Opinion
A2-98-55.
Filed May 25, 1999.
Summary: Dispute over underinsured motorist (UIM) coverage arising out of two separate automobile accidents involving each plaintiff. Before the court are defendant's motions for summary judgment and sanctions. Court finds that it remains for the North Dakota Legislature to fix any perceived inequity in its UIM scheme. Accordingly, All Nations' motion for summary judgment is GRANTED. Court further finds that one could certainly argue that North Dakota's UIM scheme produces inequitable results in cases such as this, and this perceived inequity has not gone unnoticed by members of the North Dakota Supreme Court. Accordingly, All Nations' motion for sanctions is DENIED.
ORDER
I INTRODUCTION
This dispute over underinsured motorist (UIM) coverage arises out of two separate automobile accidents involving each plaintiff. Before the court are defendant's motions for summary judgment (doc. #15) and sanctions (doc. #13). Plaintiffs oppose the motions (doc. #'s 18, 20). The matter came on for hearing on May 24, 1999 in Fargo, North Dakota.
II BACKGROUND
Briefly stated, each plaintiff purchased automobile insurance policies from defendant All Nations providing UIM coverage in the amount of $25,000 per person and $50,000 per occurrence. The policies were in full force and effect at all times pertinent, and each contained the following provisions:
"Underinsured motor vehicle" means a motor vehicle for which there is a bodily injury liability insurance policy in effect at the time of the accident, but the applicable limit of bodily injury liability is (a) less than the limit for underinsured motor vehicle coverage on your policy, or (b) has been reduced by payments to persons other than yourself injured in the accident, to an amount less than the limit for underinsured motorist coverage on your policy.
We will pay damages for bodily injury, sickness, disease, or death when you are legally entitled to collect from the owner or operator of an underinsured motor vehicle.
Our maximum liability is the lessor of (a) the amount of compensatory damages established, but not recovered by any agreement, settlement, or judgment with the person who is liable for your bodily injury; or (b) your limits of liability for Underinsured Motorist Coverage.
Each plaintiff was injured in an accident involving another driver who carried liability insurance coverage of $25,000 per person, the minimum allowable under North Dakota law. See N.D. Cent. Code § 39-16.1-11. Each plaintiff sustained injuries in excess of that amount, prompting them to seek additional recovery from All Nations via their UIM coverage. All Nations denied each claim pursuant to the aforementioned policy provisions, since the other drivers' liability coverage was not less than plaintiffs' UIM coverage limits.
Plaintiffs responded with this action, alleging breach of contract based upon the "doctrine of reasonable expectations," breach of good faith, misrepresentation/omission, unjust enrichment, and promissory estoppel claims. All Nations countered with the instant motions.
III ANALYSIS A. SUMMARY JUDGMENT STANDARDS
Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A fact is "material" if it might affect the outcome of a case, and a factual dispute is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Churchill Bus. Credit, Inc. v. Pacific Mut. Door Co., 49 F.3d 1334, 1336 (8th Cir. 1995).
The "basic inquiry" for purposes of summary judgment is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one sided that one party must prevail as a matter of law." Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376 (8th Cir. 1996) (citing Anderson, 477 U.S. at 251-52). In making this inquiry, however, this court will not "weigh the evidence, make credibility determinations, or attempt to determine the truth of the matter." Id. (citing Anderson, 477 U.S. at 249). Rather, this court's function is to determine only whether a dispute is genuine, and "[i]f reasonable minds could differ as to the import of the evidence," summary judgment is inappropriate. Id. at 1377 (citing Anderson, 477 U.S. at 250). This determination is made by reading the record in the light most favorable to the nonmoving party and drawing all "justifiable inferences" in the nonmovant's favor. Id. (citing Anderson, 477 U.S. at 255); Churchill, 49 F.3d at 1336 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).
The moving party has the initial burden of demonstrating to the court that there is no genuine issue of fact. Webb v. Lawrence County, 144 F.3d 1131, 1134 (8th Cir. 1998) (citing Celotex Corp., 477 U.S. at 323). Once the moving party has met this burden, however, the non-moving party cannot simply rest on the mere denials or allegations in the pleadings; rather, the non-movant must set forth specific facts showing that there is a general issue for trial. Id. (citing Fed.R.Civ.P. 56(e)).
B. DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
The North Dakota statutory scheme governing UIM coverage is well-known to the parties and needs no recitation here. See generally N.D. Cent. Code §§ 26.1-40-15.1-7. For purposes of this Order, it is sufficient to recall that during the time pertinent to this action, the North Dakota Legislature had settled upon a modified "gap" or "difference in limits" theory of UIM coverage, whereby a tortfeasor is deemed underinsured when the injured party's UIM coverage exceeds the tortfeasor's liability coverage.See N.D. Cent. Code § 26.1-40-15.1; Score v. American Family Mut. Ins. Co., 538 N.W.2d 206, 208 (N.D. 1995) (emphasis added). In so doing, the Legislature eschewed the "excess" theory of UIM coverage, whereby a tortfeasor is deemed underinsured when the injured party's damages exceed the tortfeasor's liability coverage. See Score, 538 N.W.2d at 208 (emphasis added).
Following the lead of the North Dakota Supreme Court, this court recognized in Wanner v. All Nations Insurance Company, Civ. No. A3-94-107 (D.N.D. Nov. 14, 1995), that UIM endorsements which incorporate the aforementioned statutory scheme are neither illusory nor violative of public policy, notwithstanding the remote possibility of recovery in cases such as this, wherein an individual contracts for UIM coverage amounting to $25,000 per person and $50,000 per accident (the minimum allowable UIM coverage), and is subsequently forced to recover from a tortfeasor carrying the statutory minimum level of liability coverage.
As previously mentioned, plaintiffs have advanced several theories of liability in the hope of circumventing the foregoing holdings. However, the court finds these attempts unavailing. As an initial matter, plaintiffs misplace their reliance upon the "doctrine of reasonable expectations," which directs courts to interpret ambiguities in contracts of adhesion to mean what the weaker party reasonably expects. RLI Ins. Co. v. Heling, 520 N.W.2d 849, 854-55 (N.D. 1994) (citing Walle Mutual Ins. Co. v. Sweeney, 419 N.W.2d 176, 181 n. 4 (1988)) (emphasis added). See Mills v. AgriChemical Aviation, Inc., 250 N.W.2d 663 (N.D. 1977). To the extent this doctrine is accepted by North Dakota courts, (See RLI, 520 N.W.2d at 855), it basically parrots the long-held notion that ambiguities in insurance contracts should be interpreted in the insured's favor. See Dundee Mut. Ins. Co. v. Marifjeren, 587 N.W.2d 191, 194 (N.D. 1998). Since the policy provisions in this case unambiguously incorporate the statutory definition of UIM coverage, plaintiffs could not have "reasonably expected" coverage of a different type.
Furthermore, plaintiffs have failed to provide sufficient factual support for their breach of duty, misrepresentation/omission, unjust enrichment, and promissory estoppel claims. As previously mentioned, the non-moving party cannot simply rest upon mere allegations in the face of a motion for summary judgment; rather, the non-movant must set forth specific facts showing that there is a general issue for trial. Webb, 144 F.3d at 1134. Plaintiffs have presented no facts indicating that their respective policies were sold or represented in a false, misleading or improper manner, or that defendant acted unreasonably in denying their claims.
In short, this court recognized in Wanner, and remains aware today, that in cases featuring UIM endorsements patterned after North Dakota law, policy holders who contract for the minimum level of UIM coverage will have only a limited opportunity to recover benefits. However, "[i]t is the court's duty in a diversity case not to formulate the legal mind of the state, but merely to ascertain and apply it." Simundson v. United Coastal Ins. Co., 951 F. Supp. 165, 167 (D.N.D. 1997) (citations omitted). It remains for the North Dakota Legislature to fix any perceived inequity in the current UIM scheme. Accordingly, All Nations' motion for summary judgment (doc. #15) is GRANTED.
C. MOTION FOR SANCTIONS
All Nations brings its motion for sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure and/or Sections 28-26-01(2) and 28-26-31 of the North Dakota Century Code. All Nations contends that, in light of the Wanner decision as well as the applicable North Dakota statutes and case law, plaintiffs' claims are unsubstantiated by existing law and fail to make out a non-frivolous argument for extension, modification or reversal of the law.
Rule 11 and Sections 28-26-01(2) and 28-26-31 generally afford a trial court discretion to sanction a party who advances pleadings that are frivolous or not made in good faith. See Fed.R.Civ.P. 11; Peterson v. Zerr, 477 N.W.2d 230, 235-36 (N.D. 1991) (citing Sections 28-26-01(2) and 28-26-31). Each of these provisions must be applied with concern for chilling vigorous advocacy, however.See id. (North Dakota statutes); see also Larez v. Holcomb, 16 F.3d 1513, 1522 (9th Cir. 1994) (Rule 11). As the foregoing indicates, one could certainly argue that North Dakota's UIM scheme produces inequitable results in cases such as this, and this perceived inequity has not gone unnoticed by members of the North Dakota Supreme Court. See Score, 538 N.W.2d at 212-213 (Meschke, J., dissenting). Accordingly, All Nations' motion for sanctions (doc. #13) is DENIED.
IV CONCLUSION
All Nations' motion for sanctions (doc. #13) is DENIED. All Nations' motion for summary judgment (doc #15) is GRANTED, and plaintiffs' complaint is DISMISSED. Judgment shall be entered reflecting this Order.
IT IS SO ORDERED.