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Luze v. Zurich American Insurance Co.

United States District Court, D. South Dakota, Southern Division

November 4, 2016

JEANETTE LUZE, individually and as personal representative of the Estate of Charles Edward Luze; Plaintiff,



         Plaintiff, Jeanette Luze, brought this action naming Zurich American Insurance Company as the defendant. Jeanette Luze moves for partial summary judgment (Docket 12), and Zurich filed a cross motion for summary judgment. Docket 17.


         The undisputed facts are:

         Farner-Bocken is headquartered in Carroll, Iowa, and Charles Luze was a resident of South Dakota at the time of this incident. Docket 14 ¶ 2. Farner-Bocken employed Charles Luze as a driver. Id. ¶ 1. On September 14, 2014, Charles Luze died in a motor vehicle accident while driving a company vehicle that was owned by Farner-Bocken and insured by Zurich. Id. ¶¶ 1-2. The liability limit in place on the vehicle at the time of the crash was $1 million. Id. ¶ 3. Zurich has not produced any evidence showing that either Farner-Bocken or Charles Luze rejected underinsured motorist (UIM) coverage in writing. Id. ¶ 4. The term “auto” in the policy included trailers and semi-trailers. Id. ¶ 6. The Business Auto Coverage form defines category 1 autos as “any autos, ” id. ¶ 7, and it defines category 3 autos as “owned private passenger autos.” Docket 15-1 at 8. The policy endorsement defines uninsured motor vehicles as an underinsured motor vehicle, and an underinsured motor vehicle is defined as “a land motor vehicle or trailer for which the sum of all liability bonds or policies at the time of the accident do not provide at least the amount an insured is legally entitled to recover as damages resulting from bodily injury.” Docket 14 ¶¶ 9-10.


         “One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses[.]” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp., 477 U.S. at 323 (“[A] party seeking summary judgment always bears the initial responsibility of . . . demonstrat[ing] the absence of a genuine issue of material fact.” (internal quotations omitted)). The moving party must inform the court of the basis for its motion and also identify the portion of the record that shows there is no genuine issue in dispute. Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citation omitted).

         Once the moving party meets its initial burden, the nonmoving party must establish “that a fact . . . is genuinely disputed” either by “citing to particular parts of materials in the record, ” or by “showing that the materials cited do not establish the absence . . . of a genuine dispute.” Fed.R.Civ.P. 56(c). “The nonmoving party may not ‘rest on mere allegations or denials, but must demonstrate on the record the existence of specific facts which create a genuine issue for trial.' ” Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th Cir. 2005) (quoting Krenik v. Cty. of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995)). For purposes of summary judgment, the facts and inferences drawn from those facts are “viewed in the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)).[1]


         This case deals with a question of law as to whether Charles Luze was covered by his employer's underinsured motorist insurance policy. The interpretation of an insurance policy is a matter of law to be determined by the court. A.Y. McDonald Indus., Inc. v. Ins. Co. of N. Am., 475 N.W.2d 607, 618 (Iowa 1991). In an action based on diversity of citizenship, a federal district court must apply the substantive law of the state in which it sits, including its conflict-of-law rules. Drinkall v. Used Car Rentals, Inc., 32 F.3d 329, 331 (8th Cir. 1994). So this court will apply South Dakota's conflict-of-law rules to determine which state's insurance laws govern.

         “South Dakota applies the provisions of the Restatement (Second) of Conflicts of Laws in order to resolve questions about which state's laws govern in particular factual situations.” Stockmen's Livestock Exch. v. Thompson, 520 N.W.2d 255, 257 (S.D. 1994). The Restatement (Second) Conflict of Laws generally recognizes that “[t]he law of the state chosen by the parties to govern their contractual rights and duties will be applied.” Restatement (Second) of Conflict of Laws § 187. “A contract must be construed in accordance with the law of the place where made unless it is shown that it was the intention of the parties to be bound by the law of some other place.” Briggs v. United Servs. Life Ins. Co., 117 N.W.2d 804, 806 (S.D. 1962). “The test of the place of a contract is the place where the last act is done by either of the parties which is necessary to complete the contract and give it validity.” Id. at 807.

         Here, the parties have not pointed to a governing choice-of-law provision in the insurance policy, and the court did not find a choice of law provision upon review of the policy. But the UIM endorsement that was added to the policy is titled the “Iowa Uninsured and Underinsured Motorists Coverage.” Docket 20-3. The language in the endorsement indicates the parties' intention to be bound by the law of Iowa, and no other provisions within the policy indicate otherwise. Also, Zurich prepared the policy and sent it to Farner-Bocken at its headquarters in Carroll, Iowa. Docket 20-1. It appears the policy was then executed in Iowa, so the final act necessary to make the policy valid occurred in Iowa. Based on the intention of the parties as expressed in the UIM endorsement and the location where the policy was executed, Iowa law applies.

         A. Whether Charles Luze was a covered insured under the policy issued by Zurich at the time of his death?

         The first issue for the court to address is whether Charles Luze was a covered insured under the insurance policy at the time of his death. Because the named insured on this policy was a corporation, the court looks to Section (B)(2) of the policy for the definition of an “insured.” Docket 16-6. This section states that an “insured” under the uninsured and underinsured policy includes anyone “ ‘occupying' a ‘covered auto.' ” Id. at 2. “Covered autos” as described on the Schedule of Coverages and Covered Autos page of the policy lists only category 3 autos. Docket 15-1 at 21. Category 3 autos are defined as “private passenger autos only.” Id ...

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