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John Jung; Janice Jung v. General Casualty Company of Wisconsin

August 9, 2011

JOHN JUNG; JANICE JUNG, APPELLANTS,
v.
GENERAL CASUALTY COMPANY OF WISCONSIN, APPELLEE.



Appeal from the United States District Court for the District of North Dakota.

The opinion of the court was delivered by: Beam, Circuit Judge.

Submitted: June 15, 2011

Before LOKEN, BEAM, and GRUENDER, Circuit Judges.

John and Janice Jung (the Jungs) challenge the denial of their claim for benefits arising from an underinsured motorists (UIM) policy issued by appellee, General Casualty of Wisconsin. The district court*fn1 granted summary judgment in favor of General Casualty. The Jungs appeal. We affirm.

I. BACKGROUND

On November 30, 2006, John Jung (Jung) was seriously injured in a motor-vehicle accident caused by a negligent driver, Richard Martin. At the time of the accident, Jung was driving a 2006 Dodge Ram 2500 pickup owned by his employer, Tooz Construction. The vehicle was covered by an insurance policy Tooz had purchased from General Casualty. The policy included a $1,000,000 UIM endorsement. Martin was driving a 2001 Dodge pickup he owned and insured under a motor-vehicle-liability policy issued by Nodak Mutual Insurance Company. That policy had a liability limit of $250,000 per person and $500,000 per accident. Martin also had an excess-liability policy issued by Nodak Mutual, which had a $1,000,000 limit. The excess-liability policy specifically listed operation of Martin's truck as an insured risk.

On July 30, 2008, the Jungs, Nodak Mutual, and Martin reached a settlement agreement under which the Jungs received $1,250,000. The settlement was paid via two separate checks: one check for $250,000--the full amount of Martin's motor-vehicle-liability policy--and one for $1,000,000--the full value of Martin's excess-liability policy. The Jungs then filed a claim with General Casualty for coverage pursuant to the UIM endorsement. General Casualty denied the Jungs' claim after concluding that Martin's vehicle was not underinsured.

On November 24, 2008, the Jungs filed suit against General Casualty in federal district court. General Casualty moved for summary judgment, arguing that, as a matter of law, Martin's truck was not underinsured. The motion was referred to the magistrate judge*fn2 who issued a report, recommending that summary judgment be granted. The Jungs filed objections with the district court. After a hearing, the district court adopted the magistrate judge's recommendations and granted General Casualty's motion for summary judgment.The Jungs then filed a Request to Certify a Question of Law to the North Dakota Supreme Court. On October 15, 2010, the district court entered an order denying this request. The Jungs appeal the adverse grant of summary judgment and the denial of their request for certification.

II. DISCUSSION

We review the district court's grant of a motion for summary judgment de novo. Genosky v. Minnesota, 244 F.3d 989, 992 (8th Cir. 2001). Summary judgment is appropriate where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Here, there is a potentially dispositive legal issue; General Casualty is entitled to summary judgment if Martin's vehicle was, as a matter of law, not underinsured. See DeCoteau v. Nodak Mut. Ins. Co., 603 N.W.2d 906, 912 (N.D. 2000). Because we are sitting in diversity, this issue is governed by North Dakota state law. Walker v. Armco Steel Corp., 446 U.S. 740, 747 (1980).

The North Dakota Century Code establishes the minimum standard for UIM coverage in the state, requiring a UIM insurer to compensate an insured for "bodily injury" damages that the insured is legally entitled to collect from the operator of an underinsured motor vehicle, so long as those damages arise "out of the ownership, maintenance, or use" of that vehicle. N.D. Cent. Code Ann. § 26.1-40-15.3(1). The Code goes on to define an underinsured motor vehicle as "a motor vehicle for which there is a bodily injury liability insurance policy, or bond providing equivalent liability protection, in effect at the time of the accident, but the applicable limit of bodily injury liability of such policy or bond [i]s less than the applicable limit for underinsured motorist coverage under the insured's policy." N.D. Cent. Code Ann. § 26.1-40-15.1(2)(a).

Under this "gap" approach to defining underinsured status, a vehicle is only underinsured if the policy limits applicable to that vehicle are less than the UIM coverage in the policy under which the insured seeks benefits. Score v. Am. Family Mut. Ins. Co., 538 N.W.2d 206, 208 (N.D. 1995). Thus, here, the relevant question is whether Martin's truck insured by Nodak Mutual was a "motor vehicle for which there is a bodily injury liability policy" with an applicable limit of less than the applicable limit of Jung's $1,000,000 UIM endorsement in the General Casualty policy. It is undisputed that Martin's car was covered by a $250,000 automobile-liability policy issued by Nodak Mutual. If this were the only applicable policy, there would be a gap of $750,000, Martin's vehicle would be underinsured, and summary judgment would be inappropriate.However, General Casualty argues that Martin's personal excess-liability policy is a "bodily injury policy"that applies to the at-fault vehicle and that, therefore, there is $1,250,000 worth of coverage on Martin's car, rendering it, as a matter of law, not underinsured.Thus, our decision here turns on whether, under North Dakota law, Martin's excess-liability policy issued by Nodak Mutual countsas a policy that covers his vehicle for purposes of section 26.1-40-15.1.*fn3

The Jungs argue that this question is controlled by Rask v. Nodak Mut. Ins. Co., 626 N.W.2d 693 (N.D. 2001). In Rask, the North Dakota Supreme Court determined that the at-fault vehicle was underinsured even though the insured collected money in a settlement from two separate insurance policies that, when combined, totaled more than the limit of the insured's UIM policy. The Rask court refused to count one of the policies under which the insured was paid in the underinsurance analysis because it was a liability policy that covered the tortfeasor-driver but had no other connection to the vehicle involved in the accident. The Rask court reasoned that the language of section 26.1-40-15.1 required it to look at the insured status of the motor vehicle, rather than the driver. Id. at 697. The Jungs argue that Rask establishes a general rule that personal-excess-liability policies are not relevant to determining whether a vehicle is underinsured under section 26.1-40-15.1. However, this argument overstates Rask's reach. We read Rask more narrowly and conclude it is distinguishable from the instant case.

Rask involved a tortfeasor who was driving someone else's car. The two policies under which the plaintiff recovered pursuant to the settlement agreement were: (1) the liability policy for the vehicle involved in the accident, which applied because the tortfeasor was a permissive user, and (2) the tortfeasor's automobile- insurance policy, which primarily applied to the tortfeasor's vehicle, but incidentally covered her as the driver of another vehicle. Id. at 695. The Rask court excluded consideration of the second policy because it was only incidentally attached to the at-fault vehicle because the tortfeasor happened to be driving the vehicle. There was no link between the vehicle and the policy except when the tortfeasor happened to be driving as a permissive user. This lack of anything more than an incidental connection between the tortfeasor and the vehicle was central to the Rask court's analysis. Id. at 697 ("Because the accident did not arise out of the ownership, maintenance, or use of any of the vehicles owned by [the tortfeasor] and insured by[the tortfeasor's insurance company], it would be inappropriate to look to those vehicles to determine whether the . . . vehicle involved in the accident was underinsured."). In contrast, here, Martin was the owner, operator, and insurer of the vehicle involved in the accident. ...


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