This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1994).




Dipchan Kissoondath, et al.,



Safeco Insurance Company,


Prudential Insurance Company,


Liberty Mutual Insurance Company,


Filed November 19, 1996


Parker, Judge

Hennepin County District Court

File No. 958992

J. Richard Baldwin, 301 Degree of Honor Building, 325 Cedar Street, St. Paul, MN 55101 (for respondents Dipchan Kissoondath, et al.)

Brian A. Wood, Jeanne H. Unger, Rider, Bennett, Egan & Arundel, L.L.P., 2000 Metropolitan Centre, 333 South Seventh Street, Minneapolis, MN 55402 (for respondent Prudential Insurance Co.)

Michael S. Kreidler, Stich, Angell, Kreidler, Brownson & Ballou, P.A., 250 Second Avenue South, #120, Minneapolis, MN 55401-2122 (for appellant)

Considered and decided by Parker, Presiding Judge, Peterson, Judge, and Willis, Judge.



Respondent Dipchan "Randy" Kissoondath owned a 60 percent interest in Randy's Interiors/Restaurant Seating, Inc. (Randy's Interiors). Randy's Interiors owned a van that Kissoondath and his wife used for both business and personal purposes. Kissoondath suffered injuries as a passenger in Michael Heinonen's car when the Heinonen vehicle was rear-ended by a taxi cab. Following a jury verdict for damages of $1,675,868 against the taxi cab company (whose liability coverage limit of $350,000 was paid), Kissoondath settled his underinsured motorist (UIM) claim against Heinonen's insurer, Safeco, for its UIM limit of $50,000.

Kissoondath brought the present action against respondent Prudential Insurance Company and appellant Liberty Mutual Insurance Company. The Prudential policy on the Kissoondath family automobile (not the van) listed Kissoondath as a named insured and had a UIM limit of $300,000. The Liberty Mutual policy on the van owned by Randy's Interiors listed Randy's Interiors as the named insured and had a UIM limit of $500,000. The policy, however, identified the named insured as an "individual," thus allegedly creating an ambiguity. Following a hearing on cross-motions for summary judgment, the district court held Liberty Mutual liable for $450,000 of UIM coverage. On appeal, Liberty Mutual argues (1) Kissoondath is not a named insured under the Liberty Mutual policy; and (2) if Kissoondath is held to be a named insured under the Liberty Mutual policy, then liability must be allocated on a pro rata basis between Prudential and Liberty Mutual. We affirm.


An appellate court, in reviewing a grant of summary judgment, must determine whether there are any genuine issues of material fact and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). A reviewing court is not bound by and need not defer to a district court's decision on a purely legal issue. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).

1. The court employed a reverse pierce of the corporate veil in concluding that Kissoondath was a named insured. While also discussing reformation of contracts, the district court relied principally upon the reverse pierce theory applied in Roepke v. Western Nat'l Mut. Ins. Co., 302 N.W.2d 350 (Minn. 1981). The district court also implied that ambiguity existed in the Liberty Mutual policy:

Lending further support to this conclusion is the fact that Minnesota law "embraces a strong policy of extending coverage rather than allowing it to be restricted by ambiguous or confusing language." Boroos, 345 N.W.2d at 790.

We conclude that neither the theory of reverse pierce nor the theory of reformation is applicable to this case. Instead, we affirm by application of the principle of ambiguity in policy language. We address this on appeal because ambiguity is a purely legal issue decisive of this entire matter, and there is no possible advantage or disadvantage to either party in not having a prior specific ruling. See Harms v. Independent Sch. Dist. No. 300, 450 N.W.2d 571, 577 (Minn. 1990) (an appellate court may decide an issue not determined by a trial court when that question is decisive and there is no possible advantage or disadvantage to either party in not having a prior ruling on the question; neither party is disadvantaged where the facts are undisputed); Diebold, Inc. v. Roadway Express, Inc., 538 N.W.2d 150, 152 (Minn. App. 1995).

Whether policy language is ambiguous is a question of law. Davis by Davis v. Outboard Marine Corp., 415 N.W.2d 719, 723 (Minn. App. 1987), review denied (Minn. Jan. 28, 1988). Policy language is ambiguous where it is reasonably susceptible to more than one interpretation. ICC Leasing Corp. v. Midwestern Mach. Co, 257 N.W.2d 551, 554 (Minn. 1977). Courts must construe ambiguous language in an insurance policy against the insurer and in favor of the insured. Hubred v. Control Data Corp., 442 N.W.2d 308, 310 (Minn. 1989). In interpreting a policy, a court must not create an ambiguity where none exists. Columbia Heights Motors, Inc. v. Allstate Ins. Co., 275 N.W.2d 32, 36 (Minn. 1979).

The Liberty Mutual policy lists Randy's Interiors as the "Named Insured." The policy goes on, however, to list the "Named Insured" as an "INDIVIDUAL," suggesting an individual insured. An endorsement to the policy is termed "INDIVIDUAL NAMED INSURED;" although this endorsement is for liability coverage and not UIM coverage, the endorsement creates further confusion as to whether Kissoondath as an individual is a named insured. Accordingly, we conclude the policy is facially ambiguous because it is reasonably susceptible to more than one interpretation. Construing the policy against Liberty Mutual as the drafter results in a conclusion that Kissoondath as an individual is a named insured. Thus, we affirm the district court on this ground.

While Liberty Mutual contends it was precluded from bringing forth facts to rebut an ambiguity argument, we believe that no facts could have been presented to explain the facial ambiguity in this policy. Additionally, Liberty Mutual fully argued to this court that, quite simply, no ambiguity existed in the policy.

2. Because Kissoondath is a named insured under the Liberty Mutual policy, we must address the second issue regarding whether Liberty Mutual and Prudential should share the UIM liability on a pro rata basis.

Under Minnesota law, an injured party who is a passenger in a vehicle owned by another must first look to the UIM coverage afforded by the vehicle driver's or owner's policy. Minn. Stat. § 65B.49, subd. 3a(5) (1990); Davis v. American Fam. Mut. Ins. Co., 521 N.W.2d 366, 368-69. In the present case, Kissoondath first looked to and received UIM coverage from Heinonen's insurer, Safeco. The district court properly offset the $50,000 paid by Safeco against the $500,000 UIM limit in the Liberty Mutual policy. See Minn. Stat. § 65B.49, subd. 3a(5).

Next, an injured person who is a passenger in a vehicle owned by another may be entitled to "excess" UIM protection from a policy in which the injured person is otherwise insured. Minn. Stat. § 65B.49, subd. 3(a)(5). As the district court noted, however, Minn. Stat. § 65B.49, subd. 3(a)(5), provides no guidance as to priority for "excess" coverage. While Liberty Mutual argues that the statute specifically spells out how to determine priority of excess coverage, we have been directed to no specific language by which the statute does so. We have studied the statute and find no reference to proration nor any indication of how to prioritize excess UIM coverage. Thus, although the statute mandates that Safeco was primary in this case, it is silent as to which policy is primary as between Liberty Mutual and Prudential, the two insurers providing excess coverage.

The district court decided this case based on the "other insurance" clauses in the Liberty Mutual and Prudential policies. The Liberty Mutual policy contains a "pro rata" other-insurance clause that promises to divide liability with policies of the same priority. The Prudential policy, on the other hand, contains an "excess" other-insurance clause that promises to pay only those damages that are "excess" over amounts payable by any other available insurance. The district court, after examining the language of these policies, held that the polices do not conflict and that Liberty Mutual's UIM coverage is primary to the Prudential policy. The court also concluded that even if the policies were in conflict, consideration of the total policy insuring intent requires that Liberty Mutual's policy be considered primary to the Prudential policy.

"In determining priority among insurers, a court must first look to the "other insurance" clauses of the policies to determine if they are in conflict." Illinois Farmers Ins. Co v. Depositors Ins. Co., 480 N.W.2d 657, 659 (Minn. App. 1992) (citing Integrity Mut. Ins. Co. v. State Auto & Casualty Underwriters Ins. Co, 307 Minn. 173, 174-75, 239 N.W.2d 445, 446 (1976)). We conclude, as did the district court, that no conflict exists between the policies. Prudential's excess coverage language places it on a lower priority than Liberty Mutual's pro rata policy. Because Liberty Mutual's payment of UIM benefits fully compensates Kissoondath for all that he is entitled to, Prudential's obligation to pay "excess" amounts is never triggered.

Even if we were to conclude that the "other insurance" clauses of Liberty Mutual and Prudential conflict, the same result would be reached. Where conflict exists between "other insurance clauses," then priority must be determined based on

the total policy insuring intent as determined by the primary policy risks upon which each policy's premiums were based and as determined by the primary function of each policy. The Minnesota courts examine the policies and determine whether the insurers are concurrently liable on the risk, or one is primarily liable and another only secondarily liable. If they are concurrently liable, each must pay a pro rata share of the loss.

Integrity Mut., 307 Minn. at 174, 239 N.W.2d at 446 (emphasis added) (citations omitted). In looking to the primary policy risks and the primary function of each policy, the Liberty Mutual policy should be considered primary. As the district court reasoned in an alternative holding,

[t]he premiums paid for the [Liberty Mutual] policy were considerably higher than those paid for the Prudential coverage. A greater potential exposure was contemplated by the [Liberty Mutual] policy, and, most importantly, the [Liberty Mutual] policy was issued to cover business-related risks whereas the Prudential policy served as the Kissoondaths' family policy. At the time of the accident, it is not contested that Kissoondath was involved in business-related activities and not personal ones.

Accordingly, even if the policies were seen to conflict, Liberty Mutual's policy would be considered primary to the Prudential policy through inquiry into the total policy insuring intent.

Liberty Mutual contends that this court's decision in Continental Cas. Ins. Co v. Teachers Ins. Co., 532 N.W.2d 275 (Minn. App. 1995), review denied (Minn. July 27, 1995), requires a pro-rata allocation of liability in the present case. In that case, Continental paid uninsured motorist benefits and brought a contribution action against another insurer, Horace Mann. Id. at 276. This court held that because Horace Mann's "other coverage" clause agreed to pay a pro rata share where other insurance applied, Horace Mann was liable to Continental in contribution. Id. at 278. We conclude that Continental does not require a pro rata allocation in the present case. Unlike Horace Mann, which had a "pro rata" clause, Prudential has an "excess" clause. Thus, the basis of the Continental decision, that Horace Mann agreed to pay a pro rata share, is not present in this case.