The opinion of the court was delivered by: Karen E. Schreier Chief Judge
ORDER ON MOTIONS IN LIMINE
The court reserved ruling on several motions in limine at the pretrial conference and indicated it would issue a written opinion in relation to those motions. Because the court's resolution of the first two motions in limine may impact other motions that the parties are briefing, the court issues this order now and will address the remainder of the motions in limine still pending at a later time.
In a diversity case, while the court applies federal procedural rules, it applies the substantive law of the state in which the district court sits. See Ashley County, Arkansas v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009). Here, the court will apply South Dakota substantive law.
I. Policy Definition of "Total Disability"
Both plaintiff and defendants agree that interpretation of insurance policies is a question of law. See Sawyer v. Farm Bureau Mut. Ins. Co., 619 N.W.2d 644, 648 (S.D. 2000). Here, the policy defines "total disability" as follows:
During the first 12 consecutive months of total disability, Total Disability means that you are not able to perform most of the duties of your occupation because of a medically determined sickness or accidental injury and are under the care and treatment of a physician. After the first 12 consecutive months of Total Disability, the definition changes and requires that you not be able to perform the duties of any occupation for which you are reasonably qualified by education, training or experience. You will be required to give us proof of your continuing Total Disability from time to time.
Pursuant to the definition of "total disability," the insurance policy has two different disability periods. During the first disability period, the insured receives benefits if the insured is not able to perform most of the duties of the insured's occupation. This is referred to as an "occupational disability" policy because it requires only that the insured be unable to perform the duties of his or her particular occupation in order to be considered "totally disabled." See Couch on Insurance § 146:3. This period of disability is not at issue because CUNA paid Powell benefits during this period. For the time following this twelve-month period, however, the definition of "total disability" changes and the insured receives benefits only if the insured is not able to perform the duties of any occupation for which the insured is reasonably qualified by education, training, or experience. This is known as a "general disability" policy because disability is defined in terms of the inability of the insured to engage in any occupation. See id. The dispute, here, arises out of the interpretation of "total disability" during this second period of disability.
The South Dakota Supreme Court has determined that the rule of literal construction does not apply to total disability provisions of insurance policies. Instead, such provisions should be construed liberally. More specifically, the South Dakota Supreme Court has consistently held that a general disability policy should not be interpreted to require the insured to be absolutely helpless in order to receive insurance policy benefits. See Lauren v. Automobile Owners' Ass'n, 92 N.W.2d 659 (S.D. 1958); Robinson v. New York Life Ins. Co., 6 N.W.2d 162 (S.D. 1942); and Hale v. Metropolitan Life Ins. Co., 273 N.W. 657 (S.D. 1937).
For example, Hale involved a general disability policy, which stated that "[a]ny employee insured under this plan who shall become wholly and permanently disabled... either by accidental injury or disease, and is thereby permanently, continuously and wholly prevented from pursuing any and all gainful occupation, will be regarded as a claimant." 273 N.W. at 658. The South Dakota Supreme Court determined that total disability as defined in the policy did not mean "absolute helplessness or entire physical disability, but rather an inability to do substantially or practically all material acts in the transaction of the insured's business in his customary and usual manner." Id. at 659. Consistent with this interpretation of "total disability," the court determined that the two efforts made by the insured to maintain himself-selling Fuller brushes and selling Sunday papers-did not preclude a finding that the insured was totally disabled. Id.
Similarly, the South Dakota Supreme Court found in Robinson that the insured under a general disability policy, which stated that if the insured became "so disabled by bodily injury or disease that he is wholly prevented from performing any work, following any occupation, or from engaging in any business for remuneration or profit," was entitled to disability benefits provided for under the policy. 6 N.W.2d at 163. The South Dakota Supreme Court determined that the trial court had properly instructed the jury that "total disability does not mean a condition or absolute helpfulness, rendering the insured unable to perform any work." Id. at 165. The trial court also properly instructed the jury that total disability meant a disability that rendered the insured "unable to perform the substantial and material acts of her occupation in the usual and customary way, or to follow any occupation or engage in any business for remuneration or profit, in the usual and customary way." Id. Finally, the trial court appropriately instructed the jury that "[a]bility to perform some of the duties of [the insured's] occupation, or of any other occupation or business for remuneration or profit, is not sufficient to defeat recovery on the policy." Id.
Also, Lauren, which is the most recent opinion specifically addressing this issue, involved a general disability provision, which stated that an insured would be entitled to benefits if an injury "wholly and continuously disable and prevent the Insured from performing any and every duty pertaining to any business or occupation." 92 N.W.2d at 660. The South Dakota Supreme Court recognized that under total disability provisions, it had continuously rejected the rule of literal construction and instead applied the rule of liberal construction. Id. at 662. In accordance with its precedent, the South Dakota Supreme Court determined that disability under the policy meant a disability "that prevents the insured from performing all duties pertaining to any business or occupation." Id. The court further interpreted disability as used in the policy to mean an "inability to perform any work for compensation of financial value in the insured's regular business or any other pursuit for which he was qualified and which he would be reasonably contemplated to pursue." Id. at 663.
Like Hale, Robinson, and Lauren, the present case involves the issue of interpreting a general disability provision in an insurance policy and thus, the court finds that these cases are controlling South Dakota authority on this issue. The interpretation of a general disability provision in an insurance policy has remained consistent in South Dakota for over fifty years. None of these case have been overruled, limited, or modified in any way, but rather have been cited with approval and continue to be controlling South Dakota authority. While the policy language in the present case may not be identical to the policy language in Hale, Robinson, and Lauren, there are no material differences that would mandate a different result.
Accordingly, based upon South Dakota precedent, the court finds that "total disability" as used in the general disability insurance provision does not mean absolute helplessness or entire physical disability rending the insured unable to perform any work, but rather means the insured is unable to perform the substantial and material acts of any occupation, which the insured is reasonably qualified by education, training, or experience, in the usual and customary way. Further, the ability of the insured to perform some of the duties of any occupation is not sufficient to preclude payments of benefits under the policy. As such, the court will instruct the jury as to this interpretation of "total disability" ...