A05-1060

Amphat Songkhamdet,

Appellant,

vs.

American Family Insurance Group,

Respondent.

Filed May 9, 2006

Affirmed

Randall, Judge

Dissenting, Minge, Judge

Pipestone County District Court

File No. C0-04-327

Todd A. Johnson, Johnson & Bannon, PLLP, 2125 South First Street, P.O. Box 1334, Willmar, MN 56201 (for appellant)

Jay Warren Ramos, William S. Partridge, Farish Law Office, 201 North Broad, Suite 107, P.O. Box 550, Mankato, MN 56002-0550 (for respondent)

Considered and decided by Minge, Presiding Judge; Toussaint, Chief Judge; and, Randall, Judge.

U N P U B L I S H E D O P I N I O N

RANDALL, Judge

The district court issued summary judgment in favor of the underinsured-motorist insurer in this dispute as to uninsured-motorist (UIM) coverage following an automobile accident in which appellant, a passenger, sustained injuries. Appellant argues that because of the presence of a Myers exclusion in the policy of the vehicle in which he was a passenger, he was not precluded from proceeding against his father’s policy as a resident insured for UIM coverage under respondent insurer’s policy. Because the district court properly determined that UIM coverage under the host driver’s policy was available to appellant for the negligence of the other driver in the accident, and the policy limits of appellant’s father’s policy did not exceed the limits of the policy of the host driver, we affirm.

FACTS

Appellant Amphay Songkhamdet suffered substantial injuries when a car in which he was riding, driven by Ki Navongsa, collided with a car driven by Sheryl Goebel on a snow-covered highway in Pipestone County. Appellant qualified as a resident insured under his father’s policy with respondent American Family, which had UIM coverage with a $30,000 policy limit. The Navongsa vehicle had liability coverage with a $30,000 policy limit and UIM coverage with a $30,000 policy limit. The latter policy contained a Myers exclusion, providing that the vehicle identified as being insured under a policy does not qualify as an “underinsured” vehicle under that policy. Myers v. State Farm Auto. Ins. Co., 336 N.W.2d 288, 292 (Minn. 1983). The Goebel vehicle had liability coverage up to $100,000.

Appellant sued Navongsa and Goebel in negligence, seeking damages for agreed-on medical expenses exceeding $200,000. Appellant settled his claims against both parties for a total of $45,000, receiving $30,000 from Navongsa’s liability policy and $15,000 from Goebel’s liability policy. Before settling the claims, appellant informed respondent of the agreement pursuant to Schmidt v. Clothier, 338 N.W.2d 256 (Minn. 1983); respondent declined to substitute its check. The settlement agreement reserved appellant’s right to seek uninsured or underinsured benefits from American Family or any other carrier.

Appellant sought UIM benefits under his father’s UIM coverage with American Family. He did not, however, seek UIM benefits through Navongsa’s policy.

After American Family denied the UIM claim, appellant sought a declaratory judgment that he was entitled to UIM benefits through his father’s policy. On cross-motions for summary judgment, the parties agreed, for purposes of summary judgment, that each of the drivers was underinsured in an amount exceeding $30,000. The district court granted summary judgment for American Family. This appeal followed.

D E C I S I O N

On appeal from summary judgment, this court determines whether any genuine issues of material fact exist and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). Because the facts are undisputed, the only issue for review involves the legal interpretation of the Minnesota No-Fault Act. Schons v. State Farm Mut. Auto. Ins. Co.,621 N.W.2d 743, 745 (Minn. 2001). An appellate court reviews the interpretation of a statute de novo. Hibbing Educ. Ass’n v. Pub. Emp. Relations Bd., 369 N.W.2d 527, 529 (Minn. 1985).

An underinsured-motorist claimant must first seek benefits from the policy issued to the driver of the vehicle that the claimant was occupying at the time of the accident. Minn. Stat. § 65B.49, subd. 3a(5) (2004); see also Thommen v. Illinois Farmers Ins. Co., 437 N.W.2d 651, 653 (Minn. 1989) (stating that passenger must look first to the UIM coverage afforded by the driver’s insurance). Thus, the limit of liability for underinsured-motorist coverage available to an injured person occupying a motor vehicle at the time of an accident is the limit specified for that vehicle. Minn. Stat. § 65B.49, subd. 3a(5). But under subdivision 3a(5), an injured person who is occupying a vehicle of which he or she is not an insured may, in certain circumstances, “be entitled to excess insurance protection afforded by a policy on which the injured party is otherwise insured.” This excess protection is limited to covered damages sustained. Id. Further, that protection “is available only to the extent by which the limit of liability for like coverage applicable to any one motor vehicle listed on the automobile insurance policy of which the injured person is an insured exceeds the limit of liability of the coverage available to the injured person from the occupied motor vehicle.” Id.

In interpreting subdivision 3a(5), the Minnesota Supreme Court has held that the No-Fault Act precludes recovery of UIM benefits under an insured’s policy when the limits of that policy do not exceed the limit of UIM benefits available from host driver’s policy. Schons, 621 N.W.2d at 748. The supreme court in Schons stated the purpose of subdivision 3a(5) is “connect[ing] an injured passenger’s total UIM benefit recovery to the limit specified for the motor vehicle the passenger occupied,” with an exception occurring when the passenger has preselected a UIM coverage level greater than the amount covering the host vehicle. Schons, 621 N.W.2d at 747.

The district court cited Schons and determined that appellant would be entitled to recover UIM benefits from American Family under his father’s policy only if the UIM benefits under Navongsa’s policy were “unavailable to [appellant] because the UIM limit under [appellant’s] father’s policy do[es] not exceed the UIM benefits of… Navongsa’s policy.” The district court determined that (1) Goebel’s liability for Songkhamdet’s injuries had been established by his settlement with Goebel in the amount of $15,000 and his pleadings and admissions; and (2) UIM benefits under Navongsa’s policy were available to appellant for Goebel’s liability. Therefore, the district court concluded that appellant was not entitled to UIM benefits under his father’s UIM policy.

Appellant challenges the district court’s summary judgment on the grounds that the Navongsa policy contained a Myers exclusion, which prevents an occupied motor vehicle from being considered an “underinsured motor vehicle” for purposes of the occupied vehicle’s UIM policy. See Myers, 336 N.W.2d at 291; see also Davis v. Am. Family Mut. Ins. Co., 521 N.W.2d 366, 369 (Minn. App. 1994) (holding that passenger injured in single-car accident could recover UIM benefits under his own UIM policy when Myers exclusion precluded him from recovering UIM benefits under policy of negligent driver). The reasoning behind the Myers exclusion is that allowing an injured party to collect both liability and UIM damages resulting from the negligent use of a motor vehicle would be to convert the first-party UIM coverage into third-party insurance, “treating it essentially the same as third-party liability coverage.” Myers, 336 N.W.2d at 291.

But appellant was injured in a multi-vehicle accident, giving rise to two UIM claims: one each against Navongsa and Goebel, who were, by stipulation, both operating underinsured vehicles. In a multi-vehicle accident, the presence of a Myers exclusion in the host vehicle’s policy does not preclude the injured passenger from recovering UIM benefits under that policy with respect to the other driver’s underinsured status for the second driver’s apportioned share of liability. Lahr v. Am. Family Mut. Ins. Co., 551 N.W.2d 732, 733 (Minn. App. 1996), review dismissed, (Minn. Nov. 15, 1996); see also Thommen,437 N.W.2d at 653 (stating that exclusion of insured’s car from qualifying as “underinsured” precludes passenger from UIM benefits “if [the driver’s] negligence was the sole cause of the accident” ). Thus, the Myers exclusion in Navongsa’s policy does not prevent appellant from seeking coverage under that policy for the negligence of Goebel, the other driver in the accident. See, e.g., Schons, 621 N.W.2d at 745 (considering application of Minn. Stat. § 65B.49, subd. 3a(5), when injured passenger recovered UIM benefits under host driver’s policy for negligence of other driver involved in accident, despite policy exclusion for negligence of host driver).

Appellant nonetheless maintains that because of the Myers exclusion in the Navongsa policy, any coverage available to him under his father’s policy is not “like” any coverage available to him under Navongsa’s policy, so that he is permitted under subdivision 3a(5) to seek excess UIM benefits under his father’s policy. But the Schons court has determined that “like coverage’ simply refers to UIM coverage” and that “the statute only requires a comparison between UIM coverage limits on the host driver’s vehicle and UIM coverage on the passenger’s own vehicle.” Schons, 621 N.W.2d at 747 n.1. Thus, when UIM coverage in the host driver’s policy is available for the UIM claim based on a second driver’s negligence, that coverage constitutes “like coverage” for the operation of the priority provision of subdivision 3a(5), triggering the policy-limits comparison under that section between the host driver’s UIM policy and the personal UIM policy of the injured passenger.

Therefore, the $30,000 policy limit available to appellant for Goebel’s underinsured negligence under Navongsa’s UIM policy must be compared to the $30,000 policy limit preselected by appellant’s father for his UIM policy. Because those limits are the same, there is no “excess” coverage available under the statute, and the district court properly determined that appellant is precluded from recovering additional UIM benefits under his father’s policy. See Minn. Stat. § 65B.49, subd. 3a(5); Schons, 621 N.W.2d at 747-48.

Appellant argues that in Schons, unlike this case, the injured passenger had already recovered UIM benefits under the host driver’s policy in the same amount ($50,000) for which she was insured under her own UIM policy. Schons, 621 N.W.2d at 746-47. But the Schons court stated that the priority scheme in subdivision 3a(5) does not require the previous collection of UIM benefits to trigger the comparison of coverage limits: “[T]he third sentence of subdivision 3a(5) …specifically renders it irrelevant whether UIM benefits were paid for [the host driver’s] or [the other driver’s] underinsured negligence, so long as [the host driver’s] UIM coverage was “available” to [the injured party].” Schons, 621 N.W.2d at 747. And the articulated policy behind the priority provisions of subdivision 3a (5), connecting an injured passenger’s total UIM recovery to the specified limit for the motor vehicle the passenger occupied, would be frustrated by allowing a plaintiff to proceed under his own UIM policy without regard to the availability of UIM benefits under the policy of the host vehicle for the underinsured negligence of a second, negligent driver. See id.

Appellant also argues that the language of Minn. Stat. § 65B.49, subd. 4a (2004), entitles him to seek UIM coverage under his father’s policy. That provision limits the maximum liability of an insurer to “the amount of damages sustained but not recovered from the insurance policy of the driver or owner of any underinsured at fault vehicle.” Id. The subdivision also provides that “[i]f a person is injured by two or more vehicles, underinsured motorist coverage is payable when any one of those vehicles meets the [statutory] definition of underinsured motor vehicle….” Id. But the Schons court has determined that subdivision 4a “only ensures that an insurer will not have to pay more than the lesser of the injured party’s uncompensated damages or the UIM limits on the insured’s policy” and remains “separate from subdivision 3a(5)’s priority and limitation scheme.” Schons, 621 N.W.2d at 748. Thus, subdivision 4a does not provide support for appellant’s right to recover UIM benefits under his father’s policy without reference to the priority scheme of subdivision 3a(5).

Appellant asserts that Goebel’s liability was strongly disputed and that he chose to proceed under his father’s policy because liability might not have been established on the Goebel vehicle. But the procedural prerequisite for making a UIM claim is that the underlying case reach the point of settlement or proceed to trial. Theodore J. Smetak, The Minnesota Motor Vehicle Insurance Manual, 393 (3d ed. 2000). The record reflects that appellant settled the tort action with respect to both defendants for $45,000, recovering $15,000 from Goebel’s liability policy and $30,000 from Navongsa’s liability policy. The parties signed an agreed statement of the record indicating their stipulation, for purposes of summary judgment, that each of the drivers was underinsured in an amount exceeding $30,000. They also agreed that appellant incurred medical expenses of over $200,000. Although actual recovery of UIM benefits requires a determination of total damages and an apportionment of fault that renders Goebel “underinsured” with respect to her liability, appellant’s declaratory-judgment action presumes that Goebel was partially at fault and that Goebel’s liability coverage was insufficient to cover her share of appellant’s injuries. Lahr, 528 N.W.2d at 260, 257 n.1. On the record as submitted, appellant has failed to raise or brief any argument that under the principles of comparative fault, the full amount of UIM coverage on the Navongsa vehicle would not be available to appellant for Goebel’s negligence. See Melina v. Chaplin, 327 N.W.2d 19, 20 (Minn. 1982) (stating that issues not briefed on appeal are waived).

Because UIM benefits under Navongsa’s policy were available to appellant for Goebel’s liability, and because a comparison of policy limits under Minn. Stat. 65B.49, subd. 3a(5), between Navongsa’s UIM policy and appellant’s father’s UIM policy reveals no excess coverage, the district court did not err in granting summary judgment for respondent.

Affirmed.

MINGE, Judge (dissenting)

I respectfully dissent. This case is submitted on stipulated facts that are inherently contradictory, confusing and potentially affect the result. Goebel’s liability was settled for $15,000. Goebel’s liability insurance coverage was $100,000. Goebel’s insurer paid the entire claim. To say that Goebel was underinsured, one would have to find her liability, based on her proportion of fault, exceeded her $100,000 of insurance coverage. The stipulation that she was underinsured is contradictory and confusing.

If Goebel is not underinsured, then the host driver’s (Navongsa’s) UIM coverage is not available for two reasons. First, there is a Myers exclusion in Navongsa’s policy that precludes its application to Navongsa’s own underinsured liability. Other than Navongsa, there is no underinsured, liable party in the transaction. Second, neither Schons nor any other case compels us to reach the conclusion that Minn. Stat. § 65B.49, subd. 3a(5) (2004) denies a person with underinsured injuries recovery under her own family policy’s UIM coverage when no other UIM coverage is triggered. We are turning the standard of “availability” of UIM coverage into a metaphysical concept of “existence.” Such an extension of the law undermines the function of UIM coverage.

I would remand for clarification of the underinsured status of Goebel and, if she was in fact not underinsured, for determination of benefits under the policy insuring the Songkhamdet family.