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Babinski Properties, and Donald Babinski v. Union Insurance Company

June 13, 2011


The opinion of the court was delivered by: Karen E. Schreier Chief Judge


Plaintiffs, Babinski Properties and Donald Babinski, brought suit against defendant, Union Insurance Company, seeking indemnification under Union's umbrella policy held by Babinski Properties for money Donald paid to settle a wrongful death suit brought against his son's estate. Union moves for summary judgment. Plaintiffs resist and move for partial summary judgment, which Union resists. Union's motion is granted and plaintiffs' motion is denied.


The facts pertinent to this order are as follows: Union issued a commercial insurance umbrella policy to Babinski Properties on November 16, 2006. Donald, a South Dakota resident, owns Babinski Properties, which is located in Sioux Falls, South Dakota.

On December 10, 2006, Donald's son, John Babinski, and John's wife, Kathi Babinski, were involved in a single-car accident in Minnesota.*fn1 At the time of the accident, John and Kathi, Minnesota residents, resided together in the same household. On the night of the accident, John drove a 2004 Minnesota-registered truck insured by American Family Insurance Group and owned by Janice Estates, a company owned by Donald. Kathi was in the passenger seat. Kathi and John died in the accident.

John's estate notified American Family that Kathi's heirs intended to bring a wrongful death suit against the estate. In June of 2007, Donald, as the administrator of John's estate, filed a declaratory judgment action in the District of Minnesota against American Family to determine the amount of available coverage to defend Kathi's heirs' lawsuit. Babinski v. Am. Family Ins. Group, 569 F.3d 349 (8th Cir. 2009) (Babinski I). American Family had issued a personal automobile insurance policy to Donald, which provided primary liability coverage for the vehicle driven by John at the time of the accident. Donald argued that the policy provided $1,000,000 in liability coverage and American Family responded that the household drop-down exclusion (household exclusion) limited coverage to $30,000, Minnesota's minimum liability coverage.

After Donald filed the declaratory judgment action, Kathi's heirs filed a wrongful death suit in state court in Hennepin County, Minnesota, against Donald as the administrator of John's estate. Kathi's heirs alleged that John's negligence caused the accident and Kathi's death. The heirs sought damages for their own pecuniary loss stemming from Kathi's death.

In Babinski I, the issue was whether American Family's household exclusion applied. The district court found that the household exclusion was ambiguous and vague and, thus, invalid. The Eighth Circuit reversed and found that the household exclusion was neither ambiguous nor vague and that the household exclusion was enforceable under Minnesota law. See Babinski I, 569 F.3d at 353. The household exclusion was only enforceable to the extent that it did not limit coverage below $30,000, the minimum amount required by Minnesota law. Id.

Before the Eighth Circuit returned its opinion in Babinski I, the state court wrongful death action settled on December 16, 2008, for $650,000 in favor of Kathi's heirs. At all relevant times, Babinski Proprieties was covered under the Union umbrella policy. When Union refused to indemnify plaintiffs for the losses and expenses involved in settling the wrongful death action, plaintiffs filed this lawsuit for indemnification in South Dakota state court. Union removed the action to this court on diversity grounds.


Federal Rule of Civil Procedure 56(a) provides that "[t]he court shall grant summary judgment if the movant shows that there is no dispute as to any material fact and the movant is entitled to judgment as a matter of law." Only disputes over facts that might affect the outcome of the case will preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is inappropriate if a dispute about a material fact is genuine, that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id.

The moving party bears the burden of bringing forward sufficient evidence to establish that there are no genuine issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The court views the facts "in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (internal citation omitted). The nonmoving party also receives "the benefit of all reasonable inferences to be drawn from the underlying facts" in the record. Vette Co. v. Aetna Cas. & Sur. Co., 612 F.2d 1076, 1077 (8th Cir. 1980) (citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 158-59 (1970)).


I. Union's Motion

Union argues that the American Family policy is not listed as underlying insurance in Union's umbrella policy, and, thus, Union need not indemnify plaintiffs. Plaintiffs respond that the ...

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