Business Owner Not an Insured, Cannot Collect Excess UIM Under Company's Policy
In West Bend Mut. Ins. Co. v. Allstate Ins. Co., 2009 WL 4981273 (Minn.), Appellant Oczak was seriously injured in a car accident in which the driver of the other car was underinsured. At the time of the accident, Oczak was the owner of an automobile repair business, North End 66, Inc., and was driving a vehicle owned by Kelly, a customer of North End.
After settling with MSI, the negligent driver's insurer, and the insurer of the car Oczak was driving, Oczak brought underinsured motorist claims against West Bend Mutual Insurance Company, the insurer of North End, and Allstate Insurance Company, his personal insurer. West Bend brought a declaratory judgment action against Oczak and Allstate to determine the obligations and coverage priorities of the insurance policies. On cross-motions for summary judgment, the district court concluded that the Allstate policy provided excess UIM coverage and that the West Bend policy did not. The court of appeals affirmed, and the Supreme Court of Minnesota granted review.
Oczak argued there could be more than one policy providing primary UIM coverage and that MSI and West Bend “share co-primary underinsurance liability.” According to Oczak, the UIM “coverages available” to him were the coverage provided by MSI, as well as the coverage provided by West Bend, the insurer of North End. Oczak stressed that Minn.Stat. §65B.49, subd. 3a(5), the applicable statute, used the term “coverages,” which suggested that the legislature contemplated coverage under more than one policy. Allstate and West Bend, however, contended there was nothing in the statute or case law that supported an argument for “co-primary” UIM coverage in this situation.
The supreme court explained that it read the word “coverages” in the statute to refer to UM and UIM “coverages” in a single insurance policy, and not multiple UIM coverages in different policies. But because the language of the statute did not expressly address whether there could be more than one policy that provided primary UIM coverage, the court explained that it may look to other factors to ascertain legislative intent.
After reviewing the occasion and necessity for the law, the circumstances under which it was enacted, the object to be obtained, and the former law, the court determined that the statute set priorities among multiple possible sources. Thus, Oczak must look first to the UIM policy limits on the vehicle he was occupying at the time of the accident—the MSI policy insuring Kelly's vehicle.
Although Oczak also relied on the reasonable expectations doctrine for access to primary UIM benefits under the West Bend policy, the court held that the reasonable expectations doctrine did not apply because the business's liability policy clearly stated that any UIM coverage for a nonowned vehicle was excess over any other collectable primary coverage.
In addition, the court held that Oczak, who was not a named insured in the business's liability policy, was not an “insured” under that policy so as to be entitled to collect excess UIM benefits under the policy. “Insured” under the statute meant the named insured under that policy or the spouse or resident household relatives of the named insured. Because the policy did not provide broader coverage than the statute, Oczak, who was not a named insured or a family member, did not have excess underinsured motorist coverage under the policy.
Editor's Note: Oczak also argued that the court should “reverse pierce” the corporate veil here such that he should be considered a “named insured” because of his status as the owner of North End, the actual “named insured” under the policy. However, although Oczak was the owner of North End, the vehicle he was occupying at the time of the accident was not owned by the corporation. Personal use of corporate property is important in a reverse-piercing case because it indicates the degree of identity between a shareholder and a corporation. Where that degree is not high, the alter ego theory which underlies the doctrine of piercing the corporate veil cannot operate. Accordingly, by taking cars left for repair out for diagnostic road tests, Oczak was acting only as an employee of the business, rather than as the corporation's “alter ego.”