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Kambeitz v. Acuity Insurance Co.

September 16, 2009

MICHAEL KAMBEITZ AND DENISE ANN DOCKTER-KAMBEITZ, PLAINTIFFS AND APPELLANTS
v.
ACUITY INSURANCE COMPANY, DEFENDANT AND APPELLEE



Appeal from the District Court of Burleigh County, South Central Judicial District, the Honorable Robert O. Wefald, Judge.

The opinion of the court was delivered by: Maring, Justice.

REVERSED AND REMANDED.

[¶1] Michael Kambeitz and Denise Ann Dockter-Kambeitz appeal from an order granting summary judgment dismissal of their claim for payment of benefits under the underinsured motorist ("UIM") provisions of a commercial auto insurance policy issued by Acuity Insurance Company. Because fraud or misrepresentation which would relieve an insurer of liability under its insurance policy with the insured does not relieve the insurer of liability to an injured innocent third party whose protection is mandated under North Dakota law, and because there exist genuine issues of material fact whether there was fraud or misrepresentation by the insured and whether Michael Kambeitz is an innocent third party under the circumstances, we conclude the district court erred in granting Acuity's motion for summary judgment. We reverse and remand for further proceedings.

I.

[¶2] On March 12, 2004, Michael Kambeitz was driving a 2001 Dodge Ram truck in Bismarck when the truck was rear-ended by another vehicle. Kambeitz was injured and received $25,000, the liability carrier's insurance limit, from the at-fault driver's insurance company. Kambeitz and his wife, Dockter-Kambeitz, then sought UIM benefits from Acuity, the insurer of the truck.

[¶3] The 2001 Dodge Ram truck involved in the accident was owned by Kambeitz's father, Thomas Kambeitz. Thomas Kambeitz is an owner of two Bismarck businesses: Bismarck Heating and Air, Inc. ("Bismarck Heating and Air"), and Newvision, LLC, which is operated under the trade name "New Vision Security Systems." New Vision was opened in 1996 or 1997, and Michael Kambeitz is its primary employee. The 2001 Dodge Ram truck is also the primary vehicle used for New Vision business.

[¶4] The 2001 Dodge Ram truck was one of seventeen vehicles insured under a commercial auto insurance policy issued by Acuity to Bismarck Heating and Air. The truck was specifically listed as a covered auto under the policy, and Michael Kambeitz was listed on Bismarck Heating and Air's schedule of drivers in the policy, along with seventeen other owners and employees of Bismarck Heating and Air. At the time of the accident, the truck was being used by Michael Kambeitz while he conducted business on behalf of New Vision. According to Michael Kambeitz, the truck was used "primarily" by New Vision, but the truck "has also been used to the benefit of [Bismarck Heating and Air] in the performance of work," because he would "occasionally run errands, pick up parts, haul parts, supplies, etc. for [Bismarck Heating and Air]."

[¶5] Acuity denied Kambeitz's claim, and Kambeitz and Dockter-Kambeitz brought this lawsuit to collect UIM benefits under the insurance policy issued to Bismarck Heating and Air. Shortly before the scheduled trial, Acuity moved for summary judgment dismissal of the lawsuit. Acuity argued the insurance policy "was procured by material misrepresentations of fact, fraud and/or concealment perpetrated by a named insured with the knowledge and collusion of plaintiffs," and that the "collusion constitutes a complete defense to plaintiff's claims." Affidavits from Thomas Kambeitz and Michael Kambeitz denying any fraud, misrepresentations, or collusion were submitted in response to the motion.

[¶6] In granting the summary judgment motion, the district court reasoned:

While Kambeitz claims the facts are in dispute, the Court finds he has not set forth a "genuine material issue of fact precluding summary judgment." Kambeitz states that Thomas Kambeitz is the owner of Bismarck Heating & Air, Inc., the entity insured by Acuity. Kambeitz also states that Thomas Kambeitz is the owner of New Vision, LLC (New Vision), and that at the time of the accident Kambeitz was employed by New Vision and using his father's vehicle in that capacity. Kambeitz asserts the Dodge Ram was listed on the policy issued by Acuity to BHAC, and that Thomas Kambeitz advised Acuity that Kambeitz would be a driver of the vehicle.

Acuity asserts this policy issued to BHAC was "procured by material misrepresentations of fact, fraud and/or concealment perpetrated by a named insured with the knowledge and collusion of the plaintiffs." While Thomas Kambeitz says he advised Acuity the Dodge Ram would be driven by Kambeitz and that he, Thomas Kambeitz, owned the Dodge Ram, he did not state that it would be primarily used by a business other than BHAC. Thomas Kambeitz does not claim New Vision is an additional business covered under the Acuity policy.

There is no genuine material issue of fact. The Dodge Ram was the business vehicle used by New Vision. There is but a minor connection with the Dodge Ram to the business of BHAC as Thomas Kambeitz states it was used to run parts. On these facts the Court finds misrepresentation to Acuity on the use of the Dodge Ram by another business entity not insured by Acuity.

The court dismissed the action, and Kambeitz and Dockter-Kambeitz (collectively "Kambeitz") appealed.

II.

[¶7] Kambeitz contends the district court erred in granting summary judgment dismissal of the claim against Acuity.

[¶8] The standard for reviewing a summary judgment is well established:

Under N.D.R.Civ.P. 56, summary judgment is a procedural device for promptly resolving a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. The party moving for summary judgment must show there are no genuine issues of material fact and the case is appropriate for judgment as a matter of law. A district court's decision on a motion for summary judgment is a question of law that we review de novo on the record. In determining whether summary judgment was appropriately granted, we view the evidence in the light most favorable to the party opposing the motion, giving that party the benefit of all favorable inferences which can reasonably be drawn from the record.

Bragg v. Burlington Res. Oil and Gas Co. LP, 2009 ND 33, ¶ 5, 763 N.W.2d 481 (quoting Erickson v. Brown, 2008 ND 57, ¶ 22, 7 ...


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