Volk v. ACE American Insurance Company
ORDER denying 14 plaintiff's Motion for Summary Judgment; granting 27 defendant's Motion for Summary Judgment (Written Opinion). Signed by Senior Judge David S. Doty on 2/5/2013. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 12-1065(DSD/JSM)
Linda Volk, as guardian of
Andrew John Johnson,
ACE American Insurance Company,
Richard W. Curott, Esq. and Curott & Associates, LLC,
P.O. Box 206, Milaca, MN 56353, counsel for plaintiff.
Steven J. Sheridan, Esq. and Fisher, Bren & Sheridan,
LLP, 920 Second Avenue South, Suite 975, Minneapolis, MN
55415, counsel for defendant.
This matter is before the court upon cross-motions for summary
Based on a review of the file, record and proceedings
herein, and for the following reasons, the court grants the motion
for summary judgment by defendant ACE American Insurance Company
This insurance-coverage dispute arises out of a 2005 injury to
Andrew John Johnson, son of plaintiff Linda Volk.
mentally-handicapped and requires the services of a personal care
Volk Aff. ¶ 2.1
At the time of his injury,
nonparty North Country Home Care, Inc. (North Country) provided PCA
services for Johnson.
On November 20, 2005, under the
supervision of his North Country PCA, Johnson was permanently
blinded in a BB gun accident.
Id. ¶¶ 5, 7.
At the time of the injury, ACE provided North Country with
coverage for both general liability and professional liability.
Answer ¶ 3.
The insurance policy (Policy) was in effect from July
6, 2005, until June 26, 2006, when North Country sold its assets
and ceased business operations.
Gill Aff. Ex. 1, at 0059.
January 2009, the Minnesota Secretary of State officially dissolved
Kirk Aff. Ex. 2, at 4, ECF No. 32.
In June 2009, Volk notified Donita Wark, former president of
North Country, that Volk intended to file a claim for Johnson’s
See McGuire Aff. Ex. 1, at 0208.
Wark reported the claim
to ACE, seeking coverage under the Policy.
coverage in August 2009, determining that the incident fell under
the Policy’s professional liability coverage, which only covered
claims made prior to the Policy’s termination. Id. Ex. 3, at 0238.
ACE informed Wark that general liability coverage did not apply
including an exclusion (Patient Exclusion) for “[a]ny loss, cost or
Linda Volk’s affidavit is attached as Exhibit A to the
affidavit of Richard W. Curott. See Curott Aff. Ex. A., ECF No.
expense arising out of ‘bodily injury’ to your patients.”
Aff. Ex. 1, at 0021; see McGuire Aff. Ex. 3, at 0237.
Following ACE’s denial of coverage, Volk sued North Country in
North Country forwarded a copy of the complaint
McGuire Aff. Ex. 5, at 0252.
Thereafter, on November 22,
Kirk Aff. Ex. 4, ECF No. 32.
On February 21, 2012,
Volk obtained a judgment against North Country for $2,675,758.27.
Id. Ex. 3.
On April 11, 2012, Volk filed this suit in Minnesota
court, seeking a declaration that ACE owed coverage under the
ACE timely removed, and both parties move for summary
Standard of Review
“The court shall grant summary judgment 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); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
“In a Miller-Shugart settlement, an insured ... who has been
denied coverage for a claim agrees with the claimant ... on a
judgment for an amount collectible from the insurance policy. The
claimant releases the insured from personal liability and the
claimant’s recovery is limited to the amount obtained from the
insurers.” Corn Plus Coop. v. Cont’l Cas. Co., 516 F.3d 674, 677
n.2 (8th Cir. 2008) (citing Miller v. Shugart, 316 N.W.2d 729
A fact is material only when its resolution affects the outcome of
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
A dispute is genuine if the evidence is such that it could
cause a reasonable jury to return a verdict for either party.
id. at 252.
On a motion for summary judgment, the court views all evidence
and inferences in a light most favorable to the nonmoving party.
See id. at 255.
The nonmoving party, however, may not rest upon
mere denials or allegations in the pleadings but must set forth
specific facts sufficient to raise a genuine issue for trial.
Celotex, 477 U.S. at 324.
A party asserting that a genuine dispute
exists - or cannot exist - about a material fact must cite
“particular parts of materials in the record.”
Fed. R. Civ. P.
If a party cannot support each essential element of
a claim, the court must grant summary judgment because a complete
failure of proof regarding an essential element necessarily renders
all other facts immaterial.
Celotex, 477 U.S. at 322-23.
In Minnesota the interpretation of an insurance policy is a
question of law.
609 (Minn. 2001).
Am. Family Ins. Co. v. Walser, 628 N.W.2d 605,
The court interprets an insurance policy in
accordance with general principles of contract construction, giving
effect to the intent of the parties.
Thommes v. Milwaukee Ins.
Co., 641 N.W.2d 877, 879 (Minn. 2002). The court gives unambiguous
language its plain and ordinary meaning, and construes ambiguous
language against the drafter and in favor of the insured.
880; Nathe Bros., Inc. v. Am. Nat’l Fire Ins. Co., 615 N.W.2d 341,
344 (Minn. 2000).
Language is ambiguous if “reasonably subject to
more than one interpretation.”
Columbia Heights Motors, Inc. v.
Allstate Ins. Co., 275 N.W.2d 32, 34 (Minn. 1979).
court “guard[s] against invitations to find ambiguity where none
Metro. Prop. & Cas. Ins. Co. v. Jablonske, 722 N.W.2d
319, 324 (Minn. Ct. App. 2006) (citation and internal quotation
A plaintiff seeking to enforce a Miller-Shugart settlement has
the burden of proving the judgment is covered by the Policy.
Koehnen v. Herald Fire Ins. Co., 89 F.3d 525, 529 (8th Cir. 1996)
(applying Minnesota law).
To do so, the insured must first
establish a prima facie case of coverage.
SCSC Corp. v. Allied
Mut. Ins. Co., 536 N.W.2d 305, 311 (Minn. 1995), overruled on other
grounds by Bahr v. Boise Cascade Corp., 766 N.W.2d 910, 919 (Minn.
If coverage is established, the burden shifts to the
insurer to prove that a policy exclusion applies.
Id. at 313. The
court strictly construes exclusions against the insurer, in light
of the insureds’ expectations. Thommes, 641 N.W.2d at 880.
insurer demonstrates that an exclusion applies, the insured bears
the burden of proving an exception to the exclusion.
536 N.W.2d at 314.
Volk argues that the injury is covered by the Policy’s general
Exclusion precludes coverage.
Volk claims that Johnson was not a
“patient,” but instead was a “recipient” or “consumer” of PCA care,
and that, as a result, the Patient Exclusion is inapplicable.
Specifically, Volk argues that “patient” connotes a professional
relationship and PCAs are not licensed professionals.
“Patient” is not defined within the Policy, and Volk argues
that the term is ambiguous.
“Patient” is not ambiguous, however,
unless it is read in isolation from the rest of the Policy.
Gammon v. Auto-Owners Ins. Co., 454 N.W.2d 434, 436 (Minn. Ct. App.
1990) (“Courts must determine the intent of contracting parties not
by a process of dissection in which words are isolated from their
context, but rather from a process of synthesis in which the words
and phrases are given a meaning in accordance with the obvious
purpose of the ... contract as a whole.” (citations and internal
quotation marks omitted) (alteration in original)).
No recovery for professional liability is possible because
no claim was timely reported. The professional liability section
only covers claims reported “during the Policy Period or during any
Extended Reporting Period.”
Gill Aff. Ex. 1, at 0025.
Minnesota law, such claims-made policies require that the insurer
be given notice of the claim during the coverage period. Winthrop
& Weinstine, P.A. v. Travelers Cas. & Sur. Co., 187 F.3d 871, 874
(8th Cir. 1999). Volk and Johnson did not raise their claim until
after the effective date of the Policy lapsed.
professional liability section provides no coverage.
refers only to “patients,” and never mentions “customers” or
Moreover, the term “patient” is used elsewhere in the Policy.
The professional liability portion covers injuries caused by “any
act or omission in the rendering or failure to render ‘healthcare
professional services,’” which are defined as “services performed
by an insured to care for or assist your patients.”
1, at 0005, 0008 (emphasis added).
Gill Aff. Ex.
If, as Volk argues, those
receiving PCA services are not patients, the professional liability
See Taulelle v. Allstate Ins. Co., 207 N.W.2d 736, 739
construed so as not to be a delusion to those who have bought
Therefore, the recipients of PCA services must be patients, and the
Even if the term “patients” is ambiguous, however, extrinsic
evidence conclusively resolves the question of whether the incident
fell within general liability coverage.
See Wessman v. Mass. Mut.
Life Ins. Co., 929 F.2d 402, 407 (8th Cir. 1991) (“[I]f the
language is ambiguous, resort may be had to extrinsic evidence, and
construction then becomes a question of fact, unless such evidence
is conclusive.” (citations omitted)) (applying Minnesota law).
Approximately seventy-four percent of North Country’s premium paid
Gill Aff. ¶ 7.
allocated to general liability coverage.
four percent of the professional liability portion covered PCA
Id. ¶ 8.
If, as Volk argues, individuals receiving PCA
services were not “patients” under the Policy, these large premiums
would be for wholly illusory coverage. See Taulelle, 207 N.W.2d at
739. As a result, the extrinsic evidence conclusively resolves any
summary judgment for ACE is warranted.4
Statutory Insurance Requirements
Volk next argues that, interpretation of the Policy terms
notwithstanding, the Policy must provide coverage.
Volk argues that, under Minnesota law, North Country was required
to “maintain a surety bond and liability insurance throughout the
duration of enrollment and provide proof thereof.”
§ 256B.0655 subdiv. 1g(2).
In other words, North Country and ACE
were not allowed to opt out of statutorily-required coverage.
Am. Family Mut. Ins. Co. v. Ryan, 330 N.W.2d 113, 115 (Minn. 1983)
(“[P]arties [to an insurance contract] are free to contract as they
desire, and so long as coverage required by law is not omitted and
policy provisions do not contravene applicable statutes, the extent
Because the Patient Exclusion applies, the court need not
address the “Other Coverage Parts” exclusion.
of the insurer’s liability is governed by the contract entered
into.” (citation omitted)).
North Country, however, maintained
coverage under the Policy until it ceased business operations, and
was not required to maintain coverage indefinitely.
Ex. 1, at 0059.
See Gill Aff.
Therefore, North Country met its statutory
coverage obligations, and Volk’s argument is unavailing.
Doctrine of Reasonable Expectations
Finally, Volk argues that the Policy should provide coverage
under the doctrine of reasonable expectations, as North Country
intended to procure comprehensive coverage.5
See Atwater Creamery
Co. v. W. Nat. Mut. Ins. Co., 366 N.W.2d 271, 277 (Minn. 1985)
intended beneficiaries regarding the terms of insurance contracts
The doctrine of reasonable expectations, however, is
correcting extreme situations ... where a party’s coverage is
significantly different from what the party reasonably believes it
has paid for and where the only notice the party has of that
Volk relies, in part, on a deposition of Donita Wark taken
prior to the commencement of this action. ACE objects to this as
inadmissible hearsay, arguing that it did not have a chance to
cross-examine Wark. See Fed. R. Civ. P. 32(a)(1). Because the
term “patient” is not ambiguous, and because the court declines to
invoke the doctrine of reasonable expectations, the court need not
address this argument.
difference is in an obscure and unexpected provision.”
Allstate Ins. Co., 749 N.W.2d 41, 49 (Minn. 2008).
As already explained, the policy language was unambiguous.
Moreover, even if there was ambiguity, this is not an extreme
situation where North Country was misled into purchasing illusory
Indeed, North Country had comprehensive coverage during
its existence, and Johnson’s injury, had it been timely reported,
would have fallen squarely within North Country’s professional
Thus, Volk may not invoke the doctrine of
reasonable expectations to establish coverage for Johnson’s injury.
Therefore, summary judgment for ACE is warranted.6
Accordingly, based on the above, IT IS HEREBY ORDERED that:
Plaintiff’s motion for summary judgment [ECF No. 14] is
Defendant’s motion for summary judgment [ECF No. 27] is
LET JUDGMENT BE ENTERED ACCORDINGLY.
February 5, 2013
s/David S. Doty
David S. Doty, Judge
United States District Court
Because the injury was not covered by the Policy, the court
does not address ACE’s argument that Wark’s assignment of the claim
to Volk was invalid.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?