This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. sec. 480A.08, subd. 3 (1996).




Vincent Dziuk, et al.,



State Farm Mutual Automobile Insurance Company,


John Deere Insurance Company,


Wilson Certified Express, Inc.,


American Inter-Fidelity Exchange,


Filed October 6, 1998


Amundson, Judge

Hennepin County District Court

File No. 9618021

Scott C. Baumgartner, Berglund & Varco, Ltd., 2140 Fourth Avenue North, Anoka, MN 55303 (for appellants Vincent and Marian Dziuk)

Robert J. Gilbertson, Robins, Kaplan, Miller & Ciresi, 2800 LaSalle Plaza, 800 LaSalle Avenue, Minneapolis, MN 55402 (for respondent Wilson Certified Express, Inc.)

Michael W. McNee, Andrea E. Reisbord, Cousineau, McGuire & Anderson, 600 Travelers Express Tower, 1500 Utica Avenue South, Minneapolis, MN 55416 (for respondent John Deere Insurance Company)

Richard L. Pemberton, Meagher & Geer, P.L.L.P., 4200 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for respondent State Farm Mutual Automobile Insurance Company)

Considered and decided by Kalitowski, Presiding Judge, Amundson, Judge, and Willis, Judge.



Appellants appeal a summary judgment, claiming: (a) their failure to notify an underinsured motorist (UIM) provider of their settlement with a tortfeasor should not preclude them from recovering UIM benefits because the lack of notice did not prejudice the UIM provider; (b) appellant-driver's insured status under a shipping company's policy, which excluded UIM coverage, should not preclude appellants from recovering UIM benefits under the policy covering the vehicle appellants use for personal transportation; (c) the UIM exclusion in the policy covering the vehicle appellants use for personal transportation violates the reasonable expectations doctrine; and (d) the non-trucking exclusion in the policy covering the truck when not used for trucking purposes creates a coverage gap and is invalid. We affirm.


Appellant Vincent Dziuk, a trucker working for respondent Wilson Certified Express (shipper), was injured in an accident. Appellant Marian Dziuk is Dziuk's wife. Without notifying the shipper, the Dziuks settled with the tortfeasor. Seeking underinsured motorist (UIM) benefits, the Dziuks sued the shipper, the shipper's insurer (respondent American Inter-Fidelity Exchange), the Dziuks' personal auto insurer (respondent State Farm), and the company that covered the truck when it was not being used for business purposes (respondent John Deere). The shipper's insurer was later dismissed. Noting that the insurance coverage the shipper procured to cover Dziuk lacked the UIM coverage required by law, the district court held the shipper potentially liable for the UIM coverage it should have procured. The court then granted all respondents, including the shipper, summary judgment, ruling: (a) the Dziuks' personal insurer did not have to provide coverage because its policy excluded UIM coverage for injuries occurring while the injured party occupied a covered vehicle; (b) the company insuring the truck when it was not used for business purposes did not have to provide UIM coverage because the truck was being used for business when the accident happened; and (c) the Dziuks' failure to notify the shipper of the settlement with the tortfeasor precluded recovery against the shipper. This appeal followed.


On appeal from a summary judgment, appellate courts ask whether there are any genuine issues of material fact and whether the trial court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). We 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). Construction of insurance policies and statutes are legal questions that we review de novo. Garrick v. Northland Ins. Co., 469 N.W.2d 709, 711 (Minn. 1991) (insurance policies); Doe v. State Bd. of Med. Exam'rs, 435 N.W.2d 45, 48 (Minn. 1989) (statutes).

I. Insured Status

The Dziuks argue that the district court erred in holding that the courts-imposed coverage by or through the shipper rendered Vincent Dziuk an "insured" for purposes of UIM coverage, thereby rendering inapplicable the policy covering the vehicle he and his wife use for personal transportation.

If at the time of the accident the injured person is occupying a motor vehicle, the limit of liability for [UIM coverage] available to the injured person is the limit specified for that motor vehicle. However, if the injured person is occupying a motor vehicle of which the injured person is not an insured, the injured person may be entitled to excess insurance protection afforded by a policy in which the injured party is otherwise insured.

Minn. Stat. § 65B.49, subd. 3a(5) (1992).

Here, while the shipper's liability policy did not provide UIM coverage, the district court required the shipper to provide that coverage, noting (a) the shipper was the "owner" of the truck under the No-Fault Act; (b) the truck was primarily garaged in Minnesota; and (c) owners of vehicles primarily garaged in Minnesota must provide UIM coverage for those vehicles. See Minn. Stat. §§ 65B.43, subd. 4 (1992) (defining "owner" in manner to include shipper), 65B.49, subd. 3a(2) (1992) (requiring "owners" of vehicles principally garaged in Minnesota to provide UIM coverage); see also Laurich v. Emasco Ins. Co., 455 N.W.2d 527, 528-29 (Minn. App. 1990) (requiring trucking company engaging driver to provide UIM coverage when that coverage is not included in coverage it purchased). Court-imposed coverage is sufficient to satisfy the No-Fault Act. See Jablonski v. Mutual Serv. Cas. Ins. Co., 408 N.W.2d 854, 858-59 (Minn. 1987) (where person had coverage lacking UIM coverage, court stated that if UIM coverage was imposed by law, resulting combination of contracted-for and court-imposed coverages would make person "insured" under policy that complied with No-Fault Act). Thus, the existence of court-imposed UIM coverage makes the policy covering the vehicle the Dziuks use for personal transportation inapplicable under Minn. Stat. § 65B.49, subd. 3a(5).[1]

II. Failure to Notify UIM Provider

An insured's failure to notify his UIM provider of the insured's settlement with a tortfeasor creates a presumption of prejudice to UIM insurer which, if not rebutted, forfeits the insured's right to pursue his UIM insurer for UIM benefits. American Family Mut. Ins. Co. v. Baumann, 459 N.W.2d 923, 927 (Minn. 1990). Here, the Dziuks did not notify the shipper of the settlement, and the district court ruled that they had forfeited their right to seek UIM benefits from the shipper by failing to present any evidence whatsoever to rebut the presumed prejudice.

On appeal, the Dziuks argue that if they had notified the shipper of the settlement and if the shipper tendered its check in place of that of the tortfeasor's liability carrier, the coverage available to the Dziuks would have been reduced.[2] The critical question in determining whether an insured forfeits the ability to pursue UIM benefits is whether there is prejudice to the UIM provider. Baumann, 459 N.W.2d at 925 (notice of settlement is required to give UIM insurer suitable opportunity to protect its potential right of subrogation). Therefore, appellant's argument is inadequate to reverse the district court.

Regarding prejudice to the shipper (as UIM provider) the Dziuks argue that, under Elwood v. Horace Mann Ins. Co., 531 N.W.2d 512 (Minn. App. 1995), because the tortfeasor tendered the limits of his liability policy, the shipper was not prejudiced. This argument was not presented to the district court and we do not address it. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (appellate courts address only issues presented to and decided by district court; party may not raise new theory on appeal). Were we to address it however, we would reject it. See Minn. R. Civ. App. P. 103.04 (appellate court may address any issue as justice requires). The Dziuks' settlement with the tortfeasor stripped the shipper (as UIM provider) of its right

to proceed against the tortfeasor for recovery of any amounts the shipper would have had to pay the Dziuks. See Schmidt v. Clothier, 338 N.W.2d 256, 261-62 (Minn. 1983) (holding that because subrogation rights arise only after insurer pays benefits to its insured, if tortfeasor is released before payment by the insurer, "no subrogation rights ever arise").[3]

III. Reasonable Expectations

The insurance policy covering the vehicle the Dziuks used for personal transportation states that it excludes coverage when other UIM coverage is available. The Dziuks argue that invoking this provision in the policy violates the doctrine of reasonable expectations because doing so required the district court to rule that Dziuk was "insured" despite the absence of UIM coverage in the policy procured by the shipper. Further, the Dziuks argue that to have foreseen this event would have required them to have an unreasonable understanding of the relevant policy and statutory provisions. See Atwater Creamery Co. v. Western Nat'l Mut. Ins. Co., 366 N.W.2d 271, 277 (Minn. 1985) ("objectively reasonable" expectations of insurance applicants will be honored, even if policy language would negate those expectations). Because this argument was not made to, or addressed by, the district court, it is not properly before this court and we do not address it. Thiele, 425 N.W.2d at 582.[4]

IV. Gap In Coverage

The policy the Dziuks bought to cover the truck excluded coverage when the truck was (a) "used to carry property in any business[;]" and (b) "used in the business of anyone to whom the auto is rented." The Dziuks argue the district court erroneously read Steele v. Great West Cas. Co., 540 N.W.2d 886 (Minn. App. 1995), review denied (Minn. 1996) to approve such an exclusion because Steele approved a non-trucking exclusion when the exclusion would create no "gap" in coverage, whereas allowing the exclusions here would cause a gap in UIM coverage. See Steele, 540 N.W.2d at 890 (holding that because allowing an exclusion in one policy would create no gaps in coverage, the exclusion was not contrary to public policy)[5]. Here, because the district court found the shipper liable for UIM coverage, there was no "gap" in UIM coverage only a gap in the Dziuks' ability to recover UIM benefits. That gap in the ability to recover benefits, was caused not by the terms of (or a court's reading of) the policies, but by the Dziuks' failure to rebut the presumption of prejudice accompanying the failure to notify the shipper of the settlement with the tortfeasor.

The Dziuks also argue that even if the failure to notify the shipper of the settlement caused them to lose their primary UIM coverage, "there would still remain a gap as to secondary UIM coverage" between the company covering his truck and the company covering the vehicle he and his wife use for personal transportation. Because neither policy is applicable, there is no "gap."


[1] The Dziuks claims that the combination of contracted-for and court-ordered coverages does not create a "policy" providing the required coverages. The statute, however, requires "a contract [or] self-insurance, or other legal means" to create "an obligation to pay the [required] benefits[.]" Minn. Stat. § 65B.43, subd. 15. Ordering the shipper to provide UIM coverage is a "legal means" for assuring that the required benefits are paid.

[2] The reason for this assertion is unclear. See Washington v. Milbank Ins. Co., 562 N.W.2d 801, 805-06 (Minn. 1997) (UIM carrier's substitution of its payment for that of tortfeasor's liability carrier allows UIM carrier to maintain the claimant's tort action and recoup the amount of the substitution payment from the tortfeasor's liability carrier).

[3] In a reply brief, the Dziuks claim their failure to notify the shipper of the settlement should not preclude them from recovering UIM benefits because the shipper was not identifiable as the UIM carrier until after the district court held the shipper liable to provide that coverage. This argument was not made in the Dziuks' brief on the merits and is not properly before the court. See McIntire v. State, 458 N.W.2d 714, 717 n.2 (Minn. App. 1990) (arguments not made in appellant's brief are waived and may not be revived in a reply brief), review denied (Minn. Sept. 28, 1990), cert. denied 498 U.S. 1090 (1991). Also, had the Dziuks tried to notify the shipper, the lack of a UIM carrier would have been revealed and the problem could have been resolved in a declaratory judgment action.

[4] Were we to address the argument under rule 103.04, however, we would reject it. The Dziuks question whether it was reasonable to have foreseen that any potential UIM coverage available from the policy covering the vehicle they use for personal transportation would be negated by the district court's imposition of UIM coverage. This is essentially an argument that it was unreasonable for the Dziuks to assume the district court would apply the law (which required the UIM coverage to be imposed). Not only can we not render such a ruling, but, as noted above, had Dziuk attempted to notify a UIM insurer of the settlement with the tort feasor, a declaratory judgment action would have resolved this problem.

[5] Cf. National Indem. Co. of Minnesota v. Ness, 457 N.W.2d 755, 758 (Minn. App. 1990) (rejecting a reasonable expectations challenge to non-trucking exclusion, stating "[w]e agree with the trial court's conclusion that `the * * * policy issued to [the driver] contained a valid limitation of coverage, limiting liability under that policy to `bobtailing' only'") (footnote omitted), review denied (Minn. Sept. 14, 1990).