STATE OF MINNESOTA
IN COURT OF APPEALS
State Farm Mutual Automobile Insurance Companies,
a foreign corporation,
Filed April 6, 1999
Carlton County District Court
File No. C397656
Michael J. Brose, Brian H. Sande, Doar, Drill & Skow, S.C., 103 North Knowles Avenue, P.O. Box 69, New Richmond, WI 54017 (for appellant)
Brian R. McCarthy, Steven J. Sheridan, Magie, Andresen, Haag, Paciotti, Butterworth & McCarthy, P.A., 1000 Alworth Building, P.O. Box 745, Duluth, MN 55801 (for respondent)
Considered and decided by Klaphake, Presiding Judge, Kalitowski, Judge, and Short, Judge.
In May of 1996, Richard Gorud notified his Illinois automobile insurance provider, State Farm Insurance Company (State Farm), of his impending move to Minnesota. State Farm's agent instructed Gorud to contact a Minnesota agent once he completed his move, but assured Gorud his automobile was "covered" until that time. Two weeks after his move, Gorud was seriously injured in an automobile accident in Wisconsin. Gorud demanded arbitration to recover Minnesota no-fault and uninsured (UM) motorist benefits. Because State Farm denied coverage, Gorud sued, and both parties moved for summary judgment. On appeal from the trial court's grant of summary judgment in favor of State Farm, Gorud argues State Farm is obligated to provide: (1) basic economic loss benefits under the Minnesota No-Fault Act because it "continued" his insurance after his vehicle was principally garaged in Minnesota; and (2) UM benefits because State Farm was required to replace, under the terms of its contract, Gorud's Illinois policy with a Minnesota policy as soon as Gorud notified his agent of his change of address. We affirm.
On appeal from summary judgment, we determine whether genuine issues of material fact exist or whether the trial court erred in its application of the law. Minn. R. Civ. P. 56.03; DHL, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997). While we must view the evidence in the light most favorable to the nonmoving party, the nonmovant must produce specific facts to create an issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552 (1986); Ruud v. Great Plains Supply, Inc., 526 N.W.2d 369, 371 (Minn. 1995). The construction of insurance policies and interpretation of statutes are legal questions, which we review de novo. State Farm Ins. Cos. v. Seefeld, 481 N.W.2d 62, 64 (Minn. 1992); Sullivan v. City of Minneapolis, 570 N.W.2d 8, 9 (Minn. App. 1997).
Minn. Stat. § 65B.49, subd. 1, states:
[N]o insurance policy providing benefits for injuries arising out of the maintenance or use of a motor vehicle shall be issued, renewed, continued, delivered, issued for delivery, or executed in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto * * * requiring the insurer to pay, regardless of the fault of the insured, basic economic loss benefits.(Emphasis added.) The legislature included the word "continued" in this provision to convert policies in existence at the time of the No-Fault Act's enactment. See Cantu, 532 N.W.2d at 263 (noting legislature realized no-fault coverage had to be initiated for all Minnesotans contemporaneously and, as a result, included "continued" in Minn. Stat. § 65B.49, subd. 1); see also Hauer v. Integrity Mut. Ins. Co., 352 N.W.2d 406, 408 (Minn. 1984) (recognizing reformation of all existing policies on effective date of new legislation would be administrative nightmare, subjecting insurers to potential liability years after legislation's enactment). Thus, although the No-Fault Act must be liberally construed to effectuate its purpose of relieving uncompensated automobile accident victims' economic distress, we cannot interpret the Act to automatically convert out-of-state policies once a policyholder moves to Minnesota. See Langenberger v. Dahl, 329 N.W.2d 69, 70 (Minn. 1983) (discussing No-Fault Act's purpose); see also Minn. Stat. § 645.17(1) (1998) (stating court must presume legislature did not intend unreasonable results in drafting laws); Gimmestad v. Gimmestad, 451 N.W.2d 662, 665 (Minn. App. 1990) (noting courts must liberally construe No-Fault Act to effect its stated purposes). The insured must actively renew or transfer its out-of-state policy to a Minnesota policy that includes economic loss benefits. See AMCO Ins. Co. v. Lang, 420 N.W.2d 895, 898-99 (Minn. 1988) (noting word "continued" in No-Fault Act akin to "renewed").
Although Gorud notified State Farm of his impending move, he did not transfer his automobile insurance policy once he completed that move. Moreover, Gorud's vehicle was not in Minnesota when the accident occurred. Cf. Minn. Stat. § 65B.50, subd. 2 (1998) (providing economic loss benefits to insureds with out-of-state policies if automobile accident occurs while vehicle is in Minnesota). Under these circumstances, State Farm's acknowledged coverage of Gorud at the time of his accident was limited to the benefits provided in Gorud's Illinois policy. Gorud is not entitled to economic loss benefits as a matter of law.
Gorud's policy provides, in pertinent part:
When we receive notice that the location of principal garaging of the vehicle * * * has been changed, we have the right to recalculate the premium based on the coverages and rates applicable in the new location. When the change of location is from one state to another and you are a risk still acceptable to us at the time you notify us of change, we shall replace this policy with the policy form currently in use in the new state of garaging.
(Emphasis added.) This provision only requires State Farm to replace a policy when an insured's residence "has been changed" and State Farm has calculated and accepted the insured's new risk. See Art Goebel, Inc. v. North Suburban Agencies, Inc., 567 N.W.2d 511, 515 (Minn. 1997) (noting phrase's ambiguity depends on its assigned meaning in entire document); Carl Bolander & Sons, Inc. v. United Stockyards Corp., 298 Minn. 428, 433, 215 N.W.2d 473, 476 (1974) (recognizing plain language only governs if it is clear and does not "involve an absurdity").
The facts, viewed in the light most favorable to Gorud, indicate Gorud had not yet changed his residence when he contacted his State Farm agent. Under these circumstances, State Farm was not obligated to replace Gorud's policy with a Minnesota policy. See, e.g., Kashmark v. Western Ins. Cos., 344 N.W.2d 844, 847 (Minn. 1984) (concluding delivery of insured's check with new address not sufficient to inform insurer of new residence given insurer's ongoing duty of surveying hundreds of policies). As a matter of law, Gorud is not entitled to UM coverage.