition of “Missouri
employee” if he did not work “at or out of a physical Missouri location on a regular basis.” And no evidence supports Railroad Salvage’s
assertions that Morales worked “at or out of a physical Missouri location on a regular basis.”
Railroad Salvage relies on cases
relating to the application of the Minnesota Workers’ Compensation Act (MWCA)
to employees of Minnesota corporations who
were injured while working outside of Minnesota. See
Minn. Stat. §
176.041, subds. 2-3 (2006). In Fitzgerald v. Eco. Lab., Inc., the
supreme court determined that Fitzgerald was covered by the MWCA even though he
lived and worked in a different state because he was employed by a company that
was “localized in the state of Minnesota.” 216 Minn.
296, 298-303, 12 N.W.2d 621, 623-24 (1943).
The holding was based on a long line of cases holding that “where a
business is localized in [Minnesota] it is the purpose of the [MWCA] to
compensate for injuries in a service incidental to its conduct, though
sustained beyond [Minnesota’s borders].”
Id.at 299, 12 N.W.2d at 623 (citations omitted). In Vaughn
v. Nelson Bros. Const., the supreme court held that the MWCA applies to
employees of Minnesota
employers whose work is, by its very nature, transient. 520 N.W.2d 395, 397 (Minn. 1994).
The supreme court concluded that Vaughn’s situation was “reasonably
within the scope of the statutory objective.”
Id. (quotation omitted). These cases might be relevant to an argument about
which state’s workers’ compensation law applies to Morales’s injuries, but that
issue is not before us. We do not find
these cases at all relevant to our analysis of the unambiguous policy language as
applied to the undisputed facts in this case.
Applying the policy language to the
facts of this case, Morales did not work out of a physical Missouri location on a regular basis. He was, at most, in Missouri only four days. Although it was argued to the district court,
the district court did not reach the issue of whether Morales was a “Missouri employee” as
defined in the policy. But it is clear
from the undisputed facts that he was not; therefore, Railroad Salvage’s
argument that Morales could not have been an out-of-state employee because he
was a Missouri
employee is without merit.
We conclude that the same undisputed
evidence that demonstrates, as a matter of law, that Morales did not work “out
of a physical Missouri location on a regular basis” also supports the district
court’s conclusion that coverage is excluded under exclusion B(1) because Morales’s
employment was not “principally localized in Missouri.”
Furthermore, Morales, who has never
been a resident of Missouri, was not in Missouri when he was hired, and he was hired to work in a
state other than Missouri. Therefore, the district court also correctly
concluded that coverage is excluded under exclusion B(3), which excludes
coverage for “any out of state employees who are hired to perform work in a
state other than Missouri.”
Railroad Salvage additionally argues
that the district court failed to appropriately require the insurer to meet its
burden to establish the applicability of the exclusions. See Domtar
v. Niagara Fire Ins. Co., 563 N.W.2d 724, 736 (Minn. 1997) (stating that the insured has
the initial burden of demonstrating coverage and the insurer has the burden of
establishing the applicability of exclusions).
Railroad Salvage asserts that “the insurer has not offered any evidence
that tends to show [that] Mr. Morales’ claim falls under one of the exclusions
in the policy.” But, as discussed above,
the insurer established the applicability of the exclusions.