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Grinnell Mutual Reinsurance Co. v. Thompson

February 17, 2010

GRINNELL MUTUAL REINSURANCE COMPANY, AN IOWA INSURANCE COMPANY,
PLAINTIFF AND APPELLANT
v.
NORMAN C. THOMPSON, SHELLY M. THOMPSON, FOLTZ TRUCKING, INC., A MINNESOTA CORPORATION, FBF LEASING, INC., A MINNESOTA CORPORATION, GARY JOHNSON, MINNESOTA RESIDENT, AND CONTINENTAL WESTERN INSURANCE COMPANY, AN IOWA INSURANCE COMPANY, DEFENDANTS FOLTZ TRUCKING, INC., A MINNESOTA CORPORATION, FBF LEASING, INC., A MINNESOTA CORPORATION, AND CONTINENTAL WESTERN INSURANCE COMPANY, AN IOWA INSURANCE COMPANY, DEFENDANTS AND APPELLEES



Appeal from the District Court of Pembina County, Northeast Judicial District, the Honorable Laurie A. Fontaine, Judge.

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

REVERSED AND REMANDED.

[¶1] Grinnell Mutual Reinsurance Company appealed from the district court's judgment ordering Grinnell to provide coverage or indemnification to Shelly Thompson with regard to a collision between a semi-trailer owned by Foltz Trucking, Inc. and a vehicle driven by Shelly Thompson. The district court also ordered Grinnell to defend Shelly Thompson against any actions arising out of the collision. Finally, the district court declared Foltz, FBF Leasing, Inc., Gary Johnson, or Continental Western Insurance Company have, or could have, claims against Grinnell arising out of the collision. We reverse the district court's judgment, because Shelly Thompson did not have permission to drive the vehicle and the Financial Responsibility Laws do not set minimum levels of insurance coverage for nonpermissive operators.

I.

[¶2] Shelly Thompson and Norman Thompson are married and live together. Norman Thompson owns a 1995 Buick Regal. Shelly Thompson has no ownership interest in the Buick. In 2005, Grinnell issued an insurance policy to Norman Thompson that covered three vehicles, including a 1995 Buick Regal. Norman Thompson is listed in the policy as the "named insured." As used in the policy, "you" and "your" are defined as:

1. The "named insured" shown in the Declarations; and

2. The spouse if a resident of the same household.

The policy provides:

A. We will pay damages for "bodily injury" or "property damage" for which any "insured" becomes legally responsible because of an auto accident. . . . We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. In addition to our limit of liability, we will pay all defense costs we incur. . . . We have no duty to defend any suit or settle any claim for "bodily injury" or "property damage" not covered under this policy.

B. "Insured" as used in this Part means:

1. You or any "family member" for the ownership, maintenance or use of any auto or "trailer".

2. Any person using "your covered auto".

The policy exclusions state:

A. We do not provide Liability Coverage for any "insured":

1. Who intentionally causes "bodily injury" or "property damage".

8. Using a vehicle without a reasonable belief that that "insured" is entitled to do so. This Exclusion (A.8.) does not apply to a "family member" using "your covered auto" which is owned by you.

The policy also states, "When this policy is certified as future proof of financial responsibility, this policy shall comply with the law to the extent required."

[¶3] In November 2005, Shelly Thompson drove the Buick without Norman Thompson's permission. The Buick collided with a semi-trailer owned by Foltz and driven by Foltz's employee, Johnson. Following the collision, Shelly Thompson told a highway patrol officer she wanted to commit suicide, but did not want to hurt anyone else. Responding to a doctor's questions, Shelly Thompson confirmed she wanted to kill herself and she tried to drive into the semi-trailer.

[¶4] In May 2007, Foltz sued Norman and Shelly Thompson for damages arising out of the collision. Grinnell provided a defense for the Thompsons against Foltz's lawsuit, subject to its right to deny coverage or withdraw. Foltz and its insurance company, Continental Western Insurance Company, made a demand on Grinnell, claiming Grinnell is liable for the damages arising out of the collision. In October 2007, Grinnell sought a declaratory judgment that it is not obligated to provide coverage or a defense to the Thompsons with regard to the collision between the Buick and the semi-trailer, and that Foltz, FBF, Johnson, and Continental have no claim against Grinnell because of Norman Thompson's policy.

[¶5] In October 2008, Foltz, FBF, and Continental filed a motion for partial summary judgment, asking the district court to declare "that Grinnell is liable for any damage caused by [Shelly] Thompson's use of the motor vehicle, whether intentional or not, up to the minimum liability limits for property damage established by North Dakota law." Grinnell then filed its own motion for summary judgment. In its memorandum opinion, the district court cited Hughes v. State Farm Mut. Auto. Ins. Co., 236 N.W.2d 870, 883 (N.D. 1975), stating:

The "important particulars as the coverage required by § 39- 16.1-11," as summarized in Hughes, are: (1) limits of liability not less than the dollar amounts listed in N.D.C.C. § 39-16.1-11(2)(b); (2) insuring the named insured and any other person driving said motor vehicle with the permission of the named insured; and (3) insuring such persons against loss arising out of the ownership, maintenance or use of such insured motor vehicle within the United States of America or the Dominion of Canada.

The district court stated Norman Thompson is the named insured of Grinnell's policy and Shelly Thompson did not have permission to drive the Buick. The district court concluded Grinnell's policy did not comply with the requirements of N.D.C.C. § 39-16.1-11, as described in Hughes, because it provides "coverage for auto accidents rather than for loss imposed by law." The district court stated further, "[A] limitation to only provide coverage for damages that the insured becomes responsible for because of an auto accident is in conflict with the minimum requirements, the minimum requirement of providing coverage for loss from liability imposed by law will prevail."

[¶6] The district court concluded, "In summary, because Norman's policy with [Grinnell] provides broader coverage than is required for whom coverage is applicable, and the policy provides narrower coverage than required for liability imposed by law under the Financial Responsibility Laws, [Grinnell]'s motion is DENIED, and Defendants' motion is GRANTED." (Emphasis in original).

II.

[¶7] On appeal, Grinnell argues N.D.C.C. § 39-16.1-11 does not require it to provide coverage to Shelly Thompson because she drove the Buick without the permission of Norman Thompson, the named insured. Grinnell argues the policy's exclusion for intentional acts applies. Foltz, FBF, and Continental argue the policy's Conformity Clause, stating "this policy shall comply with the law to the extent required," dictates Grinnell must provide coverage as described in N.D.C.C. § 39-16.1- 11(2)(b) "against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of such motor vehicles." They also argue Shelly Thompson qualifies as a "named insured" under the policy because she and Norman Thompson are treated equally under the policy.

[¶8] This Court's standard of review on 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.

Kambeitz v. Acuity Ins. Co., 2009 ND 166, ¶ 8, 772 N.W.2d 632 (quoting Bragg v. Burlington Res. Oil & Gas Co. LP, 2009 ND 33, ¶ 5, 763 N.W.2d 481). Neither party argues there is a genuine issue of material fact precluding summary judgment.

[¶9] This Court reviews a district court's interpretation of a statute de novo:

Interpretation of a statute is a question of law fully reviewable on appeal. Our primary goal in statutory construction is to ascertain the intent of the legislature, and we first look to the plain language of the statute and give each word of the statute its ordinary meaning. When the wording of a statute is clear and free of all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit. If, however, the statute is ambiguous or if adherence to the strict letter of the statute would lead to an absurd or ludicrous result, a court may resort to extrinsic aids, such as legislative history, to interpret the statute. A statute is ambiguous if it is susceptible to meanings that are different, but rational. We presume the legislature did not intend an absurd or ludicrous result or unjust consequences, and we construe statutes in a practical manner, giving consideration to the context of the statutes and the purpose for which they were enacted.

State v. Brown, 2009 ND 150, ¶ 15, 771 N.W.2d 267 (quoting In re M.W., 2009 ND 55, ¶ 6, 764 N.W.2d 185).

[¶10] The interpretation of an insurance contract is also a question of law fully reviewable on appeal. Schleuter v. Northern Plains Ins. Co., 2009 ND 171, ¶ 8, 772 N.W.2d 879 (citing ACUITY v. Burd & Smith Constr., 2006 ND 187, ΒΆ 7, 721 N.W.2d 33). We ...


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